CSR Report
Integrated Report Supplement

2 017

﻿

Daiwa Securities Group CSR REPORT 2017

Contents
Editorial Policy
Overview of Company and Businesses

2

Message from CSR Officer

4

The Daiwa Securities Group’s Businesses and Role in Society
CSR of the Daiwa Securities Group

5

3

7

Verification of Key CSR Issues and Responses to Changing Social Requirements

7

CSR Management

9

Daiwa Spirit

10

CSR Materiality of the Daiwa Securities Group

11

Initiatives through Business Activities

13■ Close-up/To Maintain a Sound Market (Role of Due Diligence Department)

14

Role and Social Responsibilities of the Financial Services

16

Provision of Quality Service to Customers

18

Initiatives through Product Development and Provision

23

To Maintain and Develop Financial and Capital Market Functions

28

Dissemination of Analysis and Proposals on the Economy, Society, and Investment Information29

Support for the Creation of Our Future Society

32

Initiatives for Supporting Business Activities

35■Close-up/Support Business Operation from Property Management to36

Environmental Management (General Affairs Department)
Corporate Governance

38

Compliance42

Human Rights Initiatives

45

Risk Management

46

IT Strategy and the Management of Systemic Risk

49

Environmental Initiatives

50

Relationship with Shareholders and Other Investors

53

Relationship with Employees

55

Engagement with Society

62

Dialogue with Stakeholders - Only Connect -65

Third-Party Evaluations

69

GRI Content Index/ISO 26000 Index

71

CSR Related Data

83

Glossary

92

Independent Assurance Report931

Editorial
Policy﻿

Daiwa Securities Group CSR REPORT 2017

Editorial Policy
We at the Daiwa Securities Group have been reporting our CSR activities annually since FY2002 for the following two objectives: todisclose our CSR activities in an easy-to-understand way and to evaluate the current state of affairs and the challenges we face. ThisCSR Report is designed to disclose non-financial information in a more detailed manner as a supplement to the Integrated Report.
The CSR Report, which is only released on our website, is produced referring to the guidelines of the Global Reporting Initiative(GRI) and ISO 26000. We have referred to the GRI Sustainability Reporting Standards 2016 since FY2017 and have identified anddisclosed our materiality. (In FY2015, we also started to take account of the provisional sustainability accounting for the financial
sector issued by the Sustainability Accounting Standards Board.) Moreover, we aim to make the report more accessible by utilizing theconcept of Color Universal Design in selecting the colors of the document.
The meanings of underlined words are provided in the glossary (p. 92).

Intended ReadershipThis report is intended for the broad range of Daiwa Securities Group stakeholders defined by ISO 26000, including customers,
shareholders and investors, employees, business partners, and local communities.

Reporting Boundary
This report generally discusses the principal companies of the Daiwa Securities Group. It does not, however, include all data from theGroup’s principal companies on items reported. The information is selected based on the respective companies’ size and type of business.
Each set of data specifies the scope of coverage. The term “Daiwa Securities Group” refers to our entire group, while the term “Daiwa
Securities Group Inc.” and the term “Daiwa Securities” refer to Daiwa Securities Group Inc. and Daiwa Securities Co. Ltd., respectively.

Period Covered by Report
FY2016 (April 1, 2016, to March 31, 2017)
The report, however, also includes some information on events and activities carried out prior to the beginning of or after the end of
FY2016, or scheduled to take place during FY2017.

Date of Publication
November 2017
(The previous report was published in October 2016; Publication of the English edition of the next report is planned for November
2018.)

Inquiries
CSR Group, Corporate Communication Department, Daiwa Securities Group Inc.
Tel: +81-3-5555-1111 (Main) E-mail: daiwacsr@daiwa.co.jp Website: http://www.daiwa-grp.jp/english/csr/

Reference Guidelines
GRI Sustainability Reporting Standards 2016
ISO 26000: Guidance on social responsibility
Sustainability accounting standards for the Financials sector, Sustainability Accounting Standards Board (SASB)
Environmental Accounting Guidelines 2005, Ministry of the Environment, Japan

Social Responsibilities of the Financial Services

Daiwa Securities Group CSR REPORT 201716

Composition of this CSR Report
Daiwa Securities Group CSR REPORT 2017

Role and Social Responsibilities of the Financial Services

Daiwa Securities Group CSR REPORT 201716

Role and Social Responsibilities of the Financial Services

urities business, the core business of theecurities Group, plays a key role in society, bya bridge between the needs of investors toassets and those of private and public sectors
funds.
e fund-raising side through underwriting
and bonds, and arranging other securitiess, the Group provides advice and assistanceanies in their efforts to raise money forent investment or R&D, as well as to national
ments, local governments, international
ons, and public corporations seeking to raiser public works projects.
e asset management side, the Group provides
iate investment information and advice, asa comprehensive and diverse lineup of financials and services to meet the various needs ofals, companies, institutional investors, andfunds. In these ways, the securities businesses the smooth flow of money by matchingand supply through financial and capital. The Group fulfills an important role andbility in society by contributing to sustainable
ment through the channeling of funds into
es that solve social issues and create newogies, for example.
vesting in corporate shares, the Daiwa
es Group promotes methods of investing thato account a company’s social responsibility
uch as its environmental and social initiatives,

Role and Social Responsibilities of the Financial Services

The securities business, the core business of the
Daiwa Securities Group, plays a key role in society, bybuilding a bridge between the needs of investors tomanage assets and those of private and public sectors
to raise funds.
On the fund-raising side through underwriting
equities and bonds, and arranging other securities
products, the Group provides advice and assistanceto companies in their efforts to raise money forequipment investment or R&D, as well as to national
governments, local governments, international
institutions, and public corporations seeking to raise
funds for public works projects.
On the asset management side, the Group provides
appropriate investment information and advice, as
well as a comprehensive and diverse lineup of financial
products and services to meet the various needs ofindividuals, companies, institutional investors, andpension funds. In these ways, the securities businessfacilitates the smooth flow of money by matching
demand and supply through financial and capital
markets. The Group fulfills an important role andresponsibility in society by contributing to sustainable
development through the channeling of funds intobusinesses that solve social issues and create newtechnologies, for example.
On investing in corporate shares, the Daiwa
Securities Group promotes methods of investing thattake into account a company’s social responsibility(CSR), such as its environmental and social initiatives,in addition to financial information. In recent years,
the Group has put its emphasis on the promotion offinancial products based on the concept of Impact
Investment, a type of Socially Responsible Investment(SRI), which refers to making more direct, quick-acting
investments to resolve social issues. From its position
as a financial institution, the Daiwa Securities Groupis endeavoring to contribute to society by developing
and marketing these products. In addition to pursuingeconomic gain, the Group is dedicated to resolving ahost of social issues.

and have proceeded with business activities incompliance with the principles. We also incorporate into
our activities the Sustainable Development Goals (SDGs)
adopted in September 2015 at the United Nations
Sustainable Development Summit.

Relevant CSR
Materiality
IX. Responsible action
as an institutional
investor
XIII. Initiatives to addresssocial concerns andcontribute to future
development ofsociety, and financial
and capital markets

and have proceeded with business activities incompliance with the principles. We also incorporate into
our activities the Sustainable Development Goals (SDGs)
adopted in September 2015 at the United Nations
Sustainable Development Summit.
●Principles for Financial Action towarda Sustainable Society (Principles for
Financial Action for the 21st Century)

The Principles for Financial Action for the 21stCentury were drawn up by a committee comprising
representatives from a range of Japanesefinancial institutions. They were tasked withdrafting a Japanese version of the Principles forEnvironmental Financial Action. This was based on arecommendation issued by Japanese Ministry of theEnvironment’s Central Environment Council with theobjective of promoting environmental finance. Eachsignatory institution is expected to endeavor reflecting
ESG (environment, society and governance) issues andconcerns to its own business practices. The Group wasinstrumental in the establishment of the principles
from the drafting stage to the final framework.
Both Daiwa Securities Group Inc. and Daiwa AssetManagement Co. Ltd. became signatories in
November 2011.

* Refer to pages 11 and 12 fordetails on materiality at the Daiwa
Securities Group.

Signed global initiatives•United Nations

supported Principles for
Responsible Investment
(PRI)

•CDP

●Principles for Financial Action towarda Sustainable Society (Principles for
Responsible Action as an
Institutional Investor
Financial Action
for the 21st Century)●Initiatives by Daiwa AssetManagement•United Nations Global

Compact (UNGC)•Principles for Financial

Action for the 21stCentury

Number of corporate
governance-related
dialogues held

The Principles for Financial Action for the 21st140
Century were drawn up by a committee160
comprising
representatives from a range of Japanesefinancial
institutions. They were tasked with
Mission for
Financial Institutions
toward Solving Social Issues
drafting a Japanese version of the Principles forEnvironmental Financial Action. This was based on arecommendation issued by Japanese Ministry of theEnvironment’s Central Environment Council with theobjective of promoting environmental finance. Eachsignatory institution is expected to endeavor reflecting
ESG (environment, society and governance) issues andconcerns to its own business practices. The Group wasinstrumental in the establishment of the principles
from the drafting stage to the final framework.
Both Daiwa Securities Group Inc. and Daiwa AssetManagement Co. Ltd. became signatories in
November 2011.

The business sector’s role in endeavoring to create asustainable society has become more important thanever. For financial institutions, materialization of such asociety through finance, their core capability, is a social
mission. At the Daiwa Securities Group, we believethat our role is not only to maintain and develop a fairand dynamic financial market, but also to incorporatea social perspective in finance and to facilitate the flowof money to build a sustainable society.
In January 2010, the Daiwa Securities Group signed
the United Nations Global Compact (UNGC), a platformto help companies that have committed to sustainable
and responsible business practices shape their policies,

Daiwa Asset Management announced its adoptionof the Japanese version of the Stewardship Code in
May 2014 and has been actively working to fulfill its
stewardship responsibility.
In January 2017, Daiwa Asset Management set up
the “Stewardship Supervisory Committee,” which
is designed to manage conflicts of interest faced infulfilling its stewardship responsibility. The committee
supervises the company’s overall stewardship activities
and is responsible for making reports to the Board of
Directors and issuing recommendations to improvestewardship activities as necessary. The committee iscomposed of outside directors and the complianceofficer, who takes charge of overseeing themanagement of conflicts of interest, thereby securing
independence from management in stewardship
activities from management and business execution.
Based on the Policy to Hold Constructive Dialogue
with Investee Companies announced in June 2014,
Daiwa Asset Management has also further deepened
the following three types of dialogue with investee
companies, with the aim of accurately understanding
the conditions of investees, sharing such assessments,
and creating medium- to long-term corporate value.

About(FY2015)âAbout(FY2016)* Results from Daiwa AssetManagement

Responsible Action as an
Institutional Investor

Relevant CSR
Materiality
IX. Responsible action
as an institutional
investor
XIII. Initiatives to addresssocial concerns andcontribute to future
development ofsociety, and financial
and capital markets* Refer to pages 11 and 12 fordetails on materiality at the Daiwa
Securities Group.

Signed global initiatives•United Nations

supported Principles for
Responsible Investment
(PRI)
•CDP
•United Nations Global

Compact (UNGC)•Principles for Financial

Action for the 21stCenturyThis CSR Report describes relevant SDGs and CSR materiality on theright side of the page for each item. We consider such composition to
be important in internal and external communication.
●SDGs

The Sustainable Development Goals (SDGs) were created by member
states of the United Nations and a variety of organizations andpeople, and they were adopted by the UN in 2015 as goals common
to all humankind. Each country promised to actively work toward theachievement of these goals.
Refer to page 8 for details.
● Materiality

The Daiwa Securities Group reviews and strengthens its CSR activities byfocusing on the 15 items that the Group identified as materiality in FY2014.
Refer to page 7–8 and 11–12 for details.

2﻿Overview of Company and Businesses

Daiwa Securities Group CSR REPORT 2017

Overview of Company and Businesses
The Daiwa Securities Group is a comprehensive securities group that operates in such fields as Retail, Wholesale, AssetManagement, and Proprietary Investment as its core businesses. The Group provides a wide range of financial services.
*Refer to page 5 for details on businesses.

Daiwa Securities Group Inc.
Retail Division

Asset Management
Division

Wholesale Division

Daiwa AssetManagement Co.Ltd.

Daiwa Securities Co. Ltd.
Retela Crea
Securities Co.,Ltd.

Daiwa Capital Markets Europe Limited

Daiwa SB
Investments Ltd.

Daiwa Capital Markets Hong Kong
LimitedDaiwa Real Estate
Asset Management
Co. Ltd.

Daiwa Capital Markets Singapore
Limited

Mi-Casa AssetManagement Inc.

Daiwa Capital Markets America Inc.

Daiwa Office
Investment
Corporation

Investment Division

Other

Daiwa Institute of
Research Ltd.

Daiwa Corporate
Investment
Co., Ltd.

Daiwa Institute of ResearchBusiness Innovation Ltd.
Daiwa PI Partners
Co. Ltd.

Daiwa Next Bank,Ltd.
Daiwa Securities BusinessCenter Co. Ltd.

Daiwa Securities
SMBC Principal
Investments
Co. Ltd.

Daiwa Property
Co., Ltd.
(As of June 30, 2017)

Net Operating Revenue¥514.8 billion¥472.7 billion

Ordinary Income¥165.1 billion¥135.6 billion

Retail Division
Wholesale Division
Asset Management Division
Investment Division
Other

FY2015FY2016FY2015FY2016

Corporate Data
● NameDaiwa Securities Group Inc.
● Head OfficeGran Tokyo North Tower
9-1, Marunouchi 1-chome,
Chiyoda-ku,
Tokyo 100-6751, Japan● Tel+81-3-5555-1111 (Main)● Established
December 27, 1943 (Founded 1902)● President and CEO
Seiji Nakata(from April 1, 2017)● Number of equity-method
affiliates11● Capital¥247.3 billion● Shares of common stock(issued and outstanding)
1,699,378,772 shares● Number of employees(consolidated)
13,836● Number of consolidated
subsidiaries
52(As of March 31, 2017)3

﻿Message from CSR Officer

Daiwa Securities Group CSR REPORT 2017

Message from CSR Officer

Tomonori Tsuji
Executive Officer
Senior Managing Director
Daiwa Securities Group Inc.

Promote Dialogue with Stakeholders without
Ignoring Social Contradictions and Challenges
As already widely discussed, multiple tales of the unexpected unfolded in the world in
FY2016. These events significantly impacted financial and capital markets. However, theview that these events should have been anticipated appears to be persuasive in lightof trends in the global economy since the financial crisis in 2008, such as the economic
recovery that many people do not feel they benefit from and a growing income disparity
between the rich and poor.
The mission of the Daiwa Securities Group is to contribute to society by supporting
financial and capital markets. The major role of the financial and capital markets is todevelop the economy and increase wealth. Our first aim is to fulfil our mission andcontribute to enable a larger number of people to feel affluent. This is because webelieve that the distribution of wealth alone cannot provide sustainable solutions to social
challenges. To achieve our mission, we still consider our 15 CSR materiality items to beimportant points.
However, many events in FY2016 reminded us again of the fact that numerous
contradictions and challenges in society have reached a level that cannot be covered
up. People’s continuous trust in the financial and capital markets is indispensable for the
Daiwa Securities Group’s sustainable growth. We will continue to consider how we will act
going forward through dialogue with various stakeholders.

4﻿The Daiwa Securities Group’s Businesses and Role in Society

Daiwa Securities Group CSR REPORT 2017

The Daiwa Securities Group’s Businesses and Role in Society
Japanese securities companies support direct financing and conduct a variety of businesses in the financial and capital
markets. In simple terms, they can be viewed as “intermediaries in financing and the capital market” because of their wide
range of businesses. Securities companies thus connect those who need money with those who wish to provide money in the
primary and secondary markets, thereby helping circulate money throughout the world.

The Daiwa Securities Group’s Value Chain (shown below)
For the Daiwa Securities Group, securities such as stocks and bonds are core financial products. Therefore, companies andorganizations issuing these securities as well as investors are our important customers. We believe that endeavoring to build
and maintain a transparent and fair value chain is our important responsibility to develop financial and capital markets in a
viable way, whilst bearing in mind the construction of a sustainable society. Asset management and sales of financial products
are also core operations at the Group. As a responsible institutional investor, our Asset Management Division aims to achieve
excellent performance by encouraging investees to seek sustainable growth over the medium to long term while appropriately
taking ESG factors into consideration.
Meanwhile, in order to ensure that we do not have any relationships with anti-social forces, we have established a set ofrules and a database among Group companies and eradicated antisocial forces from our value chain.

Primary Market
Fundprocurement

Issuers
Businessfirms
National
government

Secondary Market

Issuance

Investment
Financial/CapitalMarkets

Equities
Bonds

Proceeds

Investors

Equities
Asset
Returnmanagement
Bonds
institutions
Investment
trust
Securitized Investment Individuals inJapanassetsSecuritized
assetsRole of Securities Companies
Fund procurement

Support for initialby companies, etc.

public offerings

Assistance intrading of securities

Assistance in wealthmanagement

Information analysis
and provision

Protect market trust—Work to ensure a fair and sound market

The Daiwa Securities Group’s Businesses
Retail Division

Wholesale
Division

Asset
Management
Division

Investment
Division

Others**Including IT services, management consulting, and online banking.

5﻿The Daiwa Securities Group’s Businesses and Role in Society

Daiwa Securities Group CSR REPORT 2017

As part of the Group’s efforts to leverage financial capabilities in order to achieve a sustainable society,Daiwa Real Estate Management Co. Ltd. manages Nippon Healthcare Investment Corporation, a healthcare
REIT. We interviewed Charm Care Corporation, which operates a facility held by the investment corporation.

VOICE

Creating a Rich and Fruitful Aging Society

Being a “Home” for Residents
We at Charm Care Corporation manage private nursing homes and residences for the elderly, with theaim of making our facilities into “homes” for our residents. Going forward, we will maintain our dominant
strategy in the Kinki region around Osaka, where our head office is located. We would also like to provide
facilities targeting upper-middle and affluent customers with a particular focus on the Tokyo metropolitanarea, where a significant shortage of nursing care facilities is anticipated.
Nippon Healthcare Investment Corporation, managed by Daiwa Real Estate Management Co. Ltd., isJapan’s first listed REIT specializing in healthcare facilities and incorporates Charm Suite Ryokuchi Koen, afacility that we operate, as one of its largest assets. The use of a healthcare specialized REIT* brings us thefollowing merits.
*REIT: Real estate investment trust

Obtained
Merits● Nippon Healthcare has helped us broaden
our fund procurement options whenestablishing new facilities. Going forward,
in light of new investment and other plans,
we will be able to sell the property to theinvestment corporation at an appropriate
timing. By choosing to reduce our financial
burden, we will also be able to provide newfacilities.

Charm Care Corporation will continue toactively promote the establishment of new
facilities while using the capital market. We
will also retain and develop human resources
and achieve sustainable growth, thereby
contributing to a rich and fruitful aging society.

● Because an investment corporation generallyowns properties for a long time, we canmanage our facilities in a stable manner as
an operator.
● Our buildings and equipment areappropriately managed thanks tomaintenance provided by experts, allowing
us to devote ourselves to operating homes.
● The name recognition and public awarenessof the facilities we run have also been
boosted as a result of the facilities being
featured in the website and annual reportsof the investment corporation and othermedia.

Takahiko Shimomura
Representative Director of Charm Care Corporation

6

﻿CSR of the Daiwa Securities Group

Daiwa Securities Group CSR REPORT 20177

CSR of the Daiwa Securities GroupAs the world undergoes rapid changes, such as those in social trends and the global environment, the Daiwa Securities
Group attaches great importance to our corporate principles as being “unchanging.” Based on these corporate principles,
we have set up three pillars in promoting CSR, which also form our foundation: “Key Issue 1,” “Key Issue 2,” and “Striving
to create a pleasant working environment.” We would like to contribute to the development of society and economy
through activities for the 15 items of materiality identified based on these.

Two Key CSR Issues

Corporate Principles
Building trust

The trust and approval of customers form the very
foundation of the Daiwa Securities Group. The Group will
always place the needs of customers first, and strive todevelop the advanced, specialized skills to offer them themost-attractive products and services of any securities group.

Placing
importance on
personnel

The source of the Group’s competitiveness lies in thecapabilities of its employees. The Group will promote thecreativity of employees by offering them a challenging andself-directed working environment that encourages theirabilities and appropriately rewards their contributions.

Contributing tosociety

The Daiwa Securities Group will seek to benefit theeconomy and society through the development of healthyfinancial markets. In addition to scrupulously observing
both regulations and internal policies, the Group will strive
to maintain a high sense of morality and duty, endeavoring
to continue contributing to the sustainable growth of thesocieties in which we operate.

Maintaining
healthyearnings results

The Group will always seek to develop healthy business
operations and to increase corporate value for the benefitof shareholders. By providing customers with attractive
products and services, the Daiwa Securities Group willseek to generate strong profits and healthy returns forshareholders.

At the Daiwa Securities Group, we regard “building
trust” as one of our corporate principles. We believethat contributing to the development of society andthe economy through financial and capital markets is
our social mission and that trust from customers andsociety supports the Group’s sustained growth.
We are promoting the Group’s CSR activities under
three pillars. They comprise the following two key CSR
issues and the development of a work environment
which serves as a base for promoting these issues:

Key Issue 1

Leveraging financial capabilities tocontribute to a sustainable society

Key Issue 2

Developing sound financial and capital
markets for the next generation

Striving to create apleasant working
environment

Verification of Key CSR Issues and Responses to Changing Social Requirements
The Daiwa Securities Group recognizes that we areresponsible to various stakeholders (refer to page 9) as acorporate citizen when selecting key CSR issues. Meanwhile,social requirements for companies may change over time,
and we need to constantly verify whether significant changes
are occurring and whether our key issues accommodate
these changes.
We believe social requirements for corporations froma wide range of stakeholders have become increasingly
diversified and thus more complex to reconcile and that it
has become more important than ever to take a balanced
approach in considering these diverse demands.
In light of these circumstances, the Daiwa Securities Group
has actively participated in external CSR initiatives in Japanand overseas and promoted activities that use various codes
in order to identify properly and respond to corporate CSR
trends. The codes listed on the right side are those that weplace a special emphasis on.

Responsibility to a wide rangeof stakeholders● ISO 26000

Contributing to asustainable society● The OECD Guidelines
for Multinational
Enterprises● The United Nations
SDGs

The Daiwa Securities Group’s
sustainable growth● The Tokyo Stock Exchange’s
Corporate Governance CodeRisk control● The Core Labor Standardsof the International Labor
Organization● The United Nations
Guiding Principles on
Business and Human
Rights● The Charter ofCorporate Behavior of
the Nippon Keidanren● The Japanese versionof the Stewardship
Code (“Principles
for Responsible
Institutional
Investors”)

﻿CSR of the Daiwa Securities Group

Daiwa Securities Group CSR REPORT 2017

CSR Materiality of the Daiwa
Securities GroupIn FY2014, the Daiwa Securities Group identified CSR materiality based on the threepillars.
We have disclosed information on the Group’s initiatives for materiality. We have also
strived to grasp the expectations of our stakeholders and changes in social trends throughengagement and will review our initiatives if necessary.
I.

Appropriate proposals and after-sales service in accordance with the characteristics and needs ofcustomers

II.

Customer service with a wealth of hospitality

Contribute to thedevelopment ofsociety and economy
through financial andcapital markets

III. Development and provision of superior financial and investment products
IV. Dissemination of analysis and proposals on the economy, society, and investment information
V.

Maintenance and development of financial and capital market functions

VI. Appropriate risk controls
VII. Appropriate management of customer information
VIII. Construction and maintenance of a strong IT system
IX. Responsible action as an institutional investor
X.

Creation of a workplace that values human resource development and diversity of employees

XI. Creation of a corporate culture to comply with laws, regulations and codes in Japan and overseas,
based on self-discipline (including appropriate anti-corruption and human rights measures)
XII. Reduction of environmental load and responses to environmental changes
XIII. Initiatives to address social concerns and contribute to future development of society, andfinancial and capital markets
XIV. Contribution to local communities
XV. Construction and maintenance of an appropriate corporate governance system

About Each Initiative● The United Nations Global Compact (the Daiwa Securities
Group signed the Compact in 2010)

Human Rights

Principle 1: Businesses should support and respect theprotection of internationally proclaimed humanrights; andPrinciple 2: make sure that they are not complicit in humanrights abuses.

LabourPrinciple 3: B usinesses should uphold the freedom of
association and the effective recognition of theright to collective bargaining;
Principle 4: the elimination of all forms of forced andcompulsory labour;
Principle 5: the effective abolition of child labour; andPrinciple 6: the elimination of discrimination in respect of
employment and occupation.

Environment

Principle 7: Businesses should support a precautionary
approach to environmental challenges;
Principle 8: u
 ndertake initiatives to promote greater
environmental responsibility; andPrinciple 9: encourage the development and diffusion ofenvironmentally friendly technologies.

Anti-corruption

Principle 10: B usinesses should work against corruption in allits forms, including extortion and bribery.

● ISO 26000● The Charter of Corporate Behavior of the Nippon Keidanren (Japan Business
Federation)● The United Nations Guiding Principles on Business and Human Rights● The OECD Guidelines for Multinational Enterprises● The UN Sustainable Development Goals (SDGs)

The United Nations Sustainable
Development Goals
The Sustainable Development Goals (SDGs), which were created by member
states of the United Nations and a variety of organizations and people, wereadopted by the UN in 2015 as goals common to all humankind. Each country
has promised to actively work toward the achievement of these goals. The
Daiwa Securities Group views the SDGs as critical goals that will lead the future
direction of the world, and will address the 17 social issues of the SDGs by
positioning them as a common language for deploying business in and outside
Japan.

8﻿CSR of the Daiwa Securities Group

Daiwa Securities Group CSR REPORT 2017

CSR Management

Daiwa Securities Group Stakeholders
Issuers

Communication with Stakeholders

Investors

We believe that deepening the bond of trust we share with our stakeholders is essential
to the sustainable accomplishment of our social mission and achievement of growth.

Shareholders
and others● Policy on Communication with Stakeholders

Investees

Daiwa
Securities
Group

Employees

Basic Policy (1)Basic Policy (2)The Daiwa Securities Group will strive tomaintain two-way communication witha broad range of stakeholders based on
ISO 26000 and the Charter of Corporate
Behavior of the Nippon Keidanren.

The Group will strive to deepen communication
with stakeholders already known to us, including
customers, shareholders and other investors,
business partners, employees and local
communities.

Government

Local
communities

We have adopted the following basic policy, considering that communication withstakeholders plays an important role in identifying social demands, which change over time.

Business
partners

NPO
NGO

Basic Policy (3)The Group will strive to communicate
actively with third-parties in order to
identify other stakeholders.

● Summary of Communication
Stakeholders

Policy on Communication

Investors

We use the feedback received from customer input and questionnaires for the improvement of our business.

Issuers

We communicate with issuers as needed to check whether we have helped them to solve their issues or whether there are any points for
improvement.

Investees

Analysts and fund managers actively hold dialogue with management level personnel of investees.

Shareholders andothers

We conduct meetings with shareholders and others as well as briefings for individual investors (including online briefings).

Business partners

We engage in communication according to level of importance, in addition to communication via business deals, to confirm the
management status of information provided by the Daiwa Securities Group and check disclosure and reports related to ESG information.

Government

Experts in the think-tank division make proposals in various committees and councils set up by government offices and assemblies.

NPO/NGOWe strive to gain an understanding of the current status of social issues through visits to the operational frontline and meetings.

Local communities
Employees

We seek a symbiotic relationship with local communities through participation in local events and volunteer work.
We strive to reflect employees’ input and feedback in management via our whistle-blowing system and various questionnaires.

CSR Promotion System
Our officers and employees endeavor to implement our corporate principles through their business operations for the materialization of asustainable society and our vision.
Specifically, the CSR Group of the Corporate Communication Department at Daiwa Securities Group Inc. actively seeks informationand holds dialogues at external and internal meetings. These activities are conducted under the direction and orders of the Corporate
Communication Officer, an executive officer under the supervision of the CEO. CSR issues and our progress are shared regularly with theexecutive officer at meetings and other occasions.
Furthermore, information on CSR is taught to the Group’s newly hired employees. The CSR Group promotes and raises awareness of
CSR issues throughout branches and departments across Japan and major overseas sites and builds a network of cooperation.
Daiwa Securities Group Inc.

Foundations

Stakeholders

CEO
Daiwa Securities Health Foundation
Daiwa Securities Foundation
Daiwa Anglo-Japanese Foundation (UK)Daiwa Myanmar-Japan Foundation(Myanmar)Direction and order

Dialogue

ReportingExecutive officers
Direction and order

Reporting

CSR Group, Corporate
Communication Department

Group companies

Dialogue

Communication of
information anddevelopment of awarenessConsulting andreporting

Departments within
Daiwa Securities Group Inc.

Dialogue

Investors
Issuers
Investees
Shareholders and others
Business partners
Government
NPOs/NGOs
Local communities
Employees(As of April 1, 2017)

9﻿CSR of the Daiwa Securities Group

Daiwa Securities Group CSR REPORT 2017

Daiwa Spirit
Our corporate culture has been nurtured since the foundation of our business. After analyzing it using our corporate principle asa compass, we sorted out the basic philosophy and mindset inherent to our group and articulated them as the Daiwa Spirit, ourbehavioral guidelines.

1.

2.

3.

4.

5.

6.

Exercises self-discipline and complies fully with the law, recognizing that sustainable growth hinges on winning the trust ofcustomers, financial and capital markets, and society at large.

Secures sound profits by contributing to societal and economic development through its actions in financial and capital
markets.

Exerts unflagging efforts to build strong, sustainable, trust-based customer relations.

Continues to pioneer products and services in financial and capital markets, with each employee fulfilling his/her mission withconfidence and pride.

Cultivates unbeatable competitiveness to overcome challenges, underpinned by strong company-employee trust and solidarity
between colleagues.

Aims to be the securities group with the highest ambitions, a positive attitude that turns hardships into opportunity, andunmatched speed.

The Daiwa Securities Group’s Efforts to Maintain Balance with Shareholder Value
In promoting CSR activities, we place a great

While CSR activities generate tangible andemphasis on initiatives through business activities.

intangible value for stakeholders and shareholders,Such initiatives help solve social issues and at thethey also incur costs. As with other business activities,

same time, generate commission and fee revenue-

due to the limitations of human and other resources,tangible value for shareholders. Moreover, a cut

CSR activity costs may grow rapidly when the volume

in energy costs achieved as a result of initiatives toof activities increases. We consider it important to

reduce the environmental footprint of our businessanalyze the cost-effectiveness of our CSR activities

activities is also an example of such value.

whilst working on reducing their costs, in assessing

Value for shareholders is not limited to mattersthat are easy to gauge. Such intangible value for ourvalue for shareholders.
The Daiwa Securities Group will continue

shareholders includes trust given to us by customers,

practicing CSR activities with the aim of living up toa rise in morale of employees and improvement instakeholders’ various expectations and generating

corporate governance and compliance systems.

value for shareholders through those activities.

10﻿CSR of the Daiwa Securities Group

Daiwa Securities Group CSR REPORT 201711

CSR Materiality of the Daiwa Securities Group
Materiality

Selection reason

I.

Appropriate proposals
and after-sales service
in accordance with thecharacteristics and needs ofcustomers

The Daiwa Securities Group’s major businesses involve proposing a variety of financial products to our customers for investment.
While investment in financial products provides expected returns, various risks are also entailed. Accordingly, we are strictly
required by laws and regulations to recommend products that suit the experience and characteristics of our customers. Moreover,to build sustainable customer trust in the Group, it is indispensable to conduct sales activities that put customer needs first while
complying with laws and regulations. It is also important to continuously provide information to customers who have alreadypurchased our financial products in order to obtain their trust as we are a professional group that handles financial products
subject to price fluctuations.

II.

Customer service with awealth of hospitality

The Daiwa Securities Group needs to be a group that is continually chosen by customers to achieve sustainable growth amid fierce
competition among financial institutions. We believe that in addition to the quality of the proposals and information that we offer,careful attention with a wealth of hospitality is vital to satisfy our customers when trading with the Group.

III.

Development and provisionof superior financial andinvestment products

The main businesses that the Daiwa Securities Group conducts in financial and capital markets include (1) the provision of services
and solutions to business corporations that raise funds through securities and other means, (2) the establishment and managementof investment trusts that incorporate securities, and (3) assistance to various customers in investing in securities and other financial
products. To be continually chosen by customers, the Group believes that it is vital to continue to develop and provide advanced,
good-quality products and services.

IV.

Dissemination of analysis
and proposals on theeconomy, society, andinvestment information

To be chosen by customers, the Daiwa Securities Group needs to provide advanced, good-quality analysis of and information oncompanies issuing securities and financial and capital markets. As the trends of the overall economy and society are also importantfactors for investment decisions, the analysis of and information on such trends are indispensable. Moreover, we believe that
proposing economic policies to be taken and measures for society as a whole while capitalizing on such analysis and information
provision ability is also an important role that the Daiwa Securities Group takes on for the creation of a sustainable society.

V.

Maintenance anddevelopment of financial
and capital market
functions

Financial and capital markets function as an important social and economic infrastructure that facilitates the smooth flow ofmoney by matching fundraising needs and the investment needs of investors. The settlement of securities and funds relies ontrust in the market, where countless transactions by investors are interconnected. The maintenance of this function is critical for
major financial institutions. Moreover, developments such as the reduction of settlement time are also vital for the development offinancial and capital markets, and the Daiwa Securities Group plays a vital role as a major financial institution.

VI.

Appropriate risk controls

As a major financial institution, the Daiwa Securities Group is faced with the risks arising from various transactions, such as liquidity
risks for funding, the market risk resulting from price fluctuations, and credit risk for business partners. Failure to appropriately
manage these risks could cause massive losses and significantly affect our business.

VII.

Appropriate managementof customer information

The Daiwa Securities Group retains the details of transactions by numerous customers and their personal information. We also
obtain important information from customers that could lead to insider trading, including plans to issue securities. The obligationsof management and confidentiality related to such information are stipulated by laws and regulations. However, as a major
financial institution, we believe that information management that goes beyond the requirements imposed by laws and regulations
is vital to ensure that we do not betray the trust of our customers and other stakeholders.

VIII.

Construction andmaintenance of a strong IT
system

For major financial institutions, large-scale and sophisticated IT systems are indispensable as they are integrated with thepromotion of business. The superiority of IT systems directly affects the competitiveness of financial institutions. On the other
hand, should a large-scale system failure occur, it may have a major impact on the Group’s business until the system returns tonormal while also significantly affecting financial and capital markets. In light of external intrusions and other numerous eventsoccurring in recent years that have threatened the stability of IT systems, it is also extremely important to implement measures toprevent system failures associated with such incidents.

IX.

Responsible action as an
institutional investor

The Daiwa Securities Group has asset management companies that manage the funds entrusted by customers by investingthem in securities and other products. It is important for these asset management companies to actively engage in dialogue
with investees as institutional investors, thereby helping those investees to achieve sustainable growth.

X.

Creation of a workplacethat values human resource
development and diversityof employees

For the sustainable growth of the Daiwa Securities Group, it is extremely important for Group employees to raise their skills
as professionals and provide customers with services exceeding those of other companies. To enable employees to exhibit
their capabilities, the creation of a workplace environment that gives them a sense of job satisfaction is also vital.

XI.

Creation of a corporate
culture to comply withlaws, regulations and codes
in Japan and overseas,
based on self-discipline(including appropriate
anti-corruption and humanrights measures)

The Daiwa Securities Group is subject to not only laws and regulations related to the sales and trading of financial products, butalso a variety of other laws and regulations in and outside of Japan. We are also required to give consideration to anti-corruption
and human rights issues at home and abroad. A corporate culture that fosters self-discipline among officers and employees is a key
foundation.

XII.

Reduction of environmentalload and responses toenvironmental changes

In light of resource limitations and global warming, it is important to strive to minimize the environmental burden resulting frombusiness activities as a member of society.

XIII.

Initiatives to address social
concerns and contributeto future development ofsociety, and financial andcapital markets

A variety of stakeholders are increasingly asking companies to resolve various social issues through their businesses. The Daiwa
Securities Group is making efforts to resolve social issues using the functions of financial and capital markets, while taking on
responsibility for the development of markets.

XIV.

Contribution to local
communities

The Daiwa Securities Group carries out business at various sites in and outside of Japan. We have the important responsibility ofcontributing to local communities as a member of society.

XV.

Construction andmaintenance of an
appropriate corporate
governance system

The Daiwa Securities Group has shareholders and other stakeholders, and their expectations for the Group vary. An appropriate
corporate governance system is vital for us to raise shareholder value and give balanced consideration to these expectations.

﻿CSR of the Daiwa Securities Group

Daiwa Securities Group CSR REPORT 2017

Division in charge
Asset
Investment
Retail Wholesale
Management
Division
Division Division
Division

Other

Relevant Items for CSR Report 2017

◎

◎

◎

△

△

Provision of Quality
Service to Customers

◎

◎

◎

◯

◯

Provision of Quality
Service to Customers

◎

◎

◎

◎

◯

Initiatives throughProduct Development
and Provision

◎

◎

◎

△

◎

◎

◯

×

◎

◎

◎

◯

◎

◎

◎

◎

◎

◎

◎

◯

△

×

◎

×

×

Role and Social
Responsibilities of the
Financial Services

◎

◎

◎

◎

◎

Relationship with
Employees

◎

◎

◎

◎

◎

Compliance

Risk
Management

◎

◎

◎

◎

◎

Environmental
Initiatives

Risk
Management

◎

◎

◎

◎

◎

Role and Social
Responsibilities of the
Financial Services

Initiatives throughProduct Development
and Provision

◎

◎

◎

◎

◎

Engagementwith Society

◎
(DIR)

◎
(DSC)

◯

To Maintain and Develop
Financial and CapitalMarket Functions

Risk
Management◎

Compliance◎

Support for theCreation of Our
Future Society

Dissemination of Analysis andProposals on the Economy, Society,and Investment Information(Property)(DIR-BI)

Compliance

Risk
Management

IT Strategy and theManagement of
Systemic Risk

IT Strategy and theManagement of
Systemic Risk

IT Strategy and theManagement of
Systemic Risk

Initiatives throughProduct Development
and Provision

We identified materiality for CSR in
FY2014 and have stepped up our CSR
activities by focusing on the important
aspects identified. We referred tothe disclosure requirements shownin the G4 Sustainability Reporting
Guidelines, in addition to otherguidelines, in an effort to identify
important aspects that suit ourbusiness model as a financial services
group. To identify materiality, we firstreviewed the Group’s activities fromthree perspectives: “the provision of
good-quality services to customers,”“being a supporter for the financial
and capital markets, which arepart of our social and economic
infrastructure” and “being a memberof society.” We held discussions
within the Group, obtaining opinionsfrom third-party experts. We
then determined materiality after
conducting a questionnaire to relevant
departments within the Group to ask
about the adaptability and validityof the aspects identified with theiroperations.
We have disclosed information on
the Group’s initiatives for materiality.
We have also strived to grasp the
expectations of our stakeholders
and changes in social trends throughengagement and will review ourinitiatives if necessary. Moreover,
we will verify “Key CSR Issues”
in accordance with changes inmateriality.

