Sustainability Management
Approach to Nippon Koei Sustainability

Basic Sustainability Policy

Based on the Management Philosophy, the sustainability of ourGroup comes from developing business strategies to pursue
opportunities in the risk related to environmental and social issues
and proposing solutions for environmental and social issues
through promoting business activities.
Under the “Nippon Koei Group Code of Conduct,” and “Basic
Sustainability Policy,” each and every one of our of employees is
working with a high level of awareness to address environmental andsocial issues toward the development of a sustainable society,aiming to contribute on a global scale by leveraging our businessdomain as a consultant.

The Nippon Koei Group promotes sustainability management inorder to contribute to the development of a sustainable society,based on fair and transparent corporate management that
establishes trust with stakeholders and is guided by values sharedwithin the Group.
We promote the following activities from the perspective ofcontributing to the creation of social value through our businessactivities, in addition to the perspective of responding to the impactof our business activities on society and to social needs from awide range of perspectives.

1993

Established Nippon Koei Basic Policy for the Global
Environment

1996

Established Nippon Koei Action Plan for the Global
Environment

1998

Ten Environmental Principles were established by theConsulting Unit (former name)2015

A new version of the Ten Environmental Principles
established based on the Nippon Koei Basic Policy for
the Global Environment and the Nippon Koei Action Planfor the Global Environment as well as the Ten
Environmental Principles of the Consulting Unit.

2022

Established Basic Sustainability Policy

Sustainability Promotion System
The Nippon Koei Group established the “Sustainability Promotion
Committee” in September 2021 with the aim of further
strengthening its efforts to realize a sustainable society.
As a sub-committee of the Management Council, this Committee
will be responsible for examining important issues and key targets
for sustainability across the entire company and clarifying necessary
implementation strategies, KPIs, and activity procedures. The
Committee is chaired by the Director and Vice President (in chargeof Sustainability), with outside directors as advisors, and thecommittee members are those who are responsible for eachbusiness headquarters, business unit, and committee. Dependingon the topic to be discussed, other parties concerned will attend
the Committee, and outside experts will be invited. The Committee
Chair, advisors, and committee members are appointed by the
President, and sub-members and observers are appointed by theCommittee Chair.

Basic Sustainability Policy
Contributing to Society throughOur Business Activities

Environment

SocialEnvironmental
conservation

We will actively promote the commercialization of solutions for social issues and contribute to the developmentof a sustainable society through business activities that support the development of optimal infrastructure tomeet the needs of the times.
We will strive to create a richer social environment in harmony with the natural and living environments,emphasizing the need to respond to climate change, to make a transition to a resource-recycling society,and biodiversity.

Respect for
Human Rights

Throughout our supply chain, we recognize diversity and address human rights risks based on race, nationality,
gender, ideology, creed, and social status, and strive to avoid complicity in human rights abuses.

Human Resource
Development

We will develop human resources who have the expertise to meet the needs of our clients and who can be
active on a global scale, while maintaining fair and equitable employment relationships that enable our employees
to play an active role in the company.

Work Environment
Improvement

We will support the safety and health of our employees and promote a working environment in which they canfeel comfortable, prosperous, and fulfilled.

Enhancement ofGovernance

We will comply with our corporate governance policies and ensure transparency of management and increasecredibility through enhanced communication with stakeholders.

Conduct Businesswith Integrity

We will comply with laws, regulations, and corporate ethics, including social norms, and conduct fair transactions
with our business partners, respecting each other’s position.

Governance

33 NIPPON KOEI GROUP INTEGRATED REPORT 2022

Introduction

Strategy

Sustainability/ESG

The Committee is responsible for formulating business policies
and approving and deciding on activities related to Group-wide
sustainability risks and opportunities. The Committee’s activities aresupervised by the Board of Directors and matters discussed by theCommittee are regularly submitted and reported to theManagement Council and the Board of Directors. Specific business
operations that contribute to the Sustainable Development Goals(SDGs) will also be considered by the Committee.

Composition of the Sustainability Promotion Committee
Committee
Chair

Takayasu Tsuyusaki
Director and Vice President(Officer in charge of Sustainability)

AdvisorYoko Ishida
Outside Director

Committee
Members

Each headquarters Director General Managers anddepartment General Managers (6 persons in total)

Offices

Corporate Planning Dept.

Main Discussions of the Sustainability Promotion
Committee and Future Responses

Main
Discussions
During FYE June
2022

FutureResponses● Establishment of a Sustainability Promotion
Committee and placement of full-time officers● Consideration and establishment of the Basic
Sustainability Policy● Held study sessions to understand social trends
and to improve the quality of information
disclosure through mutual recognition of issues● Review and enhancement of Sustainability
Promotion System● Analysis of the Nippon Koei Group’s current
conditions from the perspective of sustainability
management● Realization and deepening of the roadmap andoutputs for promoting sustainability management● Realization and deepening of materiality issues(including the consideration/formulation of KPIproposals)● Response to TCFD
● Response to human rights issues

Review of Operations

Status of the Company

management in accordance with these principles and contribute to
the creation of a sustainable society through our business.

Environmental
Management
Basic Approach to the Environment
Nippon Koei established the Ten Environmental Principles striving
to reduce the environmental load and effectively utilize resources
through business and to encourage each employee to think and act
on their own.
In our operations, we will utilize our Quality and Environmental
Management System and contribute to environmental
considerations in accordance with the SDGs, the Sustainable
Development Goals, through our knowledge and technicalcapabilities related to environmental considerations.

Ten Environmental Principles❶ Gain basic understanding.

❷ Comply with environmental laws and regulations.

❸G ive consideration to the actual status of the natural andsocial environments of the region.

❹ Proactively engage in environmental impact assessment.
❺ Pay attention to the diversity of environmental fields.

❻ Enhance technological capabilities with environmental

considerations as a value added.

❼C onsider cost effectiveness in relation to environmental

considerations.

❽P ropose measures and processes enabling environmental

considerations.

❾ Accumulate, share and communicate knowledge andinformation relating to environmental considerations.

❿ I ncorporate environmental considerations into quality

management system.

Responding to Climate Change
Signatory of the UN Global Compact
In July 2019, Nippon Koei expressed
its support for the United Nations Global
Compact (UNGC) proposed by theUnited Nations. We are also a memberof the Global Compact Network Japan,
which is comprised of Japanesecompanies that have signed the UNGC.
Many of the projects in which we are
involved, such as infrastructure
construction, energy development, and environmental conservationin developing countries, will greatly contribute to the realization of
the Ten Principles of the Global Compact. We will promote

Nippon Koei promotes the modal shift from automobiles torailroads and ships, supports conversion to renewable energy,
supports the efficient use of energy, and provides consulting
services for greenhouse gas reduction from the perspectives ofvarious business fields, such as controlling greenhouse gas
emissions by improving waste treatment technology and supporting
the CDM (Clean Development Mechanism) business. In the Energy
Business, we recognize the importance of both “reducing theenvironmental impact of our own operations” during the equipment
manufacturing process and the construction of substations andpower plants, and “reducing the environmental impact of ourcustomers’ use of our Group products,” promoting initiatives onboth sides. In the area of research and development, we have set“develop businesses responding to climate change” as one of the

NIPPON KOEI GROUP INTEGRATED REPORT 2022 34

main technology measures that we are implementing across theentire company, and are for working on the development of related
cutting-edge technology and new businesses. The Company also
works to share and disseminate its technology and expertise widely,such as through the operation of NK-ClimVault, a portal site thatallows users to obtain free future climate forecast information on
rainfall and temperature in major cities.
In response to the Task Force on Climate-related Financial
Disclosures (TCFD), the Sustainability Promotion Committee isanalyzing the impact of climate change on our business andconsidering measures to address the issue. Going forward, we will
promote the appropriate disclosure of climate change-related
information, strengthen governance and business strategies related
to climate change, build further relationships of trust withstakeholders, and aim to sustainably increase corporate value.

Initiatives for Reducing Environmental
Impact In-house
At our head office building located in Chiyoda-ku, Tokyo, we haveincorporated an energy management system developed in-houseand an energy-saving system that uses geothermal heat, based on
the knowledge gained from our core businesses. Fukushima Works,
located in Sukagawa City, Fukushima which has a manufacturing
department, is working on reducing power consumption by
installing solar power generation and introducing storage batteries,
reusing packaging materials, and recycling waste plastic and wastewood.

Energy Consumption
(kl)
2,300
2,200

2,186

Water Use
(Water (10,000 m3))
2.5
2.0
1.5

2,078

0

2019.62020.62021.62022.6

Contributing to theEnvironment ThroughBusiness
Quality and Environmental Management
System
Nippon Koei has built and operates a quality and environmental
management system at each business headquarters in compliancewith ISO 9001 and ISO 14001 standards in an active effort to ensure
quality and protect the environment in its business activities.
This quality and environmental management system standardizes
business processes and fosters ongoing improvements by setting
and pursuing quality and environmental objectives as well as
assessing the effectiveness of the system. By operating this system
and responding to quality and environmental risks and opportunities
that affect our business activities, we are working to improve quality
and customer satisfaction and fulfill our social responsibilities
through environmental considerations.

