ESG Management Undertaken by the Sumitomo Rubber GroupA Message from the Executive Officer in Charge of
Human Resources
Building a Sound Corporate
Culture Is Key to Realizing“Our Philosophy”

Kiyoshi Ikawa

promote initiatives to this end, we must have a clear picture of, or
visualization of, the status of our human resources. Accordingly, wewill strive to identify promising candidates present at each division
and assess their competencies to forecast when their potential isfully realized based on time frames of three, five and 10 years.
Currently, we have identified around 100 candidates based on recommendations from more than 80 divisions. These individuals areexpected to become optimal candidates for general manager postsin the next three years. If we cast our net a further ten years into thefuture, the overall number of candidates increases around threefold.
With regard to the visualization of the status of our candidates, wewill take a multilateral approach to determine their areas of strength,
for example, logical thinking and personal relationship capabilities
based on results of various assessments and 360-degree feedback

sessions. We will also provide training and other programs to help
them enhance their competencies in areas of weakness. Furthermore,
we will conduct personnel transfers in a way that supports their personal growth and helps them enhance practical skills in the course ofengaging in new roles and positions. We believe that, in these ways,
our candidates will grow into leaders capable of achieving robust
results even in operations outside their areas of specialty.
As such, we deem it extremely important to develop a talent management framework for systematically nurturing core human resources
and have devised a combination of lectures and hands-on experience.
Also, we have not put the actual execution of this framework simply inthe hands of business divisions. The status of the framework will bedeliberated by the Human Resources Committee with input fromDirectors and other individuals in top management positions.

Executive Officer, Head of the Human Resources & General Affairs HQ

Tirelessly Improving Our Organizational Culture
Everything Starts with the Quality of Our Senior Management
The strengthening of human capital is an integral component of ourmedium- to long-term human resource strategies. We believe that, tothis end, it is important to enhance the quality of our senior management.
The example of (1) senior managers carrying out their duties to ahigh standard of quality will (2) motivate and empower employees todemonstrate higher capabilities, in turn leading to (3) increased
employee engagement and (4) the overall improvement of job quality. This will enhance public appreciation of the Sumitomo RubberGroup for the robust quality of its products and services as well as
roles it fulfills in society even as it (5) better positions us to satisfy theexpectations of customers and society as a whole. Higher customer
and stakeholder satisfaction will result in stronger operating results,
enabling us to increase the volume of cash dividends and thus (6)improve shareholder satisfaction. I consider these six steps to constitute one virtuous cycle.
Knowing that to set the above cycle into motion, we had to startwith enhancing the quality of senior managers, in 2020 we introduced a 360-degree feedback system to assess officer and manager
performance. Individuals subject to this assessment system include
President Yamamoto and other executives as well as all domestic
employees assigned to manager or higher positions. Furthermore,each officer is assigned an executive coach to enable them to constantly reflect on their management styles in the course of presiding
over the businesses, organizations and workplaces under theirsupervision.

As part of these efforts, the executive coaches also compile and mailout weekly magazines to all officers. These e-publications deliver articles on timely topics relevant to prevailing circumstances, with the aimof engaging executive in unfettered discussions regarding the management challenges they confront while ensuring they share the same vector. This, I believe, is a unique feature of our executive coaching system.
To speed up the pace and enhance the quality of decision making,we also made it a rule that the four internal directors convene regularmeetings in 2023. Gathering all the internal Directors in one room
facilitates open exchanges of frank opinions, and Executive Officers,
who are charged with supervising various fields, are welcome tofreely visit that room to share updates on the status of operationsand consult with the Directors.
Due to these and other initiatives, we have seen the steady development of a sense of unity among senior managers. Currently, weare striving to familiarize the larger body of employees with what is
now going on among senior managers regarding this growing senseof unity. Specifically, we host online discussion sessions attended byofficers, including President, to let employees frankly share theirthoughts on business challenges and their approach to work. The
video recordings of these sessions are made available to all employees via streaming, garnering positive reviews from them.
Taking these circumstances into account, we are convinced thatthe abovementioned cycle will get on a steady track by 2025, theturning point of the new Midterm Plan.

Fostering a Sense of Unity with the Manufacturing Front Lines
Our new Midterm Plan was announced in February 2023. Following
this announcement, President and other executives began visiting
individual bases to host dialogue sessions and directly brief employees on the content of this plan.
The Sumitomo Rubber Group is a manufacturer. Because of this,
we hope to make our group an even more vibrant organization inwhich those on the manufacturing front lines feel a close sense ofunity with all other business units. To that end, we would like ourfrontline manufacturing operators who work in shifts to run their lines
on an around-the-clock basis to facilitate the sharing of theirinsights. This, in turn, will inform our measures to develop into a
more vibrant organization.
A visit from the President offering some words of encouragement

and notifying them about the new business plan is hardly enough tospark the development of a sense of unity among employees.
Instead of taking a simplistic approach like this, we start by sincerely
listening to the voices of those working on the manufacturing front
lines to get a better picture of what they really think about in thecourse of their day-to-day duties and their ideals regarding what ourgroup should look like.
In this regard, I expect President Yamamoto to engage in robust
dialogues and wholeheartedly communicate his expectations regarding his colleagues on the front lines to help them to see how the viability of the Sumitomo Rubber Group hinges on their dedication. I believethat a sense of unity will gradually develop if he and other executives
succeed in winning employee support through such dialogue.