Human Rights
Initiatives

Support for theCreation of Our
Future Society

Blue

◎

◎

◎

◎

◎

Corporate
Governance

Red

Initiatives throughbusiness activities
Initiatives for supporting
business activities

12﻿

Daiwa Securities Group CSR REPORT 2017

Initiatives throughBusiness Activities
Approach and Basic Stance
The Daiwa Securities Group’s mission is to contribute to
the development of society and the economy throughbusiness operations, including wealth management forinvestors and support for the development of financial
strategies and other aspects of corporations and public
institutions. Deepening the bond of trust we share with our
stakeholders is essential to the sustainable accomplishmentof our mission and achievement of growth.

Contents●C lose-up: To Maintain a Sound Market (Role of Due
Diligence Department)●R ole and Social Responsibilities of the Financial
Services● P rovision of Quality Service to Customers● Initiatives through Product Development andProvision● T o Maintain and Develop Financial and CapitalMarket Functions●D issemination of Analysis and Proposals on the
Economy, Society, and Investment Information● S upport for the Creation of Our Future Society

13

To Maintain a Sound Market (Role of Due Diligence Department)

Daiwa Securities Group CSR REPORT 2017

Close-up

To Maintain a Sound Market (Role of Due Diligence Department)
The important social missions of securities companies include building a bridge between companies that hope to procure funds and investors whowish to invest while helping maintain a fair, highly transparent capital market throughout the process. The Due Diligence Department plays a crucialrole in maintaining the quality of the underwriting business, which forms the basis of such social missions.

Examining the Appropriatenessof Corporate Performance andDisclosed Information
When a company procures funds by issuing
securities, such as equities and bonds, or when amajor shareholder or others sell their shareholdings
in bulk, securities companies generally buy thosesecurities and sell them to investors. In such cases,
the Due Diligence Department is responsible for
examining whether the business performance trendsof and the information disclosed by the company areappropriate. In addition, when a company newly lists
its shares on a stock exchange (conducts a listing/
IPO*), we review the company’s business performancetrends as lead manager while examining whether thecompany has implemented a structure appropriate fora listed company.
*IPO: Initial public offering

Investors make investment decisions based on
information provided by companies. We holdmeetings with companies and conduct fieldwork
based on materials provided by such companies. We
also examine whether they have provided a sufficientamount of accurate information that is not likely

to cause any misunderstanding and appropriately
covers various perspectives, and whether information
regarding the companies themselves has been
provided appropriately. We then hold discussions
with relevant departments and determine whether tounderwrite securities to be issued or sold.

To Increase the Transparency of
our Examinations
The criteria and procedures for due diligence
are based mainly on laws such as the Financial
Instruments and Exchange Law and the Companies
Act, as well as the Rules Concerning Underwriting,Etc. of Securities, which are set forth by the Japan
Securities Dealers Association (JSDA). The rules
stipulated by the JSDA are self-regulatory rules formember securities companies. In light of such basic
rules, Daiwa Securities has also established its own
criteria and is rigidly performing due diligence.
Due diligence must also be highly independent.
Accordingly, the Due Diligence Department is separated
from the departments promoting underwriting and thedepartments executing the underwriting business, andis operated independently as a department supervisedby the risk management officer.

Requirements for Companies Listing their Shares
Eligibility as a financial product

Investment appeal as a financial product● After examination by the lead manager, the stock exchange
ultimately makes a decision from the perspective of protecting
investors● The listing examination covers the overall business of the company● Transmit information on the future prospects of the business andcompetitiveness, etc. appropriately to the market/investors.
● Stock price level at IPO● Shareholder return policy, etc.

IPO — Merits for Each Related Party
Issuing company

Existing shareholder

Investor

Stock listing

Procures funds, secures
procurement methods, improvescredit standing, etc.

Recoups investment throughthe sale of shares, assesses asset
holdings at market value, etc.

Acquires an opportunity to invest in
a new financial product (issue), etc.

14

To Maintain a Sound Market (Role of Due Diligence Department)

IPO Initiatives to Send New
Companies off to Capital Markets
Underwriting equities of a company carrying out
IPO involves sending a company that has never beenpreviously listed to the capital market. The listingallows the company to raise its profile and enjoy the
merits of listing such as the acquisition of a new fundprocurement means, thereby boosting the growthof a promising company. Meanwhile, the listing also
provides investors with an opportunity to invest in a
new company with a good prospect.

Due Diligence in IPO
In an IPO deal, examination begins prior to filing anapplication for listing with a stock exchange. As isthe case for companies that have already been listed,business performance and disclosed information are
reviewed. It is also important to review various aspectsof the company other than financial information
to examine whether it has a sustainable businessmodel, and whether preparations and structures forbecoming a listed company are in place. For thesereasons, we meet with the president and othertop executives of the company and ask about their
management visions while focusing on whether they

Haruyo Takano
Managing Director of the Due Diligence Department
Daiwa Securities Co. Ltd.

Daiwa Securities Group CSR REPORT 2017

have the expertise required for managers of listedcompanies, such as knowledge of compliance andcorporate governance. We also conduct hearings withbusiness partners of the company and visit worksites
such as plants and offices to confirm that business isbeing operated appropriately.
In the process of due diligence, we also always
check for any scandals or other negative information.
If such a problem is found, we pay attention towhether the company has solved the problem or
taken steps to solve the problem.
In addition, we focus on labor management
practices that have recently attracted much social
attention. If a suit has been filed between thecompany and employees, or if the company hasreceived instructions from a government office,we check the cause and any recurrence prevention
measures for the problem.

Continue Making Unceasing Efforts to
Improve the Accuracy of our Examinations
We have recently been strengthening efforts, inparticular, to enhance quality in IPO transactions. This
is in response to the request made by Japan ExchangeGroup to the entire securities industry due to recent
cases that could undermine investor confidence, suchas the revelation of past scandals and substantial
downward revisions to earnings projections madeimmediately after listing. Specifically, we aim toenhance the quality of our IPO transactions mainly bydetecting inappropriate transactions by owners and/or managers and raising the accuracy of earnings
forecast evaluations.
Daiwa Securities has been engaged in appropriately
building bridges between fund procurement needs
and investment needs through its underwriting
business for decades. To continue fulfilling this roleand contribute to maintaining and developing thecapital market, the Due Diligence Department believes
that it is important to continuously make efforts toimprove the ability of each department member, tohelp them accumulate experiences, and to enhanceaccuracy.
Society’s expectations of us have been becoming
increasingly demanding. Thus we will continue
making steady efforts to enable Daiwa Securities tomaintain and raise the quality of its underwriting
business.

15

Number of IPO deals
Cumulative results for fiscal 2012
through fiscal 2016*

68 deals (share: 19.3%)* Number of deals for which Daiwa
Securities served as lead manager. For
deals with multiple lead managers,
those in which Daiwa Securities wereinvolved as in a leading position werecounted.

Role and Social Responsibilities of the Financial Services

Daiwa Securities Group CSR REPORT 201716

Role and Social Responsibilities of the Financial Services
The securities business, the core business of the
Daiwa Securities Group, plays a key role in society, bybuilding a bridge between the needs of investors tomanage assets and those of private and public sectors
to raise funds.
On the fund-raising side through underwriting
equities and bonds, and arranging other securities
products, the Group provides advice and assistanceto companies in their efforts to raise money forequipment investment or R&D, as well as to national
governments, local governments, international
institutions, and public corporations seeking to raise
funds for public works projects.
On the asset management side, the Group provides
appropriate investment information and advice, as
well as a comprehensive and diverse lineup of financial
products and services to meet the various needs ofindividuals, companies, institutional investors, andpension funds. In these ways, the securities businessfacilitates the smooth flow of money by matching
demand and supply through financial and capital
markets. The Group fulfills an important role andresponsibility in society by contributing to sustainable
development through the channeling of funds intobusinesses that solve social issues and create newtechnologies, for example.
On investing in corporate shares, the Daiwa
Securities Group promotes methods of investing thattake into account a company’s social responsibility(CSR), such as its environmental and social initiatives,in addition to financial information. In recent years,
the Group has put its emphasis on the promotion offinancial products based on the concept of Impact
Investment, a type of Socially Responsible Investment(SRI), which refers to making more direct, quick-acting
investments to resolve social issues. From its position
as a financial institution, the Daiwa Securities Groupis endeavoring to contribute to society by developing
and marketing these products. In addition to pursuingeconomic gain, the Group is dedicated to resolving ahost of social issues.

Mission for Financial Institutions
toward Solving Social Issues
The business sector’s role in endeavoring to create asustainable society has become more important thanever. For financial institutions, materialization of such asociety through finance, their core capability, is a social
mission. At the Daiwa Securities Group, we believethat our role is not only to maintain and develop a fairand dynamic financial market, but also to incorporatea social perspective in finance and to facilitate the flowof money to build a sustainable society.
In January 2010, the Daiwa Securities Group signed
the United Nations Global Compact (UNGC), a platformto help companies that have committed to sustainable
and responsible business practices shape their policies,

and have proceeded with business activities incompliance with the principles. We also incorporate into
our activities the Sustainable Development Goals (SDGs)
adopted in September 2015 at the United Nations
Sustainable Development Summit.

●Principles for Financial Action towarda Sustainable Society (Principles for
Financial Action for the 21st Century)
The Principles for Financial Action for the 21stCentury were drawn up by a committee comprising
representatives from a range of Japanesefinancial institutions. They were tasked withdrafting a Japanese version of the Principles forEnvironmental Financial Action. This was based on arecommendation issued by Japanese Ministry of theEnvironment’s Central Environment Council with theobjective of promoting environmental finance. Eachsignatory institution is expected to endeavor reflecting
ESG (environment, society and governance) issues andconcerns to its own business practices. The Group wasinstrumental in the establishment of the principles
from the drafting stage to the final framework.
Both Daiwa Securities Group Inc. and Daiwa AssetManagement Co. Ltd. became signatories in
November 2011.

Relevant CSR
Materiality
IX. Responsible action
as an institutional
investor
XIII. Initiatives to addresssocial concerns andcontribute to future
development ofsociety, and financial
and capital markets* Refer to pages 11 and 12 fordetails on materiality at the Daiwa
Securities Group.

Signed global initiatives•United Nations

supported Principles for
Responsible Investment
(PRI)
•CDP
•United Nations Global

Compact (UNGC)•Principles for Financial

Action for the 21stCentury

Responsible Action as an
Institutional Investor●Initiatives by Daiwa AssetManagement
Daiwa Asset Management announced its adoptionof the Japanese version of the Stewardship Code in
May 2014 and has been actively working to fulfill its
stewardship responsibility.
In January 2017, Daiwa Asset Management set up
the “Stewardship Supervisory Committee,” which
is designed to manage conflicts of interest faced infulfilling its stewardship responsibility. The committee
supervises the company’s overall stewardship activities
and is responsible for making reports to the Board of
Directors and issuing recommendations to improvestewardship activities as necessary. The committee iscomposed of outside directors and the complianceofficer, who takes charge of overseeing themanagement of conflicts of interest, thereby securing
independence from management in stewardship
activities from management and business execution.
Based on the Policy to Hold Constructive Dialogue
with Investee Companies announced in June 2014,
Daiwa Asset Management has also further deepened
the following three types of dialogue with investee
companies, with the aim of accurately understanding
the conditions of investees, sharing such assessments,
and creating medium- to long-term corporate value.

Number of corporate
governance-related
dialogues held

140 (FY2015)
About 160 (FY2016)

About



* Results from Daiwa AssetManagement

Role and Social Responsibilities of the Financial Services

The first type is dialogue on Corporate Governanceheld by staff at Daiwa Asset Management responsible
for exercising voting rights. The number of dialogues
has been increasing year by year, from approximately
100 in FY2014 to approximately 140 in FY2015
and approximately 160 in FY2016. Daiwa AssetManagement also revises its policy and standards
for exercising voting rights as needed, therebyreflecting knowledge obtained from dialogue and thecircumstances surrounding the investee companies.
The revisions represent the company’s efforts to help
investee companies to improve their corporate value
and achieve sustainable growth. In March 2017,
Daiwa Asset Management also disclosed its policy inmore detail than previously. We hope that it would
enable investees to fully understand the company’s
policy and standards for exercising voting rights thus
would contribute to constructive dialogue.
The second type is engagement of analysts andfund managers through research activities. Daiwa
Asset Management held such engagement about
800 times in FY2016. Its Research Department hasorganized a policy on assessment of companies
based on the Analyst Handbook (Guide to Analyst
Activities Related to the Stewardship Code), drawn up
in FY2015, and has constructed a model that reflects
non-financial information on companies in their longterm assessment. The company intends to continue
focusing on dialogue based on the handbook in orderto further enhance its engagement.
The third type is dialogue by an engagement
team launched jointly by the Research Department
and the Equity Management Department. The teamselects companies considered to have large scope toincrease corporate value among the businesses that
Daiwa Asset Management especially focuses on in
its active investment, and holds deeper engagementwith the selected companies. Such engagement washeld 27 times in FY2016. Daiwa Asset Management
is reinforcing its activities to create a tripartite winwin situation between the companies’ customers,
employees, and shareholders. In October 2016,
it created a business strategy reference book that
presents successful and failed cases of corporate
management, and has been using the book for
dialogue.
Daiwa Asset Management has released a Reporton the Status of Stewardship Activities on its website(only available in Japanese). The report includes the

Daiwa Securities Group CSR REPORT 2017

status of engagement, such as policy, structure, andthe number of engagement times by theme, as well as
the status of exercising of voting rights and measures
to improve stewardship activities.

●Initiatives by Daiwa SB Investments
Daiwa SB Investments is also stepping up dialogue
with investees, steadily promoting initiatives tofulfill its stewardship responsibility, and further
strengthening such initiatives.
In April 2016, Daiwa SB Investments establishedthe Stewardship Promotion Section, and has been
stepping up its efforts to hold constructive dialogue
with the management of companies, such as
representative directors and CFOs, from a medium- tolong-term perspective to urge them to boost theirprofitability and appropriately control ESG risk. It
has long focused on engagement with companies
antecedently and by actively holding dialogue, urged
investee companies to turn their potential into actual
business results.
Daiwa SB Investments believes that, as an
institutional investor, it has a responsibility to provide
investees with advice on how to exercise theirpotential and how to respond and prevent recurrence
when there is a problem. The company considers thattaking various opportunities to raise issues and urge
improvement is its responsibility as an institutional
investor and that helping to raise corporate value
through such activities is also its mission for thecustomers entrusting their assets.
To receive feedback on its activities from anexternal viewpoint, Daiwa SB Investments invited two
highly independent outside directors in FY2016 whilesetting up the Responsible Investment Committee, amajority of whose members are independent outside
directors. It is thus aiming to further enhance its
customer-oriented business operation.

Daiwa Asset Management Co. Ltd.
Japan's Stewardship CodeInvestment Principles against
Cluster Munitions Producers

Company Information > Our
Stewardship Activities > Our
Stewardship Policy > Policy
on Exercise of Voting Rights(Japanese)

Daiwa SB Investments Ltd.

Investment Policy against Cluster
Munitions Producers
The Convention on Cluster Munitions (Oslo
Declaration) came into effect in August
2010. As an asset management company inJapan, a country ratifying the convention,
Daiwa Asset Management applies basic
principles for investments in, and other actions
against, cluster munitions producers. Visit thecompany’s website for details of the principles.

17

Company Information >Responsible Action as an
Investor > Our Stewardship
Activities > Our Initiatives on
the Japanese Version of the
Stewardship Code (Japanese)

Company Information >Responsible Action as an
Investor > Our Stewardship
Activities > Stewardship
Activities > Objective andBasic Approach for Exerciseof Voting Rights and Other
Activities (Japanese)Provision of Quality Service to Customers

Daiwa Securities Group CSR REPORT 201718

Provision of Quality Service to Customers
Approach and Basic Stance

Relevant CSR
Materiality

The Daiwa Securities Group understands that customer trust is the foundation of our business.
Based on the idea of the Customer First Principle, our focus is always on finding ways to deliver
genuine customer satisfaction.
We have also adopted the idea of hospitality to enhance our existing concept of customer
service. We aim to have the most satisfied customers in the financial services industry.

I.

II.

Building Deeper, Stronger Trustwith Customers
Daiwa Securities aims to build customer satisfaction
through quality services, built on understanding
customer needs quickly and proposing thebest solutions for each customer. We consider
providing faithful and appropriate explanations
to be paramount. Japan’s Financial Instruments
and Exchange Law prohibits “solicitation thatis improper in light of a customer’s knowledge,
experience, financial situation and objectives.” Daiwa
Securities’ approach is rooted in this law. As a partof our hospitality-based service, we strive to deliver
explanations that exceed the legal requirements when
promoting our financial products.
To improve our services and the quality of our
response further, we also conduct a customer service
survey once every six months. We survey customers
regarding their degree of satisfaction with ourservices and response and soliciting their feedback
and requests. Based on the survey results, we
strengthened our initiatives to improve the quality of
post-sale follow up and enhanced the convenience of
online trading in FY2016.

comprising employees engaged in in-house customer
service, at all branches. We also completed placing
employees with service assistant*2 certifications at all
branches in FY2016.
We also conduct regular training to maintainand further enhance the quality of customer
services. Moreover, staff at our head office checkcustomer services at our branches and by telephone
representatives whenever necessary.

●Improving In-Branch Customer Service
Quality
At Daiwa Securities, we have announced ourcommitment to serve customers sincerely, and strive
to provide services that can satisfy any customer. With
the aim of creating sales branches enabling senior
customers and customers with disabilities to feelsecure, we have placed dementia supporters*1, mostly* Refer to pages 11 and 12 for details
on the Daiwa Securities Group’smateriality.

FY2016 customer
service survey
Number of respondents:
Total of25,359 people(August 2016 and February 2017)•Overall score of*1 Dementia supporter
A dementia supporter is a person who has an accurate knowledgeof dementia and pays warm attention to people with dementia
and their families. The Ministry of Health, Labour and Welfare has
been stepping up the training of supporters across the country as
part of its “Dementia Supporter Caravan” project.

*2 Service assistantsatisfaction with Daiwa
Securities*

4.77(first half) ➔4.83 (second half)* Average score of evaluation on a scaleof 1 to 7 (1: very dissatisfied, 7: verysatisfied)A service assistant is a person certified as having acquired
hospitality and safe assistant skills for providing tailored support

Number of Daiwa
Securities employees
who have become
dementia supporters

for elderly and customers with disabilities.

2,572 people		(As of March 31, 2017)●Active Post-Sale Follow Up
Completing the sale of a product is only the
beginning of a securities company’s relationshipwith the customer. Follow up is a key element inbuilding the relationship of trust with the customer.
To alleviate customer dissatisfaction or concerns
arising after trading, we offer thorough explanations,appropriate proposals, and information regarding
market conditions, products, and services as a partof initiatives to reinforce our relationship of trust withcustomers.

Appropriate
proposals andafter-sales service inaccordance with thecharacteristics andneeds of customers
Customer service
with a wealth of
hospitality

Service assistant logo

Number of Daiwa
Securities employees
who have become
service assistants

282 people		(As of March 31, 2017)
Service assistant skill training classProvision of Quality Service to Customers

Daiwa Securities Group CSR REPORT 2017

●Accessible Services for Diverse
Customers
When renovating existing sales branches or planning
new branches, Daiwa Securities works to ensurethat they are accessible to more customers, throughbarrier-free measures such as reduced variations infloor level and the installation of larger counters.
In FY2016, we introduced several measures at all
sales branches for those with a hearing impairments
including the “Ear Mark” symbol indicating that
additional services are offered, writing communication
boards, and communication sheets to facilitatetransactions and procedures. We also placed caneholders to enhance safety and convenience for senior
customers and customers with disabilities visiting
our sales branches by ensuring that their canes orumbrellas do not fall onto the floor.

●Further Improvement of Consulting
Services on Inheritance and BusinessSuccession
To meet the inheritance and business successionrelated needs of customers, we are successively
increasing the number of sales branches that haveinheritance consultants. We have also introduced
an Inheritance Planner Certification® programand started offering even better quality service tocustomers. Inheritance consultants are staff members
who not only handle procedures within Daiwa
Securities but also comprehensively support any
procedure for customers at the time of inheritance.
They also arrange tax accountants, judicial scriveners
and agents for inheritance procedures in accordancewith requests from customers. Inheritance consultants
undergo lectures, training programs and OJT for the
first three months and also receive training regularly
thereafter. The Inheritance Planner Certification
program is an in-house qualification system for
employees with advanced expertise accumulated
through the certification for financial planners (CFPR)
qualifications and completion of in-house training.
It helps us to enhance our inheritance and businesssuccession-related consulting services to customers.
Ear Mark symbol

Communication sheet for people with hearing impairments

Daiwa’s Point Program
Daiwa’s Point Program rewards customers
based on their transactions. Points earned
can be exchanged for goods or used tomake charitable donations to various
groups using a conversion rate of one point
for one yen.
Organizations to which donations
can be made• Japan Committee for UNICEF• Medecins Sans Frontieres Japan
Association• WWF Japan• United Nations World Food
Programme• Save the Children Japan• Japan Platform• New Japan Philharmonic• Arts Support Kansai• The Kidney Foundation, Japan(As of April 2017)19

Number of sales
branches with Daiwa
Securities inheritanceconsultants

66 branches(As of April 2017)

Number of accredited
inheritance planners®

351 people		(As of March 2017)

Number of CFP®
accredited staff

643

peopleHighest number among
financial institutions(As of March 2017)

Daiwa’s Point Program•Amount of donations toeligible organizations

Branch Sales Agent Preventing
Bank Transfer ScamIn May 2016, during a conversation with acustomer, a sales agent at the Hiroshimabranch suspected something was wrong due
to a customer’s unusual and urgent request
for money transfer and her anxious behavior.
Noticing this, the sales agent was able totactfully prevent the customer from becoming
a victim of a bank transfer scam. The sales
agent was granted a letter of appreciationby the Kaida police station of the Hiroshima
prefectural police at a later date.

106.54 million¥(Cumulative amount from April
2003 to March 2017)•Donations made throughJapan Platform to workthat assists victims of
the Great East Japan
Earthquake

33.19 million¥(Cumulative amount from May
2011 to October 2016)* Donations continued as disaster relief
assistance funds since November 2016

Provision of Quality Service to Customers●Continuing to Hold a Wide Variety of
Seminars
Each sales branch of Daiwa Securities holds a variety
of seminars, covering topics including Japaneseand overseas markets, Nippon (Japan) Individual
Savings Account (NISA) and inheritance, to provide
information. In particular, we have been expanding
the scale of seminars for Fund Wrap, which has
garnered much attention in recent years, as well
as seminars for investment beginners and wealthmanagement customers.
In FY2016, we had approximately 23,000 seminars
in total as we actively held small-scale seminars at
sales branch counters as well as seminars at branchhalls. There were also large-scale seminar events, inaddition to those held at sales branches. We held
“Daiwa New Year’s Lectures for 2017” at 10 venues
nationwide, attracting approximately 5,300 people.

●Providing Junior and Senior HighSchool Students with Opportunities toLearn about Finance and Economy
We launched okane-no-mikata, a website for learning
about finance and economy, in March 2016 following
the start of a Junior Nippon Individual Savings
Account program. In July 2016, we also launchedjiyu-kenkyu-no-mikata, a website with content thatprimarily supports summer research assignment forchildren. In addition, we held events titled “Challenge
for Children and Parents: Learn Money & Economy
through Quiz” at three venues nationwide in Julyand August (July 24 in Tokyo, July 31 in Nagoya,
and August 6 in Osaka). The events, mainly targeted
toward elementary and junior high school students,
were designed to provide participating children andparents with opportunities to start learning aboutmoney.

Daiwa Securities Group CSR REPORT 2017

themselves will grow through child rearing and asset
management.
SODATTE not only supports wealth management
through investment but also delivers content thatencourages parents struggling with raising children
every day as well as various tips on funds for raisingchildren.
The number of page views (PVs) is increasing
month by month. In one year after starting up thesite, the number of monthly PVs exceeded 440,000,
making it clear that many people visit the website.
As a tie-up with the website, we have also heldmoney planning seminars for education funds
in collaboration with “Nikkei DUAL,” a medium
targeting dual-income households.
We will continue to disseminate useful columns
every month as an information site practicallysupporting child rearing for parents.

20

Seminars held by
Daiwa Securities•Approximately

23,000 times(Results at sales branches for
FY2016)•About5,300 people

Number of participantsin Daiwa New Year’s
Lectures for 2017
(nationwide)

Basic Policy on Customer-first
Operations
The Daiwa Securities Group has agreed
with the purport of the “Principles for
Customer-Oriented Business Conduct”
announced by the Financial Services Agency
on March 30, 2017 and expressed its
adoption of the principles. The Group has
also drawn up and announced its “Basic
Policy on Customer-first Operations.”*Refer to websites for the Group companies for details.

Major Group companies
implementing initiatives
based on the Basic Policy on
Customer-first Operations•Daiwa Securities Group
Inc. > Home > Corporate
Information > Management
Policy > Basic Policy on
Customer-first Operations•Daiwa Securities > Policy on
Customer-first Operations(Japanese)●Information Website for Child Rearing
and Money “SODATTE”•Daiwa Asset Management Co.
Ltd. > Policy on Customer-first
Operations (Japanese)

Daiwa Securities opened “SODATTE,” an information
website for child rearing and money, in April 2016 forthose balancing child rearing and work in the hopethat more people can enjoy raising their children.
The name of the website, “SODATTE” (meaning“grow” in Japanese) encompasses our hope thatchildren will grow, money will grow, and readers•Daiwa SB Investments Ltd.
> Policy on Customer-first
Operations (Japanese)•Daiwa Next Bank, Ltd. >Initiatives Based on the Daiwa
Securities Group’s “Basic Policy
on Customer-first Operations”

Okane-no-mikata, a website to learn how money works(Japanese)

SODATTE, an information website for child rearing and money

Okane-no-mikata
A website to learn how
money works (Japanese)

SODATTE
An information website for childrearing and money (Japanese)Provision of Quality Service to Customers●Contact Center Functions
The Contact Center has been a key channel fortransactions, sustaining the company’s businessmodel whose cornerstones are Daiwa Consulting andDaiwa Direct transaction courses. The center now
handles calls coming in to sales branches, thereby
acting as Daiwa Securities’ comprehensive remotecontact center for customers. To strengthen thefunctions of the center, we first expanded the scaleof services points in Tokyo and Osaka in FY2014. We
then established a contact center function in Fukuoka
in FY2016 as our third service point. By further
expanding the ability to take calls, we aim to enhance
our support functions for sales branches going
forward to increase customer convenience.

●Achieving High Evaluation from
External Institutions
In a benchmark rating program hosted by HDIJapan, we earned three stars—the highest possible
rating—in the FY2016 Customer Support and Website
Support categories of the securities industry. Thisis the second consecutive year that we have won
three stars in the Customer Support category, which
evaluates the quality of services by operators. We willseek to further improve our overall services throughtraining, aiming to achieve three stars again in thenext fiscal year.

Daiwa Securities Group CSR REPORT 2017

Working to Incorporate
Customer Voices●Initiative to Shorten Distance with
Customers
In FY2016, we started showing pictures of ouroperators on the website page for telephone inquiries
in the hope that this would give customers a sense of
security and familiarity with the Contact Center, whichis remote from our customers.

Telephone inquiry screen (Daiwa Securities website)

Scale of Contact Center

770 service points●Contact Center Initiatives
Employees at the Contact Center, which serves as
our comprehensive remote contact point, have directcontact with customers and play an increasingly
crucial role not only as a transaction channel but
also in customer support and marketing. In order tomaintain and improve contact center operations tomeet the demand for high-quality service, we provide
training and regular level checks for all Telephone
Service Representatives (TSR).
To increase customer convenience, the Contact
Center has also started handling new services such as
the individual-type defined contribution pension plan
known as iDeCo, Daiwa Fund Wrap Premium, double
limit orders, and consecutive orders.

Daiwa Securities’ Systems for Utilizing
Customer Feedback
Customers

Opinions, comments,
and requests
Consumer feedback
postcards available
at branches

Telephone/e-mailCustomer Support Center
Contact Center

Sales
branches

Management

Departmentsin charge

Improvement

Improvement

Improvement

21

Taking calls(500 in Tokyo, 150
in Osaka, and 120 inFukuoka)

Provision of Quality Service to Customers

Daiwa Securities Group CSR REPORT 2017

Customer Feedback Sent toContact Center

Calls received at theCustomer Support
Center in FY2016

The Contact Center receives numerous
comments and requests on online tradingand Daiwa Securities’ other products andservices. We share such customer feedback
information and requests with management
and relevant departments and sections of
the head office and utilize them to enhance
our services and customer interaction.
(The number of major improvements
implemented in FY2016 was 55.)
We also show some of the inquiries
received from customers on our website as“frequently asked questions,” while sharing
them with sales branches in some cases
to speed up our responses. We are thus
working to raise customer satisfaction fromvarious perspectives.

●Customer Support Center Initiatives
Daiwa Securities’ Customer Support Center is a
department within the head office that handles
customer feedback and complaints directly by phone.
It is set up within the Compliance Department of
Daiwa Securities.
The Center promptly gives feedback and complaints
from customers to relevant sales branches anddepartments and sections of the head office. It alsosorts and analyzes such feedback and complaints,
shares them with officers, sales branches, and head
office departments, and capitalizes on them as
precious information in the aim of “customer-first
operations” and “pursuit of best quality.”
To respond to customers’ calls thoroughly,
accurately, and promptly, Customer Support Center
members study the securities tax system and Daiwa
Securities’ services together on a daily basis, and work
to improve their service quality. In FY2016, the Center
received 5,196 calls, 762 down from the previous
fiscal year.

Calls Received at the Customer
Support Center
(FY)

2012

83％

2013

82％

2014

83％

2015

82％

2016

73％
0

1,000

2,000

17％ 5,436
18％ 6,289
17％ 5,393
18％ 5,958
27％ 5,196
3,000

4,000

5,000

6,000

7,000
(Calls)Inquiries

Complaints

22

No reports indicating
violation of human rights,
environmental pollution
by Daiwa Securities, orother matters raising
extremely serious concern
in general social terms

Initiatives through Product Development and Provision

23

Daiwa Securities Group CSR REPORT 2017

Initiatives through Product Development and Provision
For Addressing Social Issues
and Contributing to Future
Development of Society and
Financial and Capital Markets

is no longer impossible to separate poverty issues
from global warming issues. In June 2016, we at
Daiwa Securities sold Green Bonds issued by Crédit
Agricole Corporate and Investment Bank with the aimof extending loans to companies and projects that
contribute to environmentally-friendly economic andsocial development. In August 2016, we also soldGreen Bonds issued by the Central American Bank
for Economic Integration (CABEI). The bonds wereCABEI’s first socially responsible investment (SRI) in
support of climate change mitigation and adaptation
initiatives through related projects in Central
America. In January 2017, we sold Water Bonds
issued by Corporación Andina de Fomento (CAF)
to provide sufficient drinking water and sanitation
services in Latin America and the Caribbean region.
The proceeds of such bonds placed by the Daiwa
Securities Group have been invested in projects whichsolve a variety of issues across the globe.

●Impact Investment Bonds
Compared with typical forms of Socially Responsible
Investment (SRI), Impact Investment focuses moreon the direct impact of investment on society. It isa method that not only pursues economic benefits,
but is also a way to allocate assets solely to activities
targeted at resolving social issues, such as poverty andclimate change.
As a financial institution, we have supported thealleviation of problems in society by underwriting
various types of Impact Investment bonds.
• Initiatives in FY2016
Among various issues faced by the world today, global
warming has become a serious threat to all countries.
Developing countries are being impacted first andwith the gravest results. Global warming may destroy
the social initiatives for poverty issues that have beensteadily carried out over the last several decades. It

Relevant CSR
Materiality
III. Development andprovision of superior
financial andinvestment products
IX. Responsible action
as an institutional
investor
XIII. Initiatives to addresssocial concerns andcontribute to future
development ofsociety, and financial
and capital markets* Refer to pages 11 and 12 for details
on the Daiwa Securities Group’smateriality.

Results of Impact
Investment bonds•Daiwa Securities

cumulative sales

Independent
Assurance

675.8 billion*¥• Daiwa Securities’ sharein the Japanese market

Daiwa Securities Group’s History of SRI Funds and Impact Investment Bonds● World Impact Investment Fund
● Daiwa ETF—MSCI Japan Human& Physical Investment Index

SRI funds●2017

Impact Investment bonds● Water Bonds

●2016
●2015

● Daiwa Women Supporter Fund

●2014
●2013
●2012

● JICA Bonds● Microfinance Bonds● Green Bonds● Agri Bonds● Water Bonds● Water Bonds● Inclusive Business Bonds● Green Bonds (2 times)

55%
Total ¥1,230.2 billion** Figures have been rounded* Source: Daiwa Securities Co. Ltd.
(From March 2008 to March 2017)•Daiwa Securities

cumulative sales
for FY2016

Independent
Assurance

3 issues¥21.9 billion in total(All issues are environment-relatedbonds)● Water Bonds● Green Bonds● Green Bonds (2 times)● Water Bonds (2 times)● Agri Bonds● Banking on Women Bonds● Inclusive Business Bonds● JICA Bonds● JICA Bonds● Ecology Bonds● Banking on Women Bonds● Agri Bonds (2 times)● Water Bonds (KEXIM)● Microfinance Bonds● Vaccine Bonds

SDGs related to Impact
Investment bonds soldin the past

Initiatives through Product Development and Provision●SRI Investment Trusts
SRI investment trusts are a mixture of stocks andbonds that take into account factors other thanfinancial performance, such as ethics and social andenvironmental objectives, in addition to assessmentsof the sales and profits of the investment candidates.
We offer eco funds that limit non-financial
assessments to environmental performance, andinvestment trusts that limit their stock portfolios
to environment-related businesses. By investing inthese trusts, through financial markets, investors can
indirectly support countries and corporations thatare proactively involved in CSR and environmental
programs.

Development and Provisionof Superior Financial andInvestment Products
Amid an accelerating shift from savings to investment,
Daiwa Securities considers the development andprovision of superior products as one of our major
missions in society, and strives to develop new
products and improve their quality.

24

Daiwa Securities Group CSR REPORT 2017a service offered to customers over the medium tolong term. We provide thorough explanations before
the conclusion of a contract, report investment
performance regularly every three months, and holdfollow-up seminars whenever necessary. We thus
ensure close communication with customers and seek
to build a relationship of trust with them.
We also started offering Daiwa Fund Wrap
Premium in October 2016. The service enables
customers to have multiple investment portfolios anddesign them in a highly customized manner while
specifying a beneficiary in case of inheritance inadvance. We are thus offering a more detailed service.
Moreover, we launched Daiwa Fund Wrap Online in
January 2017. The service proposes the most suitable
investment style by utilizing Robo-Advisor technology,
enabling customers to easily manage globally
diversified investments online.
To keep attracting customers over the long term,
we will continue our initiatives to implement a
better structure and system so as to improve our
performance and the quality of our services.

Results of SRI
investment trusts•Daiwa Securities

Group net assets

Independent
Assurance

116.6

billion*1¥• Daiwa Securities’ sharein the Japanese market

28%
Total ¥407.8 billion*2*1 Source: D aiwa Securities Co. Ltd.
*2 Source: D aiwa Fund Consulting Co. Ltd.
(As of March 31, 2017)•Balance of domestic

Wrap accounts¥

6,570.2 billion•Balance of Wrapaccounts at Daiwa
Securities*¥

1,661.8 billion* From data released by the Japan
Investment Advisers Association (As of
March 31, 2017)●Initiatives of Fund Wrap Services

Major “Fund Wrap”
services newly
introduced or improved
in FY2016

Daiwa Fund Wrap is a service enabling even those
who are busy or have no investment experience
to easily start medium- to long-term diversified
investment. Under a discretionary investment
contract, Daiwa Securities invests and manages
assets on behalf of our customers. We offer plansthat enable each customer to make diversified
global investments according to their investment
policy, as do professional institutional investors
such as those managing public pension assets. It
has become more important than ever for a large
number of investors to manage their assets efficiently
and stably through diversified global investment, inparticular as a measure to address prolonged low
interest rates, which have made it difficult to findattractive investment options. Daiwa Fund Wrap is•August 2016

Renewal of Daiwa Fund
Wrap Web Service•October 2016

Start of new service Daiwa
Fund Wrap Premium•January 2017

Start of new service Daiwa
Fund Wrap Online

Daiwa Social
Contribution Wrap—
Daiwa Fund Wrap witha donation service•Amount donated in

Daiwa Fund Wrap Premium

Daiwa Fund Wrap Online

FY2016¥

4,097,604* Total donated amount from customers
and from Daiwa Securities•Donated toUnited Nations World
Food Programme,
Medecins Sans Frontieres
Japan Association, WWF
Japan, Japan Committee
for UNICEF, Japan
PlatformInitiatives through Product Development and Provision●Initiatives by the Asset Management
Division
The asset management division of Daiwa Securities
Group strives to reinforce the asset management
system and continues working on a variety of
initiatives to offer better returns to beneficiaries overthe medium to long term.
• Initiatives by Daiwa Asset Management
For Daiwa Asset Management, one of the pillars tobuilding a stable, distinguished asset management
capability is to take appropriate risks in managing
active funds. We have therefore built a support
system by collecting information from the researchdivision and other relevant specialist teams. Thisis a system enabling fund managers to take risks
without undue concern. In particular, we are striving
to improve our ability to select companies with goodprospects, hoping that this will become a major
source for strong investment performance. Amidsuch efforts, we focus on environmental, social andgovernance (ESG) issues, as they may help boost ourlong-term investment performance. Daiwa Asset

Daiwa Securities Group CSR REPORT 2017Management has placed personnel in charge of ESG
within the Fund Management Division to promote
ESG investment in an organized manner as a signatory
member of both the United Nations’ Principles for
Responsible Investment (PRI) and the Principles for
Financial Action for the 21st Century. In particular,
since announcing the adoption of the Japaneseversion of the Stewardship Code, we have been
actively engaged in dialogue with investee companies
and urging them through such dialogue to improvetheir ESG initiatives. Moreover, we have introduced
topics regarding ESG investment at in-house seminars
and training sessions for companies marketing ourinvestment trusts.
It is especially important to always grasp current
trends and customer needs in this way for thedevelopment of products. We are therefore striving
to maintain close communication by holding seminars
for customers and through operation of our uniquecall center. We are also building a structure that assists
companies marketing our products to support a shift
from savings to asset formation.