Bid/contract

2019.62020.62021.6

Job start

331

302

306

250
150

99
2018.62019.62020.62021.6782022.6

CO2 Emissions (Scope 2)(t-CO2)

5000
4,060

3,911

3,163
2019.62020.6

Kick-off meeting

Quality goals, implementation
framework, environmental
conservation and other plans

Job review/screening board

Senior engineer and othersupport as well as stronger
internal and external
communication

Job verification

Compilation of report

Evaluations byverification engineers

Final job verification

Approval of report submission
Client report evaluating
job completion

3,958
3,502

2018.6

Job proposal/quality proposal

2022.6

Management/operation via intranet system

2018.6(t-CO2)

3000

2018.6*All Nihon Kohei offices in Japan

1,844

CO2 Emissions (Scope 1)

4000

1.2

0.5

2,020

1,900

50

1.2

1.0

2,000

350

2.1

2,155

2,100

1,800

2.0

1.8

2021.635 NIPPON KOEI GROUP INTEGRATED REPORT 2022

Report on job completion

Job end

Quality assurance

Environmental conservation

Enhancement ofcustomer satisfaction

Social Responsibilities

2022.6

Introduction

Strategy

Sustainability/ESG

Review of Operations

Status of the Company

Project Information

Decarbonization

Supporting local government collaboration between Japan and developing countries toachieve a decarbonized society

In order to promote the decarbonization of cities in developing
countries, we are engaged in the commissioning of public-private
partnerships to realize decarbonization by sharing Japanese local
governments’ deep experience, know-how, and achievements
related to the formation of decarbonized societies during
collaboration with local governments in developing countries.
As part of this project, we support the formulation of master plansfor overseas cities related to decarbonization, introduce
decarbonization technologies by companies, and support thecommercialization of decarbonization technologies. We also
introduce technologies and products owned by private companies
and support their commercialization in order to formulate concrete
decarbonization projects for cities in developing countries. Since
there are many financial problems associated with commercializationin developing countries, we provide support for commercialization byintroducing subsidy schemes, etc. under the Ministry of theWaste Treatment

City-to-City Collaboration Achievements (2022)
Municipality in Japan

Foreign Municipality

Osaka City

Ho Chi Minh City, Vietnam

Toyama City

Renca Commune, Santiago, Chile

Osaka City

Eastern Economic Corridor (EEC),
ThailandKawasaki City

Pekanbaru, Indonesia

Fukuoka Prefecture

Hanoi, Vietnam

Sakai City

Ba Ria-Vung Tau Province, Vietnam

Sharing Japan’s knowledge and experience in waste disposal with Ukraine, a nation
which is experiencing waste issues

Since 2018, Nippon Koei has been conducting basic surveys toimprove municipal solid waste management in Ukraine anddispatching experts from JICA to support the improvement of solid
waste management capacity in Ukraine. As part of this work, weare currently holding online seminars (scheduled to be held fourtimes in total) to share Japan’s knowledge and experience indisaster waste management with Ukraine, which is currently
experiencing difficulties in dealing with the large amount of debris(from destroyed buildings, etc.) generated by the Russian invasion.
The first seminar, held in June 2022, was attended byrepresentatives from Ukraine’s then Ministry of Local Governmentand Land Development, Ministry of Environmental Protection andNatural Resources, and city and state governments. From Japan,
speakers included JICA officials, representatives from Nippon Koei,
and officials from the Japan Environmental Sanitation Center andHigashimatsushima City in Miyagi Prefecture, which was severely
damaged in the Great East Japan Earthquake, to deepen mutual

Clean Energy

Environment’s Joint Crediting Mechanism (JCM) and providing
guidance on application procedures.
To date, we have implemented several inter-city collaboration
projects, mainly in Southeast Asian countries, with six projects
underway in 2022.

understanding of Japan’s experience and Ukraine’s current
situation and challenges.
Going forward, Nippon Koei will continue to take the lead insupporting the recovery and reconstruction of Ukraine andcontribute to its reconstruction.

Online seminar held in June 2022

Reducing environmental impact and waste in the construction of renewable energy facilities

At the Fujiwara Power Station (Minakami-cho, Tone-gun, Gunma
Prefecture), we were responsible for the foundation of the water
turbine room, retaining walls, construction, paving and external
structures within the power station, and for the foundation of thesubstation. The project is for the renovation of the hydroelectric
power plant (22,200 kW output), which began operation in 1956,
as a “power generation facility certified for renewable energy power
generation projects based on the feed-in tariff system.” In the past,when dismantling the foundation of a water turbine generator, thicksteel materials such as water turbines and suction pipes buried inconcrete were exposed and removed by gas cutting while theconcrete was being dismantled. In this project, the burden on theenvironment was reduced by adopting a method of carrying out
the buried steel material with the cut blocks using an overheadcrane. In addition, waterless cutting, which does not use water

when cutting concrete, reduced waste (sludge water produced
during cutting).

Removing a concrete section cut using a wire saw

NIPPON KOEI GROUP INTEGRATED REPORT 2022 36

Society
Human Resource
Development

In addition to building a solid technological foundation, we aremaking intensive human resource investments in the following
points as specific measures.
Training

Human Resource Policies and BasicApproach to Human Resources

measure ❶Training

The Nippon Koei Group considers its human resources as its
greatest management asset and the source of value creation. The
Group provides a full range of training and seminar programs
designed so each employee is fully aware of their role as aprofessional, feels their own growth, freely demonstrates theirabilities, and feels a sense of purpose in their work. In addition, thepersonnel structure and training systems are formulated to support
continuing skill development.

Training, Programs, and Systems for Human Resourceand Skill Development
Training and Seminars● New employee introductory● Harassment prevention training

training● Third-year training● Mid-level employee training● Life planning seminars● Manager training● Professional engineer (secondary)● Technical development training /TD follow-up training*1● Training before appointment

exam preparation seminar

to managerial positions● Skill advancement courses, Programs● Personnel Exchange Multiseed

Program*2

etc.

Systems● NKG E-learning System● Career Path Planning System● Distance education● CPD Activity Recording System● Financial incentives for paperetc.

submissions and lecture attendance● Financial incentives forcertification attainmentetc.
*1 Technical Development: A Nippon Koei training program for employees to define theircareer vision to serve as a guide for developing technical expertise to achieve their vision.
*2 Abbreviation of Multi Seed Program, which is a system of personnel exchange that assign
employees to a different department than the originating department for a set duration todevelop engineers.

Human Resources Strategy
Our human resources strategy aims to develop world-classhuman resources in 2030. In other words, our goal is to develop
human resources that embody the Nippon Koei Group brand who“Think globally, Act locally.”
In the medium-term management plan NKG Building Resilience
2024, “establishing the Nippon Koei Group brand and quality” isincluded as a resilience measure. “NKG Quality” is the technology
and deliverables that have created a high level of customer
satisfaction, and “NKG Brand” is the trust relationships withcountries around the world built through overseas ODA projects
and advanced disaster prevention and mitigation technology
cultivated through domestic natural disaster response, which arerooted in the local community. For the Group, it is human resources
themselves that create the brands and quality, so we recognize that“strengthening our human resources” is the most importantmanagement issue.

37 NIPPON KOEI GROUP INTEGRATED REPORT 2022

measure ❷Training
measure ❸Domestic and overseas hybrid human resource
development

Regional engineer development

Development of human resources capable ofconducting cross-segment business

Human Resource Development
Programs
In order for the Nippon Koei Group to continue to exist as agroup of professionals capable of solving the issues of the times
and issues that regions face who are committed to society, we
believe that it is important for our employees to work tirelessly andfor the company to create an environment that encourages them todo so. To achieve this, we established a system for careerdevelopment and a structure for human resource development
based on the career vision formulated in 2001. In addition, it is also
important for each and every employee to be aware of the role heor she should play and to act with a sense of unity throughout theGroup. In order to achieve this goal, we indicate the following threeroles as being necessary: Technical Manager (TM), General
Manager (GM) and Project Manager (PM). We offer a variety of
training programs to promote knowledge and learning for each ofthem.
Furthermore, in order to smoothly promote work as professionals,
we believe that communication skills, specialized technical skills,social skills, and management skills that integrate these abilities are
essential. To improve these skills, we will enhance our effective
training programs.

NKG Global Academy
As part of our Medium-term Management Plan, we aim toestablish the “NKG Global Academy,” a platform which will enableengineers in the Group around the world to mutually exchange andintegrate technical information We are currently developing andexpanding the content in stages with the aim of establishing it inJune 2024. In 2030, it will be made available not only to the Groupbut also to general companies, etc. In the future, we plan to evolve
it into a place where people from all over the world can gather andlearn.
We are building a platform for co-creation with the aim of raising
the level of all Group employees and developing top-class humanresources, positioning it as a human resource development
institution for the growth of all Group employees.

Introduction

Strategy

Sustainability/ESG

Various Systems

Review of Operations

Status of the Company

Measures to Improve Employee
Engagement

Job Rotation System
We have established the Multi Seed Program (MSP) under whichyoung engineers are systematically transferred to otherdepartments to gain experience in different technologies,
businesses, and occupations, thereby developing engineers who
can accept and utilize diversity in technology, knowledge, working
environment, values, etc. The aim of this program is to develop
engineers who are not biased toward a single specialization and arecapable of responding to future changes in the businessenvironment, and to expand our human network by conducting awide range of personnel exchanges on an ongoing basis.
In regard to administrative employees, we regularly conduct job
rotations, especially for younger employees, because they are
required to demonstrate a high level of expertise in accounting,finance, legal affairs, human resources, sales, and other areas tosupport business operations in an appropriate, accurate, andefficient manner, and to carry out business management of theentire company, departments, projects, subsidiaries, etc., from amanagement perspective.