Developing a Framework for Systematically Nurturing Next-Generation Management Candidates
Another factor contributing to senior management quality is the systematic development of human resources equipped with broad perspectives backed by diverse business experience and the capability

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to identify paths toward business growth. In other words, we need tofacilitate the systematic acquisition of robust experience to support
the personal growth of our next-generation leader candidates. ToSince September 2020, the Sumitomo Rubber Group has conductedin-house questionnaire-based surveys regarding the status of its organizational culture. These questionnaires consist of approximately 20questions with a six-grade rating system, and a score of four or higher
is deemed a positive answer. Based on this rating system, we are targeting raising the ratio of employees who see our organizational culture
in a positive light to 80% or more. We also publish the results of surveys undertaken in each division so that all employees can view them.
These surveys were initiated by our keen awareness of the issues
associated with our group’s organizational culture, including an environment unsupportive of those taking on challenges, boundaries
inhibiting communications, outdated leadership styles and stagnant
profitability due to an insufficient employee understanding of business strategies. We have thus aimed to create a quantitative visualization of the status of these issues and a means of scientificallyverifying the degree of improvement through these surveys.
In March 2020, we launched a task force charged with spearheading the improvement of our organizational culture based onsurvey results. Specifically, Task Force Ambassadors were appointed
from each division to tackle organizational issues confronting thatdivision. As a result, 50 ambassadors have been at work and theiractivities have started with discussions of why we must improve ourorganizational culture and how such an improvement connects tooperating results. Over the course of approximately six months, they
have deliberated on these and other matters to develop employee
motivation and to ensure we all share the same vector. The time andresources spent on these discussions have now yielded results,
enabling the task force to steadily get on track.
As a result of these initiatives, the ratio of positive answers to questions like “is your workplace environment is supportive of those taking
on challenges” surpassed 80%. Taking these and other outcomes
into account, we feel that our corporate culture has changed andnow has an atmosphere that commends those taking on challenges

regardless of success or failure, instead of reprimanding or awarding
demerit marks to those who have taken on challenges but failed.
That being said, there is room for improvement in terms ofaddressing issues arising from low productivity. Also, the organizational culture can change rapidly depending on the external environment, the status of human resources or a combination of both.
Therefore, we believe that our efforts to improve must not end.
The improvement of an organizational culture can also lead to thecreation of a sustainable workplace, which, in turn, will attract agreat number of high-quality human resources and help maintainbusiness continuity. With this in mind, we will continuously engage indialogue and implement other initiatives to ensure that our vision isrobustly communicated to those working on the front lines andensure we all share the same vector.
Building on the outcomes of our initiatives thus far to improveorganizational culture, we launched the Corporate Transformation(CX) Project Office. Although executional capabilities are essential toaccomplishing the Midterm Plan, we consider such capabilities to bea result of a combination of techniques, skills and motivations. Insum, we believe that these elements together support employees’
drive to accomplish the plan. With this in mind, the CX Project Office
is addressing the foremost issue of how to inspire employees todevelop their drives.
We also deem it important to maintain organizational discipline. To
foster a sound sense of discipline, we will update a diverse range of
conventional human resources systems. For example, we will transition to an evaluation system that properly awards higher ratings tohigh performers and pays them accordingly. Furthermore, we willtake on DX-driven operational reforms to develop mechanisms
designed to enhance productivity.
We will thus strive to transform ourselves into a more innovative
organization through the drastic reform of our conventional businessand organizational management models.

Toward the Realization of “Our Philosophy”
Lastly, I believe that the realization of “Our Philosophy” is largely
dependent on the creation of a sound corporate culture.
As expressed in Peter Drucker’s famous quote, “Culture Eats Strategy,”a good corporate culture is essential to realizing a good strategy.
Then, what makes a corporate culture good? I believe that a soundsense of discipline and purposefulness makes a good corporate culture. I think that the strongest organization is one composed of individuals who strive day in and day out to make improvements andtake on challenges even as they thoroughly review their own conduct
to identify how to make tomorrow better than today. Accordingly, wemust develop an environment in which employees who maintain andact on such a sound sense of discipline and purposefulness areproperly rewarded. If the corporate culture encourages everyone todevelop a sense of discipline and autonomously do their best toeffect improvements, those employees will be naturally motivated totake on challenges.
We also know that our initiatives to realize a corporate culture ofthis kind need to be updated as circumstances evolve. We havepositioned the results of the aforementioned questionnaires as abarometer for measuring the effectiveness of these initiatives. Utilizing
quantitative scores as KPIs, we will periodically monitor the status of
our initiatives and make necessary corrections or adjustments.
I believe that, if we assiduously implement the initiatives discussed
above to achieve reforms and improvement even as we move forward toward the realization of “Our Philosophy,” our group will naturally flourish in terms of financial results.
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