ESG-Oriented Investment Trusts
At Daiwa Asset Management, we havelaunched an index fund that tracks the
JPX Nikkei Index 400, which is composedof companies that conform to corporate
governance and other factors, as well asan active fund that selects issues from theperspective of promoting women to play anactive role. We have also jointly developedwith MSCI Inc., an exchange traded fund (ETF)
tracking the MSCI Japan Human & PhysicalInvestment Index, which selects companies
actively making human and physicalinvestment and focuses on companies that
display excellence in corporate governanceand profitability. We have thus expanded ourline-up of products focusing on ESG.
Among these products, the Daiwa Women
Supporter Fund (nicknamed “tsubaki”)
makes investment based on four themes:companies helping women to play anactive role; companies supporting women’s
active participation in society; companies
providing products and services that target
women or are popular with women; andcompanies benefiting from increases inwomen’s incomes. The fund has achieved
good investment results. For instance, in
the approximately two-year period fromits establishment at the end of March 2015

to the end of March 2017, its performanceexceeded that of TOPIX (including dividends)
by 28.3%, and its returns were 30.1% higher
than those of the JPX Nikkei 400 (including
dividends) during the period.
The net assets of our funds are alsosteadily growing. The balance of the index
fund linked to the JPX Nikkei 400 increased
from ¥114.7 billion at the end of March 2016
to ¥167.3 billion as of the end of March2017. The balance of the ETF tracking the
MSCI Japan Human & Physical Investment
Index, established in May 2016, stood at¥77.9 billion yen as of the end of March 2017.
Daiwa Women Supporter Fund

25

Initiatives through Product Development and Provision• Initiatives by Daiwa SB Investments
As a variety of medium- to long-term management
factors are expected to affect companies’ shareprices, there is a growing need for multifaceted
corporate analysis, including the ability to analyze
and predict non-financial information over the
medium and long term that covers companies’
research and development ability and overseas project
management ability. In light of these perspectives, wenewly established the Stewardship Promotion Section
at Daiwa SB Investments in April 2016 to boost thecompany’s analysis skill. We have also stepped up
our initiatives to help companies to increase theirprofitability through constructive dialogue with them.
Since corporate analysis and research require
human resources, Daiwa SB Investments places
importance on nurturing and promoting professionals
who have acquired the ability to think on their own
through training and other means. We have also
overhauled our organizational systems as a company,
including the adoption of a performance-linked
evaluation system. Moreover, we strive to elevate

Daiwa Securities Group CSR REPORT 2017a corporate culture as a professional managementcompany and to diversify our workforce by hiring
overseas and female staff, with the aim of respondto diversifying needs and providing quality services.
We have also focused on the education of sales staff
at companies handling our products, who directly
communicate with customers. We conduct workshops
for those sales staff to enhance their marketing skills
and knowledge on investment trusts while creatingbooklets containing information necessary for themto explain to customers. We are thus working to help
those staff to improve their communication abilities.
Following the signing of the PRI in 2012, weestablished the ESG committee and rules to enhance
our capacity to evaluate and analyze ESG issues ofcompanies. These initiatives reflect our efforts to fulfill
our responsibility to pursue maximum profits with ourutmost efforts from a long-term standpoint on behalfof beneficiaries. We will continue with our initiatives
to provide good returns over the medium to longterm in our multifaceted corporate analysis, including
analysis focusing on ESG.

World Impact Investment Fund
On August 26, 2016, Daiwa SB Investments
established and started managing World
Impact Investment Fund (nicknamed Better
World). “Impact Investment” is the idea ofcapitalizing on the power of private-sector
companies to resolve various social issues thatcannot be resolved solely by governmentsor charitable organizations while pursuingeconomic benefits at the same time.
At Daiwa SB Investments, in order tocommunicate the new idea of Impact
Investment to a wider range of customers,
we work on customer-oriented provisionof information. To increase the popularity
and awareness of Impact Investment,
we have drawn up “Impact Investment,”
which gives the details of the investment
approach, and “ESG Investment—Impact
Investment Existing Beyond It,” which
describes the idea of ESG investment. Bothmaterials incorporate the idea of universal

communication design and have obtained an“Easy-to-read Design” certification from the
Universal Communication Design Association(UCDA). To deepen customers’ understandingof the features of our funds, we have also
created a special page on our website andhave supplemented information with visualcontents.

Impact Investment

26

Initiatives through Product Development and Provision●Investment Companies and Other
Initiatives to Resolve Social Problems
Daiwa Real Estate Asset Management Co. Ltd.
manages investments and infrastructure assets forsolving social issues through investment companies
and fund structures.
Nippon Healthcare Investment Corporation, which
was listed on the Tokyo Stock Exchange in November
2014, invests in healthcare facilities that are likely tosee stronger demand from society over the longer
term as the number of senior citizens increases. In
FY2014, Daiwa Real Estate Asset Management alsobegan managing new separate funds with assets
focused on photovoltaic power stations and logistics
facilities respectively. These investment funds mainly
acquire assets held by private-sector companies
for now. In the future, they aim to be receptacles
for assets to be sold by lossmaking public-private
partnership entities. Daiwa Securities Group willcontinue to fulfill its role by supplying private sector
funds for maintaining social infrastructure.
* Refer to page 6 and page 34 for initiatives of Nippon Healthcare
Investment Corporation.

A facility in which Nippon Healthcare Investment Corporation invests

Daiwa Securities Group CSR REPORT 2017

●Initiatives by Daiwa Online Trade
On April 1, 2016, Daiwa Securities celebrated the 20th
anniversary of its Internet-based securities brokerage
service Daiwa Online Trade.
In 1996, when the Internet was in its embryonicstage, Daiwa Online Trade started providing a service
that enabled the placement of orders for stock
trading over the Internet for the first time ever inJapan. Daiwa Securities has developed and released
innovative products and services successively over the
past 20 years.
Daiwa Online Trade has evolved along with a sharp
increase in transmission speed and the emergenceof the iPad and other tablet computers andsmartphones, and the number of accounts held undercontracts for Daiwa Online Trade topped 3.1 million
as of the end of March 31, 2017. Of Daiwa Securities’
total stock transactions, approximately 80% arecarried out via the online trading service, underscoring
the fact that Daiwa Online Trade has become an
indispensable channel for Daiwa Securities.
To mark the 20th anniversary of Daiwa
Online Trade, Daiwa Securities newly prepared acommunication logo. We used it in a variety of media
including online ads, posters on public transport,
and newspaper ads. We also carried out a campaign
to mark the 20th anniversary which awarded prizes
by lottery, thereby actively engaging promotional
activities to enhance the recognition of Daiwa Online
Trade among a wider range of customers.
We use three social media sites—Facebook,YouTube, and Twitter—to provide information mainly
on investment education and markets. A large
number of customers follow our official accounts.
With the accelerated development of FinTech, an
integration of finance and information technology,
we are ushering in an era where new financial
services leveraging FinTech are easily available. We arecommitted to keeping track of the trend of FinTech
and providing a top-level investment environment
while listening to customer feedback in order toensure that customers can continue to trade with asense of security. With an eye toward the future of
online trading, we hope to make our online trading
service more convenient and easy to use by leveraging
the results achieved in the past 20 years for the next
20 years.

Daiwa Online Trade 20th anniversary communication logo

Daiwa Securities’ social media
account

27

Nippon Healthcare
Investment Corporation
Total amount of assets
acquired

19.3 billion

About ¥(As of March 31, 2017)Management results
at photovoltaic
power stations anddistribution facilities
Photovoltaic power
stations•Number of deals:

8(Hokkaido, Tohoku, Hokuriku,
Kanto, and Chugoku regions)•Output:

43 MW•Balance of assets undermanagement:¥

14.8 billion

Distribution facilities•Balance of assets undermanagement:¥

11 billion(As of March 31, 2017)

Daiwa Online Trade•Number of contract

accounts

3,127,991 accounts(As of March 2017)

To Maintain and Develop Financial and Capital Market Functions

Daiwa Securities Group CSR REPORT 201728

To Maintain and Develop Financial and Capital Market Functions
The securities business, the core business of the
Daiwa Securities Group, serves as an importantsocial and economic infrastructure. It facilitates thesmooth flow of money by matching fundraising needs
through the issuance of securities and investment
needs of investors via financial and capital markets.
We recognize that maintaining and developing thisinfrastructure is about developing sound financial andcapital markets for the next generation, which is oneof our key CSR issues, and is considered to be a major
mission for the Group.

Settlement Functions
Securities settlement—a mainstay of the Group’s
overall operations—is the delivery of stocks or bonds
and funds both to and from both the buyer and sellerof a securities transaction. In markets, products canbe reliably converted into cash when necessary. Thisis the very reason why markets attract investment
funds and enable companies and others with funding
demand to procure funds. If anything that could stall
securities settlement should occur, it would not only
affect us but also damage trust in markets as a whole.
This may even have a significant impact on the global
economy. We consider it vital to settle transactions
accurately and promptly as required in order to ensurethat markets function as a social infrastructure andbecome a driver for economic development. We are
therefore striving to build a structure enabling thesmooth execution of settlement operations.
Amid the emergence of investors engaged infrequent trading leveraging computers, we have
implemented an IT system that is reliable and has
high processing capability that can appropriately
respond to a massive number of settlement deals. We
believe, however, that no matter how well operations
are systematized, the most important thing for the
securities settlement operation is human resources.
Staff members must have a wide range of knowledge
that goes beyond the operations that each of them is

responsible for in order to grasp the situation quickly
when an irregular event occurs, and then respond to it
appropriately. For that reason, we are making efforts
to visualize and accumulate the experience and knowhow acquired through daily settlement operations andexpand the scope of operations that each individual
can cover by requiring the regular rotation of tasks.
Meanwhile, the securities industry recognizes
that it is necessary to further increase convenienceand strengthen risk management to boost thecompetitiveness of Japan’s financial and capital
markets. With this awareness, discussion on the
reduction of settlement time is currently underway
in the entire industry. Daiwa Securities plays acentral role in a working group launched by theJapan Securities Dealers Association, identifying andexamining a variety of issues. Moreover, cross-borderforeign exchange transactions entail settlement risk(for example, the risk of being unable to receive
dollars even when paying yen) associated withtime differences in settlement for the currencies
involved. Daiwa Securities participated in continuous
linked settlement as a settlement member in 2016,
becoming the first Japanese securities companies to
do so. This has substantially reduced the settlement
risk of foreign exchange transactions, while requiring
us to assume greater responsibility for the stability offinancial markets.
We are determined to continue the settlement
operations no matter what happens. Under suchdetermination, we have drawn up a business
continuity plan (BCP) and regularly conduct training
in preparation for unforeseen circumstances, suchas natural disasters and terrorism. To acceleratea shift from savings to investment, the reliabilityof settlement is extremely important to maintaincustomer trust. We will continue to meet increasingly
sophisticated customer needs and quickly provide
solutions by taking advantage of a reliable settlement
infrastructure and human resources.

Investment

Retail investors

Institutional
investors

Purchase of securities

Financial & capital
markets(stocks, bonds, etc.)

Securities company

Suppliers offunds

Securities company

Securities Companies' Role in Financial and Capital Markets
Users of funds
Fundraising
Companies

Issue of stocks or bonds

Government &municipalities

Relevant CSR
Materiality
V.

Maintenance anddevelopment offinancial and capital
market functions* Refer to pages 11 and 12 for details
on the Daiwa Securities Group’smateriality.

Number of settlementtransactions handled•Daily12,000transactions on average•Annually

Approximately

3 million transactions(Transactions mainly by institutional
investors in and outside of Japan)

Dissemination of Analysis and Proposals on the Economy, Society, and Investment Information

Daiwa Securities Group CSR REPORT 2017

29

Dissemination of Analysis and Proposals on the
Economy, Society, and Investment Information
The Daiwa Securities Group provides, in addition toinvestment information, a wide range of information on
economy and society as a financial services group. We
hope that the measures we propose from a long-term
perspective will be helpful to a variety of stakeholders.

Easy-to-UnderstandCommunication of Information
Daiwa Securities publishes information to a wide
range of people from institutional and retail investors
to those who are about to start investment. The
central role in provision of information is played byhighly specialized analysts and strategists at theInvestment Strategy, Equity Research, and Fixed
Income, Currency and Commodities Research
departments. They provide information mainly
through reports based on their unique analysis.
Our information is based on close analysis andcollection of data, and we tailor our presentation forretail investors and institutional investors, who areinvestment professionals, even if the same person isproviding that information. For retail investors, weincorporate more visualized reporting.
To remove the general perception that securities
investment or securities companies are complicated,
we believe it is one of our missions to work toward
communicating our analysis in an easy-to-understand way.

Comprehensive Provision ofInformation and Policy Proposal
Activities
Daiwa Institute of Research (DIR), which assumes
the think-tank role of the Daiwa Securities Group,
provides wide-ranging economic and financial analysis
and information to the public.
At DIR, we consider it our mission to engage incomprehensive provision of information and policy
proposal activities concerning the financial andcapital markets and the real economy. We havealways sought to provide up-to-date and in-depth
information and a unique viewpoint that has neverbeen presented by others. In order to provide
information that satisfies the needs of the public, we
also exchange information and hold discussions withbusinesses, investors, governments and other public
institutions as well as overseas think-tanks and media.
In this way, we are able to analyze the currents andtrends of society and share information in the form of
published reports. We are also stepping up the releaseof ESG information, communicating wide-ranging
information via our website and “DIR Research
Quarterly Review” (our quarterly journal) regarding
community vitalization, SRI, environmental problems,
corporate governance and other issues.

Strengthening the Provision ofInformation
The Research Division of DIR has been focusing
on providing information on the environment andregional revitalization since 2015, in addition to
information on the macro economy and financial andcapital markets in and outside of Japan. With an eye
to analyzing economic and social issues from various
viewpoints, the Division has worked on six themes:(1) medical and nursing care; (2) regional economies;(3) women’s empowerment (in employment andwork); (4) global warming; (5) energy; and (6) ESG.
We are thus contributing to society by providing
information related to these themes.
To fulfill the role of a reliable compass as a thinktank, we are engaging in useful research that grasps
changes in economic and social trends and satisfies
growing needs for information.

Provision of Information throughDiverse Media●Lectures and Media Appearances
The Research Division of DIR adopts a variety ofmethods for providing information, including thewriting of reports, contribution to Research Quarterly
Review, newspapers and economic magazines, media
interviews, TV appearances, lectures, seminars,
presentations at workshops, and the publication ofbooks. We strive to plainly explain complex issues
related to the economy, society, and policy issues inand outside of Japan, while emphasizing the qualityof reports. We ensure the reliability of our reports byrequiring them to undergo reviews by a specialized
section. As a result, the information we provide has
improved in both quality and quantity, and we arecommunicating with customers and participating ingovernment councils on a continuously increasing
number of occasions.

Relevant CSR
Materiality
IV. Disseminationof analysis andproposals on theeconomy, society,and investment
information* Refer to pages 11 and 12 for details
on the Daiwa Securities Group’smateriality.

Reports and seminars
on ESG•Release of ESG reports andcommentary articles on
ESG keywords (DIR)

57 reports and articles(Results for 2016)•Number of ESG

seminars held (Daiwa
Securities)

28 seminars(Results for 2016)

Provision of
information throughdiverse media by DIR•Number of reports

posted on the website
Approximately

580 reports(Results for 2016)•The full texts of thereports are available
on the website•Number of recent

hits on the researchdivision’s page
Approximately

Mitsumaru Kumagai
Senior Managing Director,
Deputy Head of Research Division,
Chief Economist, DIR
Pictured: Live Internet coverageof deliberations of the House ofRepresentatives

4.85 million hits
(Results for 2016)

Seminars held by
Daiwa Securities
Refer to page 20 of“Provision of Quality
Service to Customers.”

Hitoshi Suzuki
Managing Director, Policy
Research Department at DIR
Pictured: Panel discussion at the
Genron NPO

Dissemination of Analysis and Proposals on the Economy, Society, and Investment Information

Daiwa Securities Group CSR REPORT 2017

●Issuance of Books and Booklets● Daiwa Internet TV

The Investment Strategy Department of Daiwa
Securities issues “Daiwa Investment Weekly”
and “Daiwa Investment Monthly” as tools forcommunicating information to general customers.
They are both distributed to sales branches of Daiwa
Securities and are also available on the Internet. For“Daiwa Investment Monthly,” we have revised it sothat readers can also view videos with a smartphone.
We will further evolve our booklets to make themeasier to understand. We also provide information invarious ways to general customers, including books
available through publishers and producing deskcalendars with information on financial events andwall-hanging market charts.

In 2000, Daiwa Securities began “Daiwa Securities
Information TV,” Japan’s only channel dedicatedto securities information, on multichannel pay TV
broadcast service “SKY Perfect TV!” Since April 2011,
we have been producing “Daiwa Internet TV” atour own studio and distributing it online in an effort
to target a wider range of viewers. We distributeinformation on the Tokyo market six times a dayin a timely manner, while providing local market
information from Hong Kong and New York every day.
In addition, we distribute corporate information as
well as video reports where analysts and economists
at Daiwa Securities and DIR provide commentaries oncurrent issues in an easy-to-understand way.
For example, in FY2016, we produced a video
that plainly explains the individual-type defined
contribution pension plan (known as iDeCo),
for which the scope of eligibility has significantly
expanded. The video was created on the concept ofbeing available at anytime, anywhere, to anybody.
The service is also available through smartphones
and tablets, enabling anybody to view their required
content at their preferred time of day wherever theyare. It is therefore well-received by retail investors.
Our Daiwa Internet TV initiative was introduced by
the SDG Industry Matrix for Financial Services (issued
jointly by the United Nations Global Compact and
KMPG International in 2015) as a case for Goal 4“Quality Education.” The report highlighted Daiwa’stimely and free of charge provision of a variety offinancial and investment information.
We will continue to make efforts to produce
programs that can be viewed by not only investors but
also those who are new to investment, and that can
support the journey from savings to asset formation.

Internet-Based Initiatives●Live Web Seminars
The Daiwa Securities Group regularly holds live web
seminars where popular strategists and analysts of
the Group appear as lecturers, in addition to seminars
held at sales branches of Daiwa Securities. Customers
can view them over the Internet in real-time andare also allowed to directly ask lecturers questions
by typing into the bulletin board function. A large
number of customers participate in our seminars eachtime.
We will continue to make efforts to communicate
market conditions and outlook and other information
to a larger number of people as plainly as possible
through our live web seminars.

Daiwa Investment Monthly

Daiwa Internet TV website

30

Live web seminars
held in FY2016
14 seminars:
Total of33,244 participants

Dissemination of Analysis and Proposals on the Economy, Society, and Investment Information

Individual-type DefinedContribution Pension Plan (iDeCo)
Following the enforcement of the revised
Defined Contribution Pension Act, thescope of people eligible for an individualtype defined contribution pension plan
(iDeCo) has significantly expanded.
On January 23, 2017, the Daiwa
Securities Group announced that it hadformed a capital and business alliance with
the SBI Group in the defined contribution
pension business. Capitalizing on thisalliance, Daiwa Securities launched a new
iDeCo plan (“Daiwa’s iDeCo”) on April 3,
2017, with SBI Benefit Systems Co., Ltd.
working as partner.
With the tie-up between SBI Benefit
Systems, which has realized a free defined
contribution plan administrator service
ahead of other companies, and Daiwa
Securities, with quality investment advisory
services, we will provide iDeCo planschosen by customers and contribute toincreasing the use of securities savings
through the expansion of a new customer
base.
iDeCo video content

Daiwa Securities Group CSR REPORT 2017

●Providing Content to Video Streaming
Service Providers
In FY2016, the Daiwa Securities Group started
providing market information distributed by Daiwa
Internet TV and other content to video streaming
service providers.
We will continue to work on various initiatives
going forward to help investors build their assets andto raise interest in asset building among inexperienced
investors.

• Companies to which content has been
provided
GMO Click TV Investment Channel(GMO CLICK Securities, Inc.) from July 2016
Nico Nico Live of Nico Nico Douga(DWANGO Co., Ltd.) from January 2017

●Original Content by Group Companies• Daiwa Asset Management Co. Ltd.
On the website of Daiwa Asset Management, we
provide a variety of videos on investment trusts,
including one-minute video comments on markets byoverseas subsidiaries. We also have a page entitled“Study with Manga! Introduction to Investment,”
where viewers can learn about investment andthe economy enjoyably. In two learning materials
serialized on the page, “Teach me, Daiwa-san!” and“Junior NISA Diary,” we explain investment in an easyto-understand way.
• Daiwa SB Investments Ltd.
On the website of Daiwa SB Investments, we provide“Learn and Benefit from Movies!” which enables
viewers to learn about information on markets andfunds as well as the basics of asset management. We
also distribute a wealth of information free of charge
in a timely manner, including “Daiwa SB 5min,”which delivers important points in five minutes, and“Study Asset Management through Cartoons.” These
programs are understandable even to those who havelittle knowledge of investment trusts.

Daiwa SB 5min (Daiwa SB Investments)“Study with Manga! Introduction to Investment” (Daiwa Asset Management)

31

Support for the Creation of Our Future Society

Daiwa Securities Group CSR REPORT 201732

Support for the Creation of Our Future Society
Developmental Support for
Capital Markets in Myanmar—Initial Public Offerings on the Yangon
Stock Exchange—
In December 2014, the Yangon Stock Exchange (YSX)
was established as a venture company between the
Daiwa Institute of Research, Japan Exchange Group,
Inc., and the Myanmar Economic Bank with broad
support from the public and private sectors in Japan.
Later, the YSX started its trading in March 2016 witha stock listing by First Myanmar Investment Co., Ltd.,and three companies newly listed their stocks on
the exchange during FY2016. Thilawa SEZ Holdings
Public Ltd. became the second listed company on theexchange on May 20, 2016. It invests in a company
that has undertaken the development of an industrial
park in the Thilawa Special Economic Zone, located in
the suburbs of Yangon City. Myanmar Citizens Bank
Ltd., engaged in the banking business in Myanmar,
became the third listed company on August 26.
First Private Bank Ltd., which is also engaged in thebanking business, became the fourth listed company
on January 20, 2017.
The YSX, in which the Daiwa Securities Groupinvests, plans to steadily increase the number oflisted companies going forward, while undertaking
strict screenings. We also carried out experiments
for three months from June 2016 for the applicationof blockchain technology to the capital market in
Myanmar to assess the applicability of the technology
as infrastructure for a next-generation financial system.
The Daiwa Securities Group has provided support
to Myanmar since 1996, when it established the
Myanmar Securities Exchange Centre as a joint venture

between DIR and the Myanmar Economic Bank. We
will continue to support the development of the capital
market in Myanmar, leveraging the expertise that wehave nurtured through our securities business.

East Japan Earthquake SME
Reconstruction Support Fund
Daiwa Corporate Investment Co., Ltd. operates theEast Japan Earthquake SME Reconstruction Support
Fund, receiving investment from the Organization for
Small & Medium Enterprises and Regional Innovation,
JAPAN (SME Support Japan), The Aomori Bank, Ltd.,Bank of Iwate, Ltd., The 77 Bank, Ltd., The Toho Bank,
Ltd., and other institutions. Targeting unlisted privatecompanies, the fund aims to expeditiously provide risk
finance mainly in the form of equity. The goal is toactively support companies in their efforts to secure
renewed growth and development by supplying financefor a variety of purposes, including restoration andreconstruction following the 2011 earthquake disaster,
including new business development, the shift to a new
industry or line of business, business reorganization andsuccession, and business incubation.
Among the investee companies, Miyagi Prefecturebased Goyo Suisan Co., Ltd., in which the fundinvested in June 2012, restored and reconstructed its
business, resulting in significant improvement in its
management conditions. Therefore, the fund fully
recovered its investment in the company in April 2017ahead of schedule, completing its support for the firsttime since its launch as a reconstruction fund.

Proof of Concept (PoC) for the Application of
Blockchain Technology in Myanmar’s Capital Market
For three months from June 2016, DIR carriedout PoC on the systems of the YSX and local
securities companies for the application ofblockchain technology.
The PoC covered the management ofcustomer assets in the YSX’s post-tradingbusiness and a variety of reporting businesses.
It reproduced the same level of services as its
existing settlement function, while contributing
to raising efficiency in transfer instructions andthe automatic sharing of balances between
securities companies as well as the real-time
preparation of a shareholder registry. Moreover,the PoC confirmed that blockchain technology

has a number of advantages in the fragile
infrastructures of emerging countries, while
revealing numerous technological challenges
that lay in the way of full-scale application. The
results of this PoC were released in a working
paper in October 2016.
Although blockchain technology is still underdevelopment, it has the potential to bring about
innovative changes to the securities industry.
We will continue seeking to evolve blockchain
technology while considering its applications to
support the Daiwa Securities Group’s initiatives
in the FinTech field.

Relevant CSR
Materiality
III. Development andprovision of superior
financial andinvestment products
XIII. Initiatives to addresssocial concerns andcontribute to future
development ofsociety, and financial
and capital markets* Refer to pages 11 and 12 for details
on the Daiwa Securities Group’smateriality.

Support for the Creation of Our Future Society

Support for the “New Tohoku”
Restoration Business Contest
2016
To further deepen the activities carried out by theEast Japan Earthquake SME Reconstruction Support
Fund, Daiwa Corporate Investment supported
the “New Tohoku” Restoration Business Contest
2016, organized by the Reconstruction Agency, incollaboration with Daiwa Securities Group Inc., which
engages in various disaster relief activities. The contest
aims to generate momentum to create local industries
for industrial restoration in disaster-affected areas. At
the award ceremony held on November 19, 2016, the“Daiwa Securities Group Phoenix Award” was given
to Makuta Amenity Company, based in Fukushima
City, which developed a system for analyzing farm
produce using smartphones.
Award ceremony for the Daiwa Securities Group Phoenix Award

Daiwa Securities Group CSR REPORT 2017

Renewable Energy Power
Generation Projects
Daiwa PI Partners Co. Ltd. (PIP) has aggressively
invested in the development and operation ofrenewable energy power generation projects,
leveraging the network of the Daiwa Securities Group,
since the renewable energy feed-in tariff system wasintroduced in July 2012.
As of the end of March 2017, PIP had developedand invested in seven photovoltaic power stations.
The six stations on which construction was completed
have all been operating stably. Such stations include
the Iwamizawa Photovoltaic Power Station, which PIP
developed independently in Iwamizawa, Hokkaido.
In September 2016, PIP also started theconstruction of a wood pulp biomass power
generation plant that uses tree trimmings as its
primary source of fuel in the city of Yonezawa,
Yamagata Prefecture. The construction is underwaywith Green Thermal Co. Ltd., to which PIP has
contributed capital, with an eye toward completionin 2017.
The Group will continue to aggressively invest in thedevelopment and operation of energy infrastructure
assets.

33

Power stations
developed/invested in
by PIP
Photovoltaic power
stations•Output: Approximately

88.7

MW in total
A breakdown is shown
below.
•Stations in operation:
Approximately

50.3 MW(total for six stations)•Stations underconstruction:
Approximately

38.4 MW(one station)•Projected amount ofelectricity generated
annually*:
Equivalent to the amountfor approximately

21,000 households
Biomass power station(currently underconstruction)•Output:

6.2 MW in total

Initiatives for Wood Pulp Biomass Power
Generation Plants
PIP has formed an alliance with Green Thermal,
a leading company for the development
and operation of wood pulp biomass power
generation plants, and has been promoting
active development.
In September 2016, as its first investment ina biomass power generation plant, PIP started
the construction of Yonezawa Minami Power
Generation Station, which was developed jointly
by Green Thermal in Yonezawa, Yamagata. The
station is Yonezawa City’s first-ever biomass
power generation plant.
Starting with this plant, we will continue topromote the development of the biomass power
generation business across Japan jointly with
Yonezawa Minami Power Generation Station

Green Thermal.
The wood-based biomass power generation
business uses carbon-neutral power generation
facilities that do not affect changes in theamount of carbon dioxide. Moreover, since
it adds a new value to wood trimmings leftin forests as fuel, it is a community-based
power generation business contributing to themaintenance of biological diversity throughforest conservation. The business is also
expected to invigorate the forestry industry,
thereby creating new industries and employment
and contributing to the revitalization of regional
economies.

Yonezawa Minami Power Generation Station under construction•Projected amount ofelectricity generated
annually*:
Equivalent to the amountfor approximately

12,000 households* Measured in terms of electricity
consumption per household

Support for the Creation of Our Future Society

Contribution to Local
Communities throughInvestment Activities ofInvestment Corporation
Daiwa Real Estate Asset Management Co. Ltd.
manages Nippon Healthcare Investment Corporation,
which was listed on the Tokyo Stock Exchange inNovember 2014 as Japan’s first REIT focusing on
healthcare facilities. The investment corporation
mainly invests in healthcare facilities such as private
nursing homes, which are likely to see stronger
demand from society over the medium to long termas the population continues to age.
Employees of the investment company visit facilitiesof their investees several times a year. They participate
in interaction events held within the facilities, suchas making chocolate snacks for Valentine’s Day anddistributing them to residents, and assisting meetings
to show respect to the elderly. They also help performdaily work at the facilities, including cleaning theperiphery of the facilities, pruning plants in the
courtyards, and pulling out weeds.
As the owner of its investees’ facilities, theinvestment company started these initiatives todeepen its understanding of the services provided
to residents. The initiatives are now becoming local
community contribution activities through the corebusiness, and we will continue to actively work onthese initiatives.

Regional Revitalization-related
Initiatives
The Management Consulting Division of DIR is actively
involved in regional revitalization, on which thegovernment has its focus.

●FY2015• Dispatched an employee to Ayabe City of Kyoto
Prefecture under the regional revitalization personnel
support system* and assisted the city in formulating
its population vision and comprehensive strategy.
• Supported the formulation of comprehensive
strategies by multiple municipalities such as Honjo
City of Saitama Prefecture by leveraging theexpertise mentioned above.
* Regional revitalization personnel support system: A system ofdispatching personnel selected by the national government fromamong national government employees, university researchers,
and those working in the private sector as assistants to the headsof municipalities with a population of not more than 50,000 thathave been actively working for regional revitalization.

●FY2016• Analyzed the current status of measures for regional
revitalization strategy implemented by Kyoto
Prefecture, made future predictions, and examined
effects.
• Provided support to the development of nursing
care services on behalf of Fukushima Prefecture.

Daiwa Securities Group CSR REPORT 2017

We will continue to work on initiatives formunicipalities to revitalize regions and thereby
revitalize Japan as a whole.

The Daiwa Securities Group &the University of Tokyo: Futureof Finance ForumIn April 2017, the University of Tokyo, Daiwa Securities
Group Inc., and DIR launched the “Daiwa Securities
Group & the University of Tokyo: Future of Finance
Forum.” We created the forum to jointly seek ways
to solve various issues for the finance business thatare expected to occur in society of the near future,and the effective use of FinTech for this objective. The
finance business is directly affected by the population
decline and the shrinking of regional economies
resulting from the aging of society and the declining
birthrate. Meanwhile, incorporating innovativetechnologies related to the dissemination andcollection of information through social media, as wellas the accumulation and analysis of data using ICT,
could potentially bring significant added value to theservices provided by the finance business. The Futureof Finance Forum aims to contribute to improving
the economy and the quality of life via rejuvenationof the finance business model by examining various
structural issues in society from scratch and carryingout rapid transformation proactively.

34﻿

Daiwa Securities Group CSR REPORT 2017

Initiatives for Supporting
Business Activities
Approach and Basic Stance
The financial and capital markets are based on theconfidence and trust of participants. We consider thatsustaining confidence and trust in us is essential for us to
not only continue our business activities but also live up to
the expectations of our stakeholders.

Contents●C lose up:
Support Business Operation from Property
Management to Environmental Management(General Affairs Department)●C orporate Governance●C ompliance●H uman Rights Initiatives●R isk Management● IT Strategy and the Management of Systemic Risk
● E nvironmental Initiatives●R elationship with Shareholders and Other Investors●R elationship with Employees● E ngagement with Society

35Support Business Operation from Property Management to Environmental Management (General Affairs Department)

Daiwa Securities Group CSR REPORT 2017

Close-up

Support Business Operation from Property Management toEnvironmental Management (General Affairs Department)
The General Affairs Department of Daiwa Securities Group Inc. supports the appropriate business operations by the Group by taking on a wide
range of roles, including the management and operation of the properties and facilities held by the Group and budget management for theseassets as well as work related to the whistle-blowing system, environmental management, disaster prevention measures, and measures to prevent
traffic accidents.

Responsible for Managing Properties
Held by the Daiwa Securities Group

Measures to Address Disaster Risk
by Region

The Daiwa Securities Group owns numerous
properties for its business activities. Maintenancework to protect these properties against age-related
deterioration is entrusted to Daiwa Property Co., Ltd.,
which takes charge of real estate management within
the Group.
Daiwa Securities uses approximately 1,000
company cars at its sales branches across Japan. The
General Affairs Department not only introduces thesecompany cars, but also takes on the role of reducing
traffic accidents. For example, we alert employees bydisseminating a prompt report on traffic accidents
every week and broadcasting drive recorded imagesof cars in traffic accidents once a month in ourinternal TV program. We also hold a discussion-based
road safety workshop every year while incorporatingroad safety training into our annual training program.
In regions that have a lot of snow, snow driving
classes are also provided in collaboration with local
driving schools.

Daiwa Securities has offices across Japan. As disasterrisk differs amongst regions, it has formulated adisaster response plan for each sales branch. The
General Affairs Department sends the hazard maps
created by the municipalities of respective regions tobranches and makes them available on our intranet.
We also prepare disaster relief supplies and send themto each branch.
For example, we have prepared life jackets forregions that could be affected by the anticipatedNankai Trough earthquake with possible damage
from a tsunami in mind, while preparing shovels,
dust masks, and dust glasses for Kagoshima, which ishome to Sakurajima, an active volcano, as a measureagainst volcanic ash. We thus strive to minimize
damage to the customers visiting branches andemployees while also introducing measures that
address predicted damage to facilities in an effort toensure that business is not easily suspended.

Emphasis on Environmental
Consideration in Property Management
In the management and operation of facilities heldby Group companies, we give consideration to theenvironment. When introducing air conditioners,
copiers, and other office equipment, they musthave highest-level energy-saving functions as aprecondition. We also choose hybrid cars and ecocars for our company cars in consideration of safety
and fuel efficiency. We continue to engage in steady
activities, such as the promotion of LED lighting andawareness-raising activities via our in-house magazine
to urge employees not to waste electricity or paper in
offices.
In addition, the General Affairs Department
discusses group-wide environmental management
every week together with Daiwa Property Co., Ltd.
and representatives from the CSR Group of the
Corporate Communication Department. We also
hold a meeting of the Environmental Management
Council, composed of environmental representatives
at the Group’s major companies every six months toshare data, confirm targets, plan awareness-raising
activities, and make reports.
* Refer to “Environmental Initiatives” on pages 50–52.

Koji Yamashita
Managing Director of the General Affairs Department of
Daiwa Securities Group Inc.

36

Support Business Operation from Property Management to Environmental Management (General Affairs Department)

Responding to All Whistleblowing Reports
While Strictly Protecting Anonymity
The Daiwa Securities Group’s whistleblowing system
can be accessible by all executives and employees
at the Group, including temporary employees. The
contact point of the system is in the General Affairs
Department and an outside law firm. When receivinga report, we thoroughly examine the case anddesignate and give instructions to the department orsection responsible for carrying out an investigation.
Based on the results of the investigation, we
implement countermeasures and provide feedback
to the whistleblower. We also strive to enhance ourwhistleblowing system to respond to all possible
issues that may arise in the future.
Reports are mainly related to harassment issues,
time management, and rule violations. We strictly
protect the anonymity of whistleblowers and respondto all reports while exercising great care to ensure thatthose making reports do not suffer any disadvantage.
* Refer to “Structure and Achievements of Whistleblowing System(Corporate Ethics Hotline)” on page 41 for the whistleblowing
system.

Cooperative System with
Stakeholders

Daiwa Securities Group CSR REPORT 2017

Future Issues and Measures
Aging branches and facilities need to be proactively
maintained. The General Affairs Department isengaged in businesses that require various expenses,
and we have started reviewing cost structure acrossthe Group to check for any waste in an effort to raisebusiness efficiency.
The General Affairs Department has a lot ofcontacts with inside and outside parties. By taking
advantage of this, we would like to expand ourplanning function so that it fully reflects the needs ofmanagement.

Winner of the Office Environment
Excellence Award 2016
Tokyo Contact Center

Daiwa Securities’ Tokyo Contact Center won
an Office Environment Excellence Award in theContact Center Awards 2016. It was recognized
as having a work (office) environment thatfacilitates employees’ work and contributes
to improving their motivation. The event,sponsored by Ric Telecom Co., Ltd, is held every
three years.