Career Development Support System
We have established a system to help employees who seek toenhance their own professional development. The purpose of the“Financial incentives for certification attainment” program is toencourage employees to acquire official qualifications necessary forbusiness strategy as well as to promote the development of
employees’ skills and self-improvement.
Under the educational support system for self-improvement, we
subsidize tuition fees for employees who have completed courses(correspondence courses, etc.) approved by the company.
In addition, we encourage employees to submit papers and givelectures at academic conferences, and provide the “Financial
incentives for paper submissions and lecture attendance” program
for the purpose of developing skills and forming external networks.

Support System for Obtaining Professional
Engineer Certification
Certified Professional Engineer is the highest national qualificationfor engineering employees in Japan and it is essential for ourbusiness strategy that our engineers have this qualification.
Therefore, we supports employees seeking to become certified
professional engineers by offering annual preparation seminars forthe certification examinations.
Programs are designed to build the confidence of individuals
preparing for the examination through correcting and advising
about written submissions, workshops and study sessions on test
preparation and how to write papers, practice questions andanswers, and mock interviews for the oral examination. The
Company also offers financial incentives and a support system forthe cost of examinations to reward employees that earn
certification.

We believes that it is important for all employees to share thevision and mission of the Nippon Koei Group and operate its
business with a sense of unity.
In addition, smooth internal communications, especially thebuilding of good human relationships between superiors andsubordinates, is directly linked to the improvement of employee
engagement. For newly appointed managers, training is provided
from the perspective of how to enhance team strength while
utilizing the individuality and strengths of their subordinates.
In addition, we believe that it is important to properly evaluateabilities and achievements in order to improve employee motivation.
Therefore, we conduct personnel evaluations once a year linked to thetarget management system. In order to ensure the proper operation ofthis personnel evaluation, we conduct evaluator training for newly
appointed managers, and in order to ensure the fairness of evaluation
results, we hold an evaluation committee in which multiple members
are appointed and established by director generals of different
headquarters to verify the evaluation from an objective perspective.
In addition to these measures prepared by the company, we
conduct a career questionnaire once a year for all employees(excluding part-time and contract employees) as an opportunity for
employees to present us with their own career aspirations andrequests. The results are used for job rotation purposes and to
improve the work environment.

Key Human Resource Data
2019

2020

2021

2022

Number of Certified
Professional Engineers(Group total, number of
persons)

1,621

1,656

1,727

1,743

Number of Certified
Professional Engineers(Non-consolidated,
number of persons)

1,334

1,362

1,420

1,466

Number of New
Employees(Domestic Group total,
number of persons)

173

187

206

205

Ratio of Female Employees
Among New Employees(Domestic Group total,in percent)

21.4

22.5

29.1

37.1

Average Number of Yearsof Employment(Non-consolidated, years)

14.4

13.9

13.6

13.4

Employee Turnover Rate
(Non-consolidated, in percent)

2.3

2.1

1.8

2.4

Training Cost per Person
per Month(Non-consolidated, in JPY)

3,502

2,646

1,187

2,903

Turnover Rate of New Graduate Hires Within 3 Years*
Month/
Year of Entry
Turnover Rate
Within 3 Years

April 2016 April 2017 April 2018 April 2019
10.3%

7.0%

7.9%

7.6%

* For example, the figure indicates the ratio of new graduate hires who joined Nippon Koei in
April 2019 that have left the company within three years (by the end of March 2022).

NIPPON KOEI GROUP INTEGRATED REPORT 2022 38

Society

Work Style Reform

Work-Life Balance Initiatives

The Group has established a Work-Life Balance Promoting
Committee under the Management Council to pursue a balanced
work style that emphasizes the quality of labor so that each
employee can work with a sense of satisfaction and fulfillment andfulfill their work responsibilities. Based on the existing themes of“work style reform” and “productivity improvement,” the Nippon
Koei Group is working faster than other companies in the industry
on work style reform with a focus on establishing systems andenvironments that make optional and diverse work styles possible
which place emphasis on work quality. As a response to the
Covid-19 pandemic that we currently face, while using thedecisions of the government and local governments as a standard,
we have set an office attending rate for each employee according
to the status of the pandemic since March 2020 to protect theirsafety and health, and we continue to use a combination of
telework and telecommuting systems. In the Tokyo metropolitanarea, we have expanded the options for remote work by
successively opening satellite offices in consideration of employees
who have difficulty working from home due to their homeenvironment and other factors.
At the Head Office, by flexibly selecting and utilizing locations
suited for work content, such as spaces for online meetings, offices
for focused work, etc., we have established a work environmentthat encourages collaboration and improved productivity. In
addition, in order to accelerate in-house DX, the DX Transformation
Department is working to improve operational efficiency through theuse of AI and RPA, and many good examples of how DX has
helped have already emerged. The systems such as flextime andtelework that have been implemented in response to the “workstyle reform” and the corresponding expansion of the IT
infrastructure environment, such as the shift to cloud computing,digitization of various internal applications (move to a paperless
approach), and the establishment of online meetings, have not only
promoted diverse work styles but also increased productivity.

Nippon Koei acquired the Kurimin andPlatinum Kurumin* Certification from the
Ministry of Health, Labour and Welfare as
a company with a high-standard of
support for child raising in accordancewith the Act on Advancement of Measures
to Support Raising Next-Generation.
Nippon Koei build an environment where human resources may
have diverse work styles in an effort to foster a better work climate.

● Initiatives for work style reform and improving

productivity● Introduce telework, free address system, andsatellite offices● Improve the efficiency of online meetings andregulate them
● Digitization of various internal applications(paperless)Improve officesystem efficiency● Use smartphones for extension calls

Systems to Support Work FriendlinessNippon Koei has put in place a wide range of programs as a way
to support employees at different stages of life whether having or
raising children or caring for sick or elderly family. In addition tocomplying with legal standards, we also add our own preferential
treatment and systems to our efforts to enhance the work-lifebalance of our employees.

Childcare Leave
Employees with children under the age of three may take up to
18 months of childcare leave.

Childcare Leave Utilization RateFYE June 19

FYE June 20

FYE June 21

FYE June 22

Total

23.6%

31.0%

38.7%

39.0%

(Male)

10.2%

14.5%

17.2%

28.7%

(Female)

84.6%

87.5%

111.8%

122.2%

Sick/Injured Childcare Leave System
Employees with children up to elementary school age are entitled
to take sick/injured child care leave in addition to annual paid leave.

Sick/injured Childcare Leave Utilization RateFYE June 19
25.2%

FYE June 20

FYE June 21

30.4%

23.1%

FYE June 22
25.6%

Nursing Care Leave
Employees who need to care for a family member can takenursing care leave in addition to annual paid leave.

Nursing Care Leave Utilization RateFYE June 19
1.2%
Improvemanagement
work efficiency
Improveefficiency of
production
activities

 igitization of purchase management/contract●D

management
 isualization of schedule management, labor●Vmanagement, and daily tasks
 igitalization of sales tools●D●D igital Transformation of activities from orderacquisition to production through the use of AI,
DB, and RPA

39 NIPPON KOEI GROUP INTEGRATED REPORT 2022

FYE June 20
1.6%

FYE June 21
0.9%

FYE June 22
0.5%

Introduction

Strategy

Sustainability/ESG

Supporting Employee HealthIn order for our human resources, the foundation of the Group, tofully demonstrate their abilities, we have established the Group
Health Declaration and are working on health management thatconsiders employee health from a management perspective andstrategically promotes various measures to improve employee
health.

Review of Operations

Status of the Company

External Evaluation
Nippon Koei was certified as a 2022 “White 500” Outstanding
Health and Productivity Management Organization, continuing its
status for four years in a row.

Nippon Koei Group Health Declaration
The Nippon Koei Group believes that in order to put into
practice our management philosophy of “Act with integrity
and contribute to society through technology andengineering,” our employees and their families must be
healthy, both physically and mentally.
By maintaining and promoting the health of employees andtheir families, and creating a vibrant work environment andhighly productive work styles that respect diversity, we willrealize a favorable work-life balance of employees as wellas the well-being of the Group and contribute to thedevelopment of a sustainable society through our business.

Mental Health Care
Caring about the mental and physical health as well as the safetyof our employees, we conduct annual stress checks for all
employees and the ratio of employees participating in stress checks
is 90%, which is higher than the national average. In addition, we
have introduced an EAP (Employee Support Program) counselingservice provided by certified psychologists to create an environment
where employees can easily consult with them.

Percentage of Employees That Received Stress Checks(%)
100

Employee Health Management Support
Under the leadership of the Officer in charge of HealthManagement (Director and Vice President), we are implementing
measures focused on the prevention of severe illnesses based on
the premise that 100% of employees receive health checkups (allemployees, including contract employees and part-time employees
who are obliged to enroll in social insurance). We have establisheda wide range of preventive measures, such as annual healthcheckups, including gynecological checkups and complete physicalexaminations for all employees over 35 years of age, as well asrecommendations for reexaminations by full-time industrial
physicians for employees with findings and interviews with industrial
physicians for those at high risk.

Health Management PDCA Cycle
We identify health issues, evaluate and improve the results basedon the annual plan we have formulated, and make improvements
every year.
PLAN Set goals and tasks

DO Implement measures● Analyze health checkup results, etc.

● Implement various healthand identify issues● Formulate a one-year plan andreport to the Management Council

measures● Obtain data through userquestionnaires, etc.