To execute a wide range of businesses, the General
Affairs Department entrusts some businesses tothird parties and executes them in collaboration withsuch parties. We hold regular meetings with eachof these parties and constantly exchange reports
so as to constantly confirm steps to be taken if an
extraordinary event occurs.
We also actively collaborate and communicate withoutside parties, such as the community council in the
Marunouchi-Otemachi-Yurakucho area, where ourhead office is located, the management company of
our head office building, fire stations, and the police.
Office Environment Award Plaque37

Corporate Governance

38

Daiwa Securities Group CSR REPORT 2017

Corporate GovernanceApproach and Basic Stance

Relevant CSR
Materiality

The Daiwa Securities Group clearly separates the supervisory and executive functions of its
management to create a highly transparent and objective corporate governance system. As
with Corporate Executive Officers of Daiwa Securities Group Inc., employees responsible
for head office functions also hold similar roles for the securities subsidiary. Under thisstructure, the Group is pursuing a management structure that improves the efficiency ofhead office operations and that maximizes synergies between Group companies.

Basic Stance on Corporate
GovernanceWith group management based on a holding
company structure, Daiwa Securities Group aims
to achieve a highly transparent and objective
governance structure in international terms. The
Group has built a unified group management systemthat elicits synergies among group companies withhighly efficient and specialized oversight of groupcompanies.
The Group has adopted a company with Three
Committees System with the objective of supervising
management through:(a) Better decision-making agility by having theBoard of Directors assign significant authority
to corporate executive officers while clarifying
the division of duties among corporate executive
officers;(b) More effective supervisory functions at theBoard of Directors from the appointment ofoutside directors with highly specialized skills,

and better transparency in management fromthe establishment of the Nominating Committee,
Audit Committee and Compensation Committeewith outside directors a majority of theirmembers; and(c) Highly independent and ethical outside directors
providing advice from an outside perspective tothe Board of Directors and the three committees
based on their knowledge and experiences.
The Group also proactively engages in CSR activities
to gain the trust of stakeholders. CSR encompasses
providing excellent products and services to customers
with integrity, appropriately returning profits anddisclosing information to shareholders, creating
pleasant work environments and fair personnel
evaluation systems for employees, strictly observing
regulations and following corporate ethics, managing
the environment, and contributing to society.
Through these initiatives, the Group aims to further
enhance its corporate governance structure in termsof transparency, agility and efficiency, in order tocontinuously improve corporate value.

XV. Construction andmaintenance ofan appropriate
corporate governancesystem* Refer to pages 11 and 12 for details
on the Daiwa Securities Group’smateriality.

Number of times eachcommittee met(FY2017)•Nominating Committee:

4•Audit Committee:

12•Compensation Committee:

5•Board of Directors:

10
Rate of attendanceat Board of Directors
meetings by outside
directors

98.3%* Including Mr. Ryuji Yasuda, who retired
from the board in June 2016

Corporate Governance System at Daiwa Securities Group
Shareholders’ Meeting

Board of Directors,
14 members(including 6 outside directors)

Determination of the BasicManagement Policy andother matters

Nominating Committee,
7 members(including 5 outside directors)

Audit Committee, 5 members(including 4 outside directors)

Compensation Committee,
5 members(including 3 outside directors)

Nominates directors for selection,or recommends dismissal

Audits the activities of directors
and corporate executive officers,
audits business reports and financial
statements, and prepares audit reports

Sets policy for compensationof directors and corporate
executive officers, and determines
compensation amount for each

Outside Directors Council, 6 members(6 outside directors)
Increases communication amongst outside directors

Executive Management
Committee, 14 members
Deliberates and decides onmatters relating to important
operations, Group-widebusiness strategy as well asbasic policies concerning
structural and other issues thatcrossover Group companies

Representative
Executive Officer

Group Risk Management
Committee

Disclosure Committee

Group IT Strategy Committee

Overseas
Management
Committee

Gathers information on the systemand current situation of risk
management, and sets policy andstrategy regarding risk management

Determines scope of consolidated
financial reports, scope of evaluationof internal control reports anddisclosure of important information

Deliberates and decides on the integrationof management strategy and IT strategy, theacceleration of IT investment decision-making,and the improvement of IT investment efficiency

Makes decisions on issues
related to the managementof overseas offices andother operations abroad

Group Internal Audit Committee
Deliberates and decides on issues relating to the internal audit system and theverification of internal control activities

Corporate Governance

Daiwa Securities Group CSR REPORT 2017

The corporate governance structure consists of
the Board of Directors and the three aforementioned
committees (Nominating Committee, Audit
Committee and Compensation Committee) as
supervisory functions. Business execution functions
are embodied in the Executive Management
Committee and its subcommittees comprising theGroup Risk Management Committee, the Disclosure
Committee, the Group IT Strategy Committee, andthe Overseas Management Committee, as well as
the Group Internal Audit Committee, the internal
audit organization that reports directly to the Chief
Executive Officer (CEO).

Basic Policy• Compensation should contribute to increasing
shareholder value through sound businessdevelopment and function effectively as anincentive that leads to the improvement of businessperformance in the short term as well as themedium to long term.
• Compensation should be at a level that iscompetitive not just in Japan but internationally as asecurities group that carries out global business.
• Compensation should help business execution andsupervision to function effectively as a company
with a Three Committee system.

Major Initiatives in Corporate
GovernanceCompensation for directors and corporate executive
officers is determined by the Compensation
Committee. Executive compensation has threecomponents: basic compensation; performance-based
compensation; and share price-linked compensation.
• Basic Compensation
Basic compensation is compensation fixedaccording to post, duties, and role.
• Performance-Based Compensation
Performance-based compensation is determinedaccording to the degree of contribution by theindividual after comprehensively taking into
account ROE and consolidated ordinary income,along with other factors such as the results ofmanagement targets as outlined in the MediumTerm Management Plan.
Directors who do not concurrently serve as
corporate executive officers are not entitled toreceive performance-based compensation.
• Share Price-linked Compensation
To increase correlation with shareholder value,stock options and others that are worth a certain
percentage of basic compensation are granted asshare price-linked compensation.
Outside directors are not entitled to receive shareprice-linked compensation.

History of Daiwa’s Corporate Governance
June 1998

Elected outside auditors
Became the first listed Japanese company
to adopt a holding company structure

April 1999

Established the Advisory Board
Established the Group Management
Committee

June 2000

Established the Compensation
Committee
Elected outside directors

June 2002

July 2003
June 2004

October 2015

Shortened directors’ terms of office fromtwo years to one year
Established the Internal Control
Committee
Shifted to a Committee System(currently, a company with a Three Committee system)

Complied with the Corporate Governance
Code
Established the Outside Directors Council

April 2017

Appointed outside directors aschairpersons of all Three Committees

Major Points• Published the Corporate Governance Report detailing
our response to the Corporate Governance Code• Decided more than two members and more than
one-third of the Board of Directors should be
independent outside directors• Elected one additional outside director and six out of
14 Board of Directors as outside directors for FY2016.
• Strengthened management transparency andoversight functions by increasing the ratio ofoutside directors on the Nominating Committee
and the Audit Committee• Determined that all of the chairpersons of the threecommittees be outside directors from FY2017 while
taking steps to further improve the governance system

Executive Compensation That Is
Closely Linked to Performance
Compensation for directors and corporate executive
officers is based on the following basic policy.

Supervisory Function
The Board of Directors consists of 14*1 directors,
including six outside directors*2 and two female
directors. The Board of Directors determines key
management policy and oversees executive duties. In
order to perform this supervisory role from multiple
viewpoints in accordance with the demands ofsociety, the policy for selecting new board members
states that candidates must have a strong sense of
ethics and demonstrate initiative and leadership.
Additionally, outside directors are experts in suchfields as management and accounting. In addition, thesupervisory function of Daiwa Securities Group Inc. isreinforced by the Audit Committee and the Office of
the Audit Committee. The Audit Committee, which
consists of a majority of outside directors, plays apivotal role in the supervision of executive duties. The
Audit Committee is assisted by the Office of the Audit
Committee, which is a department independent ofexecution of business.
*1 As of June 30, 2017*2 Outside directors as defined by Article 2-15 of Japan’sCompanies Act

39

Refer to page 79 of our
FY2016 securities reportfor details.
> Policy on Selecting
Director Candidates> Composition of theBoard of Directors

Corporate Governance

Daiwa Securities Group CSR REPORT 2017

Preventing Conflict-of-Interest
Transactions between Group
Companies
Conflict-of-interest transactions between Group
companies can occur in situations such as intra-Group
trading. The Daiwa Securities Group applies rules
regarding conflicts of interest stipulated by Japan’sCompanies Act to Executive Committees as well as
Board meetings. Conflicts of interest within the Groupare prevented through a rule prohibiting an executive
officer from voting when he or she is also the directorof an interested Group company.

Internal Control System andInternal Audit
In recognition that management is responsible formaintaining an internal control system to ensure thesound and appropriate execution of business, theGroup, under the main initiative of Daiwa Securities
Group Inc., has established a system for managing
the Group’s major business risks. Through this system,
the Group endeavors to ensure business effectivenessand efficiency, reliable financial reporting, compliancewith laws related to business activities, and asset
preservation.
The Internal Audit Department verifies the internal
control system. This department sits independently
from all other departments, reports to a dedicatedcorporate executive officer, and ensures internal audits
to act as an important function of raising Group value
through the creation of a sound and efficient internal
control system. The authorization of internal audit
plans and reporting of audit results are undertakenby the Group Internal Audit Committee. Internal audit
plans are authorized by the Audit Committee or adesignated member of the Audit Committee who
has received the prerequisite authority from the Audit
Committee. The results of audits are also reported to
the Audit Committee.
Daiwa Securities Group seeks to raise its corporate
value by effectively conducting internal audits, andimplements risk-based internal audits primarily
through its Internal Audit Department.
The Internal Audit Department pays special
attention to certain aspects of the Group’s businessactivities. They include the internal control systems
at Daiwa Securities Co. Ltd. and overseas offices as aforeign business operator, the internal control systems
at Daiwa Next Bank, Ltd. as a bank, the status ofbusinesses that involve the collaboration between
Group companies, and the status of control overGroup companies by the holding company.
Reports to the Group Internal Audit Committee
are not limited to the audit results conducted at
Daiwa Securities Group Inc. and Daiwa Securities Co.
Ltd., but also include highly important findings madeduring audits conducted on companies in Japan andoverseas.
The Internal Audit Department collaborates with
the internal auditing divisions of Group companies
through periodic meetings, monitoring, and audits.
The Internal Audit Department maintains
communications with the Audit Committee
and accounting auditor, making any necessary
adjustments to ensure that audits are performed
efficiently, and receives audit requests from the Audit
Committee.
The degree to which these internal auditing
activities satisfy The Institute of Internal Auditors’“International Standards for the Professional Practiceof Internal Auditing,” the global standard for internal
auditing, is routinely evaluated by independent
outside third parties, which helps to constantly
improve the system.

Internal Auditing System Diagram of Daiwa Securities Group
Daiwa Securities Group Inc.

ReportingGroup Internal Audit Committee(Chairman: CEO)• Authorization of internal audit
plans and other important matters,
including the revision and/or abolitionof internal audit rules and regulations

Collaboration

Audit Committee

Reporting• Consent of internal audit plans, the revision
and/or abolition of internal audit rules andregulations, and appointment/assignmentsof personnel responsible for internal audits• Audit delegation

ReportingCommunication/
Adjustments

I n t e r n a l Au d i t D e p a r t m e n t
Direct audit/Monitoring/
Collaboration

Daiwa Securities Co. Ltd.

Global/Internal Audit

Internal Audit Department

Overseas securities subsidiaries

Internal Audit Department staff holdconcurrent positions at Daiwa Securities
Group’s internal audit department

Europe/Middle East region
Asia/Oceania region
Americas region

Direct audit/Monitoring/
Collaboration

Domestic Group
companies

Accounting
auditors

Board of Directors

40

Corporate Governance

Daiwa Securities Group CSR REPORT 2017

Structure and Achievementsof Whistleblowing System(Corporate Ethics Hotline)
Since January 2003, the Daiwa Securities Grouphas been operating a Corporate Ethics Hotline,
through which employees can report problems in
the workplace directly to a corporate ethics officer of
Daiwa Securities Group Inc. or outside lawyers.
When the hotline is contacted, the corporate
ethics officer, in cooperation with the internal
control officers at each Group company, carries out afactfinding investigation, while taking steps to protect
the caller. In 2016, 41 reports were received throughthe whistleblowing system. The Group is working
to ensure that all employees are familiar with the
Corporate Ethics Hotline, including staff at affiliatedcompanies and temporary workers, in order to ensurethat anyone can use it without hesitation. We arealso making efforts to respond quickly when calls arereceived. The Group is taking steps to improve thehotline so that it can work effectively as a deterrent
to prevent problems before they occur, not just as ameasure to solve problems.

Audit Committee’s Activities
The Daiwa Securities Group’s Audit Committee isengaged in auditing activities for duties executed bydirectors and corporate executive officers. In FY2016,
the three outside directors that serve as members of
the Audit Committee accompanied the ComplianceDepartment’s on-site inspections of three sales
branches as part of their efforts to build customer
trust, a key issue for their audit policy. They wereinvolved in a range of activities by the ComplianceDepartment, including prior investigations, on-site
inspections, evaluation, and opinion exchange.
Through this involvement, the three outside directors
had an opportunity to deepen their understandingof how sales branches prevent solicitation and othermarketing activities that could lead to issues related tosuitability and how the Compliance Department finds
and points out problematic transactions and thengives instructions for improvement. We will continue
with our initiatives to strengthen our corporate
governance system.

Use of the intranet to increase employee awarenessTax Policy
The Daiwa Securities Group has enacted the “Daiwa
Securities Group Tax Policy” in aiming to develop
corporate tax governance. It describes our code of
conduct and standard of judgments in taxation.

41

Number of reports
received throughwhistleblowing system
for FY201641(down 1 from FY2015)

Daiwa Securities Group Tax Policy
1. The Daiwa Securities Group complies withlaws and ordinances, and contributes tosustainable development of the society
through appropriate tax payments withhigh ethical standards.
2. The Daiwa Securities Group rewards ourshareholders by achieving sound profits
based on proper and fair tax planning.
3. For cross border intra group transactions,
The Daiwa Securities Group sets
appropriate price, which can achieveadequate accountability under transfer
price tax regulations.
4. The CFO, executive officer in charge ofFinance, and Head of Finance Departmentof Daiwa Securities Group Inc. from time
to time provide guidance and advice tosubsidiaries and other departments within
the group as necessary, so that corporate
governance over tax matters can be wellshared and implemented throughout the
Daiwa Securities Group.

An outside director checks a phone call recorded at a sales branch* No reports indicating violation ofhuman rights, environmental pollution
by Daiwa Securities, or other matters
raising extremely serious concerns ingeneral social terms

Refer to “Support
Business Operationfrom Property
Management toEnvironmental
Management (General
Affairs Department)”
on pages 36–37 for thewhistleblowing system.

Compliance

Daiwa Securities Group CSR REPORT 201742

ComplianceApproach and Basic Stance

Relevant CSR
Materiality

The Daiwa Securities Group has four corporate principles. They are “building trust,” “placing
importance on personnel,” “contributing to society,” and “maintaining healthy earnings
results.” The Group believes that compliance is a significant element for achieving theseprinciples. The goal of the Group’s compliance activities is not merely to “comply with laws
and regulations,” but to earn the trust of customers, markets, society, and stakeholders.

Compliance System

conducts on-site inspections. Moreover, it visits thework sites of headquarters departments and sections
directly, identifying issues and providing training
support. The Customer Support Center, establishedwithin the Compliance Department, comprehensively
handles customer feedback and complaints andreflects them in the business to improve customer
satisfaction. One of Daiwa Securities’ strengths isthat full-time internal administrators belonging to
the Compliance Department are stationed at all
sales branches. The internal administrator works on
improving the effectiveness of the PDCA cycle (plan,do, check, act) at each sales branch, while closelycooperating with the Compliance Department, in aneffort to build a solid compliance system.
As of March 2017, the compliance section consistsof approximately 260 staff, composed of 42 staff
at the Compliance Control Department, 79 at theCompliance Department, and approximately 140
working as internal administrators at sales branches.
The staff members are striving to strengthen the
Daiwa Securities Group’s compliance system.

The compliance system of the Daiwa Securities Groupconsists of the Compliance Control Department,
which mainly has the function of establishing overallrules, and the Compliance Department, which istasked with providing support to sales branches
and headquarters departments and sections. The
two collaborate to build a compliance system,working concurrently for Daiwa Securities Group
Inc. and its subsidiary Daiwa Securities. At the Daiwa
Securities Group, the compliance system supports
Daiwa Securities and other Group companies while
focusing on three key issues: securing the fairness andtransparency of the market, eliminating any relations
with anti-social forces, and maintaining information
security.
At Daiwa Securities, the Compliance Department
monitors transactions and solicitation by sales
branches, identifies challenges and issues, and visitssales branches to check their business status andprovide instructions. The department also regularly

The Daiwa Securities Group’s Compliance Framework
Daiwa Securities Group Inc.
Group Internal Audit Committee

Group Risk Management Committee

Reporting

Reporting

Reporting and consultations

Reporting and consultations

Compliance Control Department and Compliance Department

Instructions andmonitoring

Reporting ofcompliancerelated meetings

Keeping track of the compliance program
Conflict-of-interest management
Trading rules for executives and employees
Transaction screening
Measures for eradicating anti-social forces
Information security management
Keeping track of progress of lawsuitsetc.

SupportReporting ofcompliancerelated meetings

Overseas subsidiaries

Daiwa Securities

Other Group
companies

Compliance Section

Compliance Control Department
Compliance Department

Compliance Section

Reports andconsultations
Instructions andmonitoring

Opinions, comments,
Addressing complaints
and requests
and disputes
Checking anti-social forces

Sales branches and headquarters
departments and offices

Customers

I.

Appropriate
proposals andafter-sales service inaccordance with thecharacteristics andneeds of customers
VII. Appropriate
management ofcustomer information
XI. Creation of acorporate culture tocomply with laws,
regulations and codes
in Japan and overseas,
based on selfdiscipline (including
appropriate anticorruption andhuman rights
measures)* Refer to pages 11 and 12 for details
on the Daiwa Securities Group’smateriality.

ComplianceFull Implementation of the
Customer First Principle
Daiwa Securities is taking measures in line with thecompliance program to ensure the effective operationof our internal control system and strict complianceof our sales activities with laws and regulations. For
FY2017, we set up the pillars outlined below, while
maintaining the “Customer First Principle” as the
keyword as in the previous fiscal year:
1. E stablishment of customer-first business operation
2. Reinforcement of internal control systems at
headquarters departments and sections
3. Exercise of proper functions as a gatekeeper to themarketDaiwa Securities markets a wide range of financial
products including investment trusts. When soliciting
investment from customers, we ensure compliancewith the principles of integrity and fairness, theprinciple of suitability, and the principle of selfresponsibility from the perspective of investor
protection. We have adopted the practice ofsystematically providing continuous and thoroughafter-sale follow-ups, rather than leaving it toindividual sales agents, especially when the market
is on a downward trend. We consider providing
thorough, face-to-face explanation to customers andmaintaining customer trust and a sense of security
at the time of market fluctuations to be part ofthe practice of Customer First Principle for Daiwa
Securities as a marketer of financial products. We willcontinue stepping up such initiatives going forward.

Securing the Fairness andTransparency of the Market
The Daiwa Securities Group is working to secure thefairness and transparency of the market from twostandpoints. These are how to check and prevent illicit
transactions by investors and by Daiwa Securities itself.
To prevent illegal transactions by investors, Daiwa
Securities checks daily transactions by extracting deals
that go beyond certain criteria, such as whether they
have an excessive impact on the market. In particular,
in order to prevent insider trading from occurring,
we ask customers’ place of employment andpositions within their companies before registering
their information. This practice allows us to checktransactions as soon as trading orders are placed bycustomers who are in a position to acquire internal
information. We also check the past transactions
conducted with us retroactively when timely
disclosure is made for important information.
To prevent illegal transactions within the Daiwa
Securities Group, we strictly manage not just material
facts of listed companies but broader information
related to them in a similar way. We have also
introduced a system managing their information,
keeping track of people obtaining information andwhere information has been sent. Through these
efforts, we have constructed a structure to prevent
illegal transactions.

Daiwa Securities Group CSR REPORT 2017

Eliminating Any Relations with
Anti-social Forces
At the Daiwa Securities Group, we are continuously
persisting in activities to eradicate “anti-social”
forces based on our recognition of the large rolethat financial institutions play in this area. We alsocollaborate with the police and lawyers to eliminate
any relations with such forces.
We have implemented a structure that prevents
any relationship with anti-social forces fromcommencing by collecting a variety of information
related to them and closely checking suchinformation when accounts are to be opened. We
also constantly accumulate new information andregularly check existing accounts in an effort totighten the management of ongoing transactions.
All Group executives and employees, including
personnel serving customers at sales branches,regularly undergo training to constantly stay alert.

Basic Policy on Avoiding
Involvement with Anti-social Forces
To ensure fairness and the sound development of
the securities market and protect our customers
and employees, the Daiwa Securities Group has
created a framework to eliminate the influenceof organized anti-social forces, their associates,
corporate extortionists, and other criminal
elements and takes systematic measures to avoid
all ties with such elements.
1. The Daiwa Securities Group will not carryout any transactions whatsoever with
antisocial forces.
2. If it is determined that parties alreadyhaving transactions with the Daiwa
Securities Group are anti-social forces, wewill swiftly take appropriate measures toterminate dealings with them.
3. The Daiwa Securities Group will provide nofunds to anti-social forces.
4. The Daiwa Securities Group will accept no
unfair demands from anti-social forces.
If it is determined that an unfair demandhas been made by anti-social forces, wewill take legal action in the civil or criminal
court against the party making thedemand.
5. The Daiwa Securities Group establishes
close cooperative relationships withoutside parties such as the police force,
the National Center for the Eliminationof Boryokudan (anti-social forces), legal
experts, and others.

43Compliance

Initiatives against Bribery andCorruption
In line with the principles of the United Nations
Global Compact, the Daiwa Securities Group works
to prevent corruption. Daiwa Securities’ code of
ethics and conduct prohibits employees from giving
or receiving rewards or entertaining customers.
Headquarters departments and offices have also
incorporated the status of observance of management
rules on entertainment into self-inspection items
since FY2015. Each department and office therefore
inspects their practice voluntarily, and the results ofinspections are checked by relevant departments andsections. Officers in charge or relevant departments
and sections also monitor the use status ofentertainment expenses at sales branches to confirm
that such expenses are appropriately spent.
With respect to dealings with government
officials, headquarters departments and offices andsales branches all manage them separately fromother deals, thereby keeping an especially close
eye on them, as entertaining government officials
is prohibited by law. Our management rules onentertainment also prohibit employees from giving
benefits to the government officials of foreigncountries. In addition, we provide periodic e-learning
training and engage in other awareness-raising
activities for employees to ensure that we are not
involved in bribery or corruption.
We have also built a structure that prevents thefraudulent granting of benefits at overseas worksites
by establishing internal rules that suit local laws andregulations.

Information Security
We at the Daiwa Securities Group have implemented
numerous information security measures to protect
personal information entrusted to us by customers ina safe and precise manner.
In many personal information leakage incidents
arising in recent years, leakage has occurred at third
parties to which operations have been entrusted.
Accordingly, when signing an outsourcing contract
with a third party, we thoroughly check theinformation management structure of the party. We
also continue with our initiative to conduct on-site
visits before outsourcing to examine the businesspractices of the potential outsourcer.
Following the enforcement of the Individual
Number Act (the Act on the Use of Numbers to
Identify a Specific Individual in the Administrative
Procedure) in October 2015, we now ask customers
to provide us with their Individual Numbers. We havecontrolled access to information entrusted to us bycustomers, including Individual Numbers, by isolatingsuch information physically and managing themwith extra care. No matter how much information
is systematized, there always remains a humanelement. To ensure that a mistake does not occur,
we focus on training for sales personnel to recognize
the importance of information management, while
keeping the number of employees authorized
to access personal information at the minimum
necessary level.

Daiwa Securities Group CSR REPORT 2017

Daiwa Securities also bans employees from taking
personal information out of the company in principle.
When it is absolutely necessary to take informationout for business purposes, we require employees toobtain prior approval from an internal administrator
or other superiors and to keep records, thereby strictly
managing such information. We also strictly manage
the printing of personal information and output toexternal recording media, while constantly monitoring
whether there is any unauthorized use. Moreover,since some of the documents received from customers
are paper-based, we have implemented an initiative
to prepare specialized portfolios to avoid the risk oflosing documents within the company.

Fostering Compliance Awareness
The Daiwa Securities Group considers it extremely
important for each employee to always maintaina high level of compliance awareness. We havetherefore adopted a compliance-related program
in training for new employees and a number ofother internal training courses, while giving tests oncompliance regularly through e-learning. At Daiwa
Securities, we post an “Information Security CheckTest” and “Compliance Digest” every Monday on
our intranet and also broadcast compliance-related
contents twice a month in our internal TV programthat is aired every morning. Moreover, at Daiwa
Securities’ sales branches, the branch chief and theinternal administrator lead an initiative to provide
training and instructions that suit each workplace on adaily basis. The branch chief also chairs a compliance
meeting in which all branch members participate. We
have thus implemented various systems to keep thecompliance awareness of all employees at a high level,
and continue to foster awareness among employees.

Important Issues for FY2017 andBeyondWe will strive to establish customer-first business
operation and also work on strengthening thechecking function, including the internal control
system of the headquarters. It is imperative that wecomply with set rules, and we consider that the goalof our initiatives should not be just such adherence.
Compliance is a common theme that must be
addressed by the entire industry and also a matterof trust in the securities industry as a whole. We will
therefore exchange information with industry peers
and proceed with measures while sharing goodpractices with one another. The Daiwa Securities
Group will strive to strengthen compliance as aleading company of the industry going forward andmake efforts to contribute to enhancing trust in theentire securities industry.

44

Human Rights Initiatives

Daiwa Securities Group CSR REPORT 201745

Human Rights Initiatives
Relevant CSR
Materiality

Approach and Basic Stance
The Daiwa Securities Group is strengthening efforts based on its corporate principles, theAct on Promotion of Education and Enlightenment of Human Rights, the United Nations
Global Compact and ISO 26000, to educate its employees about human rights with the aimof improving a corporate culture rooted in the basic principles of human rights.

Basic Policy for Initiatives
Addressing Human Rights andSocial Integration Issues
1. T he Daiwa Securities Group supports andcomplies with the protection of humanrights as advocated internationally anddoes not infringe on human rights within
the boundaries of its influence.
2. The Daiwa Securities Group educates andinstructs Group employees with accurate
information on human rights and social
integration issues.
 t the same time, the Group views human
3. A
rights and social integration issues as
our own problem, not somebody else’s
problem, and fosters a sensitivity thatenables empathy with the suffering ofothers.
4. We provide an equitable working
environment that values people and is freeof discrimination or human rights violations
based on race, nationality, biological sex,
sexual orientation, or gender identity.
 ach employee is a member of society
5. E
unburdened by prejudice.

Specific Efforts
1. We highly value the human rights of every
stakeholder and our staff will always
address clients, local communities and theirmembers with great awareness of humanrights.
2. We work to ensure that our hiring andrecruiting, personnel evaluations and labor
management practices are always fair.
3. The Group is continually improving internal
human rights education and awarenessprograms, including regular training andfeedback and response loops.
Human Rights Awareness Promotion Committee
Revised on August 12, 2016

Human Rights Education andAwareness
In 1984, the Daiwa Securities Group set up the
Human Rights Awareness Promotion Committee.
Its establishment is aimed to promote activities andtraining for raising human rights awareness, thereby
encouraging better understanding and appreciationof social integration and other human rights issues.
Since the committee’s establishment, we havebeen working to achieve its objective. Besides thecommittee, all Group managers at the head office orbranch level act in a promotional role, using education
and awareness activities to ensure that employees
correctly understand and acknowledge human rights
and social integration issues. The committee revised
and released the Group’s Basic Policy for Initiatives

Addressing Human Rights and Social Integration
Issues in August 2016.
The Daiwa Securities Group has been a memberof the Industrial Federation for Human Rights, Tokyo,
since 1998. The Federation is composed of 124
companies mostly headquartered in Tokyo with a
combined total of one million employees (as of April2017). Federation members work together to improvetheir employees’ awareness of human rights issues
through research and communication.
Composition of Human Rights Awareness Promotion Committee
Chair: the director as Human Resources Officer at Daiwa Securities Group Inc.
Vice Chair: Head of the Human Resources Department
Committee Members: F ive department heads including the head of the
Corporate Communication Department, General
Affairs Department, and Compliance Control
Department

Initiatives in FY2016
In FY2016, we provided human rights educationas part of training for the Group’s new employees
conducted immediately after their induction ceremony
as well as in training for young employees (annex
education) and for those newly becoming generalmanagers, managers, and associate managers. The
chief of the Human Rights Awareness Promotion
Committee Secretariat took charge of all of thesetraining courses. We have also been providing
training on LGBT issues since FY2015. It has firstbeen conducted for those in compliance and humanresources divisions, and the issues are also taken up in
training for new employees every year. LGBT issues arealso included in training for promoted employees as
an opportunity to deepen their understanding further.
The cumulative number of employees participating in
training on LGBT is now 1,838.
The Group also held a Human Rights AwarenessWorkshop, an event to consider human rights frommultiple viewpoints, for all executives and employees.
Discussions between participants were held after
watching an educational video entitled “I want towork for a fair company,” which focuses on subjects
such as foreigners and people with disabilities. We also
solicited human rights awareness slogans between
October and December in a contest designed topromote a broader and deeper understanding of
human rights issues. Contest participation was open
not just to employees but also to their families. The
winning entries were presented in our in-housemagazine.
Human rights education for employees

XI. Creation of acorporate culture tocomply with laws,
regulations and codes
in Japan and overseas,
based on selfdiscipline (including
appropriate anticorruption andhuman rights
measures)* Refer to pages 11 and 12 for details
on the Daiwa Securities Group’smateriality.

Human rights educationfor employees for
FY2016•Training participants

567 new employees•Objective

To acquire basic
knowledge concerning
human rights and tounderstand and raiseawareness of the Group’s
fundamental principles
concerning respect forhuman rights•Training participants

485 promoted employees•Objective

To acquire knowledge
and raise awarenessconcerning humanrights required for theirrespective positions

Risk Management

Daiwa Securities Group CSR REPORT 2017

46

Risk Management
Approach and Basic Stance

Relevant CSR
Materiality

While the Daiwa Securities Group pursues profitability and growth, we also recognize theimportance of identifying and evaluating the various risks associated with our business
operations accurately, and controlling them effectively. Our objective is to improve corporate
value steadily by maintaining a sound financial base and profit structure by properly
balancing risks and returns and by implementing effective risk control and management.

V.

Risk Type and Degree ofImportance

Risk Management and Risk
Appetite Framework*1

Risks that are particularly important for the Daiwa
Securities Group are those related to our key securities
business, securities transactions, and market making,which is associated with such trading. We focus inparticular on managing risk for foreign currency
liquidity, which reflects the liquidity of funds, due tothe considerable size of transaction amounts. We alsoneed to control such risks as the market risk resulting
from fluctuations of securities prices, credit risk forbusiness partners and issuers, and the operationalrisk that inevitably arises in the execution of business.
Moreover, we manage the integration risk bymeasuring impact on the Group’s capital and liquidityfrom a forward-looking perspective.

As one of Japan’s Domestic Systemically Important
Banks (D-SIBs), Daiwa Securities Group Inc. not only
complies with the Basel rules, which are internationalbanking regulations, but has also drawn up the “Risk
Appetite Statement,” which has been decided by
the Board of Directors. The Statement is designed toclarify the policy on risk-taking and risk management
frameworks that are consistent with the overallbusiness strategy of the Daiwa Securities Group. In
line with its business profiles as a security group,
it defines risk categories, quantitative indicators to
be managed, risk culture based on the corporate
principles, and the governance structure supportingthese matters.

Risk Appetite Framework
Concept Chart

Corporate Principles

Building trust, placing importance on personnel, contributing to society, maintaining healthy earnings results

Maintenance anddevelopment offinancial and capital
market functions
VI. Appropriate risk
controls
XI. Creation of acorporate culture tocomply with laws,
regulations and codes
in Japan and overseas,
based on selfdiscipline (including
appropriate anticorruption andhuman rights
measures)
XII. Reduction ofenvironmentalload and responses
to environmental
changes* Refer to pages 11 and 12 fordetails on materiality at the Daiwa
Securities Group.

*1 Risk Appetite Framework
This risk appetite framework defines
risk appetite as the type and total
amount of risk that should be assumed
in order to achieve business strategies.
It is a common phrase used internallyto discuss risk-taking policies within thecontext of business management.

Social Role Required
Realization of a fair and transparent market

Risk Culture
Risk Capacity

Business Strategy■ Maximum allowable risk in light of liquidity and capital requirements■ Management Vision■ Basic Management
PolicyDirection andideal to be
pursued■ Medium-Term
Management Plan

Specific
guideline andstrategy

Action Plan
Financial Strategy■ Fundraising Plan

Capital Buffer
Risk Appetite■	E stablishment of risk appetite in terms of profitability and quantitativeand qualitative elements to achieve business strategy■ Profitability indexes■	Q uantitative indicators: liquidity, capital, concentration risk, andoperational risk indicators■	Qualitative elements: Implementation of system to manage Statement, risk
culture, operational and other risks as well as articulation of management
policyRisk LimitsFirst Defensive Line

Governance System/Management Information System

Internal
AuditRisk Management

Daiwa Securities Group CSR REPORT 2017

Based on this risk appetite framework, we at
Daiwa Securities Group Inc. control risk according
to the profile and the size of risk at each business,and monitor the risk management systems andrisk exposures of our subsidiaries. Risk exposuresand issues are discussed at the Group Risk
Management Committee, which is a sub-committeeof the Executive Management Committee. The Risk
Management Department plays a central role in theserisk controls.

●System Adequate to Prevent Risk at
Worksites (Three Lines of Defense)
The Risk Management Department has set up
groups according to risk fields, comprising market
risk management, credit risk management, liquidity
risk management, and planning groups. Each groupis responsible for controlling risk in their fields.
The department also has an IT & Administrationgroup that provides IT support due to the elaborate
calculations required in risk measurement. Moreover,overseas business bases and major group companies
also have risk control divisions. We thus manage
risk at home and abroad through group-wide
collaboration.
It is a fact that risk materializes where businessis executed. The Risk Management Department
monitors risk based on measurement of indicators,
but always communicates with business units
because numerical data is sometimes not enough todetermine business conditions. The department has
also employed Risk Control Self-Assessment (RCSA),
identifying risks at each business unit along withpeople working there and implementing measures

to avoid risk. We thus help them, where risk arises,
to control risk on their own. The first line of defense
to prevent risk from emerging is each business unit,
which controls risk based on self-discipline. The
second is the Risk Management Department, which istasked with controlling risk in a cross-organizationaland comprehensive manner. The third is the Internal
Audit Department. We endeavor to control risk by
utilizing these three defense lines.

Supply Chain Management andHuman Rights Due Diligence
The Daiwa Securities Group regularly checks the
documents disclosed by major business partners,
including providers of IT equipment and services, aswell as news reports about these companies and theirreputation on the Internet in order to address issues
in the Group’s supply chain, including ones related tothe environment, society, human rights, informationand cyber security. If any issues are found, we takesteps, such as urging the business partners to make
improvements.
We also collect information provided by public
institutions in and outside of Japan and exchange
information with external parties to be aware ofhuman rights issues that exist in the countries where
the Group conducts business operations. We thenconsider taking appropriate measures for issues ofimportance.
We carry out due diligence in deals underwritten
and in self-investment deals, considering not only
business history and financial aspects but also
environmental and social issues.

Response to the UK Modern
Slavery Act 2015

Risk Management System
Daiwa Securities Group Inc.

Group companies• Daiwa Securities

Nominating Committee

Board of Directors

Audit Committee
Compensation Committee

Executive Management Committee
Outside Directors Council

Reporting

Representative Executive Officer

ReportingGroup Internal Audit Committee

Discussion
andreportingGroup Risk Management Committee

ReportingCRO**Chief Risk Officer

Comprehensive Risk Management Structure

Risk Management Department
Marketrisk

Creditrisk

Liquidity
Operations System
risk
risk
risk

Policyformulation
andinstruction

Operational risks
Human
Information Compliance
Legal risk resource
Security risk
risk
risk

Physicalassetsrisk• Daiwa Capital Markets
Europe Limited• Daiwa Capital Markets Hong
Kong Limited• Daiwa Capital Markets
America Inc.
• Daiwa Asset Management• Daiwa Office Investment
Corporation• Daiwa Corporate Investment• Daiwa PI Partners• Daiwa Securities SMBC
Principal Investments• Daiwa Next Bank
• Other Group companies( As of June 30, 2017)47

Risk Management

BCP
To be prepared for emergencies, we have drawn up abusiness continuity plan (BCP) prioritizing important
operations to be restored or continued* in orderto keep the financial markets open and to protect
customers’ economic activities. Emergencies whichmight make our head office functions, branches anddata centers or other important facilities inoperative
include: earthquakes, fires, storms, floods, otherextraordinary weather conditions, terrorism, serious
outbreaks of infectious diseases, such as new
strains of influenza, and serious disruptions of social
infrastructures and services due to such events. In
accordance with this plan, we will not only ensure thesafety of customers, our employees, and protectionof our assets but will strive to continue our vital
operations in the financial markets where our businessserves public interests. For example, we have begun
operating Japan’s highest-level backup center, whichenables us to easily switch to the alternate system
in case of an emergency at headquarters. We canthereby continue vital operations through a substituteoffice location.
* Prioritized operations to be restored orcontinued
1. Carrying out securities transactions traded in the markets andyet to be settled
2. Payment to our customers
3. N ew orders from customers to sell, cancel or withdraw for the
products be• Domestic listed shares, including closing long positions on
margin transactions• MRF (money reserve funds)• Japanese government bonds for individual investors• Ordinary deposit●Initiatives on Impact of Climate
ChangeA significant rise in sea levels and the occurrence of
extremely large typhoons due to global warming
have recently raised concerns over potential largescale flood damage. Some of the Daiwa Securities
Group’s important business bases are located inplaces not very far from the seashore or rivers andmay be affected should floods occur. We are not justtaking general precautions against flood damage,but promoting such measures as setting up key
equipment and facilities at different sites and moving
machinery to the upper stories of our office buildings,
in order to mitigate the impact of disasters on ourbusiness operations as much as possible.