91.0

89.9

89.5
National average
78.0%

50
0

2020.62021.62022.6* National Average Data, Source: Ministry of Health, Labour and Welfare (July 26, 2017)

Labor Safety and Health Initiatives
Nippon Koei places top priority on safety in every aspect ofcorporate activities in the Group Code of Conduct and complies
with all occupational health and safety laws, regulations and internal
rules. Our basic objective is to prevent occupational accidents andillnesses and ensure the safety of all people from our corporate
officers and employees to partner companies and everyone else in
the value chain.
Our human resources are the foundation of Nippon Koei. The
entire Group not only strives to engage in health management
initiatives but also promotes various health measures unifying thecompany, employees and health insurance association to help all of
our human resources perform to the best of their abilities.
In the event an occupational accident or illness occurs, we have
put in place a crisis management system to respond quickly whileworking to prevent recurrence by disclosing the necessary
information both inside and outside of the company.

Number of Occupational Accidents● Identify issues for the next

fiscal year and consider
countermeasures

ACTION Make improvements● Quantitatively analyze theeffect of each measure on
target indicators

Total

FYE June 20

FYE June 21

FYE June 22

13

10

11

CHECK Evaluation

NIPPON KOEI GROUP INTEGRATED REPORT 2022 40

Society

Diversity
The Nippon Koei Group has established a working environment
in which diverse human resources with different values andperspectives, regardless of nationality, gender, age, or employment
status, can demonstrate their individuality and abilities and play anactive role in the Group. We believe that this is indispensable for thegrowth of the Group. In our Long-term Management Strategy, we
have also included in our human resource strategy the developmentof a highly productive work environment that makes maximum useof innovative technologies such as AI and ICT in line with theprogress of digitalization, and the pursuit of diverse work styles anddiversity management regardless of the form, place, or time of
employment.
In 2021, to further promote the active participation of diverse
human resources, we set three diversity targets (numerical targets)of ratio of female managers, ratio of foreign managers, and ratio of
mid-career recruit managers, which are all to be achieved by 2030.
These figures will be reviewed and announced each fiscal year, andwe will work steadily to achieve these targets.
In addition, as a basis for the success of these diverse humanresources and the expansion of diverse work styles, we willcontinue to promote the building of various foundations, such as
reducing overtime work, improving the annual paid leave utilization
rate, developing and operating a childcare leave system that is easy
for both men and women to take, creating a gynecological leavesystem to support further success for women, and establishing an
English-speaking consultation service for non-Japanese.

Diversity Goals for 2030
2021 Level

2022 Level

2030 Target

Ratio of female managers

4.5%

5.4%

15% or more

Ratio of foreign managers

0.4%

0.5%

1% or more

Ratio of mid-career recruit managers

30.1%

31.3%

30% (retained)

implement new priority measures at the graduate recruitment stage
to increase the ratio of female employees. Specifically, we have set
a target for increasing the percentage of new female university
graduates hired to at least 20%.

Ratio of New Female University Graduates Hired(Domestic Group Total)
FYE June 19
21.4%

FYE June 20
22.5%

FYE June 21
29.1%

FYE June 22
37.1%

Promoting the Active Participation of
Foreign Employees
Nippon Koei recruits new and mid-career human resources
regardless of nationality to accelerate its global businessexpansions. In addition to further advancing our response to
globalization in Japan, we are also promoting the development of
global human resources for new graduates in career-track positions
as well as the creation of autonomous career plans.

Ratio of Foreign Employees
FYE June 19
1.7%

FYE June 20

FYE June 21

1.9%

2.2%

FYE June 22
3.0%

Promoting the Active Participation of
People with Disabilities

Women’s Participation andAdvancement in the Workplace

We are working to create a comfortable working environment forpeople with disabilities and to develop their work duties, such as
working together as a team for a single task. In 2022, Aichi Tamano
Information System Co., Ltd., a Group company established in
1987 for the purpose of promoting the employment of people withsevere disabilities, was certified as a special subsidiary of the
Nippon Koei Group, transforming from its old form as a subsidiaryof Tamano Consultants. The employment rate in recent years has
been 2.69% (including the special subsidiary), exceeding thestatutory employment rate of 2.3%.

Ratio of Employees Who are Disabled
In regard to the policy on women’s advancement, we have set
quantitative targets in the “Action Plan based on the Act on
Promotion of Women’s Participation and Advancement in the
Workplace” and are continuing our efforts. In addition, we will

41 NIPPON KOEI GROUP INTEGRATED REPORT 2022

FYE June 19
2.02%

FYE June 20
2.17%

FYE June 21
2.09%

FYE June 22
2.69%

Introduction

Strategy

Sustainability/ESG

Human Rights Initiatives
Supporting the ten principles of the UN Global Compact in thefour areas of human rights, labor, environment, and anti-corruption,in line with the “Nippon Koei Group Code of Conduct,” and the “TenEnvironmental Principles,” the Nippon Koei Group obeys laws andordinances related to the human rights of workers in each country
where it conducts business while respecting basic human rights. In
addition, the Nippon Koei Group has established items related to
the respect for human rights in our Basic Sustainability Policy andmateriality.We respect human rights and strive to maintain a fairworkplace without discriminating against employees based on
gender, age, origin, nationality, race, ethnicity, creed, religion, or
disability.

Code of Conduct(Main Corporate Responsibilities)
Respect for Human Rights:
Nippon Koei affirms diversity and does not limit
employment opportunities or discriminate on the basis ofrace, nationality, gender, thought, faith, or social status.

Guidelines of Conduct(Main Corporate Responsibilities)
 omply with laws and regulations concerning human●Crights.
 espect the personality, diverse values, and character of●R

each individual, treat each other with respect, and act
responsibly.
 alue the efforts of the International Labor Organization●V(ILO) regarding human rights and avoid use of child laborthat violates the ILO recommendations or forced labor inany form. Inform our business partners to assume thesame attitude.
 o not harass or treat others unfairly, including sexual●D
harassment and workplace bullying. Do not allow others
to take such actions.
 espect and protect the privacy of individuals. Handle●R
confidential personal information deliberately according
to the predetermined procedure. Do not leak nor try toacquire unnecessary information.

Training and Seminars
Nippon Koei provides harassment prevention training
corresponding to each career stage. In addition to training for
employees in their third year of employment on how to deal withharassment, etc., lectures by invited experts on the impact ofharassment on mental health, etc., are provided in training for newly
appointed managers and section managers. Company-widetraining for creating a workplace free of power harassment andsexual harassment is held once a year for all managers, and experts
are invited to participate online while reviewing each year’s theme.
The attendance rate has been 100% each time it has been held.

Review of Operations

Status of the Company

In addition, we plan and implement various training and seminars,
such as “Managerial Seminars for Training Female Subordinates”
based on the increase in the number of young female employees
due to the active recruitment of new graduates in recent years, and“Online Management Training” based on the increase in online
communication due to the Covid-19 pandemic.

Harassment Consultation System
We have established three contact points for harassment-related
consultations. Employees can consult with our Personnel
Department, labor union, or outside attorney. Consultants may
directly consult with these contacts, and the privacy of theconsultants will be strictly protected. Each consultation desk ismade known to employees on the company intranet (this includes
the prohibition and disciplinary action of harassment under theemployment rules, and the dissemination of definitions of various
types of harassment).
In the event of a consultation or report, the department in charge
will investigate the matter and, based on the results of theinvestigation, take corrective measures such as disciplinary action
and implementation of preventive measures.

Business Due Diligence
While conducting business in Japan or overseas, Nippon Koei
promotes business due diligence that focuses on environmental
and social aspects. We work to reduce potential human rights risks
by effectively assessing the impact of our activities on people andregional societies based on international standards.

Respect for Human Rights in the
Supply Chain
In recent years, the importance of corporate efforts to respecthuman rights has increased, and we recognize that efforts torespect human rights not only within our company but also
throughout the supply chain are required. For this reason, we haveidentified the creation of “a workplace environment where humanrights are respected and employees feel fulfilled” as one of themateriality issues in our sustainability management, and are aiming
to formulate a human rights policy to promote initiatives based on aclearer understanding of our approach to human rights. As a group,
we will operate with respect for human rights and work together
with various stakeholders, including our business partners, topromote respect for the human rights of all stakeholders related toour business activities.

NIPPON KOEI GROUP INTEGRATED REPORT 2022 42

Corporate Governance
The Nippon Koei’s fundamental approach to enhancing theGroup’s corporate value is to perform comprehensive corporate
governance by strengthening oversight of management
organizations, ensuring management transparency, and maintaining
a structure facilitating the swift execution of business.

Basic Corporate Governance Policy
To promote corporate governance, the Company’s Board of
Directors has established and implements the “Fundamental
Approach to Corporate Governance.” The “Fundamental Approachto Corporate Governance” has been formulated with reference tothe chapters of the Tokyo Stock Exchange’s “Corporate
Governance Code” and consists of the following sections: Basic
Philosophy of Corporate Governance (Chapter 1), Ensuring
Shareholder Rights and Equality (Chapter 2), Appropriate
Collaboration with Stakeholders Other than Shareholders (Chapter3), Appropriate Information Disclosure and Transparency (Chapter4), Responsibilities of the Board of Directors and Others (Chapter5), and Dialogue with Shareholders (Chapter 6).

Committees and Meeting Organizations
Related to GovernanceNippon Koei maintains an Audit & Supervisory structure with a
Board of Directors, Audit & Supervisory Board, and accounting
auditors.
In 2003, we introduced an executive officer system as a voluntary
system which separates management monitoring and supervisory
functions from business execution functions, thereby clarifying
responsibilities and accelerating decision-making. Since 2016, wehave established and operated the Nominating and Compensation
Advisory Committee, which includes independent outside officers,
to enhance the supervisory function of the nomination andcompensation of directors, and to ensure the fairness andtransparency of management.

Main Initiatives for Strengthening Corporate Governance
2003

President

From 2001
Katsuyoshi Wada

2016

From 2004
Shu Takahashi

Separation between
management
oversight andbusiness execution

2003

Outside Director

From 2003 1 (11 Directors)

Outside Audit &Supervisory
Board Members

From 2014
Ryuichi Arimoto

From 2008
Noriaki Hirose

From 2021
Hiroaki Shinya

Changed the number of Directors stipulated in the articles of incorporation to 15 or less
Adopted executive officer system

From 2001
1 (3 Audit & Supervisory
Board Members)

From 2014
2 (11 Directors)

From 2020
3 (11 Directors)

From 2006
2 (3 to 4 Audit & Supervisory Board Members)

From 2016
Nominating and Compensation
Advisory Committee

Committees

Management
Philosophy

Established in 2001

Nippon Koei
Group Code of
Conduct

Established in 2001

Basic Corporate
Governance
Policy43 NIPPON KOEI GROUP INTEGRATED REPORT 2022

Revised in 2006

Revised in 2013

Established in 2016

Introduction

Strategy

Sustainability/ESG

Review of Operations

Status of the Company

Corporate Governance Organizational Chart
General Meeting of Shareholders
Appoint/
Dismiss

Appoint/Dismiss

Recommend

Consult

Nominating and Compensation
Advisory Committee

Cooperate
ReportReportPresident and Representative Director
Audit
Cooperate

Instruct
ReportSustainability Promotion Committee

Safety and Health & Environment Committee

Technology Committee

Internal Control over Financial Reporting Committee

Business Strategy Committee

Information Security Committee

Internal
controlaudit

Human Resources Committee
ReportBusiness Operations

Consult

Corporate Headquarters
Accounting audit

Dispatch auditors

Group Companies

Provideadviceandguidance

Appoint/
Dismiss

Legal Advisor

Board of Executive Officers

Internal audit

Provide guidanceWork-Life Balance Promotion Committee

ReportAccounting Auditor

Total Risk Management Council

Internal Auditing Office
Technical Auditing Office

Management Council

Audit & Supervisory
Board

Audit

Board of Directors

Main Committees Related to Governance
Meeting
Frequency

Number of Members

Head

Board of Directors

The Board of Directors, in accordancewith the Regulations of the Board of
Directors, makes decisions about
important matters and oversees the
directors’ execution of their duties.

Meetings arenormally held
once a month

Composed of 11 Directors. 3 are
Outside Directors.
Four Audit & Supervisory Board
members, including two Outside Audit &Supervisory Board Members, also attend
meetings of the Board of Directors.

Representative
Director andChairman

Nominating andCompensation Advisory
Committee

The committee reports its discussions of
personnel changes, director
compensation, and other matters to theBoard of Directors.

6 times a year

Composed of 6 members. These
members include 3 Independent Outside
Directors and 1 Independent Outside
Audit & Supervisory Board Member.

Representative
Director andChairmanManagement Council

The Management Council discusses
basic policies related to businessexecution and important matters related
to management and promotes businessplanning.

Meetings arenormally held
twice a month

The council is composed of 10 members,
including three representative directors aswell as five directors and two executive
officers designated by the President.
One Full-time Audit & Supervisory Board Member
attends the council meetings as an observer.

President andRepresentative
Director

Board of Executive Officers

The Board closely monitors the executionof specific measures related to the annual
business plan and the medium-term
management plan.

Meetings arenormally held
once a month

Composed of 31 members(Representative Director andPresident and 30 Executive Officers).
Two Full-time Audit & Supervisory
Board Members attends the meetings
as observers.

President andRepresentative
Director

Audit & Supervisory Board

The Audit & Supervisory Board conducts
audits related the execution of duties bydirectors and audits including monitoring
the independence of accounting auditors.

Meetings arenormally held
once a month

Composed of 4 members (2 full-time
Audit & Supervisory Board Membersand 2 Part-time Audit & Supervisory
Board Members).

Full-time Audit &Supervisory
Board Member

Total Risk Management
Council

The Total Risk Management Council
supervises the overall promotion of risk
management.

Meetings arenormally held
once a month

Composed of 8 directors with thepresident serving as the Chair.
One Full-time Audit & Supervisory Board Member
attends the council meetings as an observer.

President andRepresentative
Director

Committee/Council Name

PurposeNIPPON KOEI GROUP INTEGRATED REPORT 2022 44

Policies and Procedures for Nominating andDismissing Directors

Board of Directors
The Board of Directors formulates mid- to long-term strategies
and plans and supervises management to achieve sustainablegrowth and medium- to long-term improvements in corporate value
under its fiduciary responsibility and accountability to shareholders,
thereby improving profitability, capital efficiency, and other aspectsof the company’s operations.

In order to improve fairness and transparency, proposals forappointing/dismissing Directors (proposals for the General Meetingof Shareholders or Board of Directors meetings regarding positions
and appointments), which include the benefits and negatives ofreappointment, are first screened by the Nominating andCompensation Advisory Committee and then discussed by theManagement Council. Afterwards, plans are then decided by the
Board of Directors.
In addition, Plans for appointing/dismissing Audit & Supervisory
Board Members (plans for the General Meeting of Shareholders) are
decided by the Board of Directors after consultation by theManagement Council which obtains consent from the Audit &Supervisory Board in advance.

Concept Behind the Composition of theBoard of Directors
The Board of Directors is based on the concept that eachmember has character, insight, experience, knowledge, and ability,
and can make comprehensive decisions from a broad perspective.
It is composed of members who are judged to be the best in
consideration of their overall balance taking into account thecompany’s business environment.
In order to incorporate diverse perspectives into corporate
management, we appointed one female Outside Director who has
held the position since September 2020. In addition, there is one
female Outside Audit & Supervisory Board Member.
Although there are currently no foreigners serving as Directors,
we ensure diversity in the composition of the Board of Directors asa whole by appointing directors with various skills (experience,
knowledge, and abilities) as shown in the table below.

Officer Skills
Based on the above concept behind the composition of theBoard of Directors, the Company selects candidates after
identifying various skills (experience, knowledge, and abilities) that
directors and corporate auditors should possess in order to move
our long-term management strategy and medium-term
management plans forward.

Officer Skills
Activity status(for reference)

Skills (experience, knowledge, ability)
Name

Job title

Age(Gender)

Corporate
Planning

Technology/
IT

Ryuichi Arimoto

Director and Chairman

69(Male)●

Hiroaki Shinya

Representative Director
President

62(Male)●

Takayasu
Tsuyusaki

Director and Vice
President

66(Male)●

Haruhiko Kanai

Representative Director
Senior Managing
Executive Officer

64(Male)●●

Noriaki Yoshida

Representative Director
Senior Managing
Executive Officer

64(Male)●●

Yasushi Hirusaki

Director
Managing Executive Officers

60(Male)●Tomohisa
Fukuoka

Director
Managing Executive Officers

59(Male)●●

Hiroshi Yokota

Director
Managing Executive Officers

62(Male)●●

Hiizu Ichikawa

Outside Director

75(Male)

Kazumasa
KusakaOutside Director

Yoko Ishida●

Sales/
Marketing

Human Resources
Development

Financial/
Accounting

Legal/
Internal
Control

Environment/
EnergyGlobalNumber ofyears in theposition

Number of Board of
Directors Meetings
Attended (FYE June 2022)

●

●

●

●

●

13

18/18
(100%)

●

●

5

18/18
(100%)

●

●

●

●

●

●

●

●

●

●

●

5

18/18
(100%)

●

●

5

18/18
(100%)

1

13/13(100%)

5

18/18(100%)

1

13/13(100%)

●

●

●

●

●

●

●

●

●

●

ー

ー

●

●

●

●

●

●

8

18/18
(100%)

74(Male)

●

●

●

●

●

●

7

18/18
(100%)

Outside Director

65(Female)

●

●

●

2

18/18
(100%)

Yoshizo Goto

Full-time Audit &Supervisory Board Member

63(Male)

●

●

●

●

●

4

18/18
(100%)

Kunio Okamura

Outside Full-time
Audit & Supervisory
Board Member

68(Male)

●

●

●

●

●

3

18/18
(100%)

Naoki Honjo

Audit & Supervisory
Board Member

68(Male)

●

●

●

●

●

4

18/18
(100%)

Yoshiko Koizumi

Outside Audit & Supervisory
Board Members

79(Female)

●

●

●

●

5

18/18
(100%)●●●* Since Noriaki Yoshida and Tomohisa Fukuoka were newly appointed and assumed their positions at the 77th General Meeting of Shareholders held on September 29, 2021, the number of Board of Directors meetings they were able to attend differs from that for the other
Directors listed.
* Because Director Hiroshi Yokota was newly appointed and assumed his position at the 78th General Meeting of Shareholders held on September 29, 2022, the terms of office and attendance for the fiscal year ended June 30, 2022 are not shown.