Daiwa Securities Group CSR REPORT 201748

IT Strategy and the Management of Systemic Risk

Daiwa Securities Group CSR REPORT 2017

49

IT Strategy and the Management of Systemic Risk
Approach and Basic Stance

Relevant CSR
Materiality

Under its Medium-Term Management Plan, “Passion for the Best” 2017, the Daiwa Securities
Group will promote two IT strategies (basic IT policies), namely, “strategic IT investment” and“strengthening IT governance” in order to achieve the management vision of “leading thecapital markets in Japan and Asia, and becoming the customer’s first choice securities group.”

IT Governance Structure
The Daiwa Securities Group has established the GroupIT Strategy Committee as a sub-committee of the
Executive Management Committee and created the
IT Strategy Committee at Daiwa Securities, the corecompany of the Group, as a subcommittee of theManagement Committee. These committees deliberateand decide medium- and long-term IT investment
policies and budgets for IT investment after taking
into account business needs and trends in the businessenvironment, such as systems and regulations. The
Group has also established the Group IT Management
Committee (the prior consultation organization of theGroup IT Strategy Committee), headed by the CIO*,
putting in place a system for deliberation at the director
level to address common issues and the medium-term
IT strategies of each Group company.
Against a backdrop of globally tightening financial
regulations, increasingly serious and sophisticatedcyberattacks, and the spread of advanced services
combining finance and IT (FinTech), the CIO has beenplaced in charge of overseeing all IT-related operations
across the Group, including overseas bases, throughthe aforementioned committees, and is tasked withstrengthening collaboration within the Group andmanaging risk on a global basis.
* CIO: Chief Information Officer

Strategic IT Investment
Aware of the importance of unifying management
and IT strategies, the Daiwa Securities Groupprioritizes the allocation of resources in IT investmentsthat contribute to the achievement of Group
performance targets and business strategies. By
aiming to coordinate strategic IT investments withchanges in tax systems and infrastructure platforms
that are essential for business continuity, the Group
strives to enhance the value added of its businesses.
In addition to undertaking investments for a varietyof purposes, including the upgrade and expansion of
the fund wrap lineup as well as online services, steps
were taken to push forward initiatives in such areas as
artificial intelligence (AI), Big Data, voice recognition,
blockchain and other new technologies in FY2016.
Moreover, the Daiwa Securities Group strengthened
management systems to ensure the safe and securesubmitting of My Number, the government’s
identification system, from customers and further
bolstered cyber security measures across the Group asa whole, including overseas bases.
In line with continued advancements intechnological innovation, technologies with thelatent capability to significantly alter the way inwhich business is conducted are close to commercial
application. With this in mind, the Daiwa Securities
Group is setting up forums to facilitate discussions
regarding financial innovation that utilizes cuttingedge technologies across the Group organization,
headed by the CIO. As far as promising technologies
and initiatives are concerned, energies are directed
toward swiftly conducting verification tests and trials
while also promoting alliances and collaboration
with external partners. At the same time, the Daiwa
Securities Group is working diligently to put in place amechanism that will allow it to flexibly and efficiently
provide products and services that place the needsof customers first. Moreover, every effort is being
made to employ advanced technologies to addressGroup-wide management issues, including the needto dramatically improve productivity while taking into
consideration work style reform.

Systemic Risk Management
The Daiwa Securities Group has worked to maintainand enhance the management of systemic risk in orderto reliably provide high-quality services to customers
while protecting information assets from various
threats and risks. The Group monitors the status ofits networks and information systems and makes
qualitative improvements to its systems based on
periodic risk assessments, in order to prevent risks fromoccurring.
Against this backdrop, the Daiwa Securities
Group has positioned the need to ensure cybersecurity as an important issue in the context ofmanaging risks. This reflects the recent and growing
threat of cyberattacks. As a result, the Group has
established the Daiwa-CSIRT*, a Group-wide crosssectional specialist organization that collects andanalyzes the latest information on cyberattack
methods and vulnerability while coordinating withexternal institutions. Drawing on this information
and analyses, ongoing steps are being taken tostrengthen cyber security measures encompassing theGroup as a whole, including overseas bases. These
steps include building multilayered initiatives thatcombine a number of technological countermeasures,continuously monitoring networks and equipment,
detecting and analyzing attacks, and putting inplace the Security Operation Center (SOC), which
is charged with the responsibility of formulating
countermeasures.
* Computer Security Incident Response Team: the organizationthat manages cyber security across departments

V.

Maintenance anddevelopment offinancial and capital
market functions
VII. Appropriate
management ofcustomer information
VIII. Construction andmaintenance of astrong IT system* Refer to pages 11 and 12 fordetails on materiality at the Daiwa
Securities Group.

Environmental Initiatives

Daiwa Securities Group CSR REPORT 201750

Environmental Initiatives
Approach and Basic Stance

Relevant CSR
Materiality

Protecting the global environment, the basis of our livelihoods, is essential for a sustainable
society. Through our business activities, the Daiwa Securities Group strives to help resolve
environmental issues by promoting products that can help reduce the environmental
burden, and also by introducing investments that help make environmental technologies
and infrastructure more widely available. At the same time, we are working to establish asystem that efficiently collects data on Daiwa’s environmental load. We are also focusing on
raising employees’ environmental awareness to empower them to reduce the environmental
burden in daily business operations.

XII. Reduction ofenvironmentalload and responses
to environmental
changes* Refer to pages 11 and 12 fordetails on materiality at the Daiwa
Securities Group.

Environmental Management
Environmental Vision
The Group is dedicated to protecting the precious
global environment and preserving it for future
generations by leveraging financial capabilities.

Environmental Principles
The Group recognizes the importance ofenvironmental principles such as the effort tocombat global warming, recycling and reuse of
raw materials, and preserving biodiversity, inorder to create a sustainable society for the 21st
century. The Group pledges to contribute to solving
environmental issues through its business as afinancial service company and to constantly seek
new ways to reduce its environmental impact as a
responsible corporate citizen.

Basic Environmental Policies
1. M
 ake positive environmental contributions
through our core business activities
We shall seek to develop and provide financial
products and services that promote a low-carbon,
recycling-oriented, and symbiotic society.
2. Implement an environmental management
We shall implement an environmental
management system and constantly seek new
ways to improve environmental activities.
In addition, we shall support environmental
education and publicity efforts, while promoting
environmental protection efforts by employees.
3. T ake steps to save natural resources, reduce energy
consumption, and promote biodiversity system
We shall continue to progress in our efforts to
reduce the use of natural resources and energy,
and seek ways to improve materials and energy
efficiency (including efforts to improve businessefficiency). We shall also take steps to reducewater use and reduce, reuse, and recycle othermaterials to contribute to a more environmentallyfriendly society. Furthermore, considering theimportance of biodiversity, we shall seek asymbiotic relationship with the environment anduse safe, clean methods of materials procurement.
4. Promote environmental communication
Working in concert with business partners,
the local community, NGOs and NPOs, weshall actively disseminate information about
environmental issues, and communicate ourconcern for the environment to customers andsociety at large.
5. S trictly observe environmental regulations
We shall always endeavor in environmental
preservation, observing environmental laws
and regulations in addition to the Group’s
environment policies.
Daiwa Securities Group Inc.
May 22, 2012

Every six months, the Daiwa Securities Group holds a
meeting of our Environmental Management Council,
where representatives from major companies of
the Group share data and exchange information. In
addition, at Daiwa Securities and Daiwa Property
Co., Ltd., both of which have a significant impact on
the Group’s power consumption and CO2 emissions,the relevant departments hold a joint meeting
every week, discussing measures to reduce theirenvironmental impact, checking the progress ofimprovement measures and sharing information.
Moreover, Group companies with offices in Gran
Tokyo North Tower attend a meeting of the CO2
Reduction Promotion Committee hosted by the
management company of the building every six
months, working together to reduce the overall CO2
emissions of the building. We strive to improve ourefforts, while reporting quantitative data on ourenvironmental impact over time, including energy andwater consumption, CO2 emissions, waste disposal
and recycling volume.

Initiatives to Reduce
Environmental Impact ofBusiness Activities●Introduction of Environmental
Accounting

Cases of soil andgroundwater pollution
found within office sites•FY2016None

As part of our efforts to reduce environmental load,
the Daiwa Securities Group prepares and discloses
environmental accounting. It is expected to moreaccurately help us to track the costs and effects ofenvironmental preservation and reduce environmentalloads more effectively.
*R efer to CSR Related Data “Environmental Accounting” on page 90.

●Initiatives at Group Companies
When installing new equipment at head and branch
offices, Daiwa Securities requires that the equipment
be certified under Top Runner standards. For example,
we replaced 21 multifunction copiers at the head officein FY2016, thereby reducing the power usage for thesemachines to approximately one-third (an estimate by

Investment in energysaving air conditioning
systems for FY2016¥

439.11 million(including installation costs)

Environmental Initiatives

the manufacturer). We have also been replacing ourcompany cars successively since FY2014 with eco-cars
and hybrid vehicles that have significantly improvedin fuel efficiency. The replacement, at the time ofcompletion, would reduce CO2 emissions by theamount equivalent to the CO2 absorption of more than
40,000 Japanese cedar trees annually (an estimate by
Daiwa Securities using fuel efficiency data disclosed byautomakers). The introduction of LED lights into thehead office of DIR was completed in the summer of
2017. In addition, the Daiwa Securities Group strives tochoose environmentally friendly products in its central
purchasing.

●Initiatives to Raise Environmental
Awareness
The Daiwa Securities Group is striving to raise
the environmental awareness of each employee
through various initiatives. For example, our inhouse magazine, “Fuji,” has a column entitled“Eco-Initiatives at the Office,” which mainly shares
the status of the Group’s environmental initiatives
and introduces environmental measures that canbe implemented by employees depending on eachindividual’s awareness.
With respect to the printing of documents, werecommend aggregate printing and double-sided
printing. We are also encouraging the reductionof paper usage by showing operational guidance
and the rate of reduction in paper usage for every
three months in the areas within offices wheremultifunction copiers are installed. We reduced paper
consumption by 4.7% year on year in FY2016.

●Offering Environmentally Friendly
Services
Daiwa Securities provides an online service that allows
customers to request a wide range of electronic
reports. Reports cover such areas as each transaction
or balance and other pertinent details as a substitutefor written notifications (hardcopy reports). Reports
received in an electronic format can, in principle, be
accessed and confirmed as and when required, saved
to personal computers, and printed for five years after
initial receipt. The proportion of customers choosing
the online service was 40.2% as of the end of March
2017, up 1.4% from the previous year. We willcontinue recommending the service to increase thenumber of customers using it.

●CO2 Emissions
Energy consumption at the Daiwa Securities Group’s
domestic offices (on a CO2 emissions basis) fell byapproximately 3.6% in FY2016 compared with
FY2015 as a result of increased efforts to conserve
energy (excluding CO2 emissions related to employee
commutes).
➔ Refer to page 89 of “CSR Related Data” for details.

●CO2 Emissions Reduction Targets
We have set up the goal of reducing CO2 emissions

Daiwa Securities Group CSR REPORT 2017by 1% from a year earlier, in principle, on a domestic
consolidated basis, while complying with the Act on
the Rational Use of Energy and Tokyo’s environmental
protection ordinances in a continuous and systematicway.
We continue to take energy saving initiatives
including the implementation of the “Cool Biz”
program in FY2017 as well, carrying out energy
savings measures through on- and off-peak periods.

●Targets for FY2017● Continue to introduce eco-cars● Initiatives for the reduction of electricity
consumption

Achieve a reduction of at least 10% from the
FY2009 level (as of FY2020)
Achieve a reduction of at least 20% from the
FY2009 level (as of FY2030)*On a per unit area basis for both targets● Improve the accumulation of environmentrelated data and hone skills to analyze thosedata● Purchase products certified under the Top
Runner standards

51

Company cars in Japan(Daiwa Securities)

1,039 vehicles
including624 eco-cars
101 hybrid cars
(As of March 31, 2017)•Introduction results for

FY201676 eco-cars
60 hybrid cars
•Introduction plan for

FY201760 eco-cars
40 hybrid cars

Initiatives in Real EstateManagement●Operation of the Sustainability
Committee
Daiwa Real Estate Asset Management launched a
Sustainability Committee in FY2013 as part of its
efforts to systematically address a variety of CSR
related challenges. The Committee, comprising thepresident and full-time executives, continuously draws
up policies on sustainability and discusses challenges
and activities as needed.

●Environmental Initiatives at Shinjuku
Maynds Tower
The following environmental initiatives have been
implemented since 2012 at the Shinjuku Maynds
Tower building, which is owned by Daiwa Office
Investment Corporation and operated by Daiwa Real
Estate Asset Management:• Adoption of LED Lighting (2012–present)
Since 2012, we have continued to install LED
lighting systems in common-use space, such as theunderground parking lot, first basement level, andentrance on the first floor. By the end of March 2017,
we installed LED lights in approximately 70% of thearea of common-use space. We have also adopted thegreen lease scheme* since 2014 to promote the useof LED lights in tenant-owned spaces. The installation
has proceeded gradually under the scheme, with bothtenants and landlords enjoying its merits. We estimatethat LED lights were introduced into approximately
70% of the area of tenant-owned spaces by
November 2017. In some cases, the electricity usage
has been halved compared with the pre-adoption
level. We plan to gradually introduce LED systems
in other tenant-owned space as well after holding
discussion with tenants.

CO2 emissions
reduction by adopting
LED lighting (incomparison with thelevels prior to theintroduction of LED
lighting)•About296.3 tons

(Shinjuku Maynds Tower in 2016)

Environmental Initiatives

Daiwa Securities Group CSR REPORT 2017

*Green Lease Scheme
A method enabling the landlord and the tenant of a rentalbuilding or other types of rental property to cooperate andreduce the environmental load in a scheme benefiting both sides.
Such methods include an arrangement where the tenant returns
part of the savings, such as a decrease in electricity charges,
attributable to the landlord’s investment in energy-saving
facilities, as a green lease payment to the landlord.

The proportion of the area into which LED
lights have been introduced in the tenantoccupied space of Shinjuku Maynds Tower

70.0％

67.5％

60.0％
50.0％
40.0％

33.9％

30.0％
20.0％
10.0％
0.0％

3.4％ 3.4％

18.2％
10.3％
6.9％

Period ended Period ended Period ended Period ended Period ended Period ended Period ended
Nov. 2014 May 2015 Nov. 2015 May 2016 Nov. 2016 May 2017 Nov. 2017

*The proportion of the area for the period ended November 2017 isan estimate that was made as of July 2017.

●Shinjuku Maynds Tower Maintains DBJ
Green Building Certification*
We are engaged in environment-conscious officebuilding management at Shinjuku Maynds Tower.
For example, we continuously improve its facilities tobe environmentally friendly and to conserve energy
and also conduct awareness-raising activities forbuilding tenants. In addition to these operations,the building’s environmentally and socially friendly
aspects have been highly evaluated. Shinjuku Maynds
Tower therefore continued to be certified by theDevelopment Bank of Japan (DBJ) as a “building
with exceptionally high environmental and social
awareness (Four Stars)” in February 2017.
*S
 coring model of DBJ Green Building Certification
The scoring model of DBJ Green Building is a comprehensive
scoring model uniquely developed by the Development Bankof Japan Inc. (DBJ). The DBJ grants certification to real estate
properties with high environmental and social awareness (“Green
Building”) based on a five-scale ranking system.
DBJ Green Building Certification logo52

Relationship with Shareholders and Other Investors

Daiwa Securities Group CSR REPORT 2017

53

Relationship with Shareholders and Other Investors
Approach and Basic Stance
The Daiwa Securities Group works hard to advance communication with shareholders andother investors. We will work hard to provide stockholders and investors with improved
communications and information that are easy to understand.

Breakdown of Shareholders
Breakdown by Investor Type (As of March 31, 2017)
Total number of shares outstanding:
1,699,378,772
Other
5.3%

Foreigninvestors
37.5%

Individuals
in Japan
22.6%
Financial institutionsin Japan
30.7%
Other corporationsin Japan
3.9%

Dividend Policy
Daiwa Securities Group Inc. aims to continuously
provide improved value for shareholders, including
distribution of profits. In principle, dividends arepaid semiannually (interim and year-end dividends)
at a payout ratio of approximately 40% based on
consolidated financial performance. We also actively
seek ways to increase returns to our shareholders,
including share buybacks when we have sufficientaccumulated capital to pursue further growth.

Communication with
Shareholders and Investors
Every year, many shareholders attend our general
meeting of shareholders, which is an opportunity
for us to interact directly. Other activities include
telephone conferences on the days of earnings
announcements, briefings about the company for
individual investors, management strategy briefing
sessions, one-on-one meetings with analysts andinvestors and participation in Daiwa Investment
Conferences held in Tokyo, Hong Kong and New
York.
In addition, we are further developing information
disclosure on our IR websites and publishingintegrated reports and business reports forshareholders. We will continue to strive to make ourcommunications even more accessible and precise forshareholders.

Questionnaire for Shareholders
We distribute a questionnaire to shareholders coinciding with the
distribution of rewards under our Shareholder Rewards Program at
the end of September, to gather and incorporate their views into
management and IR activities. The findings of these questionnaires
are utilized to enhance satisfaction with the shareholder reward
program and to improve our business operations.

September 2016 Shareholder Rewards Questionnaire
Contents• When did you first purchase our shares?

Breakdown ofshareholders(As of March 31, 2017)•Foreign investors

37.5%(Down 1.8 points from the end of
the previous fiscal year)•Individuals in Japan

22.6%(Up 1.8 points from the end of theprevious fiscal year)• Why did you choose to buy the stock of Daiwa Securities?
(multiple answers allowed)• What types of disclosure and corporate communication
would you like to see enhanced in the future? (multiple
answers allowed)• Are there any products you would like for the shareholder
reward program? (multiple answers allowed)

Shareholder Reward Program
Daiwa Securities Group Inc. has been implementing
a shareholder reward program for over 10 years to
express our continuing gratitude to shareholders. We
also introduced a catalog system for rewards at theend of March 2008 and significantly expanded our
lineup of products posted in the catalogue from 24 to
50 items at the end of March 2016. Reward products
are provided semiannually, at the end of Marchand September. Shareholders have multiple reward
options to choose from such as regional specialties;
charitable donations; “Kaisha Shikiho,” a quarterly
journal on investment; and points that can be used in
Daiwa’s Point Program. For those qualified at the endof each March, they are also offered an opportunity
to choose a calendar.
At the end of September 2016, it was also
made possible to apply for reward products on thewebsite, along with the conventional method of
application by postcard.

IR Information Digest (Japanese)

For Shareholders

Relationship with Shareholders and Other Investors

Daiwa Securities Group CSR REPORT 2017

Initiatives in FY2016

Disclosure System●Dissemination of Information to
Various Stakeholders

The Daiwa Securities Group has formulated theDisclosure Policy, which outlines the Group’s basic
approach to information disclosure and strives
to provide information that is fair, prompt, andappropriate.

With a shift from savings to investment facing aturning point, the Daiwa Securities Group actively
disseminated information contributing to theimprovement of the Group’s corporate value. For
example, we communicated the progress of our
Medium-Term Management Plan, an overview ofour management policy for FY2016, and otherinformation efficiently and effectively at earnings
announcements and management strategy briefing
sessions, as well as in business reports.
For institutional investors in Japan and abroad, we
implement effective activities that suit each investor
base. Through regular communication, we nurture
relationships of trust with the staff responsible forexercising voting rights, in addition to analysts,
portfolio managers, and others. We also hold anumber of meetings with overseas bond investors
with an eye toward the Daiwa Securities Group’s firstever issuance of global dollar bonds.
Moreover, the Group holds live seminar-stylebriefings for individual investors on the Internet aswell as briefings at sales branches of Daiwa Securities,
attracting the participation of many investors anda large audience. At these briefings, we provide
a question-and answer session and conduct aquestionnaire, thereby obtaining diverse feedback, inorder to use such feedback for the improvement ofcommunication with individual investors in the future.

●Increasing Shareholder Returns
The Daiwa Securities Group’s capital policy is to
aim to continuously improve the Group’s corporate
value while seeking to achieve an optimum balance
between maintaining financial health, raising capitalefficiency, and increasing shareholder returns. From
FY2015, in an effort to further increase shareholder
returns, we raised the targeted payout ratio toaround 40%. We will also buy back our own sharesas needed to further increase returns to shareholders
through the enhancement of capital efficiency.

Briefing materials about the company for individual investors(March 2016 edition)●Disclosure Policy
As a company engaged in the securities business, ininformation disclosure, we aim to be a role model forother listed companies. We will strengthen disclosureof not only financial information, but also nonfinancial information with social and environmental
aspects that are not evident in short term financial
figures.

Disclosure Policy● The Daiwa Securities Group will provide
important information about the Group,
including financial, social and environmental
aspects, in a fair, prompt and appropriatemanner. We will thereby promote
understanding of the Group amongshareholders, investors, local communities andother stakeholders to help them to properly
evaluate us.
● The Group will comply with the Financial
Instruments and Exchange Law, other laws andregulations as well as rules implemented by
the financial instruments exchanges where ourstock is listed.
● T he Group will strive to disclose information
fairly in terms of both content and timing.
● The Group will utilize various communication
channels including briefings, telephone
conferences, the Internet and printed materials
to disclose information in a manner that is easy
for investors to comprehend.
● The Group will always keep in mind our
responsibility to lead the securities market
and strive to set an example for other listedcompanies in disclosing information.
● To ensure that these policies are implemented
properly, the Group has establisheda Disclosure Rule that sets forth theestablishment of a Disclosure Committee and
the Group’s information disclosure methods.

54

Number of overseas
IR activities held in
FY2016•North America:

2

IR events(about 40 meetings)•Europe:2

IR events(about 30 meetings)•Asia:

2

IR events(about 30 meetings)

Company briefings forindividual investors
held in FY2016•Number of briefings at

sales branches of Daiwa
Securities:

5•Number of live seminar-style

Internet briefings:

2•Total number of participants:

approximately

2,600 people
Share buyback•Buyback period

From February 10,2017 to April 21,
2017•Total number of shares

repurchased:

27
million shares(Percentage to total number of issued
shares excluding treasury stock:
1.59%)•Total amount of shares

repurchased:

18.998 billion¥

Relationship with Employees

Daiwa Securities Group CSR REPORT 2017

55

Relationship with Employees
Approach and Basic Stance

Relevant CSR
Materiality

The Daiwa Securities Group believes that maximizing the motivation of our employees willlead to improved customer satisfaction and consequently enhance shareholder value. We
take a range of measures to ensure that all of our employees feel a sense of job satisfaction
and that their families and partners share their pride to be part of the Group. We have ourcorporate culture nurtured since foundation of our business, and we regard it as the core of
Daiwa’s identity. We have taken steps to crystallize the basic philosophy and mindset of theGroup inherent of our culture to be manifested as the “Daiwa Spirit.”
We hope that the “Daiwa Spirit” will enhance employees’ sense of unity and togetherness
and thus the Group’s overall strength.

Hiring Initiatives●Recruitment of University Graduates●Hiring Approaches and Trends

In FY2011, we began hiring recent university
graduates who had obtained their diploma within
the preceding three years with or without any work
experience during the period as part of our efforts tobuild a diverse workforce. These recruits receive thesame training as new graduates.

The Daiwa Securities Group wants all of ouremployees to work with a high level of loyalty andmotivation. All new college graduates recruited by theGroup, including those with disabilities, are brought
on as full and regular employees aiming to encourage
newly hired to have a sense of trust and pride in theGroup, and a sense of solidarity with their colleagues.
We are making efforts to provide an environment
where a diverse range of people can perform to theirfull potential. We also focus on attracting people
capable of excelling globally to take a leadership rolein the development of capital markets in Japan andAsia and become the customer’s first choice securities
group.

●Fairness in Hiring
The Daiwa Securities Group has formulated andannounced its Guidelines for Fair Hiring, comprising
three fundamental principles for ensuring fair hiring
practices.

Guidelines for Fair Hiring
1. U
 tmost respect for the rights of theapplicants
2. Eligibility for all individuals who meetthe hiring criteria
3. M aking all hiring decisions based ona fair and objective evaluation of
the applicants’ ability, aptitude andmotivation

Support for the Success of
Veteran Employees
The Daiwa Securities Group has in place a Senior
Advisor System that provides veteran employees witha wealth of experience to play an active role in theworkplace. Senior advisors are dispatched to locationsof their choice and engage in community-based
consulting and sales from a long-term perspective.
Highly-motivated and talented employees cancontinue working after retirement under our Daiwa
Master System. In FY2017, we started allowing senioradvisors to continue working regardless of their age.
In accordance with the enactment of revisions to
the Act on Stabilization of Employment of Elderly
Persons in 2013, and as the careers of employees
grow longer, we associate our sustainable growth
as a company with the employment of older people
who wish to continue learning and working in ameaningful way as a part of the organization. Daiwa
Securities Co. Ltd. is greatly expanding its training
programs for employees aged 45 and older, andhas introduced a License Certification System thatprovides incentives to employees to improve their skills
and polish their acumen as professionals. We support
both work and caregiving, and are creating anenvironment in which employees can move forward
enthusiastically without concerns over their future
lifestyle.

Employment of People with
Disabilities
As of FY2016, the Daiwa Securities Group had moreX.

Creation of aworkplace that values
human resource
development
and diversity of
employees* Refer to pages 11 and 12 fordetails on materiality at the Daiwa
Securities Group.

Refer to page 10 for the“Daiwa Spirit.”

Number of new
employees for FY2017

678 people(8 group companies*)*Refer to page 84 of “CSR Related
Data” for companies coveredby data.

Relationship with Employees

than 180 employees with disabilities handling a wide
range of responsibilities in our head office, sales
branches and contact centers.
We started recruiting new graduates withdisabilities as regular employees (general office staff)
in FY2008, and in FY2011 broadened the scheme
to the career-track employee, regional career-track
employee, and employee for customer services.
We have also vigorously increased recruitment
opportunities by holding briefings about the company
for new graduates, participating in career expos,
and implementing job placement support programs
for university students with disabilities. Once people
with disabilities are hired, we provide support for
their career advancement, for example, creating
opportunities for them to enter the career-track andregional career-track employment opportunities.

Human Resource Development
and Skill Enhancement●Employee Training Approaches andTrendsThe Daiwa Securities Group’s competitiveness derives
from our employees. We have a management vision
to take a leadership role in the development of
capital markets in Japan and Asia and become thecustomer’s first choice securities group. To realize thisvision, we focus on human resource developmentwith the aim of creating clusters of professionals.
We offer extensive training programs to newly
hired employees as we believe that the time when
they join us is a critical period for their training. We
adopt a system that allows employees to acquire not
only basic knowledge and skills, but also to honetheir knowledge, techniques and mindsets throughcorporate philosophy, CSR, and a variety of otherprograms in the curriculum. It enables us to nurture
top-quality human resources with professional skills at
an early stage.
We believe that our employees must have a firm
understanding of corporate ethics and compliance inorder to ensure the development of sound financial
and capital markets, which is a key issue for the
Daiwa Securities Group. Accordingly, we offer regulartraining on information security and compliance.

●Education and Training System
The Daiwa Securities Group trains employees with
programs tailored to their skill levels based on agroup-wide policy. We aim to foster a sense ofsolidarity among Group employees across divisions
while offering training opportunities at groupmeetings.
At Daiwa Securities, a large number of different
training programs are available to ensure that bothyoung and experienced employees can raise their skills
in line with their career vision.
• Training for Young Employees
The Daiwa Securities Group views the first two yearsof an employee’s career as a period for their basic

Daiwa Securities Group CSR REPORT 2017training to become a professional. The Daiwa Basic
Program covers this period of training, and the scopeof the program was greatly expanded in FY2015.
To train employees, we now set the items and levels
that should be acquired, and organically combine
group training, OJT, e-learning, and support for theacquisition of qualifications. For employees in their
third to fifth year of employment, we have introduced
an educational program called “Qroad.” This program
helps to improve their knowledge, techniques, andmindsets to achieve the industry’s best quality.
It presents high-level goals until the fifth year of
employment to further promote employees’ growth.
• Skill Training
We provide skill training aimed at enhancing businessskills and management skills as an opportunity
for employees to acquire various skills and special
knowledge.

Number of times skill
training was held in
FY201620 training courses held
46 times•Cumulative number ofparticipants:

7,507 people
Cost for the Group’s
educational investment

2.1 billion¥• Training for Veteran Employees
Since FY2015, we have been providing the Advanced
Skill-building Program, a training program for
employees aged 45 and older that is designed tocontinuously improve skills. We have also introduced alicense certification system that provides incentives to
employees who continue to work on improving theirskills. In the two years since its introduction, 1,300
employees, accounting for approximately 60% of
personnel aged 45 and older, undertook over 12,000
training programs.

●Supporting Employees Trying to Earn
Credentials
Daiwa Securities Group consistently strives to further
enhance its expertise as a part of efforts to be thecustomer’s first choice securities group. Daiwa
Securities sees Financial Planner (AFP and CFP®) and
Securities Analyst qualifications as core requirements,and encourages employees to acquire thesecertifications. As a result, Daiwa Securities has 643
employees with CFP® certifications, the highest level inthe industry. CFP® is a high-level credential certifying
knowledge and skills in the tax system, inheritance, andreal estate fields needed to provide financial planning
services. Moreover, as a result of the introductionof the Daiwa Basic Program, an educational training
program covering the first two years of employment,
78% of employees in their second year of employment
acquire AFP, while 60% have passed the Chartered
Member of the Securities Analysts Association of Japan(CMA) examination (Level 1).
Since FY2014, we have had an Inheritance
Planner Certification program in place. Certification
candidates are selected from among employees with
CFP qualifications, undergo practical training in-house,
and those who pass are certified as personnel withadvanced expertise through an in-house qualification
system. In addition, the company provides generous
support by, for example, subsidizing certification costs
so that employees can enhance their specialized skills
and become professionals.

56

Number of persons
earning CFP®
certifications

643(At the end of March 2017)

Number of Chartered
Members of the
Securities Analysts
Association of Japan(CMA)®

1,542 people(As of the end of March 2017)

Relationship with Employees●Intra-group Job Postings and theCareer Track Change System
We have instituted a Career Track Change System thatenables non-career-track employees to transfer tocareer-track and regional career-track positions. Under
the system, more than 1,200 employees have moved
to other positions. We have also instituted a system of
intra-group job postings to help employees with skills
and the desire to realize their potential to open newcareer paths.

●Evaluation System
To ensure that all employees can continue working
with a high level of motivation, it is important tohave a fair and convincing evaluation system. For thisreason, the Daiwa Securities Group has implemented
a multifaceted evaluation system for managers
whereby subordinates conduct evaluation. This
involves subordinates assessing each manager’s job
performance in carrying out daily duties and theresults being fed back to the manager. The scheme
aims to help managers to identify their challenges
and improve their managerial skills through training
programs and other means, thereby improving ouroverall productivity. The multifaceted evaluation
system covers all managers, including executives, theheads of departments, offices, and sales branches,and section chiefs.
We also take their compliance-related performance
into account. In addition, we endeavor to createa personnel evaluation system that motivates all
employees, regardless of years they are with us,
whether they are young, middle of their careers, or
experienced veterans, to challenge the next stageof their careers and to work in positions with bigger
responsibilities.

Striving to Create a PleasantWorking Environment●Encouraging Work-Life Balance (WLB)
One of the Daiwa Securities Group’s targets is topromote an advanced level of WLB. The Group iscommitted to pursuing working styles that enable
employees to achieve a balance between their private
and professional lives, and makes efforts to create anenvironment in which both men and women can workin a variety of ways. Not only do we seek to establish
systems that enable diverse work styles, but we also
work to change employee awareness by ensuring
employees leave work before 7 p.m., by encouraging
them to take all their paid holidays, and by setting a
day of welcoming family visits to the workplace.
Moreover, since FY2008, we have been holding
a quarterly meeting of executives, the heads ofdepartments, offices, and sales branches, andother employees, where a variety of measures areactively discussed. The Daiwa Securities Group has
adopted systems aimed at supporting its employees
in both areas of child-rearing and nursing care thatexceed statutory requirements. Surveys concerning
the Group’s efforts to support both the careerand childrearing needs of its employees have been
conducted to solicit input from all Group employees.
These surveys are designed to ascertain the degree towhich employees are using the Group’s systems andDaiwa Securities Group CSR REPORT 2017

to collect feedback focusing particularly on employee
needs. Drawing on the results of the surveys, theGroup is working to further improve conditions andput in place a pleasant working environment for all
employees. Prior to an employee returning to work
after taking childcare leave, interviews are conductedwith relevant department, office, and branchheads. In this manner, energies are being channeledtoward ensuring a smooth return to work. Even
during childcare leave, employees are still eligible forpromotions and raises based on their contributions todate. We set up a Childrearing Support Leave system
in FY2014, which resulted in the acquisition rateof childcare leave for male employees significantly
increasing from 2% to 97%. In recent years, we havealso focused on support for employees’ efforts tobalance work and nursing care, and have expanded
a variety of support programs. For example, wehave allowed employees to divide their nursing careleave into up to four periods while extending thetotal length of such leave to three years. We havealso established Life Support paid leave and started
offering an e-learning course on supporting initiatives
to balance work and nursing care. Moreover, alldepartments, offices, and sales branches of Daiwa
Securities hold a study meeting on how to respondto the aging of society and balance work and nursing
care. We are thus working to increase employees’
awareness and foster an environment that facilitates
the utilization of these support programs.

Trends in Acquisition Rate of Childcare Leaveby Gender
Gender

FY2014FY2015FY2016

Acquisition
FemaleRate ofChildcare Leave Male

(FY)

99.3%

100%

100%

41.9%

73.1%

96.8%

●Encouraging Women to Succeed
The Daiwa Securities Group proactively appoints
talented human resources regardless of gender.
We are trying to appeal more to women’s individualinterests by introducing thriving female employees
as role models in internal publications and providing
opportunities for cross-company communication,in order to increase the number of women in
management positions. A career consultation service
has been set up on the Group’s internal initiatives for
WLB site. Female executives as well as heads of eachdepartment, office, and branch give advice on theconcerns and inquiries of female employees.
Daiwa Woman’s Forum

57

Number of female
executives•Daiwa Securities Group Inc.

2 people(directors and corporate executive
officers)•The entire Group

7 people(directors, corporate executive officers,
and executive officers)

Number of women in
managerial positions•The entire Group375 people(As of March 31, 2017)

Ratio of women in
managerial positions•Daiwa Securities

2.3% (At the end of March 2005)→10.6% (At the end of
March 2017)•The entire Group

2.2% (At the end of March 2005)→8.8% (At the end of
March 2017)* Refer to page 86 of “CSR Related
Data” for “Employee Support Plans.”Relationship with Employees

Targets for Years through FY2020(Daiwa Securities)

work before 7 p.m., support for employees balancing
work and child rearing or nursing care, and otherinitiatives. Daiwa Securities also won an excellence
award in the Minister Prize in the Family-friendly
Enterprises Category of the “Equality and Work-life
Balance Enterprises” for FY2016 held by the Ministryof Health, Labour and Welfare.

●Initiatives to Improve Employee HealthAt the Daiwa Securities Group, we regard
placing importance on personnel as one of our
Corporate Principles, and believe the source ofour competitiveness lies in the capabilities ofour employees. We recognize that creating anenvironment where employees can continue working
actively and vigorously over a long period brings
improvement in corporate value, and thus we are
actively working on health management. Our Human
Resources Departments, Health Insurance Association,and occupational health staff collaborate closely topromote relevant measures. We started our initiatives
to improve employees’ health in earnest in 2008,
when specific health checkups and specific counselingguidance were initiated at worksites. Since then, we
have been engaged in various initiatives and activities
to raise employees’ awareness, with the top priority
placed on measures for those who have a high risk oflifestyle diseases. As a result, the Group was selected
for three consecutive years as “Health & Productivity
Stock Selection,” a title awarded jointly by Japan’s
Ministry of Economy, Trade and Industry and theTokyo Stock Exchange to companies promoting thehealth of their employees. This underscores the factthat our efforts are highly regarded by society.
⇒ Refer to “Third-Party Evaluations” on page 69
for details.

Structure to Promote HealthManagement

Executive office

Health Management Promotion
Meetings at Daiwa Securities
Group Inc.

Health Management
Promotion Section, Human
Resources Department at
Daiwa Securities Group Inc.

At least 15%, more than a fivefold increase fromthe FY2005 level・Ratio of women in new graduates recruited: 50%(stable)・Ratio of women in participants in training: 50%
・Acquisition rate of annual leave: at least: 70%・Acquisition rate of childcare leave for male employees: 100%
In 2015, the current Chairman of the Board of
Daiwa Securities Group Inc. showed his support
for the Declaration on Action by A Group of Male
Leaders Who Will Create a Society in which Women
Shine spearheaded by Japan’s Gender Equality Bureauof the Cabinet Office. Daiwa Securities also wona “Minister of State for Special Missions (Gender
Equality) Prize” in “Advanced Corporation Awards
for the Promotion of Women” held by the Cabinet
Office of Japan in FY2016. The prize was awarded inrecognition of the company’s active appointment of
women, its practice of ensuring that employees leave

General Health
Development Centers

・Ratio of women in managerial positionsThe Daiwa Securities Group• T he Daiwa Securities Group aiwa Securities Group Inc.
•D
 aiwa Securities Co. Ltd.
•D
 aiwa Asset Management Co. Ltd.
•D
• T he Daiwa Institute of ResearchGroup•D aiwa SB Investments Ltd.
 aiwa Securities Business Center•D
Co. Ltd.
including other Group companies

Trinity Structure
Human
Resources
Department

GeneralHealthDevelopment
Centers

HealthInsurance
Association

Health Insurance
Association

The Daiwa Securities Group has a total of seven
women in top management positions who work as
directors, corporate executive officers, and executive
officers. They include two female executives at Daiwa
Securities Group Inc., who serve as director andcorporate executive officer. The number of womenin management positions is increasing year by year,with the Group’s total number standing at 375 asof the end of March 2017. The ratio of women in
management positions has risen from 2.2% at theend of FY2004 to 8.8% on a group-wide basis (upfrom 2.3% to 10.6% at Daiwa Securities).
By increasing the number of role models, weare making it easier for the Group’s female staff toenvision their career path. In this context, there has
been a sharp increase in female employees aspiring
to advance their careers by switching to careertrack and regional career-track positions in recent
years. To date, more than 1,200 female employees
converted to career track positions. An increasing
number of employees have also taken advantage of
our Professional Return Plan, a system for re-hiring
employees who left work to raise children or care forfamily members, starting them at the same level ofcompensation as when they left. The scope of thissystem was expanded in FY2015. This has helped us
secure talented personnel who support operations.
Starting in FY2014, Daiwa Securities launched thefemale employee career support training initiative(Daiwa Woman’s Forum) helping women to build
networks among themselves.
We will continue to increase the number of female
managers, aiming to develop female leaders who will
drive the future of Japan’s financial industry.
Daiwa Securities has a proven track record of
implementing a wide range of initiatives that help
female employees reach their full potential. The
company has also clarified its objectives through to
FY2020. In this manner, positive steps are being taken
to provide an environment in which employees withdiverse values can maximize their capabilities.