45 NIPPON KOEI GROUP INTEGRATED REPORT 2022

Introduction

Strategy

Sustainability/ESG

Review of Operations

Status of the Company

Evaluation of the Effectiveness of theBoard of Directors

Initiatives for Enhancing the Deliberationsof the Board of Directors

The Company analyzes and evaluates the effectiveness of theBoard of Directors every year with the aim of improving thefunctions of the Board of Directors and enhancing governance. We
promote a PDCA cycle to improve the effectiveness of the Board of
Directors by discussing the identified issues at the Board of
Directors meetings and making improvements.

In order to enhance the deliberations at the Board of Directors
and enhance its functions, the Company implements the following
initiatives to train officers and energize deliberations.

Process for Evaluating the Effectiveness of theBoard of Directors● A survey for Directors and Audit & Supervisory Board

Members is conducted (anonymous questionnaire using
a third-party organization to ensure objectivity)● The Board of Directors evaluates the effectiveness of theBoard of Directors based on the aggregated andanalyzed results of the survey, and the summary of theevaluation results is described in the Corporate
Governance Report which is made public in October.

Evaluation Content● The content of the questionnaire is based on fixed-point

observation. However, social issues, recent issues facedby the Company, etc. will be newly added.
● This year’s survey addressed eight topics:(① composition and operation of the Board of Directors,② management and business strategies, ③ risk andcrisis management, ④ monitoring of group companies,⑤ evaluation and compensation of management).
⑥ Investment-related, ⑦ Dialogue with shareholders,etc., ⑧ Other matters).

Evaluation Results and Future Issues(Evaluation results)● Confirmed that the effectiveness of the Board of
Directors of the Company was ensured, including theimprovement of the matters indicated previous fiscal
year.

Officer Training
In order for officers to properly fulfill their responsibilities,
the basic objective of officer training is for officers toacquire necessary knowledge and improve abilities
regarding corporate value, governance, etc.
● Training for officers at the time of their appointment
When an officer is newly appointed, we provide training
to them on the roles (including legal responsibilities)
expected of Directors and Audit & Supervisory Board
Member, compliance, etc. In addition, we explain our
corporate history, Management Philosophy, businessoutline, management situation, governance system, etc.
to outside officers.
● Ongoing training after their appointment
We regularly invite lecturers from outside of theCompany to hold seminars on topics that are relevant tocurrent events for all officers. We also continue toprovide opportunities for officers to acquire specialized
knowledge, such as attending outside seminars.

Initiatives to Promote Lively Discussions● Since 2014, the Board of Directors has had two Outside

Directors to encourage lively discussions. In addition,
since September 2020, the Company has appointed an
additional female outside director, making it threeoutside directors, thereby ensuring diversity in thecomposition of the Board of Directors and achieving
even more vigorous deliberations.
● In order to demonstrate the function of the Board of
Directors as a monitoring board, we have beentransferring authority since 2018 to the President on
certain orders, which were previously decided by the
Board of Directors.

(Issues)● Expansion of business execution reports of Group
companies● Further improvement of Board of Directors operations

NIPPON KOEI GROUP INTEGRATED REPORT 2022 46

Policies for Developing Our Next
Generation of Executives
President Succession Plan
The President Succession Plan was established by the Board of
Directors after deliberation by the Nomination and Compensation
Advisory Committee for the purpose of selecting candidates whomeet the personnel requirements for the position of President of theCompany. This plan consists of the development andimplementation of a plan to enhance the qualities required of acandidate to become President, and the evaluation, selection, anddeliberation processes of the candidate for becoming President.
In implementing the President Succession Plan, the Nomination
and Compensation Advisory Committee thoroughly deliberates on
the successor candidates proposed by the current President,
taking into account the exchange of opinions with the candidates
and their compatibility with medium- to long-term management
strategies and strives to ensure transparency, fairness, andobjectivity of the plan.

Development and Selection of Executive
Candidates
We recognize the importance of forming a group of executive
management candidates in order to enhance the above-mentioned
candidate pool for President and to strengthen as well as stabilize
the management foundation of our Company and our Group.
As a measure to realize this, we have introduced a system fortraining and selecting candidates for management positions from thestage of promotion to the highest level of employee qualifications.
Specifically, employees with certain in-house qualifications andpositions, who are selected through the recommendation of theirdepartment heads, are required to attend SMC (Senior
Management) training, where they analyze and formulate businessstrategies and solutions under the guidance of external instructors
for about six months on themes such as creating new businesses
and overcoming management issues at the Company, and present
them to Company management. The purpose of this training is tofoster the ability to make strategic decisions from a management
perspective.
Candidates for promotion to the highest level of internal
qualification will be recommended from among the participants ofthis SMC training, and promotion will be decided through interviews
with internal directors (including presentations). In order to acquire
the general knowledge required as a candidate for executive
management, these promoted candidates will participate in training
sponsored by external organizations.
In addition, candidates who are nominated to become executive
officers on the recommendation of the President will be interviewed(including candidate presentations) with outside directors as theirmain interviewers. Based on their opinions, candidates will be
appointed as executive officers through prescribed procedures
such as resolutions of the Board of Directors. Newly appointed
executive officers will participate in training organized by externalorganizations for the purpose of acquiring knowledge of generallaws and regulations necessary for managers and fostering theirresolve as managers.

47 NIPPON KOEI GROUP INTEGRATED REPORT 2022

Policy Regarding Strategic Shareholdings
For the purpose of business expansion and sustainable growth of
our company, our policy is to hold stocks that are necessary forpolicy purposes while selling stocks when it is no longer rational tohold them, as appropriate based on a comprehensive considerationof their importance in business strategy and business relationships
with business partners, from a medium- to long-term perspective.
Strategic shareholdings are examined from a medium- to longterm perspective, taking into account their returns and risks. The
purpose and rationality of strategic shareholdings reflecting theseresults are examined by the Board of Directors.
With regard to voting rights for strategic shareholdings, voting
rights are exercised based on factors such as whether the investee
company is conducting management that places emphasis on thedevelopment of the investee company and the interests of its
shareholders, and whether the proposal contributes to theenhancement of the corporate value of the investee company.

Approach to Officer Compensation anda Description of Each Type ofCompensation
Description of Compensation System for
Directors
Director compensation follows the compensation framework
established at the General Meeting of Shareholders, and individualcompensation amounts are set using the following policies andprocedures established by the Board of Directors. The Company
has adopted a structure in which these compensation systems arereviewed by the Nominating and Compensation Advisory
Committee, which is primarily comprised of independent outside
directors, as necessary.
In addition, compensation is structured as described below.

Directors Other than
Outside Directors

Composed of fixed compensation (monthly
compensation), results-based compensation(bonus) and compensation for restricted stocks

Outside Director

Composed solely of fixed compensation(monthly compensation)

Audit & Supervisory
Board Member

Composed solely of fixed compensation(monthly compensation)(individual compensation is determined throughconsultation among corporate auditors)

Fixed Compensation
Fixed compensation (base compensation) for Directors (otherthan Outside Directors) is determined for each Director based on
their role and level of responsibility. Monthly compensation isdetermined in accordance with the standards predetermined foreach official position.
Part of the compensation of Outside Directors is spent to acquire
the Company’s share under the Directors’ Stock Ownership Plan.
Audit & Supervisory Board Members have the option of allotting a
portion of the salary to be used to acquire Company shares in the
Officer Shareholding Association.

Introduction

Strategy

Sustainability/ESG

Review of Operations

Status of the Company

Results-based Compensation (bonus)

Restricted Stock Compensation

For directors (other than outside directors), performance-linked
compensation (bonus) is positioned as an incentive for short-term
performance improvement, and sales revenue and net income
attributable to owners of the parent company for each fiscal year
are selected as appropriate performance evaluation indicators.
Specifically, a standard amount is determined according to theachievement rate based on the planned value of sales revenue andprofit attributable to owners of the parent company as a bonus
payment standard, and the Representative Director and President
evaluates the degree of achievement of business performance andthe degree of contribution to the company, etc. of each Director.
Furthermore, bonuses are paid every year at a certain time after theend of the relevant fiscal year within the maximum annual amountof remuneration for directors approved by the General Meeting of
Shareholders following deliberation by the Nomination andCompensation Advisory Committee.

Restricted Stock Compensation has been implemented startingin September 2017 with the intention of having directors share withshareholders the merits and risks of share price fluctuations andproviding additional motivation to contribute to increase in the shareprice and enhancement of corporate value.
Within the scope of the total amount of monetary compensation
claims to be paid as compensation for restricted stock that has
been approved separately from the annual limit of director
compensation at the general meeting of shareholders, restricted
stock is allocated at a certain time each year by having themonetary compensation claims paid to each director contribute inkind according to predetermined criteria for each position.