Daiwa Securities Group CSR REPORT 2017

58

Health-related Data*•Rate of participation in

regular health checkups
Close to100%

•Rate of participationin thorough medical
examinations, which
are voluntary screenings(mainly cancer screenings
for employees aged 35
years or older)
FY2015
FY201683%

86%•Percentage of overweight

employees

29.1%•Percentage of employees

who smoke

23.7%•Percentage of employees

who regularly exercise

19.0%•Percentage of employees

who took the stress check

91.3%•Proportion of thoseseeing doctors after
regular health checkups
in employees withproblematic results in suchcheckups

87.8%* E xcerpted mainly from “Daiwa
Securities Group White Book on
Health 2016”

Relationship with Employees

Daiwa Securities Group CSR REPORT 2017

In October 2015, to further reinforce theGroup’s structure to promote health management,
we appointed a Chief Health Officer (CHO) andestablished Health Management Promotion Meetings
to be held across the Group. We also published“Daiwa Securities Group White Book on Health” tohelp employees to understand the results, issues,and policy of each measure and efficiently use oursystem. In light of the White Book, we implement
various measures so that our employees have a goodunderstanding of their health, have a high level ofhealth awareness, and can maintain or improve theirhealth.
Health Management Promotion Meeting

59

KA-RA-DA iki-iki Project
In November 2016, we introduced the“KA-RA-DA iki-iki Project—HealthyLifestyle” in collaboration with the
Human Resources Department, the Health
Insurance Association, and the General
Health Development Centers. The Programaims to raise health awareness among all
employees, including young employees who
previously had little interest in health. We
grant reward points based on employees’
degree of participation in the following
events to improve health. Points earned
can be exchanged for gifts such as healthrelated goods and can also be used to makedonations to TABLE FOR TWO.
Events● 10 minutes per day of physical activity (Plus 10)● No alcohol challenge program ● Breakfast Everyday program● Diet recording ● Stop eating between meals● KA-RA-DA iki-iki seminars● Harahachi program to promote moderate meal portions● Walking challenge program● Smoking cessation challenge program

Initiatives for Better Health*1●R egular health checkup●H elicobacter pylori test and hepatitis virus
testing (for the prevention of gastric cancer
and liver cancer)● Thorough medical examination (cancer
screening) (to supplement standard tests) +options for employees of specific ages
● Breast cancer and cervical cancer exams● S ystem that uses a follow-up confirmation
form (known as a “yellow paper”*2)● S moking cessation support● Walking challenge program● P rogram to promote moderate meal portions● K A-RA-DA iki-iki Project● L ecture on health literacy●C ommunication of health-related
information to all Group employees● Influenza vaccination● Issuance of Daiwa Securities Group WhiteBook on Health●M easures for those with severe diseases●A ction to promote countermeasures against
cancer*1 E xcerpted mainly from “Daiwa Securities Group WhiteBook on Health 2016”*2 System to urge employees to see doctors after theirregular health checkups. Employees receiving this form
are required to obtain a doctor’s comment within two
weeks and submit it to us. This has contributed to ahigher rate of visits to medical institutions after checkups.
We have almost a 100% visit rate for employees who cansee doctors.

“For the Health of It”
Under its health initiative “For the Healthof It,” Daiwa Capital Markets America
has been engaging in activities to raise
employees’ awareness regarding theimportance of living a healthier lifestyle andmaintaining their health.
The activities include planning lunches andseminars with nutritionists, issuing healthinformation every other month, providing
a smoking cessation program and a yoga
class, and making healthy fruits and snacks
available in the pantry. Employees canalso use a sports gym at a discount priceand participate in massage events held
three times a year. In addition, the annual
biometric screening event held by thecompany identifies employees’ health riskon the spot by measuring finger blood flow
quickly and painlessly. This is expected tohelp employees to improve their health.
Yoga class

Number of participantsin the FY2016 walking
challenge

2,223 people in total(Events held twice in the year)

Relationship with Employees●Initiatives for Mental Health
Maintaining and managing both physical and mental
health is vital for the sound career development of
employees. The Mental Health Support Office has
two full-time certified clinical psychologists on its staff
to provide consultations for employees themselves,
their subordinates, colleagues, families, and others.
Staff members on the Mental Health Support
Office also visit departments, offices, sales branches,and group companies to provide training for self-care,mental health management, and mental strength andto hold interviews with young sales personnel.
We are thus focusing on measures to prevent
mental health problems, while providing the “Returnto-work Support Plan” designed to help those on
leave to return to work smoothly, in an effort tocreate an environment where all employees can workwith peace of mind.
• Interviews with Young Sales Personnel
Young employees may feel a lot of stress from lives
as working adults and from having so many newexperiences. However, they sometimes do not talkabout their worries or do not realize that they arein a poor mental condition. We therefore conductindividual interviews with young sales personnel
in their first to fourth years of employment whenproviding training at sales branches (individual
requests for interviews are also accepted). Throughthese interviews, we increase interest in mental healthamong such employees and remind them that wehave implemented an internal support structure.
We refer them to certified clinical psychologists
within the Mental Health Support Office forcounselling, depending on the need.
Even if employees cannot undergo counselling at
the Mental Health Support Office due to geologicalor timing constraints, they will be able to receive
counselling in their local areas through a third-party
institution providing telephone consultation services
for mental and physical health with which our Health
Insurance Association ties up.
• Return-to-work Support Plan
We send a notice on the “Overview of Non-workrelated Medical Leave System” to employees goingon leave. The notice states that they can use a followup service, depending on their needs, based on the
Return-to-work Support Plan prepared by the Mental
Health Support Office.
When the Mental Health Support Office receives
a request from someone planning to return to work,
it prepares a plan after conducting hearings on past
duties and so on from that person and the head ofCounselling at the Mental Health Support OfficeDaiwa Securities Group CSR REPORT 2017

the office that the person belongs to. The prepared
plan is then sent to the office head. This systemenables the office head and the person returning
to work to share the support information and is
expected to further reinforce follow-ups.
We are now considering drawing up the“Return-to-work Support Guide for Managers andSupervisors” to distribute it to the heads of relevant
offices because there are still few cases where thissystem has been used.

60

Training on mental
health•Training at sales offices

and branches

52 branches•Group company training

13 times

Communication

Interviews with young
sales personnel●Communication with Employees

497 people

We believe that good communication with employees
is vital for a better workplace environment. We havethus implemented a semiannual self-assessment
system whereby employees can communicate theircareer plans to their superiors and the Human
Resources Department. Under the system, employees
can also communicate not only their career visions but
also their thoughts on the duties that they assume,
personnel and training systems, the workplaceenvironment, and other factors to the Human
Resource Department. The Daiwa Securities Group
uses such feedback to develop an environment thatenables employees to work with a high level ofmotivation.
To give feedback on assessment results, we conduct
interviews with department and sales branch heads
twice a year, thereby sharing future goals and careerdevelopment with them and providing appropriate
instructions and advice to each employee.
We also regularly conduct questionnaires on worklife balance for all employees. Moreover, we conduct
interviews with employees returning from childcare
leave after some time has passed in an effort toresolve any worries. This input from employees helps
us to identify areas to be improved in our systems
and initiatives and to create a better workplaceenvironment.

●Communication among Employees
In October 2007, Daiwa Securities introduced aprogram for supporting club activities. This program
was created to help employees enjoy their time off
and to deepen their friendships with colleagues,
building more opportunities to share a sense of
camaraderie and solidarity. It is also intended tosupport work-life balance and facilitate a fuller social
life for employees. The program was expanded andenhanced in FY2009. Under this program, employee
groups that meet certain conditions are recognized as
Daiwa Clubs or Daiwa Circles, which receive subsidies
to cover some of their activity costs. As of March
2017, 20 clubs and four circles are active across theGroup.

(FY2016)

Relationship with Employees

Daiwa Securities Group CSR REPORT 2017

●Relationship with Employee Unions

Number of Employee
Union Members

We regularly hold labor-management negotiations on
bonuses and other compensation and the working
environment, while increasing opportunities to learn
the opinions of our employees through questionnaires
conducted by employee unions among their members
for better mutual understanding.

6,943 people(As of March 31, 2017)* Refer to page 87 of “CSR Related
Data” for companies covered by data.

●Initiatives for Families

Number of Family Visit
Day participants

We work to ensure that members of employees’
families share their pride to be part of the Group.
Since FY2008, we welcome employees’ families to theworkplace on Family Visit Day to give family members
a better understanding of our company and theemployees’ jobs.
Other initiatives for supporting our employees’
families include the new creation of kid’s ceremonyleave, family day leave, and leave to celebrate parents’longevity, as well as the extension of mental healthsupport to employees’ families.

6,315 people(FY2016)●Active Use of In-House Magazine
The Daiwa Securities Group issues an in-housemagazine, “Fuji,” whose history dates back to 1925,
when one of the company’s predecessors, Fujimoto
Bill Broker Bank, commenced its publication. The
magazine has been praised even outside of theGroup for its roles as a communication tool among
employees.
We currently distribute 19,000 copies of Fuji every
other month to Group executives and employees,
their families and retirees. We also post the magazine
on our WLB promotion website for employees sothat those on leave for child rearing or nursing carecan read it at home. The magazine covers a wide
range of topics beyond management and personnel
information. It also introduces initiatives taken byGroup companies and posts serial articles on theGroup’s history, human rights issues, ESG, mental
and physical health, laws and hobbies. Executives andemployees also contribute articles to the magazine.

Family Visit Day

61

In-house magazine “Fuji”

Engagement with Society

Daiwa Securities Group CSR REPORT 201762

Engagement with Society
Approach and Basic Stance

Relevant CSR
Materiality

The Daiwa Securities Group considers it important to work together with NPOs and NGOs as agood corporate citizen engaging in consistent collaboration with the local community to foster
sustainable development. Our activities can be categorized into the following four key fields.
1. Education and research activities in economics and finance 2. Assistance to communities
inside and outside of Japan through foundations and NPOs 3. Support for culture, the arts,and sports activities 4. Corporate citizenship activities

Education and Research Activities
in Economics and FinanceCapitalizing on financial and economic expertise
accumulated through its securities business, theDaiwa Securities Group engages in business-academia
collaborations and supports programs for junior andsenior high school students as well as teachers. We
believe that economic and financial education isimportant in helping young people develop the capacity
to build their own lives and shape the future world.
* Refer to “CSR Related Data” on page 87 for “Results in
Economic and Financial Education.”

Economic and Financial Education
Sustainable Developmentof the Japanese Economy
Research
institutions

Schools
Understandingof social andeconomicprinciples

Improveeconomic
and financial
knowledge

Developfinancial
specialists

Discloseresearch results
Create practicalapplications

Commercial
and businessapplicationof research
results

Elementary/junior/high school
students

Undergraduate
students

Graduatestudents

ResearchersIntellectual
property(IP)/patents

Support foruniversitylaunched
ventures and IP
headquarters
Participate inclasses

Provide or
supportclasses
Dispatch
instructors

Provide or
supportclasses
Dispatch
instructors

Joint
researchResearchsupportSupport foruniversitylaunched
venturesand IP
headquarters

Group Employee Cooperation●Support for KidZania
The Daiwa Securities Group is a supporter of
KidZania, a theme park designed to offer work
experiences to children, and has been providing
support to the facilities in Tokyo and Koshien (Hyogo
Prefecture) since they opened. In the Daiwa Securities
pavilions, children act as consultants, giving advice
to client investors at a securities company, going to
nearby pavilions, and conducting interviews to checktheir levels of traffic and popular products. Based on
the results of the interviews, they then select where
to invest and make investment recommendations fortheir customers.

●Finance ParkThe Daiwa Securities Group cooperates with Finance
Parks operated by Junior Achievement Japan. This
program provides opportunities for junior high school
students to learn economic and financial mechanismsthat will be necessary for them in their adult life.
Finance Parks have been operating in Shinagawa,Tokyo and Kyoto since 2005 and in Iwaki, Fukushima
Prefecture and in Sendai, Miyagi Prefecture since
FY2014. We have set up pseudo-branches in theseparks. To date, a total of 94,793 students haveparticipated.

●Initiatives for Junior and Senior HighSchool and College Students• For Junior and Senior High School Students
The Corporate Communication Department of Daiwa
Securities Group Inc. visited junior and senior highschools from which requests were received, including
a private junior high school in Nara Prefecture, toconduct a class on the theme of the structure ofstock companies and the role of securities firms. In
September 2016, the Gifu sales branch of Daiwa
Securities also visited a public junior high school in
Gifu City and conducted a career education class on
the theme of the knowledge and joy of professionals.
The Daiwa Securities Group also accepts requests forcorporate training at head offices and sales branches.
We mainly explain the role of securities firms insociety and the details of the securities business tohelp participants to determine their future course andoccupation.

XIV. Contribution to local
communities* Refer to pages 11 and 12 fordetails on materiality at the Daiwa
Securities Group.

Refer to page 87 of“CSR Related Data” for“Corporate Citizenship
Initiatives andExpenditures.”

Number of participantsin Finance Parks for
FY2016

20,261peopleShinagawa: 1,591
Kyoto: 7,087
Iwaki: 3,060
Sendai: 8,523(on an application basis; surveyed
by Junior Achievement Japan)

Engagement with Society• For College Students and Others
In August 2016, Daiwa Securities Group Inc.
established the University of Tokyo Hongo Tech
Garage as a site to advance entrepreneurshipeducation in the University of Tokyo (a donation
project by the Daiwa Securities Group).
The project aims to create an environment thatenables students at the University of Tokyo tovoluntarily promote their projects while expanding
educational programs. Under the project, we will takeinitiatives that lead to the creation of start-ups thatwill play a major role in the next generation and thedevelopment of human resources for innovation.

●Support for Economic and Financial
Education Using the Okane-no-Mikata
WebsiteRefer to “Providing Junior and Senior High SchoolStudents with Opportunities to Learn about Financeand Economy” on page 20.

Assistance to Communities Inside
and Outside of Japan throughFoundations and NPOs

●Support to “Job Almanac 2016”●Daiwa Securities Health Foundation

The Daiwa Securities Group Inc. provided support
to “Job Museum,” a career education material forelementary school children released by The Asahi
Shimbun Company. We explained the structure ofstocks and the role of securities firms in an article
entitled “What is a stock?” The material conforms to
the government guideline for teaching and is available
in both book and website versions. The book version“Job Almanac 2016” was donated to elementary
schools across Japan. The web version “Job Museum
Kids” has a quiz and other features that make itpossible to enjoy the site like a game.

In commemoration of Daiwa Securities’ 30th
anniversary, the Daiwa Securities Health Foundation
was established in 1972 to support medical research.
Since the year following its establishment, theFoundation has provided grants to outstanding
research projects focusing on medicine and medicalcare for middle-aged and elderly people. In recent
years, in light of the progressive aging of society, theFoundation has expanded the scope of its support
to research projects on health, welfare, and nursing
care, in addition to conventional research projects. In
FY2016, which marked the Foundation’s 43rd year of
support, applications from projects on nursing careand rehabilitation, in particular, started to increase.
Applications from those other than doctors as well as
young researchers also stood out.

●Preparing Financial Education
Textbook “Let’s Learn about Stocks”
Since the end of 2016, the Corporate Communication
Department of Daiwa Securities Group Inc. has been
preparing “Let’s Learn about Stocks,” a financial
education textbook targeting upper-grade elementary
school children and above, with support from school
teachers. The textbook comes in two types, forstudents and for instructions. Readers learn aboutcompanies in the basic course and stocks, which are amethod for companies to raise funds, in the advanced
course. The textbook was first used in schools in
FY2017.

Visiting career education class

Job Almanac 2016

“Job Almanac 2016”

Donation of

25,350 copies(published on May 31, 2016)

Daiwa Securities
Health Foundation's Independent
Assurance
cumulative grants
awarded through FY2016
Independent Assurance•Number of recipients

1,193 people•Total amount of grants¥

1,178.0 million

Daiwa Securities
Foundation's cumulative
grants awarded
through FY2016
Volunteer Activities Grants•Number of projects receiving grants

3,176•Total amount of grants¥

730.67 million

Independent
Assurance

Grants to volunteer work fordisaster recovery (the Great
East Japan Earthquake)•Number of projects receiving grants●Daiwa Securities Foundation
In 1994, the Daiwa Securities Foundation was
launched as part of commemoration activities for the50th anniversary of Daiwa Securities’ establishment
in order to make a contribution to society fromour profits. Since the year of its establishment, theFoundation has provided grants to support activities
for the elderly, people with disabilities, and children,and other volunteer work of high social significance.
In FY2016, three kinds of volunteer activity grants
were awarded: Volunteer Activities Grants, whichmarked 23rd time of awarding; grants to volunteer
work for disaster recovery (Great East Japan
Earthquake) that marked the sixth such award since2011; and grants to support activities for victims of
the Kumamoto Earthquakes, which occurred in April
2016. The Foundation also made its 23rd round of
grants to research projects on volunteer work.

●Daiwa Anglo-Japanese Foundation(Chartered in the United Kingdom)

Financial Education Textbook “Let’s
Learn about Stocks”

63

Daiwa Securities Group CSR REPORT 2017

The Daiwa Anglo-Japanese Foundation is a UK charity
established in 1988 in part with contributions from
Daiwa Securities, for fostering closer ties between the
United Kingdom and Japan.
Presentation ceremony for the Osaka region (Daiwa Securities Foundation)

238•Total amount of grants¥

99.05 million

Grants to volunteer workfor disaster recovery (theKumamoto Earthquakes)•Number of projects receiving grants

67•Total amount of grants¥

19.07 million

Grants to research projects
on volunteer work
•Number of projects receiving grants

30•Total amount of grants

26.36 million¥

Media reports concerning
grant activities•Daiwa Securities Health Foundation:

7

newspapers and TV stations•Daiwa Securities Foundation
Grants to volunteer work for disaster recovery(the Kumamoto Earthquakes): 11 newspapers
Volunteer Activities Grants and grants tovolunteer work for disaster recovery (the Great
East Japan Earthquake): 33 newspapers(Surveyed by the Daiwa Securities HealthFound and the Daiwa Securities Foundation)

Job Museum Kids (Japanese)

Daiwa Securities Health Foundation (Japanese)

Daiwa Securities Foundation (Japanese)

Engagement with Society

Daiwa Securities Group CSR REPORT 2017

Principal activities include:(1) A warding grants to individuals, institutions, andorganizations working to promote ties between
the United Kingdom and Japan(2) Enabling British and Japanese students andacademics to further their education by providing
opportunities for joint research and supporting
exchanges and other bilateral initiatives(3) A warding Daiwa Scholarships for British
graduates to study Japanese and undertake work
assignments in Japan(4) Organizing a year-round calendar of events toimprove understanding of Japan in the United
Kingdom (at the London head office)
The Foundation’s Tokyo office provides local
assistance to Daiwa Scholars (students from theUnited Kingdom), administers grant applications
from Japan and collaborates with other institutions
promoting Anglo-Japanese relations. In September
2016, the foundation held the second course of
Daiwa Ichiban Lectures, which began in FY2015 incollaboration with the British Embassy. Mr. Lionel
Barber, editor of the Financial Times, delivered alecture titled “The United Kingdom Post-Brexit.”
Moreover, in Daiwa Scholarships in JapaneseStudies, established in FY2015 as a scholarshipprogram for studies on Japan and Japanese language
training, three persons were selected for FY2016. Thisis a program in which the Daiwa Securities Groupfunds the tuition and living expenses in Japan for
individuals from the United Kingdom.

●Daiwa Myanmar-Japan Foundation
On April 1, 2013, the Daiwa Securities Groupestablished the Daiwa Myanmar-Japan Foundation
to improve people’s livelihood in Myanmar and todevelop the human capital necessary for sustainableeconomic growth. The foundation focuses on
training people who will carry key responsibilities in
Myanmar’s future capital markets by implementing
a scholarship program that provides junior staff ofthe country’s central government with opportunities
to study in Japan. It also focuses on assisting the
Myanmar Institute of Certified Public Accountants(MICPA) in developing public accountants. In April
2016, the foundation signed a tripartite memorandumof understanding with the MICPA and the JapaneseInstitute of Certified Public Accountants oncooperation in human resource development.

●Kopernik Program
Kopernik is a US-based NPO established in 2009 withthe goal of improving quality of life and reducing
poverty in developing countries; it began operationsin Japan in 2010. Kopernik has developed a program
to enable contributors in developed countries to
go online and donate to NPOs/NGOs in developing
countries or areas of their own choosing by selecting
needed products such as simple water purifiers andsolar lamps. Kopernik shares details of recipient NPO/NGO activities supported by donations on its website
to ensure transparency.
Donations sourced from our revenue from the
Daiwa Eco Fund and Russell Global Environmental
Technology Fund are granted to this program withproducts and recipients selected based on theirconsistency with the principles of these funds.

●Daiwa Securities Phoenix Japan
Program
In May 2012, the Daiwa Securities Group establishedthe Great East Japan Earthquake Relief Assistanceprogram. The program donates a portion ofmanagement fees from the Daiwa Nippon Support
Fund Vol. 3. Phoenix Japan and continues providing
assistance to local NPOs through the Japan
Earthquake Local NPO Support Fund (specifiedaid), which was set up by Japan NPO Center, acertified NPO. The program supports the humanresources development of local NPOs. Their activities
include educational assistance and reconstructing
communities in the disaster-affected areas.

Cumulative number ofpeople completing
Independent
the Daiwa Scholar Assurance
program by FY2016

165 people
Contributions by
Daiwa Myanmar- JapanFoundation•Number of Myanmar citizens receiving
scholarships

17 people•Number of participants in public
accountant training in Myanmar

45 people(Cumulative contributions throughFY2016)

Donations made to Independent
Assurance
the Kopernik
program for FY2016

3,877,335¥(1) Region
Turkey (Syrian refugees)
Support granted: Hygiene
supply kit(2) Region
The Kratie region of Cambodia
Support granted: Solar lamps,
water purifiers, cooking stoves(3) Region
The Siem Reap region of Cambodia
Support granted: Solar lamps,
cooking stoves

How Daiwa Securities Phoenix Japan
Program Works
Flow of funds
Flow of reports

Japan NPO Center
Japan Earthquake Local
NPO Support Fund(Special Aid)

Selection and advice
Donations

Daiwa
Securities“Special aid”
selection committee

Reconstruction
assistanceNPO
Operation and grant
Civil Society Initiative FundJapan NPO Center

The 26th term Daiwa Scholars

64(4) Region
MyanmarSupport granted: Technology fair,needs survey

Amount of grants
Independent
selected to FY2016 Assurance
fifth-term programfor Daiwa Securities
Phoenix Japan Program•Grant recipients

7 groups•Total amount of grants

24.07 million¥

Training completion ceremony (Daiwa Myanmar-Japan Foundation)
The Daiwa Anglo-Japanese Foundation

Kopernik Program (Japanese)

Daiwa Securities Phoenix Japan
Program (Japanese)

Engagement with Society

Daiwa Securities Group CSR REPORT 2017

Dialogue with Stakeholders - Only Connect At the end of 2004, when there would otherwise have been a cheerful atmosphere ahead of the start of a
new year, we witnessed on TV screens the inconceivable damage caused by a major earthquake that struck
off the island of Sumatra and the resulting Indian Ocean tsunami.
Through the Daiwa Securities Group Tsunami Reconstruction Fund*1, which we started based on the belief
that we should do something, we supported local NPOs in disaster-affected countries for 10 years from 2005
through 2014.

Initiatives in FY2016
In February 2017, to examine the results and issues of our
support, we visited Sri Lanka, where we had backed*2
microfinance activities by local women’s groups, incooperation with Asian Community Center 21 (ACC21), a
specified nonprofit corporation.
*1 For the Daiwa Securities Group Tsunami Reconstruction Fund, refer to “Looking back on
10 Years of the Daiwa Securities Group Tsunami Reconstruction Fund” on page 48 of“Daiwa Securities Group CSR Report 2015.”*2 The grants in Sri Lanka were provided through a local group, Kantha Sansandaya—
Wilpotha (KSW).

Representative of KSW★ Messages from the community
1. Thanks to support from microfinance, I am now able to earn astable income and pay for my children to go to school.
2. The group activities have reinforced our solidarity.
3. The Daiwa Securities Group provided us with support for along time, and this was very helpful.
4. I am now willing to give a hand to others, rather than justtaking care of myself.

★ Lessons learned by the Daiwa Securities Group
1. It appears that due to the strong bond of the community,
this microfinance framework supported the community in recovering from the damage caused by the tsunami andhelped women to stand on their own feet.
2. Sri Lanka experienced a devastating civil war in the past, and I think this kind of community-bonding activity led tothe interchange between the divided areas.

★ Initiatives to be taken by the Daiwa Securities Group going forward
1. When engaging in disaster relief activities in an area hit by a major disaster, we will seek to capitalize on the powerof communities in the area.
2. We will seek to provide support in a different way from the emergency activities implemented by internationalNGOs and others.

“Only Connect” is the phrase encompassing our wish to generate new values by connecting with various stakeholders. It is a referenceto Howards End, one of British author E. M. Forster’s most famous novels.

65

Engagement with Society●Donation to Gunma Prefecture World
Heritage and Gunma Silk Heritage
Succession Fund
Tomioka Silk Mill and Related Sites in Gunma
Prefecture were added to the UNESCO World
Heritage List in 2014. Daiwa SB Investments launched
Tomioka Silk Mill and Silk Industry Heritage Sites
Preservation Activity Support Fund (nicknamed
Gunma’s Silk Heritage) to preserve the buildings forsericulture, silk reeling, and textile manufacturingthat remain within the prefecture, as well as
folk performing arts. We donated a portion ofmanagement fees from the fund.
The initiative jointly taken by investors, sales
companies, and Daiwa SB Investments helps the
project to pass on the value of Gunma’s silk culture
and silk industry, which led Japan’s modernization, tofuture generations.

Support for Culture, the Arts,
and Sports Activities
The Daiwa Securities Group provides support for awide range of cultural and artistic activities, including
art exhibitions, classic concerts, and sports. For
example, we have been the special sponsor of theMainichi Shimbun Central Contest for Book Review
Painting, which aims to encourage reading andimprove children’s reading skills. In the contest,elementary pupils, junior and senior high school
students express their impression and images frombooks that they have read by means of paintings.
In February 2017, we also supported the Tokyo
Marathon, for which we have been an official partner
since FY2015, to mark, in part, the Group’s selection
as a listed company proactively working to improve
employees’ health in the “Health & Productivity
Stock” program in 2017 for three consecutive years.
We also assist a broad range of sports activities
including those of the Japanese Para-Sports
Association, a public interest incorporated foundation,and the Japanese Para-Swimming Federation, ageneral incorporated association.

At a ceremony of the Japanese Para-Swimming Federation

Daiwa Securities Group CSR REPORT 2017

Corporate Citizenship Initiatives
The Daiwa Securities Group believes that participationin volunteer programs and other community actions
by employees helps broaden their perspectives andfamiliarize them with different values. We consider
that this, in turn, has a good influence on both theirwork and their lives. Through our intranet, we provide
information on volunteer opportunities for projects
planned by ourselves, other businesses and NPOs/
NGOs as well as events that help educate employees
and raise their awareness. We also strive to create
an environment that makes it easy for employees tovolunteer by setting up a recognition program, theVolunteer Award, among other incentives. In ourwork to encourage as many employees as possible
to participate in volunteer activities, we will seek
ongoing collaborations with external organizations,strengthen internal communications on volunteeringand volunteer opportunities and continue to pursue
increased opportunities for employees to engage.

●Volunteer Activities by Employees• The Hands-on Forest Experience 2016—
Environmental Maintenance for Sayama Hills
As part of the Group’s efforts to conserve biodiversity,
the Daiwa Securities Group conducts a volunteer
activity every year with participation of Group
employees. For FY2016, 26 Group employees andtheir families participated in an activity in Sayama Hills
in Saitama Prefecture on April 23. The participants
first learned about the importance of community
village preservation in a class provided in collaboration
with the Totoro Fund, a public interest incorporated
foundation. They later carried out thinning work inareas crowded with bamboo, and tried bamboo shootdigging. The areas were turned into a healthy bamboo
forest that allowed an adequate amount of sunlight in.
• International Cooperation through a Collection
Drive
The Daiwa Securities Group has been running acollection drive as an initiative that is easy for employees
to take part in. Pre-loved books and unusable postcards
are collected and donated to three groups: JEN BOOKMAGIC, Japan Committee “Vaccines for the World’sChildren,” and Live with Friends on the Earth. The
proceeds from the sale of items collected are used tofund their activities, including support for education,

Participants of the Hands-on Forest Experience 2016

66

Amount of donations
to Gunma Prefecture
World Heritage andGunma Silk Heritage
Succession Fund3.21 million¥(Combined amount withdonations from The
Gunma Bank, Ltd., which
also handles the fund)(July 2016)

Culture, the arts, andsports activities•The Mainichi Shimbun

Central Contest forBook Review Painting
Special sponsor for

23 years
Number of participant
schools

6,955 schools
Total number of entries

701,239 entries
Number of exhibitions of
winning works

9 sales branches
Contribution made in
FY2016 throughIndependent
collection drives Assurance(equivalent monetary
value)•JEN BOOK MAGIC

33,451¥•Japan Committee “Vaccines

for the World’s Children”

146,813¥•Live with Friends on the

Earth
¥

94,304

Engagement with Society

medical services and agricultural development
assistance in developing countries. We will continue theactivity as its accessibility makes it quite popular among
our employees.
• TABLE FOR TWO (TFT) Program
Since the spring of 2013, the Daiwa Securities
Group has contributed to the TFT Program, which
is organized by TABLE FOR TWO, an internationallydesignated NPO. This is an initiative aimed atcorrecting food imbalances between developing anddeveloped countries by donating a portion of revenue
from the purchase of food and drink by Group
officers and employees to pay for school lunches indeveloping countries. In FY2016, a donation to the
TFT Program was adopted as one of the gifts forwhich points granted to participants in “KA-RADA iki-iki Project,” which was designed to improve
employees’ health, can be exchanged. Under thissystem, the Group also matches these donations by
100% to raise employees’ awareness of the programand expand their opportunities for participation.

team to children at welfare facilities and bodies in
the prefecture, while Mito branch employees, mainly
new recruits, aided neighborhood activities in a local“Mito-komon” festival. The sales branches of Daiwa
Securities are thus involved in various local activities.

●Initiatives Taken by the Group’s
Overseas Offices•A ctivities at the Group’s Hong Kong
Operational Base
Daiwa Capital Markets Hong Kong donated
HK$50,000 each to victims of two major earthquakesthat occurred in FY2016. One is the Kumamoto
Earthquakes, which occurred in April 2016, and theother is the earthquake that hit Myanmar also in
April 2016. Both regions are closely connected with
the Daiwa Securities Group and Asia. Daiwa CapitalMarkets Hong Kong supports disaster victims throughits donations and is praying for their recovery. The
company will continue planning a variety of CSR
activities.

* For “KA-RA-DA iki-iki Project,” refer to page 59 of “Relationshipwith Employees.”●Donation of Christmas Cakes
Voluntary members of Daiwa Securities employees
have engaged in an activity to present cakes marketedby a business partner of the company in a Christmas
campaign to children at child support facilities
through Second Harvest Japan, an NPO. In FY2016,
they donated a total of 91 cakes to nine organizations,
including one based in Shinjuku Ward, Tokyo thatprovides study support and meal services once a week
free of charge to elementary and junior high school
students living in single-parent households.

●Initiatives at Sales Branches of Daiwa
Securities
Daiwa Securities’ 146 sales branches nationwide
engage in a variety of activities contributing to local
communities.
In FY2016, the Matsuyama branch agreed with
Matsuyama City’s initiative to create a comfortableand beautiful road environment, and continuously
participated in an activity to clean up city roads
as well as a planting activity. The Shizuoka branch
donated 200 tickets for the soccer games of a local

Participants of “Mito-komon” festival (Daiwa Securities’ Mito Branch)

67

Daiwa Securities Group CSR REPORT 2017

• Activities at the Group’s London Operational Base
Daiwa Capital Markets Europe engages in various
support through charity activities by the Daiwa
Society.
(1) H olding fund-raising events and activities tosupport the events of charity organizations(2) Last Hour Appeal(Charity fund made up of salary deductions fromvoluntary officers and employees)(3) Introduction of a probation training program(Program to hire socioeconomically disadvantaged
young people as probationary employees andprovide opportunities to be employed)(4) Activities to support homeless people through anorganization
Daiwa Capital Markets Europe will continue engaging
in various CSR activities in FY2017.
• Activities at the Group’s New York Operational Base
Daiwa Capital Markets America has implemented a
Charity Friday since March 2001. This initiative allows
employees who make a $5 donation to wear jeans
to work that day. The company also matches theemployees’ donations. The total donations are given
to groups engaging in support activities for education,
poverty, disease, disasters, and others.

TFT Program

Independent
Assurance

Contributions madeJanuary–December, 2016

21,993Aroundschool lunches
in developing countries(Calculated on the assumption that one
meal costs ¥20)

Engagement with Society• Activities at the Group’s South Korea
Operational BaseIn FY2017, Daiwa Securities Capital Markets Korea
participated in the “Love Noodle” event held by
the Korean National Red Cross, continuing its
participation from last year. The fair contributes tosociety by bringing cheer to the growing number of
elderly people living alone in South Korea, where thenumber of nuclear families is increasing. Furthermore,
the company has introduced a compensatory holiday
system for employees who volunteer on weekends
with the aim of supporting a good work-lifebalance and establishing sustainable management.
Departments also submit annual plans in order toencourage people to leave work on time and taketheir annual leave. Daiwa Securities Capital Markets
Korea will strengthen its support for CSR activities andwill strive to contribute widely to Korean society.

●Initiatives to Promote Volunteer
Activities• Volunteer Award
Daiwa Securities has the President’s Awards program
to recognize outstanding achievements by employees.
As part of the program we introduced the Volunteer
Award in FY2007, which is given twice a year toemployees and groups involved in volunteer initiatives
and activities that provide ongoing support tocommunities.
• Dissemination of Information through theInternal Network
The Daiwa Securities Group provides a wide range
of information on volunteer programs within theGroup through our intranet, believing that volunteer
activities help broaden the perspectives of employees
and provide benefits by making them aware of various
social issues. We introduce the best practices fromsuch volunteer work through our in-house magazine
and other means in an effort to expand the range ofvolunteer activities.

"Love Noodle" (Daiwa securities Capital Markets Korea)

Daiwa Securities Group CSR REPORT 2017

●Donation of Shareholder Reward Items
Daiwa Securities Group Inc. implements a shareholder
reward program. Together with the operation of thisprogram, we donate items returned to us due to therelocation of shareholders and so on, as well as items
received for our shareholdings in other companies,
to organizations such as designated NPOs and public
interest incorporated foundations.

●Disaster Assistance•D onations to Areas Damaged by the 2016
Kumamoto Earthquakes
Daiwa Securities Group Inc. made a donation
through Japan Platform, a designated NPO, and theCentral Community Chest of Japan, a social welfare
corporation, to support the victims of the earthquakes
centering on the Kumamoto Region that occurredin April 2016 and assist reconstruction work in thedisaster-affected areas. At the same time, group
employees also made voluntary contributions.
Moreover, to help rebuild important culturalproperties, Daiwa Securities made a donation to thefund to support the restoration of damaged cultural
heritage such as Kumamoto Castle and Aso Shrine.

68

Contribution to
Independent
areas damaged by Assurance
the 2016 Kumamoto
Earthquakes¥

10 million

Employee donations
Approximately

10 million¥(on a reported basis)

Contribution to the Independent
fund to support the Assurance
restoration of damaged
cultural heritage such as
Kumamoto Castle and Aso
Shrine10 million¥

Third-Party Evaluations

Daiwa Securities Group CSR REPORT 2017

Third-Party Evaluations
Name

Evaluation

Dow Jones Sustainability Indices
The Dow Jones Sustainability Indices (DJSI) are a stock index of companies with sustainable practices selected by
Dow Jones & Company, Inc. of the United States and RobecoSAM AG of Switzerland. Daiwa Securities Group
Inc. is a constituent of DJSI World. Since DJSI World was launched in 1999, it has continually been included in
DJSI.

FTSE Indices
FTSE is a subsidiary of the London Stock Exchange. It develops global indexes and provides data for investment.
Daiwa Securities Group Inc. has been included in the FTSE4Good, an index of socially responsible companies
compiled by FTSE, for twelve consecutive periods since September 2006.
In July 2017, Daiwa Securities Group Inc. was included in the FTSE Blossom Japan Index. This index is used as an
ESG passive management benchmark by the Government Pension Investment Fund.

MSCI Indices
MSCI measures and publishes various indices.
In July 2017, Daiwa Securities Group Inc. was selected a constituent of the MSCI Japan Empowering Women
Index. In the same month, Daiwa Office Investment Corporation was included in the MSCI Japan ESG SelectLeaders Index. These indices are used as ESG passive management benchmarks by the Government Pension
Investment Fund.

Nadeshiko Brand
Daiwa Securities Group Inc. has been selected a “Nadeshiko Brand” for three consecutive years, from FY2015 to
FY2017. This title is awarded by the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange tolisted companies for having excellent track records in empowering women at their companies.
We are recognized highly for our efforts to establish specific targets for the promotion of support of female
employees and work-life balance, as well as for building an environment where individuals with diverse values
can maximize their abilities.