Description of Officer Compensation
Director(excluding
outside director)

Outside Director

Audit &
Supervisory
Board Member

Fixed Compensation

Directors (excluding outside directors): Up to ¥465 million(includes bonus)
Outside Directors: Set at ¥45 million
Audit & Supervisory Board Member: Set at ¥80 million

●

●

●

Results-based
compensation (bonus)

The standard amount is determined according to thepercentage of achievement of the planned value of sales
revenue and profit attributable to owners of parent

●

–

–

Restricted Stock
Compensation

Set at ¥60 million

●

–

–

Compensation (annual amount)Standard Compensation Structure for Director Compensation
Fixed Compensation (Base Compensation)

Results-based compensation (bonus)

Restricted Stock Compensation

67%

19%

14%

Compensation Amounts for Directors and Audit & Supervisory Board Members in FYE June 2022
Total Amount of Compensation by Type (Millions of yen)

Officer Classification

Total AmountofCompensation(Millions of yen)Fixed Compensation

Number of Eligible
Officers

Number of Officers
Eligible

Base
Compensation

Restricted Stock
Compensation

Bonus

359

206

43

110

10

29

29

–

–

2

Outside Director

45

45

–

–

3

Outside Audit & Supervisory
Board Members

33

33

–

–

2

Directors(excluding outside directors)
Audit & Supervisory Board
Members(excluding outside members)

NIPPON KOEI GROUP INTEGRATED REPORT 2022 48

Compliance

Compliance Training

In order to conduct business appropriately in a global society andto prepare for all kinds of risks that may hinder business activities,
initiatives and guidance that serve as common guidelines worldwide
are becoming increasingly important. We are aware that thoroughcompliance is a source for increased corporate value, and we are
striving to achieve highly transparent management. In addition, weare systematically responding to compliance risks in promoting ourbusiness by visualizing them as much as possible.

We provide training on compliance by career level, holdcompliance lectures for officers and executive employees, andprovide training for each department. During training sessions,lectures are given on causes and preventive measures withreference to specific cases, and participants learn about laws which
are closely related to our business. In addition, through the Group’s
E-learning system, we conduct education and testing on various
themes such as compliance with the Antitrust Act and harassment,
and provide training for employees, including training for employees
at some Group companies.

Code of Conduct
The Nippon Koei Group has established the Nippon Koei Group
Code of Conduct (basic policy) for the Group’s common code of
conduct, and aims to truly enhance corporate value by
incorporating it into the daily actions of each and every executive
and employee. It has been made available into seven languages,
including Japanese, English, and Spanish, and shared with
employees around the world. We aim to create a highly transparent
management system and build a relationship of trust across theentire Group as well as establish and operate a complianceobservance system that also aims for the Company to adhere tosocial norms in order to put into practice our Management
Philosophy “Act with integrity and contribute to society throughtechnology and engineering” in accordance with laws andregulations.
Nippon Koei Group Code of Conduct URL
https://www.n-koei.co.jp/english/profile/ideas/pdf/code_of_conduct.pdf

Compliance Organizational Chart
Board of Directors

External
Reporting Desk

Company-wide
Compliance
Liaison Council
Group
Compliance
Liaison Council

Total Risk Management Council
Business Operations Committee

Head Office Committee

OfficesCompliance Office withineach Headquarters

Offices
Legal & ComplianceDepartment

Business Operations
Compliance Managers
CouncilGroup Companies

Compliance Awareness Survey
The Nippon Koei Group regularly conducts a complianceawareness survey of officers and employees within the Group every
year. All surveys are conducted anonymously with the results
disclosed within the Group and reflected in our complianceactivities.

49 NIPPON KOEI GROUP INTEGRATED REPORT 2022

Compliance Consultation/Reporting
System
We established the Consultation/Reporting System Regulationsin 2003 and have set up a system where employees who becomeaware of compliance violations or actions that may violate
compliance can directly consult or report to the Department incharge of compliance or an outside attorney. This system isavailable not only to our employees but also to temporary
employees, Group companies, and business partners. The numberof reports (excluding consultation cases) over the past few years is
as shown in the table below.

Number of Internal Reports
FYE June 2020

FYE June 2021

FYE June 2022

12

7

7

Initiatives for Preventing Corruption
As our Group is expanding its business globally, we cannot deny
the risk of being asked to provide improper financial benefits in thecourse of promoting business, discussions, and negotiations withlocal government agencies, etc. Therefore, we must assume suchcases in advance and take firm action.
Since the Nippon Koei Group is a signatory to the UN Global
Compact, it has incorporated the four areas of human rights, labor,
environment, and anti-corruption, and their ten principles, into our
Code of Conduct, which we adhere to. The Code of Conduct
stipulates that we will not pursue profits by unfair means and that
we will conduct our business activities in compliance with laws andregulations based on fair, transparent, and free competition.
In addition, in order to ensure thorough compliance, we haveestablished and operate internal rules such as the Anti-Bribery
Regulations. For example, we have established standards for what
constitutes inappropriate expenditures, and we have establishedrules to deal with the risk of fraud, such as ensuring that any
unreasonable demands are not judged solely by the field, but arealways discussed with the Head Office.

Introduction

Strategy

Sustainability/ESG

Risk Management
As we conduct a wide range of business activities on a global
level, we believe that a solid risk management system is essential
for implementing our business strategies. In formulating long-term
management strategies and medium-term management plans,risks are comprehensively identified and closely monitored as we
conduct our business activities, while incorporating various
measures to hedge risks.

Risk Management Organization and
SystemAs an organization to supervise the overall risk management
promotion, the Total Risk Management (TRM) Council meets monthly
to identify and assess risks within the Group and promote risk
prevention and countermeasures.
The TRM Council is comprised of eight directors including thePresident serving as the Chair. Each meeting includes an Audit &Supervisory Board member who attends as an observer. Executive
Officers of Nippon Koei have the duty of conducting risk
management related to the assigned duties each was given. Total
Risk Management Council members consist of individuals who areat the Executive Officer level or above.
The TRM oversees the overall promotion of risk management,
and the TRM as well as the Safety and Health & Environment
Committee, Internal Control over Financial Reporting Committee,
and Information Security Subcommittee, all of which are under thesupervision of the TRM, manage risks across the entire company
and report important risk information monthly to the Board of
Directors.

Risk Management Plan Formulation and
PDCA Cycle
Based on the Basic Policies on the Development of Internal
Control System established by the Board of Directors, Nippon Koei
has formulated a Group-wide Risk Management Plan and is
promoting systematic risk management.
Each division identifies and evaluates risks associated with its
business activities each fiscal year, formulates specific management
measures to prevent risk events from materializing or to minimize
the possibility of losses, and drafts a risk management plan. Aftercompiling risk management plans for each department anddiscussing and formulating a Group-wide risk management plan,
TRM regularly monitors the progress of the risk management plan,
review the progress, issues, and future countermeasures, andimplements a PDCA cycle. When a significant risk event becomesapparent, we conduct an assessment of the risk management plan,take necessary measures and improvements, and reflect them in
the risk management activities of each division. In addition, thestatus of risk management at Group companies is reported to the
TRM Council by the heads of each department, and it is monitored
on a regular basis.

Review of Operations

Status of the Company

In the event of a crisis, in accordance with the Crisis
Management Regulations, a Company-wide emergency task force
or emergency task force of the relevant department is established
to respond appropriately to the crisis after promptly reporting to the
President (who serves as Chair of the TRM Council).

Business Continuity Initiatives
If we do not have adequate countermeasures for natural
disasters as well as for epidemics and outbreaks of infectious
diseases, there is a risk that we will be forced to suspend
operations for a long period of time, which could result in significant
losses that would have a major impact on our stakeholders. As acompany involved in the infrastructure that supports people’s daily
lives, we believe that it is our social responsibility to continue toprovide stable services. Therefore, we have established a business
continuity plan (BCP) and are working to create and regularly review
procedures for responding quickly and appropriately in the event ofa crisis.

Quality and Environmental Management
System
We have established and implement a quality and environmental
management system in accordance with ISO 9001 and ISO 14001.
This system standardizes work procedures in projects, review andverification methods, and checks the degree of achievement ofquality targets. This minimizes risk and promotes the achievementof project objectives. In addition, by continuously acquiringknowledge about the environment and improving technicalcapabilities, we have realized consideration, including environmental
risk management.

Information Security
The Group has established an information security system toappropriately manage the confidential information of customers inorder to receive and perform consulting services from customers,
including government and public agencies. The Group Code of
Conduct stipulates the thorough protection and management of all
information obtained in the course of work and the prevention ofunauthorized use and leakage. In addition, we have established andimplement the Basic Policy on Information Security and theInformation Management Rules to protect and manage informationand prevent unauthorized use and leakage. In addition, as a
response to increasing information security risks such as
cyberattacks, we continuously improve information security
measures under the supervision of the Information Security
Subcommittee established under the TRM Council. In addition, we
have been audited by a third-party organization and somedepartments have obtained the ISO 27001 certification, aninternational standard for information security management systems(ISMS).

NIPPON KOEI GROUP INTEGRATED REPORT 2022 50

A Discussion with Outside Directors

Yoko Ishida

Hiizu Ichikawa

Kazumasa Kusaka

Outside Director

Outside Director

Outside Director

various forms, there is no form that will act as a panacea to makeTransition to a Holding Company

everything go well. Since conditions surrounding a company
change depending on the trends of the times and various
circumstances, we should think about organizational design fromthe perspective of how we can achieve the desired results― 
Please tell us your thoughts about Nippon Koei’stransition to becoming a holding company.

according to the circumstances at the time. Since its founding,
Nippon Koei has continued to grow with the Consulting Businessserving as its core business. From the 2010s, Nippon Koei has

KusakaRegarding the transition to a holding company, at first I

would like to say that although organizations in the world exist in

51 NIPPON KOEI GROUP INTEGRATED REPORT 2022

diversified its business by launching its Urban & Spatial
Development Business and Energy Business as part of its previous

Introduction

Strategy

Sustainability/ESG

Review of Operations

Status of the Company

long-term management strategy. When diversifying, somecontinue to promote diversification and aim to become ancompanies establish new companies under the umbrella of a mainorganization that encompasses a wide range of fields. However,company, but there are cases where communication between thewhat is most important in doing so is having leaders who can drive

main company and its subsidiaries may not be successful. In thegrowth. If each leader can exert a strong centripetal force and unite

Nippon Koei Group, each business has different origins, track

a diverse group of people toward a single goal, the organization willrecord, and way of working, so it is important to establish an

develop into a powerful entity with many strengths.

organizational structure that facilitates communication within the

In this sense, just as important as the transition to a pure holding

Group as smoothly as possible.

company structure is the further strengthening of the supervisory

For this reason, it was thought that a horizontal relationshipfunction of the holding company. As a holding company with awould work better for the Nippon Koei Group, in which othernominating committee,etc., it is important that the committees

operating companies, including Nippon Koei itself, are establishedproperly discuss and select leaders who are suitable to lead theunder the umbrella of the holding company rather than a vertical

Nippon Koei Group in an open and fair manner. I would like people

relationship between Nippon Koei as an operating company and its

to focus on the new structure of the Nippon Koei Group, which willsubsidiaries for group governance. With the Consulting Business aspromote both the shift to a holding company structure to

the “eldest son” and the Urban & Spatial Development Business,encompass a wide range of diverse fields and the function ofEnergy Business, and other business companies that have newly

objectively selecting leaders to oversee these fields.

joined the Nippon Koei Group serving as “younger daughters andsons,” I believe that it will be possible to create a relationship ofmutual understanding and cooperation among the businesscompanies. In order to realize the ideal vision we have envisioned― 
What other changes are you expecting as a resultof the transition to a holding company?

for the future, I believe that the optimal organizational structure atpresent is a pure holding company structure.

KusakaIshida The business conditions surrounding the Nippon Koei

the growth of potential leaders. As an example, it is conceivableGroup continue to change drastically due to the spread ofthat human resources who have been active in the operating

Covid-19, the permeation of DX, and the further progress ofcompanies for 15 to 20 years will be transferred to the Corporate

globalization. In addition, as the positions of countries around thePlanning Department of the holding company for about two years.

world and regional communities such as ASEAN are changing, theWhile simply staying with the operating company to which you

nature of Japan’s ODA is also changing. It is becoming increasingly

originally belonged may deepen your knowledge of the businessdifficult to formulate future-oriented plans in management based onfield, it is difficult to gain a multifaceted perspective doing so. The

common sense, so we need to increase management flexibility

holding company brings together potential leaders who are

more than ever. For the Nippon Koei Group, it is necessary to build

expected to play a central role in the future management of the

an organizational structure that is both top-down and bottom-up

Nippon Koei Group and gives them the opportunity to enhancerather than the monolithic corporate management scheme that has

their understanding of the group as a whole and their knowledge ofbeen in place until now with Nippon Koei at the center. Instead ofgroup management. If each potential leader gains this kind ofconcentrating our strengths in the monolithic Nippon Koei, eachexperience and plays an even more active role after returning to his

operating company should demonstrate its strengths whileor her original company, it will lead to the sustainable growth of thecollaborating within the Group to create new value. In other words,

entire Group as a result. I believe that the deepening ofeach operating company should autonomously demonstrate its

communication and personal relationships among seconded

strengths. At the same time, we aim to build an organizational

employees will also strengthen the cohesiveness of the entire Groupstructure that maintains a sense of unity as the Nippon Koei Group.

in the future.

This is what is behind the transition to a pure holding company

In addition, the head of each business division will move from theposition of making decisions in that division to that of president of astructure.
Ichikawa

It can also be expected that the transition will accelerate

As Mr. Kusaka said, it does not mean that everything

single operating company and will fulfill their accountability towill work just because the organization has a given form. An

stakeholders while exercising their authority as president. By doingorganizational form is only a box. Therefore, the success of aso, they will be able to realize their potential and eventually growcompany is determined by the ability of the people within to

into leaders who can lead the entire Group.

demonstrate their individual strengths. When it comes to whether

Ishida I think it is true that the position makes the person. If thethe organization or the people are more important, it goes withouttransition to a holding company structure increases the number ofsaying that the people are more important. Nippon Koei Group will

new positions, we can expect to further promote diversity, including

NIPPON KOEI GROUP INTEGRATED REPORT 2022 52

increasing the number of our female and non-Japanese employees.

expansion in North America with Quadrangle as a foothold, BDP is

In the past, community and infrastructure development was carried

expanding its business area both geographically and vertically.

out almost exclusively from the perspective of men. Recently,

Since these companies are also subsidiaries of the Nippon Koei

however, the opinions of women have been incorporated as well.

Group, we have the opportunity to hear directly about the latest

Diversity at the project level is progressing steadily and I believe thattrends in the business environment from our colleagues where

the transition to a holding company structure will lead to greater

those companies are based, including the political economy ofdiversity at the management level.

each country, rather than obtaining information from the media in

Although the ratio of female managers at Nippon Koei isTokyo. We can get opinions from different perspectives on thejust over 5%, I expect that if more women are placed in positions ofsame phenomenon. Diversity is not just about gathering people

responsibility in the future, they will contribute to the creation of new

with different attributes. It is intrinsically valuable in working withvalue from a different perspective than men.

people with different perspectives and having contact with other

Ishida Since connections with overseas group companies,

parts of the world. I believe that interacting with employees ofincluding BDP Holdings Limited (BDP), a British architectural design

overseas-based Group companies and deepening mutual

firm that is part of the Nippon Koei Group, are increasing, we mayunderstanding of different cultures will serve as the foundation for

consider taking advantage of the expanded cooperative

Nippon Koei, a Japanese company, to play an active role in therelationships to develop human resources, such as transferring

world, create value, and grow.

Kusakaemployees from Nippon Koei to those companies and humanresource exchanges with universities.
Ichikawa

Another option is to constantly send two or three

trainees to a Group company that possesses know-how, such as
BDP. BDP also acquired Pattern Design Limited, which designed

About Our ESG Initiatives

the stadiums for the Football Qatar World Cup. Since we have sucha company with a global presence under our corporate umbrella, I
think it would be good if we could expand mutual exchanges andenable Nippon Koei employees to learn about their latest
technology. By absorbing their knowledge, we should be able to― 
I would like to hear your opinions on the Nippon

Koei Group’s seven materiality issues.

increase the overall strength of the Group as a whole.
KusakaIn 2019, BDP acquired the Canadian architecturaldesign company Quadrangle. By accelerating its business

Ichikawa

Solving social issues is what Nippon Koei does. It is

our mission to play a role in the field of renewable energy, since theenergy sector, which is linked with the decarbonization of society,was the first business undertaken by our founder, Yutaka Kubota.
All of the seven materiality issues are important for the Nippon Koei
Group to grow sustainably together with society. However, it may
be more effective to promote each materiality issue with somedegree of prioritization rather than to pursue each in a uniform
manner. From this perspective, “Challenge to decarbonization” is aparticularly important materiality issue.
In the consulting field, DX must be fully utilized to improve
efficiency and speed. In order to strengthen infrastructure, it will benecessary to devise ways to double or triple the efficiency within alimited budget. To achieve this, it is important to enhance theorganization and human resources.
Ishida I think it is important to give priority, but also to encourage
the Nippon Koei Group to focus on areas that it has notemphasized so far is the significance of raising the seven materiality
issues. For the Nippon Koei Group, which operates not only inJapan but also overseas, this is a good opportunity to raiseawareness of global social issues. It is important to recognize ourcompany’s situation from the perspective of society. As a member

53 NIPPON KOEI GROUP INTEGRATED REPORT 2022

Introduction

Strategy

Sustainability/ESG

Review of Operations

Ichikawa

Status of the Company

From my experience, good companies have goodpeople. They listen and respond to customers when they are reallyfacing trouble. I think that is the most important thing for a company
to do, and I hope that Nippon Koei will continue to be such a
company.
I believe that my role as Outside Director is to continue to convey
opinions through my own filters on each and every move that
Nippon Koei faces. I feel that guiding Nippon Koei in a direction that
I think is appropriate will contribute to the company.
KusakaBoth Ms. Ishida and Mr. Ichikawa talked about “people.”

I also feel that companies are ultimately all about people. The“software” (people) is combined with the “hardware” (organizations)and the wisdom of each organization is accumulated. Therefore, I
would like to meet with all employees at Nippon Koei Group
regardless of position to deepen our communications when theCovid-19 pandemic is under control. I think there are opportunities
for small groups to meet for dinner and where people can talkfreely, so traveling to many sites and engaging in dialogue with
employees is what I most want to do now.
of the Sustainability Promotion Committee, I am very happy that weare now able to have discussions about materiality issues.
KusakaIt is important to use the identified materiality issues astools for communication with stakeholders. In the process ofcarefully explaining to investors and other stakeholders what
Nippon Koei believes is important and why, I believe that the Groupcan clarify its values.

Closing Messages― 
In closing, could you each give us a closing

message regarding your expectations for the
future of the Nippon Koei Group and the role thatyou would like to play as an Outside Director?
Ishida Construction and development consultants in the Nippon
Koei Group play an important role in creating plans to materialize
policies created by JICA and other national agencies and in giving
shape to the needs of local people, but they are not well known
and are often seen as behind-the-scenes helpers. Althoughreserved nature and seriousness are good qualities of this company,
I would like to see the Nippon Koei Group’s presence enhanced bystrengthening its ability to communicate outside the industry a bit
more. I expect that this will lead to the acquisition of excellent humanresources and the development of new markets.

NIPPON KOEI GROUP INTEGRATED REPORT 2022 54