Health & Productivity Stock
SelectionAwards for Companies Promoting
Equality and Work-Life Balance
Minister of Health, Labour andWelfare Prize

Daiwa Securities Group Inc. has been selected as a “Health & Productivity Stock Selection” for three consecutive
years, from FY2015 to FY2017.
This title is awarded jointly by Japan’s Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange tocompanies promoting the health of their employees.
We engage in various initiatives to improve employees’ health under close collaboration between our Human
Resources Departments, Health Insurance Association, and occupational health staff. The initiatives recognizedinclude a system to urge employees with problematic results to see doctors after their regular health checkups,
measures against lifestyle diseases, smoking cessation support, and health support for female employees.

Daiwa Securities received the Minister of Health, Labour and Welfare Prize in the Family Friendly Corporations
category of the Ministry of Health, Labour and Welfare’s FY2016 Awards for Companies Promoting Equality andWork-Life Balance.
The Awards for Companies Promoting Equality and Work-Life Balance is a commendation system recognizing
companies that have promoted initiatives that might serve as models for other companies to emulate with regard
to positive action for the empowerment of working women, and to action for the support of a healthy balance
between work and child raising and nursing. Daiwa Securities Group was recognized for providing diverse
support for realizing a healthy balance between work and childcare, in order to create an environment in which
both men and women can continue to work in a highly motivated manner.

69

Third-Party Evaluations

Daiwa Securities Group CSR REPORT 2017

Name

Evaluation

Award for Companies that Leadthe Way in Letting Women Shine:
Minister of State for Gender
Equality Prize

Daiwa Securities received the Minister of State for Gender Equality Prize at the Cabinet Office’s FY2016 Awards
for Companies that Lead the Way in Letting Women Shine.
The Cabinet Office established the Awards for Companies that Lead the Way in Letting Women Shine with theaim of recognizing companies whose efforts to promote improvements in working environments for women
have been recognized by investors, job seekers and consumers. The Cabinet Office hopes that recognizing
the policies, initiatives and achievements—as well as the disclosure of relevant information—related to theappointment of women at leading companies might encourage other companies to implement similar programs.
Daiwa Securities received the award in recognition of its endeavors to actively employ women, to encourage
leaving the workplace before 7 p.m., and to support the realization of a healthy balance between work andchildcare.

Ikumen Enterprise Award: Special
Encouragement Prize

Daiwa Securities received the 2016 Ikumen Enterprise Award’s Special Encouragement Prize for actively promoting
the realization of a healthy balance between work and child raising for its male employees, and improving
business processes to facilitate this. The Ikumen Enterprise Awards form part of the Ikumen Project, and arepresented by the Ministry of Health, Labour and Welfare to support “Ikumen”—men who play an active role inchild-raising—and to encourage men to take parental leave.
Daiwa Securities has announced a goal of ensuring that 100% of its eligible male employees take parental leave
by FY2020. The company encourages the use of, and is engaged in establishing a working environment thatfacilitates the taking of, parental leave.

Action to Promote
Countermeasures Against Cancer:
Minister of Health, Labour andWelfare Prize

Action to Promote Countermeasures Against Cancer is a national project whose goal is to detect and treat
cancer at an early stage. The project aims to increase the number of people who undertake cancer checks
during corporate health examinations, and currently has the support and cooperation of 2,300 corporations andgroups.
Daiwa Securities Group received the Minister of Health, Labour and Welfare Prize in March 2017, in recognitionof implementing the most advanced program of cancer countermeasures of any company.

“Platinum Kurumin”—Certified as a Family-Friendly
Employer

The certified family-friendly employer logo (nicknamed “Kurumin”) shown is the certification symbol forfamily-friendly employers provided by Japan’s Ministry of Health, Labour and Welfare based on the Act on
Advancement of Measures to Support Raising the Next Generation of Children. In addition to Daiwa Securities
Group Inc. obtaining certification as a family-friendly employer on June 9, 2008. Daiwa Securities, Daiwa
Institute of Research Holdings, Daiwa Institute of Research, Daiwa Institute of Research Business Innovation, andDaiwa Securities Business Center have also been certified.
Moreover, as of March 11, 2016, Daiwa Securities and Daiwa Securities Business Center were certified as
especially excellent companies among the Certified Family-friendly Employers that have implemented higher
levels of initiatives.

“Tomonin”—Logo for Promoting
Work Environments
for Balancing Work
with Long-Term CareThe Daiwa Securities Group has continuously built a working environment where employees can find it easy to
use work-life balance support programs in an effort to help them to continue working while balancing work andnursing care. The Ministry of Health, Labour and Welfare conferred the logo (nicknamed “Tomonin”) to us forpromoting the provision of a working environment favorable for balancing work with long-term care.

GRESB 2016 “Green Star”
Daiwa Office Investment Corporation, a REIT managed by Daiwa Real Estate Asset Management, has received
the Green Star, the highest category of recognition in the Global Real Estate Sustainability Benchmark (GRESB)
Survey, for five consecutive years.

ISO Certification● ISO 14001
Daiwa Institute of Research Business Innovation Ltd. has received ISO 14001 certification, which is aninternational standard for environmental management systems. Through its business activities, Daiwa Institute of
Research Business Innovation has endeavored to realize a harmonious relationship with the global environment,
and actively works to reduce environmental load.
● ISO 27001
Daiwa Institute of Research Ltd. and Daiwa Institute of Research Business Innovation Ltd. have received ISO
27001 certification, which is an international standard for information security management systems. In orderto maintain and manage the confidentiality, integrity and availability of their information assets, both companies
continue to improve their information security.
● ISO 20000
Daiwa Institute of Research Ltd. and Daiwa Institute of Research Business Innovation Ltd. have received ISO
20000 certification, which is an international standard for IT service management systems. In order to provide
their customers with a high-quality IT service, both companies are engaged in organizational enhancements
to the quality of their IT services including cost management, business process optimization and continuous
improvements.

70

GRI Content Index (GRI Standards)

Daiwa Securities Group CSR REPORT 201771

GRI Content Index (GRI Standards)
In compiling the Daiwa Securities Group CSR Report 2017, reference was made to the GRI Standards of the Global Reporting Initiative (GRI).

General Disclosures
ClausesOrganizational
ProfileStrategy

Ethics and Integrity

Governance

Disclosures

Link

102-1

a. Name of the organization

Overview of Company and Businesses

102-2

a. A description of the organization’s activitiesb. Primary brands, products, and services, including an explanation of any products or services that arebanned in certain markets

Overview of Company and Businesses/
Initiatives through Business Activities(Provision of Quality Service toCustomers)

102-3

a. Location of the organization’s headquarters

Overview of Company and Businesses

102-4

a. Number of countries where the organization operates, and the names of countries where it has
significant operations and/or that are relevant to the topics covered in the report

Overview of Company and Businesses/
Integrated Report 2017102-5

a. Nature of ownership and legal form

Overview of Company and Businesses

102-6

a. Markets served, including:i. Geographic locations where products and services are offeredii. Sectors servediii. Types of customers and beneficiaries

Overview of Company and Businesses/
Integrated Report 2017

102-7

a. Scale of the organization, including:i. Total number of employees
ii. Total number of operations
iii. Net sales (for private sector organizations) or net revenues (for public sector organizations)
iv. Total capitalization (for private sector organizations) broken down in terms of debt and equity
v. Quantity of products and services provided

Overview of Company and Businesses

102-8

a. Total number of employees by employment contract (permanent and temporary), by genderb. Total number of employees by employment contract (permanent and temporary), by regionc. Total number of employees by employment type (full-time and part-time), by genderd. Whether a significant portion of the organization’s activities are performed by workers who are not
employees. If applicable, a description of the nature and scale of work performed by workers who are
not employees.
e. Any significant variations in the numbers reported in Disclosures 102-8-a, 102-8-b, and 102-8-c (suchas seasonal variations in the tourism or agricultural industries)
f. An explanation of how the data have been compiled, including any assumptions madeCSR Related Data

102-9

a. A description of the organization’s supply chain, including its main elements as they relate to theorganization’s activities, primary brands, products, and services

CSR of the Daiwa Securities Group/
Risk Management102-10a. Significant changes to the organization’s size, structure, ownership, or supply chain, including:i. Changes in the location of, or changes in, operations, including facility openings, closings, andexpansions
ii. Changes in the share capital structure and other capital formation, maintenance, and alteration
operations (for private sector organizations)iii. Changes in the location of suppliers, the structure of the supply chain, or relationships with suppliers,
including selection and termination

Overview of Company and Businesses

102-11a. Whether and how the organization applies the Precautionary Principle or approach

Compliance/Risk Management/IT
Strategy and the Management of
Systemic Risk

102-12a. List of externally-developed economic, environmental and social charters, principles, or other initiatives
to which the organization subscribes, or which it endorses

CSR of the Daiwa Securities Group/
Initiatives through Business Activities(Role and Social Responsibilities of
the Financial Services)102-13a. A list of the main memberships of industry or other associations, and national or international
advocacy organizations

Principal Member Qualification• Nippon Keidanren • Japan
Securities Dealers Association• Principles for Financial Action
for the 21st Century • PRI • CDP• Global Compact Network Japan,etc.

102-14a. A statement from the most senior decision-maker of the organization (such as CEO, chair, or
equivalent senior position) about the relevance of sustainability to the organization and its strategy foraddressing sustainability

Message from CSR Officer/
Integrated Report 2017102-15a. A description of key impacts, risks, and opportunities

Message from CSR Officer/Initiatives
through Business Activities/
Integrated Report 2017102-16

a. A description of the organization’s values, principles, standards, and norms of behavior

CSR of the Daiwa Securities Group(CSR of the Daiwa Securities Group)102-17a. A description of internal and external mechanisms for:i. Seeking advice about ethical and lawful behavior, and organizational integrity
ii. Reporting concerns about unethical or unlawful behavior, and organizational integrity

Corporate Governance/ Initiatives
for Supporting Business Activities(Support Business Operationfrom Property Management toEnvironmental Management)

102-18a. Governance structure of the organization, including committees of the highest governance bodyb. Committees responsible for decision-making on economic, environmental, and social topics

Corporate Governance102-19a. Process for delegating authority for economic, environmental, and social topics from the highest
governance body to senior executives and other employees

CSR of the Daiwa Securities Group(CSR Promotion System)

GRI Content Index (GRI Standards)

Governance

Daiwa Securities Group CSR REPORT 2017102-20a. Whether the organization has appointed an executive-level position or positions with responsibility foreconomic, environmental, and social topic
b. Whether post holders report directly to the highest governance body

CSR of the Daiwa Securities Group(CSR Promotion System)

102-21a. Processes for consultation between stakeholders and the highest governance body on economic,
environmental, and social topics
b. If consultation is delegated, describe to whom it is delegated and how the resulting feedback isprovided to the highest governance body

CSR of the Daiwa Securities Group(CSR Promotion System)/Corporate
Governance/Relationship with
Employees (Communication)

102-22a. Composition of the highest governance body and its committees by:
i. Executive or non-executive
ii. Independenceiii. Tenure on the governance bodyiv. Number of each individual’s other significant positions and commitments, and the nature of thecommitments
v. Gender
vi. Membership of under-represented social groupsvii. Competencies relating to economic, environmental, and social topics
viii. Stakeholder representation

Corporate Governance/Integrated
Report 2017102-23a. Whether the chair of the highest governance body is also an executive officer in the organizationb. If the chair is also an executive officer, describe his or her function within the organization’s
management and the reasons for this arrangement

Corporate Governance/Integrated
Report 2017102-24a. Nomination and selection processes for the highest governance body and its committees
b. Criteria used for nominating and selecting highest governance body members, including whether and how
i. Stakeholders (including shareholders) are involved
ii. Diversity is considerediii. Independence is considerediv. Expertise and experience relating to economic, environmental, and social topics are considered

Corporate Governance/Integrated
Report 2017/Corporate Governance
Report102-25a. Processes for the highest governance body to ensure conflicts of interest are avoided and managedb. Whether conflicts of interest are disclosed to stakeholders, including, as a minimum:
i. Cross-board membership
ii. Cross-shareholding with suppliers and other stakeholdersiii. Existence of controlling shareholder
iv. Related party disclosures

Corporate Governance/Integrated
Report 2017/Corporate Governance
Report102-26a. Highest governance body’s and senior executives’ roles in the development, approval, and updatingof the organizations’ purpose, value or mission statements, strategies, policies, and goals related toeconomic, environmental, and social topics

CSR of the Daiwa Securities Group(CSR Promotion System)

102-27a. Measures taken to develop and enhance the highest governance body’s collective knowledge of
economic, environmental, and social topics

Not reported

102-28a. Processes for evaluating the highest governance body’s performance with respect to governance ofeconomic, environmental, and social topics
b. Whether such evaluation is independent or not, and its frequency
c. Whether such evaluation is a self-assessmentd. Actions taken in response to evaluation of the highest governance body’s performance with respect
to governance of economic, environmental, and social topics, including, as a minimum, changes inmembership and organizational practiceNot reported

102-29a. Highest governance body’s role in identifying and managing economic, environmental, and social
topics and their impacts, risks, and opportunities—including its role in the implementation of due
diligence processesb. Whether stakeholder consultation is used to support the highest governance body’s identificationand management of economic, environmental, and social topics, and their impacts, risks, andopportunities

CSR of the Daiwa Securities Group(CSR Management)

102-30a. Highest governance body’s role in reviewing the effectiveness of the organization’s risk management
processes for economic, environmental, and social topics

CSR of the Daiwa Securities Group(CSR Promotion System)

102-31a. Frequency of the highest governance body’s review of economic, environmental, and social topics andtheir impacts, risks, and opportunities

CSR of the Daiwa Securities Group(CSR Promotion System)

102-32a. The highest committee or position that formally reviews and approves the organization’s sustainability
report and ensures that all material topics are covered

CSR of the Daiwa Securities Group(CSR Promotion System)

102-33a. Process for communicating critical concerns to the highest governance body

CSR of the Daiwa Securities Group(CSR Promotion System)/Corporate
Governance102-34a. Total number and nature of critical concerns that were communicated to the highest governance bodyb. Mechanism(s) used to address and resolve critical concerns

Corporate Governance102-35a. Remuneration policies for the highest governance body and senior executives for the following typesof remuneration:i. Fixed pay and variable pay, including performance-based pay, equity-based pay, bonuses, anddeferred or vested shares
ii. Sign-on bonuses or recruitment incentive payments
iii. Termination payments
iv. Clawbacks
v. Retirement benefits, including the difference between benefit schemes and contribution rates for thehighest governance body, senior executives, and all other employeesb. How performance criteria in the remuneration policy relate to the highest governance body’s andsenior executives’ objectives for economic, environmental, and social topics

Corporate Governance/CSR RelatedData102-36

a. Process for determining remunerationb. Whether remuneration consultants are involved in determining remuneration and whether they are
independent of managementc. Any other relationships which the remuneration consultants have with the organization

Corporate Governance/Corporate
Governance Report102-37a. How stakeholders’ views are sought and taken into account regarding remuneration
b. If applicable, the results of votes on remuneration policies and proposals

Corporate Governance102-38a. Ratio of the annual total compensation for the organization’s highest-paid individual in each countryof significant operations to the median annual total compensation for all employees (excluding thehighest-paid individual) in the same country

Not reported

102-39a. Ratio of percentage increase in annual total compensation for the organization’s highest-paid
individual in each country of significant operations to the median percentage increase in annual totalcompensation for all employees (excluding the highest-paid individual) in the same country

Not reported

72

GRI Content Index (GRI Standards)

Stakeholder
Engagement

Reporting practiceManagement
ApproachDaiwa Securities Group CSR REPORT 201773

102-40a. A list of stakeholder groups engaged by the organization

CSR of the Daiwa Securities Group(CSR Management)

102-41a. Percentage of total employees covered by collective bargaining agreements

Relationship with Employees(Communication)/CSR Related Data

102-42a. The basis for identifying and selecting stakeholders with whom to engage

CSR of the Daiwa Securities Group(CSR Management)

102-43a. The organization’s approach to stakeholder engagement, including frequency of engagement by typeand by stakeholder group, and an indication of whether any of the engagement was undertaken
specifically as part of the report preparation process

CSR of the Daiwa Securities (CSR
Management)/Initiatives throughBusiness Activities (Provision of
Quality Service to Customers)/
Relationship with Shareholders
and Other Investors/Relationshipwith Employees/Engagement withSociety102-44a. Key topics and concerns that have been raised through stakeholder engagement, including:i. How the organization has responded to those key topics and concerns, including through its
reportingii. The stakeholder groups that raised each of the key topics and concerns

Initiatives through Business Activities(Provision of Quality Service toCustomers)/Relationship with
Shareholders and Other Investors/
Relationship with Employees/
Engagement with Society (Dialogue
with Stakeholders)

102-45a. A list of all entities included in the organization’s consolidated financial statements or equivalent
documentsb. Whether any entity included in the organization’s consolidated financial statements or equivalent
documents is not covered by the report

Overview of Company and Businesses

102-46a. An explanation of the process for defining the report content and the topic Boundaries
b. An explanation of how the organization has implemented the Reporting Principles for defining reportcontent

Editorial Policy (Reporting
Boundary)/CSR of the Daiwa
Securities Group (CSR Materiality of
the Daiwa Securities Group)102-47a. A list of the material topics identified in the process for defining report content

CSR of the Daiwa Securities Group

102-48a. The effect of any restatements of information given in previous reports, and the reasons for such
restatements

Not applicable

102-49a. Significant changes from previous reporting periods in the list of material topics and topic Boundaries

Not applicable, because there havebeen no significant changes since
the previous report102-50a. Reporting period for the information provided

Editorial Policy

102-51a. If applicable, the date of the most recent previous report

Editorial Policy

102-52

a. Reporting cycle

Editorial Policy

102-53a. The contact point for questions regarding the report or its contents

Editorial Policy

102-54a. The claim made by the organization, if it has prepared a report in accordance with the GRI Standards,
either:i. “This report has been prepared in accordance with the GRI Standards: Core option”
ii. “This report has been prepared in accordance with the GRI Standards: Comprehensive option”

Editorial Policy

102-55a. The GRI content index, which specifies each of the GRI Standards used and lists all disclosures includedin the reportb. For each disclosure, the content index shall include:
i. The number of the disclosure (for disclosures covered by the GRI Standards)
ii. The page number(s) or URL(s) where the information can be found, either within the report or inother published materials
iii. If applicable, and where permitted, the reason(s) for omission when a required disclosure cannot be
madeThis table references GRI content

102-56a. A description of the organization’s policy and current practice with regard to seeking external
assurance for the reportb. If the report has been externally assured:i. A reference to the external assurance report, statements, or opinions. If not included in the assurance
report accompanying the sustainability report, a description of what has and what has not beenassured and on what basis, including the assurance standards used, the level of assurance obtained,
and any limitations of the assurance process
ii. The relationship between the organization and the assurance provider
iii. Whether and how the highest governance body or senior executives are involved in seeking external
assurance for the organization’s sustainability report

Independent Assurance Report andIndependent Assurance Mark

103-1

a. An explanation of why the topic is materialb. The Boundary for the material topic, which includes a description of:i. Where the impacts occur
ii. The organization’s involvement with the impacts. For example, whether the organization has caused
or contributed to the impacts, or is directly linked to the impacts through its business relationshipsc. Any specific limitation regarding the topic Boundary

CSR of the Daiwa Securities Group(CSR Materiality of the Daiwa
Securities Group)

103-2

a. An explanation of how the organization manages the topic
b. A statement of the purpose of the management approachc. A description of the following, if the management approach includes that component:i. Policies
ii. Commitments
iii. Goals and targets
iv. Responsibilities
v. Resources
vi. Grievance mechanismsvii. Specific actions, such as processes, projects, programs and initiatives

CSR of the Daiwa Securities Group(CSR Materiality of the Daiwa
Securities Group/Daiwa Spirit)

103-3

a. An explanation of how the organization evaluates the management approach, including:i. The mechanisms for evaluating the effectiveness of the management approachii. The results of the evaluation of the management approachiii. Any related adjustments to the management approach

CSR of the Daiwa Securities Group(CSR Management)

GRI Content Index (GRI Standards)

Daiwa Securities Group CSR REPORT 201774

Economic
Economic
Performance

201-1

a. Direct economic value generated and distributed (EVG&D) on an accruals basis, including the basic
components for the organization’s global operations as listed below. If data are presented on a cash
basis, report the justification for this decision in addition to reporting the following basic components:
i. Direct economic value generated: revenues
ii. Economic value distributed: operating costs, employee wages and benefits, payments to providers ofcapital, payments to government by country, and community investments
iii. Economic value retained: “direct economic value generated” less “economic value distributed”
b. Where significant, report EVG&D separately at country, regional, or market levels, and the criteria
used for defining significanceCSR Related Data/ Disclosure Report2017 (Consolidated Statements ofIncome/Consolidated Statements of
Changes in Net Assets)/Integrated
Report 2017

201-2

a. Risks and opportunities posed by climate change that have the potential to generate substantive
changes in operations, revenue, or expenditure, including:i. A description of the risk or opportunity and its classification as either physical, regulatory, or otherii. A description of the impact associated with the risk or opportunityiii. The financial implications of the risk or opportunity assumed before action is taken
iv. The methods used to manage the risk or opportunity
v. The costs of actions taken to manage the risk or opportunity

Initiatives for Supporting
Business Activities (Support
Business Operation from Property
Management to Environmental
Management)/Risk Management/
Environmental Initiatives

201-3

a. If the plan’s liabilities are met by the organization’s general resources, the estimated value of those liabilities
b. If a separate fund exists to pay the plan’s pension liabilities: items
i. The extent to which the scheme’s liabilities are estimated to be covered by the assets that have been
set aside to meet themii. The basis on which that estimate has been arrived atiii. When that estimate was madec. If a fund set up to pay the plan’s pension liabilities is not fully covered, explain the strategy, if any,
adopted by the employer to work towards full coverage, and the timescale, if any, by which theemployer hopes to achieve full coveraged. Percentage of salary contributed by employee or employere. Level of participation in retirement plans, such as participation in mandatory or voluntary schemes,
regional, or country-based schemes, or those with financial impact

Disclosure Report 2017 (AccountingStandards for Significant
Allowances)

201-4

a. Total monetary value of financial assistance received by the organization from any government during
the reporting period, including:i. Tax relief and tax credits
ii. Subsidies
iii. Investment grants, research and development grants, and other relevant types of grantiv. Awards
v. Royalty holidays
vi. Financial assistance from Export Credit Agencies (ECAs)vii. Financial incentives
viii. Other financial benefits received or receivable from any government for any operationb. The information in 201-4-a by countryc. Whether, and the extent to which, any government is present in the shareholding structure

Impact is insignificant

202-1

a. When a significant proportion of employees are compensated based on wages subject to minimum
wage rules, report the relevant ratio of the entry level wage by gender at significant locations ofoperations to the minimum wageb. When a significant proportion of other workers (excluding employees) performing the organization’s
activities are compensated based on wages subject to minimum wage rules, describe the actions
taken to determine whether these workers are paid above the minimum wagec. Whether a local minimum wage is absent or variable at significant locations of operation, by gender.
In circumstances in which different minimums can be used as a reference, report which minimum
wage is being used.
d. The definition used for “significant locations of operation”

Impact is insignificant, due to thenature of our business

202-2

a. Percentage of senior management at significant locations of operation that are hired from the local communityb. The definition used for “senior management”
c. The organization’s geographical definition of “local”
d. The definition used for “significant locations of operation”

Not reported

203-1

a. Extent of development of significant infrastructure investments and services supported
b. Current or expected impacts on communities and local economies, including positive and negative
impacts where relevantc. Report whether these investments and services are commercial, in-kind, or pro bono engagements

Initiatives through Business Activities(Support for the Creation of Our
Future Society)/Engagement withSociety (Assistance to Communities
Inside and Outside of Japan throughFoundations and NPOs)

203-2

a. Examples of significant identified indirect economic impacts of the organization, including positive andnegative impactsb. Significance of the indirect economic impacts in the context of external benchmarks and stakeholder
priorities, such as national and international standards, protocols, and policy agendas

Not applicable

Procurement
Practices

204-1

a. Percentage of the procurement budget used for significant locations of operation spent on suppliers
local to that operation (such as percentage of products and services purchased locally)b. The organization’s geographical definition of “local”
c. The definition used for “significant locations of operation”

Impact is insignificant, due to thenature of our businessAnti-corruption

205-1

a. Total number and percentage of operations assessed for risks related to corruption
b. Significant risks related to corruption identified through the risk assessment

Compliance/Risk Management

205-2

a. Total number and percentage of governance body members that the organization’s anti-corruption
policies and procedures have been communicated to, broken down by regionb. Total number and percentage of employees that the organization’s anti-corruption policies andprocedures have been communicated to, broken down by employee category and regionc. Total number and percentage of business partners that the organization’s anti-corruption policies
and procedures have been communicated to, broken down by type of business partner and region.
Describe if the organization’s anti-corruption policies and procedures have been communicated to any
other persons or organizations.
d. Total number and percentage of governance body members that have received training on anticorruption, broken down by region
e. Total number and percentage of employees that have received training on anti-corruption, broken
down by employee category and region.

Compliance

205-3

a. Total number and nature of confirmed incidents of corruption
b. Total number of confirmed incidents in which employees were dismissed or disciplined for corruptionc. Total number of confirmed incidents when contracts with business partners were terminated or not
renewed due to violations related to corruptiond. Public legal cases regarding corruption brought against the organization or its employees during thereporting period and the outcomes of such cases

Not applicable

206-1

a. Number of legal actions pending or completed during the reporting period regarding anti-competitive
behavior and violations of anti-trust and monopoly legislation in which the organization has been
identified as a participant
b. Main outcomes of completed legal actions, including any decisions or judgments

Not applicableMarket Presence

Indirect Economic
Impacts

Anti-competitive
Behavior

GRI Content Index (GRI Standards)

Daiwa Securities Group CSR REPORT 2017

Environmental
Materials

Energy

Water

301-1

a. Total weight or volume of materials used to produce and package the organization’s primary products
and services during the reporting period, by:i. Non-renewable materials used
ii. Renewable materials used

Not applicable

301-2

a. Percentage of recycled input materials used to manufacture the organization’s primary products andservices

Not applicable

301-3

a. Percentage of reclaimed products and their packaging materials for each product categoryb. How the data for this disclosure have been collected

Not applicable302-1

a. Total fuel consumption within the organization from non-renewable sources, in joules or multiples,and including fuel types usedb. Total fuel consumption within the organization from renewable sources, in joules or multiples, andincluding fuel types used
c. In joules, watt-hours or multiples, the total
i. Electricity consumption
ii. Heating consumptioniii. Cooling consumption
iv. Steam consumption
d. In joules, watt-hours or multiples, the total
i. Electricity soldii. Heating soldiii. Cooling soldiv. Steam solde. Total energy consumption within the organization, in joules or multiples
f. Standards, methodologies, assumptions, and/or calculation tools used
g. Source of the conversion factors used

CSR Related Data

302-2

a. Energy consumption outside of the organization, in joules or multiples
b. Standards, methodologies, assumptions, and/or calculation tools usedc. Source of the conversion factors used

CSR Related Data

302-3

a. Energy intensity ratio for the organizationb. Organization-specific metric (the denominator) chosen to calculate the ratioc. Types of energy included in the intensity ratio; whether fuel, electricity, heating, cooling, steam, or alld. Whether the ratio uses energy consumption within the organization, outside of it, or both

CSR Related Data

302-4

a. Amount of reductions in energy consumption achieved as a direct result of conservation and efficiency
initiatives, in joules or multiples
b. Types of energy included in the reductions; whether fuel, electricity, heating, cooling, steam, or allc. Basis for calculating reductions in energy consumption, such as base year or baseline, including therationale for choosing it
d. Standards, methodologies, assumptions, and/or calculation tools used

CSR Related Data

302-5

a. Reductions in energy requirements of sold products and services achieved during the reporting period,in joules or multiples
b. Basis for calculating reductions in energy consumptions, such as base year or baseline, including therationale for choosing it
c. Standards, methodologies, assumptions, and/or calculation tools used

CSR Related Data

303-1

a. Total volume of water withdrawn, with a breakdown by the following sources:
i. Surface water, including water from wetlands, rivers, lakes, and oceans
ii. Ground wateriii. Rainwater collected directly and stored by the organization
iv. Waste water from another organizationv. Municipal water supplies or other public or private water utilities
b. Standards, methodologies, and assumptions used

CSR Related Data

303-2

a. Total number of water sources significantly affected by withdrawal by type:i. Size of the water source
ii. Whether the source is designated as a nationally or internationally protected areaiii. Biodiversity value (such as species diversity and endemism, and total number of protected species)
iv. Value or importance of the water source to local communities and indigenous peoples
b. Standards, methodologies, and assumptions used

Impact is insignificant

303-3

a. Total volume of water recycled and reused by the organizationb. Total volume of water recycled and reused as a percentage of the total water withdrawn as specified
in Disclosure 303-1
c. Standards, methodologies, and assumptions used

Not reported

75

GRI Content Index (GRI Standards)

Biodiversity

Emissions

Daiwa Securities Group CSR REPORT 2017

304-1

a. For each operational site owned, leased, managed in, or adjacent to, protected areas and areas ofhigh biodiversity value outside protected areas, the following information:i. Geographical locationii. Subsurface and underground land that may be owned, leased, or managed by the organizationiii. Position in relation to the protected area (in the area, adjacent to, or containing portions of theprotected area) or the high biodiversity value area outside protected areas
iv. Type of operation (office, manufacturing or production, or extractive)v. Size of operation site in km2 (or another unit, if appropriate)vi. Biodiversity value characterized by the attribute of the protected area or area of high biodiversity
value outside the protected area (terrestrial, freshwater, or maritime ecosystem)vii. Biodiversity value characterized by listing of protected status (such as IUCN Protected Area
Management Categories, Ramsar Convention, national legislation)

Not applicable304-2

a. Nature of significant direct and indirect impacts on biodiversity with reference to one or more of the following:i. Construction or use of manufacturing plants, mines, and transport infrastructure
ii. Pollution (introduction of substances that do not naturally occur in the habitat from point and nonpoint sources)iii. Introduction of invasive species, pests, and pathogens
iv. Reduction of species
v. Habitat conversion
vi. Changes in ecological processes outside the natural range of variation (such as salinity or changes ingroundwater level)b. Significant direct and indirect positive and negative impacts with reference to the following:i. Species affected
ii. Extent of areas impacted
iii. Duration of impacts
iv. Reversibility or irreversibility of the impacts

Not applicable304-3

a. Size and location of all habitat areas protected or restored, and whether the success of the restoration
measure was or is approved by independent external professionals
b. Whether partnerships exist with third parties to protect or restore habitat areas distinct from where
the organization has overseen and implemented restoration or protection measuresc. Status of each area based on its condition at the close of the reporting period
d. Standards, methodologies, and assumptions used

Not applicable

304-4

a. Total number of IUCN Red List species and national conservation list species with habitats in areas
affected by the operations of the organization, by level of extinction risk:
i. Critically endangered
ii. Endangerediii. Vulnerable
iv. Near threatenedv. Least concern

Not applicable

305-1

a. Gross direct (Scope 1) GHG emissions in metric tons of CO2 equivalentb. Gases included in the calculation; whether CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, or allc. Biogenic CO2 emissions in metric tons of CO2 equivalentd. Base year for the calculation, if applicable, including:i. The rationale for choosing it
ii. Emissions in the base yeariii. The context for any significant changes in emissions that triggered recalculations of base year
emissionse. Source of the emission factors and the global warming potential (GWP) rates used, or a reference to
the GWP source
f. Consolidation approach for emissions; whether equity share, financial control, or operational control
g. Standards, methodologies, assumptions, and/or calculation tools used

CSR Related Data

305-2

a. Gross location-based energy indirect (Scope 2) GHG emissions in metric tons of CO2 equivalentb. If applicable, gross market-based energy indirect (Scope 2) GHG emissions in metric tons of CO2 equivalentc. If available, the gases included in the calculation; whether CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, or all
d. Base year for the calculation, if applicable, including
i. The rationale for choosing it
ii. Emissions in the base yeariii. The context for any significant changes in emissions that triggered recalculations of base year
emissionse. Source of the emission factors and the global warming potential (GWP) rates used, or a reference to
the GWP source
f. Consolidation approach for emissions; whether equity share, financial control, or operational control
g. Standards, methodologies, assumptions, and/or calculation tools used

CSR Related Data

305-3

a. Gross other indirect (Scope 3) GHG emissions in metric tons of CO2 equivalentb. If available, the gases included in the calculation; whether CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, or allc. Biogenic CO2 emissions in metric tons of CO2 equivalentd. Other indirect (Scope 3) GHG emissions categories and activities included in the calculatione. Base year for the calculation, if applicable, including:i. The rationale for choosing it
ii. Emissions in the base yeariii. The context for any significant changes in emissions that triggered recalculations of base year
emissionsf. Source of the emission factors and the global warming potential (GWP) rates used, or a reference to
the GWP source
g. Standards, methodologies, assumptions, and/or calculation tools used

CSR Related Data

305-4

a. GHG emissions intensity ratio for the organizationb. Organization-specific metric (the denominator) chosen to calculate the ratioc. Types of GHG emissions included in the intensity ratio, whether direct (Scope 1), energy indirect(Scope 2), and/or other indirect (Scope 3)
d. Gases included in the calculation; whether CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, or all

CSR Related Data

305-5

a. GHG emissions reduced as a direct result of reduction initiatives, in metric tons of CO2 equivalentb. Gases included in the calculation; whether CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, or allc. Base year or baseline, including the rationale for choosing itd. Scopes in which reductions took place; whether direct (Scope 1), energy indirect (Scope 2), and/or
other indirect (Scope 3)
e. Standards, methodologies, assumptions, and/or calculation tools used

CSR Related Data

76

GRI Content Index (GRI Standards)

Emissions

Daiwa Securities Group CSR REPORT 2017305-6

a. Production, imports, and exports of ODS in metric tons of CFC-11 (trichlorofluoromethane) equivalentb. Substances included in the calculationc. Source of the emission factors used
d. Standards, methodologies, assumptions, and/or calculation tools used

Impact is insignificant

305-7

a. Significant air emissions, in kilograms or multiples, for each of the following:i. NOxii. SOxiii. Persistent organic pollutants (POP)iv. Volatile organic compounds (VOC)v. Hazardous air pollutants (HAP)vi. Particulate matter (PM)vii. Other standard categories of air emissions identified in relevant regulations
b. Source of the emission factors usedc. Standards, methodologies, assumptions, and/or calculation tools used

Impact is insignificant

306-1

a. Total volume of planned and unplanned water discharges by:i. Destinationii. Quality of water, including treatment methodiii. Whether the water was reused by another organizationb. Standards, methodologies, and assumptions used

Impact is insignificant

306-2

a. Total weight of hazardous waste, with a breakdown by the following disposal methods whereapplicable:
i. Reuse
ii. Recyclingiii. Compostingiv. Recovery, including energy recovery
v. Incineration (mass burn)vi. Deep well injection
vii. Landfill
viii. On-site storageix. Other (to be specified by the organization)b. Total weight of non-hazardous waste, with a breakdown by the following disposal methods whereapplicable:
i. Reuse
ii. Recyclingiii. Compostingiv. Recovery, including energy recovery
v. Incineration (mass burn)vi. Deep well injection
vii. Landfill
viii. On-site storageix. Other (to be specified by the organization)c. How the waste disposal method has been determined:
i. Disposed of directly by the organization, or otherwise directly confirmed
ii. Information provided by the waste disposal contractor
iii. Organizational defaults of the waste disposal contractor

CSR Related Data

306-3

a. Total number and total volume of recorded significant spillsb. The following additional information for each spill that was reported in the organization’s financial
statements:
i. Location of spill
ii. Volume of spilliii. Material of spill, categorized by: oil spills (soil or water surfaces), fuel spills (soil or water surfaces),
spills of wastes (soil or water surfaces), spills of chemicals (mostly soil or water surfaces), and other(to be specified by the organization)c. Impacts of significant spills

Not applicable306-4

a. Total weight for each of the following:i. Hazardous waste transported
ii. Hazardous waste imported
iii. Hazardous waste exported
iv. Hazardous waste treatedb. Percentage of hazardous waste shipped internationallyc. Standards, methodologies, and assumptions used

Not applicable

306-5

a. Water bodies and related habitats that are significantly affected by water discharges and/or runoff,
including information on:i. The size of the water body and related habitat
ii. Whether the water body and related habitat is designated as a nationally or internationally protectedareaiii. The biodiversity value, such as total number of protected species

Not applicable

Environmental
Compliance

307-1

a. Significant fines and non-monetary sanctions for non-compliance with environmental laws and/or
regulations in terms of:i. Total monetary value of significant fines
ii. Total number of non-monetary sanctions
iii. Cases brought through dispute resolution mechanisms
b. If the organization has not identified any non-compliance with environmental laws and/or regulations,a brief statement of this fact is sufficient

Not applicable

Supplier
Environmental
Assessment

308-1

a. Percentage of new suppliers that were screened using environmental criteria

Not applicable308-2

a. Number of suppliers assessed for environmental impactsb. Number of suppliers identified as having significant actual and potential negative environmental
impactsc. Significant actual and potential negative environmental impacts identified in the supply chaind. Percentage of suppliers identified as having significant actual and potential negative environmental
impacts with which improvements were agreed upon as a result of assessmente. Percentage of suppliers identified as having significant actual and potential negative environmental
impacts with which relationships were terminated as a result of assessment, and why

Not applicable

Effluents and
Waste

77

GRI Content Index (GRI Standards)

Daiwa Securities Group CSR REPORT 2017

SocialEmployment

401-1

a. Total number and rate of new employee hires during the reporting period, by age group, gender andregionb. Total number and rate of employee turnover during the reporting period, by age group, gender andregionCSR Related Data

401-2

a. Benefits which are standard for full-time employees of the organization but are not provided totemporary or part-time employees, by significant locations of operation. These include, as a minimum:
i. Life insurance
ii. Health careiii. Disability and invalidity coverage
iv. Parental leave
v. Retirement provisionvi. Stock ownershipvii. Othersb. The definition used for “significant locations of operation”

Relationship with Employees(Striving to Create a PleasantWorking Environment)

401-3

a. Total number of employees that were entitled to parental leave, by genderb. Total number of employees that took parental leave, by genderc. Total number of employees that returned to work in the reporting period after parental leave ended,by genderd. Total number of employees that returned to work after parental leave ended that were still employed
twelve months after their return to work, by gendere. Return to work and retention rates of employees that took parental leave, by gender

Relationship with Employees(Striving to Create a PleasantWorking Environment)/CSR Related
Data

Labor/Management
Relations402-1

a. Minimum number of weeks’ notice typically provided to employees and their elected representativesprior to the implementation of significant operational changes that could substantially affect themb. For organizations with collective bargaining agreements, whether the notice period and provisions for
consultation and negotiation are specified in collective agreements

Not reported

Occupational
Health and Safety

403-1

a. The level at which each formal joint management-worker health and safety committee typicallyoperates within the organizationb. Percentage of workers whose work, or workplace, is controlled by the organization, that are
represented by formal joint management-worker health and safety committees

Not reported

403-2

a. Types of injury, injury rate (IR), occupational disease rate (ODR), lost day rate (LDR), absentee rate (AR),and work-related fatalities, for all employees, with a breakdown by:
i. Region
ii. Genderb. Types of injury, injury rate (IR), and work-related fatalities, for all workers (excluding employees)
whose work, or workplace, is controlled by the organization, with a breakdown by:
i. Region
ii. Genderc. The system of rules applied in recording and reporting accident statistics

Not reported

403-3

a. Whether there are workers whose work, or workplace, is controlled by the organization, involved in
occupational activities who have a high incidence or high risk of specific diseases

Relationship with Employees(Striving to Create a PleasantWorking Environment)

403-4

a. Whether formal agreements (either local or global) with trade unions cover health and safetyb. If so, the extent, as a percentage, to which various health and safety topics are covered by these
agreements

Relationship with Employees(Striving to Create a PleasantWorking Environment/
Communication)

404-1

a. Average hours of training that the organization’s employees have undertaken during the reporting
period, by:i. Gender
ii. Employee category

Relationship with Employees(Human Resource Development andSkill Enhancement)

404-2

a. Type and scope of programs implemented and assistance provided to upgrade employee skills
b. Transition assistance programs provided to facilitate continued employability and the management ofcareer endings resulting from retirement or termination of employment

Relationship with Employees(Human Resource Development andSkill Enhancement)

404-3

a. Percentage of total employees by gender and by employee category who received a regularperformance and career development review during the reporting period

Relationship with Employees(Human Resource Development andSkill Enhancement)

405-1

a. Percentage of individuals within the organization’s governance bodies in each of the following
diversity categories:
i. Gender
ii. Age group: under 30 years old, 30-50 years old, over 50 years oldiii. Other indicators of diversity where relevant (such as minority or vulnerable groups)
b. Percentage of employees per employee category in each of the following diversity categories:
i. Gender
ii. Age group: under 30 years old, 30-50 years old, over 50 years oldiii. Other indicators of diversity where relevant (such as minority or vulnerable groups)

CSR Related Data/Integrated Report
2017

405-2

a. Ratio of the basic salary and remuneration of women to men for each employee category, by
significant locations of operationb. The definition used for “significant locations of operation”

CSR Related Data

Non-discrimination

406-1

a. Total number of incidents of discrimination during the reporting periodb. Status of the incidents and actions taken with reference to the following:i. Incident reviewed by the organization
ii. Remediation plans being implemented
iii. Remediation plans that have been implemented, with results reviewed through routine internalmanagement review processes
iv. Incident no longer subject to action

Corporate Governance/Initiatives
for Supporting Business Activities(Support Business Operationfrom Property Management toEnvironmental Management)

Freedom of
Association
and Collective
Bargaining

407-1

a. Operations and suppliers in which workers’ rights to exercise freedom of association or collective
bargaining may be violated or at significant risk in terms of:i. Type of operation (such as manufacturing plant) and supplierii. Countries or geographic areas with operations and suppliers considered at riskb. Measures taken by the organization in the reporting period intended to support rights to exercise
freedom of association and collective bargaining

Not applicable due to the nature ofour businessTraining and
Education

Diversity and Equal
Opportunity

78

GRI Content Index (GRI Standards)

Daiwa Securities Group CSR REPORT 2017Child Labor

408-1

a. Operations and suppliers considered to have significant risk for incidents of:i. Child labor
ii. Young workers exposed to hazardous work
b. Operations and suppliers considered to have significant risk for incidents of child labor either in terms of:i. Type of operation (such as manufacturing plant) and supplierii. Countries or geographic areas with operations and suppliers considered at riskc. Measures taken by the organization in the reporting period intended to contribute to the effective
abolition of child labor

Our business entails no risk of using
child labor

Forced andCompulsory Labor

409-1

a. Operations and suppliers considered to have significant risk for incidents of forced or compulsory labor
either in terms of:i. Type of operation (such as manufacturing plant) and supplierii. Countries or geographic areas with operations and suppliers considered at riskb. Measures taken by the organization in the reporting period intended to contribute to the eliminationof all forms of forced or compulsory labor

Our business entails no risk of using
forced labor

Security Practices

410-1

a. Percentage of security personnel who have received formal training in the organization’s human rights
policies or specific procedures and their application to security
b. Whether training requirements also apply to third-party organizations providing security personnel

Impact is insignificant, due to thenature of our businessIndigenous Rights

411-1

a. Total number of identified incidents of violations involving the rights of indigenous peoples during thereporting periodb. Status of the incidents and actions taken with reference to the following:i. Incident reviewed by the organization
ii. Remediation plans being implemented
iii. Remediation plans that have been implemented, with results reviewed through routine internalmanagement review processes
iv. Incident no longer subject to action

Not applicable

Assessment

412-1

a. Total number and percentage of operations that have been subject to human rights reviews or humanrights impact assessments, by country

Risk Management

412-2

a. Total number of hours in the reporting period devoted to training on human rights policies orprocedures concerning aspects of human rights that are relevant to operations
b. Percentage of employees trained during the reporting period in human rights policies or procedures
concerning aspects of human rights that are relevant to operations

Human Rights Initiatives

412-3

a. Total number and percentage of significant investment agreements and contracts that include humanrights clauses or that underwent human rights screeningb. The definition used for “significant investment agreements”

We have no operations in areas
where there are special concerns
about protection of human rights

413-1

a. Percentage of operations with implemented local community engagement, impact assessments, and/or development programs, including the use of:i. Social impact assessments, including gender impact assessments, based on participatory processes
ii. Environmental impact assessments and ongoing monitoringiii. Public disclosure of results of environmental and social impact assessments
iv. Local community development programs based on local communities’ needs
v. Stakeholder engagement plans based on stakeholder mappingvi. Broad based local community consultation committees and processes that include vulnerable groupsvii. Works councils, occupational health and safety committees and other worker representation bodies
to deal with impacts
viii. Formal local community grievance processes

Impact is insignificant, due to thenature of our business

413-2

a. Operations with significant actual and potential negative impacts on local communities, including:i. The location of the operations
ii. The significant actual and potential negative impacts of operations

Not applicable

Supplier Social
Assessment

414-1

a. Percentage of new suppliers that were screened using social criteria

Not applicable

414-2

a. Number of suppliers assessed for social impacts
b. Number of suppliers identified as having significant actual and potential negative social impacts
c. Significant actual and potential negative social impacts identified in the supply chaind. Percentage of suppliers identified as having significant actual and potential negative social impacts
with which improvements were agreed upon as a result of assessmente. Percentage of suppliers identified as having significant actual and potential negative social impacts
with which relationships were terminated as a result of assessment, and why

Not applicablePublic Policy

415-1

a. Total monetary value of financial and in-kind political contributions made directly and indirectly by theorganization by country and recipient/beneficiaryb. If applicable, how the monetary value of in-kind contributions was estimated

CSR Related Data

Customer Healthand Safety

416-1

a. Percentage of significant product and service categories for which health and safety impacts areassessed for improvement

Not applicable due to the nature ofour business

416-2

a. Total number of incidents of non-compliance with regulations and/or voluntary codes concerning thehealth and safety impacts of products and services within the reporting period, by:i. Incidents of non-compliance with regulations resulting in a fine or penalty
ii. Incidents of non-compliance with regulations resulting in a warningiii. Incidents of non-compliance with voluntary codesb. If the organization has not identified any non-compliance with regulations and/or voluntary codes, abrief statement of this fact is sufficient

Not applicable due to the nature ofour business

Local Communities

79

GRI Content Index (GRI Standards)

Product and Service
Labeling

Daiwa Securities Group CSR REPORT 2017

80

417-1

a. Whether each of the following types of information is required by the organization’s procedures for
product and service information and labeling:i. The sourcing of components of the product or service
ii. Content, particularly with regard to substances that might produce an environmental or social impactiii. Safe use of the product or service
iv. Disposal of the product and environmental or social impacts
v. Other (explain)b. Percentage of significant product or service categories covered by and assessed for compliance withsuch procedures

Initiatives through Business Activities(Provision of Quality Service toCustomers)

417-2

a. Total number of incidents of non-compliance with regulations and/or voluntary codes concerning
product and service information and labeling, by:i. Incidents of non-compliance with regulations resulting in a fine or penalty
ii. Incidents of non-compliance with regulations resulting in a warningiii. Incidents of non-compliance with voluntary codesb. If the organization has not identified any non-compliance with regulations and/or voluntary codes, abrief statement of this fact is sufficient

Not applicable

417-3

a. Total number of incidents of non-compliance with regulations and voluntary codes concerningmarketing communications, including advertising, promotion, and sponsorship, by:i. Incidents of non-compliance with regulations resulting in a fine or penalty
ii. Incidents of non-compliance with regulations resulting in a warningiii. Incidents of non-compliance with voluntary codesb. If the organization has not identified any non-compliance with regulations and/or voluntary codes, abrief statement of this fact is sufficient

Not applicable

Customer Privacy

418-1

a. Total number of substantiated complaints received concerning breaches of customer privacy,
categorized by:i. Complaints received from outside parties and substantiated by the organization
ii. Complaints from regulatory bodies
b. Total number of identified leaks, thefts, or losses of customer datac. If the organization has not identified any substantiated complaints, a brief statement of this fact issufficient

Not applicable

Social andEconomicCompliance419-1

a. Significant fines and non-monetary sanctions for non-compliance with laws and/or regulations in thesocial and economic area in terms of:i. Total monetary value of significant fines
ii. Total number of non-monetary sanctions
iii. Cases brought through dispute resolution mechanisms
b. If the organization has not identified any non-compliance with laws and/or regulations, a brief
statement of this fact is sufficientc. The context against which significant fines and non-monetary sanctions were incurred

Not applicable

GRI Content Index (GRI Standards)

Daiwa Securities Group CSR REPORT 201781

Specific Standard Disclosures for Financial Services (GRI)
Clauses
Products andServices

DMA

Indicator

Link

FS1

Policies with specific environmental and social components applied to businesslines

CSR of the Daiwa Securities Group (CSR Promotion
System)/Initiatives through Business Activities (Role andSocial Responsibilities of the Financial Services/Provision of
Quality Service to Customers)

FS2

Procedures for assessing and screening environmental and social risks in businesslines

Not reported

FS3

Processes for monitoring clients’ implementation of and compliance withenvironmental and social requirements included in agreements or transactions

Compliance

FS4

Process(es) for improving staff competency to implement the environmental andsocial policies and procedures as applied to business lines

CSR of the Daiwa Securities Group (CSR Promotion
System)/Relationship with Employees (Human Resource
Development and Skill Enhancement)

FS5Interactions with clients/investees/business partners regarding environmental andsocial risks and opportunities

Initiatives through Business Activities (Provision of Quality
Service to Customers)/Relationship with Shareholders andOther Investors

Aspect: Product Portfolio
FS6

Percentage of the portfolio for business lines by specific region, size (e.g. micro/
SME/large) and by sector

Overview of Company and Businesses/Disclosure Report
2017/Integrated Report 2017

FS7

Monetary value of products and services designed to deliver a specific social
benefit for each business line broken down by purpose

Initiatives through Business Activities (Initiatives throughProduct Development and Provision/Support for theCreation of Our Future Society)

FS8

Monetary value of products and services designed to deliver a specificenvironmental benefit for each business line broken down by purpose

Initiatives through Business Activities (Initiatives throughProduct Development and Provision/Support for theCreation of Our Future Society)

Coverage and frequency of audits to assess implementation of environmental
and social policies and risk assessment procedures

Corporate Governance

Aspect: Audit
DMA

FS9

Aspect: Active Ownership
FS10

Percentage and number of companies held in the institution’s portfolio withwhich the reporting organization has interacted on environmental or social
issues

Not reported

FS11

Percentage of assets subject to positive and negative environmental or social
screening

Initiatives through Business Activities (Role and Social
Responsibilities of the Financial Services)

Voting policy(ies) applied to environmental or social issues for shares over which
the reporting organization holds the right to vote shares or advises on voting

Initiatives through Business Activities (Role and Social
Responsibilities of the Financial Services)

DMA
Society

FS12

Aspect: Local Communities
FS13

Access points in low-populated or economically disadvantaged areas by typeNot applicable

FS14

Initiatives to improve access to financial services for disadvantaged people

Initiatives through Business Activities (Provision of Quality
Service to Customers)/Engagement with Society (Assistanceto Communities Inside and Outside of Japan throughFoundations and NPOs)

Aspect: Product and Service Labeling
FS15

Policies for the fair design and sale of financial products and services

Initiatives through Business Activities (Provision of Quality
Service to Customers)

FS16

Initiatives to enhance financial literacy by type of beneficiary

Engagement with Society (Education and Research
Activities in Economics and Finance)

DMA

ISO 26000 Index

Daiwa Securities Group CSR REPORT 2017

ISO 26000 Index
In compiling the Daiwa Securities Group CSR Report 2017, reference was made to the core subjects of ISO 26000.
Core Subjects and Issues
6.2
Organizational
governance
6.3 Humanrights

6.4 Labor
practices

6.5 Theenvironment

6.6 Fair
operatingpractices

6.7 Consumer
issues

6.8 Community
involvement
anddevelopment

Message from CSR Officer/CSR of the Daiwa Securities Group/Overview of Company andBusinesses/Corporate Governance/Compliance/Risk Management
Issue 1: Due diligence

Risk Management (Supply Chain Management and Human Rights Due Diligence)Issue 2: Human rights risk situations

We have no operations in areas where there are special concerns about protection of humanrightsIssue 3: Avoidance of complicity

Risk Management/Human Rights Initiatives

Issue 4: Resolving grievances

Corporate Governance/Initiatives for Supporting Business Activities (Support Business
Operation from Property Management to Environmental Management)

Issue 5: Discrimination and vulnerable groups

Relationship with Employees (Hiring Initiatives)/Human Rights Initiatives/CSR Related Data

Issue 6: Civil and political rights

Relationship with Employees

Issue 7: Economic, social and cultural rights

Relationship with Employees/Human Rights Initiatives

Issue 8: Fundamental principles and rights at work

Relationship with Employees

Issue 1: Employment and employment relationships

Overview of Company and Businesses/Relationship with Employees (Hiring Initiatives)/CSR
Related Data

Issue 2: Conditions of work and social protection

Relationship with Employees (Hiring Initiatives) (Striving to Create a Pleasant Working
Environment)

Issue 3: Social dialogue

Relationship with Employees (Communication)

Issue 4: Health and safety at work

Not applicable

Issue 5: Human development and training in the workplace

Relationship with Employees (Human Resource Development and Skill Enhancement)

Issue 1: Prevention of pollution

Not applicable

Issue 2: Sustainable resource use

Environmental Initiatives/CSR Related Data

Issue 3: Climate change mitigation and adaptation

Environmental Initiatives/Risk Management

Issue 4: Protection of the environment, biodiversity and restorationof natural habitats

Engagement with Society (Corporate Citizenship Initiatives)/Environmental Initiatives/CSR
Related Data

Issue 1: Anti-corruption

CSR of the Daiwa Securities Group/Risk Management/Corporate Governance/Compliance

Issue 2: Responsible political involvement

CSR of the Daiwa Securities Group/Corporate Governance/Compliance/Risk Management/CSR
Related Data

Issue 3: Fair competition

Corporate Governance/Compliance

Issue 4: Promoting social responsibility in the value chain

CSR of the Daiwa Securities Group/Environmental Initiatives

Issue 5: Respect for property rights

Not applicable due to the nature of our business

Issue 1: Fair marketing, factual and unbiased information and faircontractual practices

Initiatives through Business Activities (To Maintain a Sound Market/Provision of Quality Service
to Customers)

Issue 2: Protecting consumers’ health and safety

Not applicable due to the nature of our business

Issue 3: Sustainable consumption

Initiatives through Business Activities

Issue 4: Consumer service, support, and complaint and dispute
resolution

Initiatives through Business Activities (Provision of Quality Service to Customers)

Issue 5: Consumer data protection and privacy

IT Strategy and the Management of Systemic Risk

Issue 6: Access to essential services

Not applicable

Issue 7: Education and awarenessInitiatives through Business Activities (Dissemination of Analysis and Proposals on the
Economy, Society, and Investment Information)/Engagement with Society (Education andResearch Activities in Economics and Finance)

Issue 1: Community involvement

Message from CSR Officer/Initiatives through Business Activities (Support for the Creation of
Our Future Society)/Engagement with Society (Corporate Citizenship Initiatives)

Issue 2: Education and culture

Engagement with Society

Issue 3: Employment creation and skills development

Initiatives through Business Activities (Support for the Creation of Our Future Society)

Issue 4: Technology development and access

Initiatives through Business Activities (Support for the Creation of Our Future Society)

Issue 5: Wealth and income creation

Initiatives through Business Activities (Initiatives through Product Development and Provision)/
Engagement with Society (Assistance to Communities Inside and Outside of Japan throughFoundations and NPOs)

Issue 6: Health

Initiatives through Business Activities (Initiatives through Product Development and Provision)/
Engagement with Society (Assistance to Communities Inside and Outside of Japan throughFoundations and NPOs)

Issue 7: Social investment

Initiatives through Business Activities/CSR Related Data

82

CSR Related Data

Daiwa Securities Group CSR REPORT 201783

CSR Related DataManagement Report
Compensation Paid to Directors and Corporate Executive Officers of Daiwa Securities Group Inc. in FY2016(1) Total Amount of Compensation, Etc. by Type of Officer, Total Amount of Compensation, Etc. by Type, and the Number of Executives

Type of Officer
Directors
Corporate Executive
Officers
External Directors

Total Amount of Compensation, Etc. by Type

Total Amount ofCompensation,
Etc.

Basic Compensation

Stock Options¥27 million¥24 million¥3 million

Performance-Based
Compensation—¥1,219 million¥553 million¥87 million¥578 million—

14 persons¥105 million¥105 million

—

—

—

7 personsLump-Sum Retirement
Pay—

Number of Executives
2 persons*Seven directors also served as corporate executive officers; their compensation is included under “Corporate Executive Officers.”(2) Total Amount of Consolidated Compensation, Etc. by Officer

NameTotal Amountof Consolidated
Compensation, Etc.

Shigeharu Suzuki¥213 million

Takashi Hibino

Seiji Nakata

Shinya Nishio

Toshihiro Matsui¥252 million¥172 million¥123 million¥101 million

Keiko Tashiro¥102 million

Mikita Komatsu¥101 million

Type of
Officer
Corporate
executive
officer
Corporate
executive
officer
Corporate
executive
officer
Corporate
executive
officer
Corporate
executive
officer
Corporate
executive
officer
Corporate
executive
officerCompany name

Total Amount of Consolidated Compensation, Etc. by Type

Daiwa Securities Group Inc.

Basic
Compensation¥69 million

Performance-Based
Compensation¥85 million

Daiwa Securities Co. Ltd.

¥46 million

—

—

—

Daiwa Securities Group Inc.

¥69 million¥11 million¥124 million—

Stock Options¥11 million

Lump-Sum
Retirement Pay—

Daiwa Securities Co. Ltd.

¥46 million

—

—

—

Daiwa Securities Group Inc.

¥60 million¥8 million¥77 million—

Daiwa Securities Co. Ltd.

¥25 million

—

—

—

Daiwa Securities Group Inc.

¥19 million¥6 million——

Daiwa Securities Co. Ltd.

¥46 million—¥51 million—

Daiwa Securities Group Inc.

¥42 million¥5 million¥42 million—

Daiwa Securities Co. Ltd.

¥10 million

—

—

—

Daiwa Securities Group Inc.

¥43 million¥5 million¥42 million—

Daiwa Securities Co. Ltd.

¥10 million

—

—

—

Daiwa Securities Group Inc.

¥42 million¥5 million¥42 million—

Daiwa Securities Co. Ltd.

¥10 million

—

—

—

* Only officers whose total amount of consolidated compensation, etc. exceeds 100 million yen are listed.
* Type of Officer is the same as that for Company Submitting Annual Securities Reports.
* Under Type of Officer, directors who concurrently serve as corporate executive officers are designated as corporate executive officer.

Social Report
Scope of data
Consolidated: Entire Group (except for equity-method affiliates)
Ten Group companies: Daiwa Securities Group Inc., Daiwa Securities Co. Ltd., Daiwa Asset Management Co. Ltd., Daiwa Institute of Research Holdings Ltd., Daiwa
Institute of Research Ltd., Daiwa Institute of Research Business Innovation Ltd., Daiwa SB Investments Ltd., Daiwa Securities Business Center
Co. Ltd., Daiwa Property Co., Ltd., and Daiwa Corporate Investment Co., Ltd.
Eight Group companies: Daiwa Securities Group Inc., Daiwa Securities Co. Ltd., Daiwa Asset Management Co. Ltd., Daiwa Institute of Research Ltd., Daiwa Institute of
Research Business Innovation Ltd., Daiwa SB Investments Ltd., Daiwa Securities Business Center Co. Ltd., and Daiwa Corporate Investment Co., Ltd.
Two Group companies: Daiwa Securities Group Inc., Daiwa Securities Co. Ltd.

Employees at the Daiwa Securities Group (Consolidated)(Unit: persons)

As of March 31, 2016

As of March 31, 2017

Employees

FA*1

Male

7,600

56

Temporary
Employees—(Career track*2)

7,196

—

—

7,018

(Managers)

3,897

—

—

3,901

—

—

4,505

68

—

4,660

59

—

Japan Female(Career track*2)

Employees

FA*1

7,552

52

Temporary
Employees
—

—

—

2,975

—

—

3,116

—

—

(Managers)

316

—

—

375

—

—

Japan total

855

12,105124

843

12,212

111

Overseas

1,472

—

97

1,513

—

90

Total

13,577124

940

13,725

111

945*The number of employees stationed overseas has been included in the “Overseas” category.
*1 Financial advisors*2 Includes regional career-track employees and specialists

CSR Related Data

Daiwa Securities Group CSR REPORT 2017

Number of New Graduates Recruited by the Daiwa Securities Group
April 2015
Career-track employees/regional career-track
employees(Unit: persons)April 2016

April 2017
345

Male

345

332

Female

336

330

333

681

662

678

Total

84

*This data covers eight Group companies.

Workforce Statistics
FY2014FY2015FY2016

Average annual salary*1 (in ten thousand yen)

1,171

1,212

1,072

Average age (years old)

41.8

42.0

42.1

Average number of years of service (years)

15.3

15.4

15.3

FY2015FY2016*This data pertains to Daiwa Securities Group Inc. (including those who simultaneously work for Daiwa Securities).
*1 Average annual salary includes bonuses and other. There is no wage gap based on gender or nationality.

Average Age(Unit: years old)

FY2014
Total

38.0

37.9

38.0

Male

39.4

39.5

39.6

Female

35.9

35.6

35.7

FY2014FY2015FY2016*This data covers Daiwa Securities.

Average Number of Years of Service(Unit: years)

Total

13.6

13.5

13.6

Male

15.0

15.1

15.2

Female

11.5

11.3

11.4

FY2014FY2015FY20163

3

3

FY2014FY2015FY201656

68

69

End of FY2014

End of FY2015

End of FY2016

2.10

2.05

2.02

*This data covers Daiwa Securities.

Employee Turnover Statistics
Total(Unit: %)*This data covers Daiwa Securities.

Re-Employment under the Daiwa Master System
Number of employees hired under the Daiwa Master System(Unit: persons)*This data covers Daiwa Securities.

Employment Rate for Persons with Disabilities
Employment rate for persons with disabilities(Unit: %)*This data covers Daiwa Securities.

Achievements of Selected Participants in Management Training
Daiwa Management Academy: Targeting
department managers(Unit: persons)

FY2014FY2015FY2016

Number of people who have completed training (cumulative)

335

358

380

Daiwa Leadership Program: Targeting deputy
general managers

FY2014FY2015FY2016

Number of people who have completed training (cumulative)

734

797

862

*This data covers 10 Group companies.

CSR Related Data

Daiwa Securities Group CSR REPORT 2017

Participants in Skill Training

85(Unit: persons)

Number of people who have completed training (cumulative)*1

FY2014FY2015FY2016

4,591

6,073

7,507

*This data covers eight Group companies*1 T he number of people completing training in coaching, presentation, negotiation skills, logical thinking, communication, inheritance and business succession master course, investment analysis basic course,
derivatives basic course, medium-sized corporations master course, real estate basic course, financial modeling basic course, time management (intermediate course), motivation management, time management(basic course), question-asking abilities enhancement, corporate analysis basic course (intermediate accounting course), corporate analysis master course (how to read annual securities reports), IB origination,
behavioral science (secret art of teaching/skills to continue trying), stress management, coaching (basic course), or facilitation.

Number of Persons Earning Credentials*1
Credentials(Unit: persons)

As of March 31, 2015

As of March 31, 2016

As of March 31, 2017

Affiliated Financial Planner (AFP)

5,279

5,333

5,626

Certified Financial Planner (CFP®)

590

616

643

1,504

1,525

1,542

Chartered Member of the Securities Analysts Association of Japan (CMA)
Chartered Financial Analyst (USA credential)
TOEIC (730-990)
Overseas MBA program, etc.

50

57

59

1,556

1,660

1,752

160

168

173

*1 This data covers 10 Group companies (according to filings by employees).

Successful Applicants in Internal Recruiting System(Unit: persons)

Held

No. of Successful
Applicants Applicants

Positions Offered
M&A, SMA consultants, analysts, internal wholesalers, compliance, dealers, derivatives, traders,fund managers, principal finance specialists, venture capitalists, money managers, research,underwriting, sale, overseas, management consultant, individual and corporate sales, productdevelopment, proposals and planning, investment advisors, global trainees, etc.

Cumulative from FY2000

1,003

158

* This data covers 10 Group companies.

Working Hours and Paid Vacation Usage Rate
FY2014FY2015FY2016

Annual regular working hours (hours)

1845

1837.51837.5

Average monthly overtime hours (hours)*1

28.2

24.0

23.5

56

63

66

Paid vacation usage rate (%) (including special summer vacation)*2*This data covers 2 Group companies*1 Figures indicate employees at the two companies that are members of the Daiwa Securities Group Employees’ Union.
*2 In addition to annual paid vacation, the Daiwa Securities Group offers three days of special summer vacation. These figures show usage rates for annual paid vacation when the special summer vacation is
included.

Employee Welfare System Usage

Number of employees taking childcare leave*1
Number of employees taking nursing care leave(Unit: persons)

FY2014FY2015FY2016

Female

576

640

671

Male

134

250

327

Female

6

4

0

Male

1

2

2

*This data covers all consolidated Group companies.
*1 Employees eligible for childcare leave include non-regular employees (contract workers, part-timers, etc.).

Employees Taking Childcare Leave and Other Related Plans
FY2014FY2015FY2016

Female

99.3

100.0

100.0

Male

41.9

73.1

96.8

Female

93.2

92.5

91.5

Male

100.0

100.0

100.0

Percentage of women working when their children turned one (%)

99.3

100.0

100.0

Short working hour system usage (persons)

180

249

324

Daycare subsidy usage (persons)

437

505

625

Percentage of employees taking childcare leave (%)
Return to work rate for those taking childcare leave (%)* This data covers Daiwa Securities.

CSR Related Data

86

Daiwa Securities Group CSR REPORT 2017

Main Initiatives for Work-Life Balance and Employee Support Plans
Systems to Support Balancing of Work and Childcare
Program Description

Program NameChildcare leave

Employees can take childcare leave until the day before their child’s third birthday

Childcare support leave

When employees’ spouse gives birth or returns to work, leave may be taken (first two weeks of pay is guaranteed for childcare leave)

Exemption from overtime work

System by which employees can leave work earlier by up to 90 minutes per day (by increments of 10 minutes) until the child
graduates from elementary school.
Employees are exempt from overtime work until their children complete the third grade of elementary school

Restricted overtime work

Employees are exempt from overtime work exceeding a certain number of hours until their children finish elementary school

Reduced-hour work arrangements

Daycare subsidy

The Group offers subsidies for daycare expenses until employees’ child begins elementary school

Babysitter system

Employees can use the babysitter services of service providers with which the company has signed a corporate contract at discount rates.
This system encourages employees to take paid vacation and has introduced leave for marriage preparations, kid’s ceremonyleave to attend an entrance ceremony or other events, family day leave to give employees a chance to spend quality time with
their families, and leave for celebrating parent’s longevity

Expanded leave system

Enables employees to return to work after a period of childcare leave. Daiwa WLB Station, a work-life balance promotion websitethat focuses on various support systems related to childrearing and nursing care, provides information for employees on childcare
leave and helps facilitate their smooth return to the workplace

Support after returning to work

System to Support Balance of Work and Nursing Care
Reduced work hours (securing time for nursing care)

Employees can shorten their work hours by up to two hours per day

Life support paid leave

Employees can take up to 50 days’ leave due to injury, disease, nursing care preparation, or infertility treatment, except whenother types of leave are available, by accumulating expired paid leave

Exemption from overtime work

Employees are exempt from work outside regular working hours (overtime work) from the time they start providing nursing careto the time the reasons for nursing care have disappeared

Restricted overtime work

Employees can restrict overtime work to not more than 24 hours per month and 150 hours per year from the time they start
providing nursing care to the time the reasons for nursing care have disappeared.

Nursing care leave

Employees can take leave up to 4 times for not more than 1,095 days per family member requiring care

Expanded support for balancing work and nursing care

The company has established a class on support for balancing work and nursing care to help resolve employees’ concerns for future nursing care

Other systems to support balancing of work and nursing care
Job location change system
Spouse work reassignment leave system
Professional return plan (rehiring of sales staff)
Web

Offers a position in a new location when an employee must relocate after marriage or spouse’s job transfer
Employees may opt to take leave for a certain period (up to 5 years) in the event their spouses are reassigned to work in alocation that is untenable for them to commute to work
Offers opportunities for re-employment to former full-time employees who left their jobs for marriage or childcare (The scopeof eligibility for the program has been expanded since November 2015, from those returning to work within 5 years of theirretirement to those within 10 years)

Work Life Balance Daiwa Securities Group Inc. > Corporate Information > Work Life Balance > Systems and Initiatives of the Daiwa Securities Group (Japanese)

Female Employees and Managers at the Daiwa Securities GroupEnd of FY2014(Unit: %)End of FY2015

End of FY2016

Percent of employees who are female (Consolidated)

36.1

37.2

38.1

Percent of employees who are female (Daiwa Securities only)

39.6

40.7

41.4

Percent of managers who are female (Consolidated)

6.3

7.5

8.8

Percent of managers who are female (Daiwa Securities only)

7.5

8.9

10.6

FY2016

Women Newly Appointed to Managerial Positions
FY2014FY2015

Number of women newly appointed to managerial positions (persons)

42

45

62

Total number of those appointed to managerial positions (persons)

156

166

192

Percent of managers who are female (%)

26.9

27.1

32.3

* This data covers Daiwa Securities

CSR Related Data

Daiwa Securities Group CSR REPORT 201787

Number of Employee Union Members
End of FY2014

End of FY2015

End of FY2016

Number of employee union members (persons)

6,573

6,822

6,943

Ratio of employees who are employee union members (%)

63.1

64.2

64.0

*The data covers eight Group companies, excluding Daiwa Asset Management, which has its own employee union, and Daiwa Property, which has no employee union.

Corporate Citizenship Initiatives and Expenditures

Independent
Assurance(Unit: thousand yen)Type of Activity

FY2014

1. Education and research in economics and finance

189,624

137,193

42,351

2. Assistance to communities inside and outside of Japan through foundations and NPOs

153,779

147,748

128,594

3. Support for culture and the arts

257,400

296,110323,110

4. Corporate citizenship initiatives

5,476

2,706

3,400

606,279

583,758

497,457

Total

FY2015FY2016

Political Contribution(Unit: million yen)

FY2014FY201530

30

Political contribution

Results in Economic and Financial Education
Program
Support for Finance Park
Support for the Student Company Program(Unit: persons)

FY2014FY2015

11,847

15,362

Cumulative number since the initiation of support (in September 2003)
17

N/A

Cumulative number since the opening (in June 2005)

FY2016
20,261
94,793
N/A
221

CSR Related Data

Daiwa Securities Group CSR REPORT 2017

Environmental Report
Scope of data
Energy consumption, CO2 emissions, clean water consumption (Japan):Domestic: We have incorporated figures on energy consumption and CO2 emissions for the three companies having a reporting obligation under laws andregulations. Daiwa Securities, Daiwa Property, and Daiwa Institute of Research. Daiwa Institute of Business Innovation has also been included in thecalculation in light of its significant impact on the Group’s environmental burden. The data for Gran Tokyo North Tower, where the Daiwa Securities
Group is based, includes data for Group companies other than those mentioned above.
Overseas: London, New York, Hong Kong, and Taiwan offices
Waste: Gran Tokyo North Tower, Daiwa Yaesu Building, Toyocho Center Building, Daiwa Eitai Building, DIR Headquarters Building, and Osaka Branch Building of
Daiwa Securities
Paper consumption: Gran Tokyo North Tower

Energy Consumption

Independent
Assurance

Offices

Japan

Type

FY2014FY2015FY2016

Electricity* (thousand kWh)

73,816

71,182

Utility Gas (thousand Nm3)

336

326

320

Heavy oil (kL)

26.7

23.2

21.1

Diesel fuel (kL)

0.09

0.09

0.07

Gasoline (kL)

1,002

952

896

69,496* Electricity consumption for data center of Daiwa Institute of Research Business Innovation Ltd. has been calculated retroactively from FY2014

Offices
OverseasType

FY2015FY2016

8,892

7,526

6,387

Utility Gas (thousand Nm3)

—

91.5

101.9

Offices

Total(Japan and overseas)

FY2014

Electricity (thousand kWh)Type

FY2014FY2015FY2016

Electricity (thousand kWh)

82,70878,708

Utility Gas (thousand Nm3)

336

418

422

Heavy oil (kL)

26.7

23.2

21.1

Diesel fuel (kL)

0.09

0.09

0.07

Gasoline (kL)

1,002

952

896

75,88388

CSR Related Data

CO2 Emissions

Daiwa Securities Group CSR REPORT 2017

Independent
Assurance(Unit: t-CO2)

Offices

Japan

89

Type

FY2014FY2015FY2016

Electricity

35,94432,852

Utility Gas

759

745

731

Heavy oil

72.3

62.7

56.9

31,708

Diesel fuel

0.23

0.23

0.16

Gasoline

2,325

2,208

2,079

Commuting (bus/railroad)*
Total

—

—

1,443

39,10035,86836,018

Scope 1

831

808

788

Scope 235,94432,852

31,708

Scope 3*

2,325

2,208

3,521

* CO2 emissions from commuting by Daiwa Securities’ officers and employees are calculated from FY2016.
(Unit: t-CO2)

Offices
OverseasType

FY2014FY2015FY2016

Electricity

4,935

3,520

3,064

Utility Gas

—

204

227
(Unit: t-CO2)

Offices

Total(Japan and overseas)

Type

FY2014FY2015FY2016

Electricity

40,87936,372

Utility Gas

759

949

958

Heavy oil

72.3

62.7

56.9

34,772

Diesel fuel

0.23

0.23

0.16

Gasoline

2,325

2,208

2,079
1,443

Commuting——

Scope 1

831

1,012

1,015

Scope 240,87936,372

34,772

Scope 3

2,325

2,208

3,521

Calculation Methods
Calculations have been made in accordance with methods stipulated in the Act on the Rational Use of Energy and the Act on Promotion of Global WarmingCountermeasures. In light of their relevance, figures for steam, cold water, and kerosene used at some offices are not included in calculations. There may also bediscrepancies in the total amounts due to rounding.
A) Electricity
Domestic: We use the CO2 emission factor (actual emission factor) for each electricity supplier.
Overseas: Figures for CO2 emission factors in 2014 are those published for each country by the International Energy Agency. Figures for CO2 for 2015 andthereafter are calculated by using the latest figures published by the local government or electricity provider.
B) Utility gas
Domestic: After consumption is calculated as the volume of gas at normal condition, each provider’s CO2 emission factor or calorific value and emission factor
specified by law is used to calculate CO2 emissions.
Overseas: Same calculation method as above “Japan” (calculated based on the calorific value and emission factor defined in the Act of Promotion of Global
Warming Countermeasures). Data for FY2015 is included in calculations.
C) Heavy oil and diesel fuelCalculated on consumption basis.
D) Gasoline
The fuel used in rental cars used as company cars. Categorized in accordance with the Basic Guidelines on Accounting for Greenhouse Gas Emissions
Throughout the Supply Chain.
E) Commuting
CO2 emissions were calculated using the commutation expense paid by Daiwa Securities to its officers and employees as well as the latest CO2 emission factor
per commutation expense for railroad and bus (commercial ride-sharing), published by the Ministry of the Environment.

★ CO2 Emissions per Employee (Japan)
OfficesJapan

Type
Per employee (t-CO2)
Number of employees in Japan (persons)

FY2014FY2015FY2016

3.3

2.9

2.6

11,938

12,22913,836* Data is excluded from the scope of independent assurances. Calculated based on CO2 emissions in Japan and the consolidated number of employees in Japan.

CSR Related Data

90

Daiwa Securities Group CSR REPORT 2017

Clean Water Consumption

Independent
Assurance

Offices

Type

FY2014

Clean water (thousand m3)

Japan

FY2015118.9

FY2016

117.7

117.1

Waste
FY2014Paper waste
Non-paper waste

FY2015FY2016

Non-paper waste (t)

317.7

320.3

Recycling rate (%)

93.0

93.6

92.4

Non-paper waste (t)

221.2

210.6

211.5

Recycling rate (%)

51.7

53.8

48.4

310.4

Paper Consumption
FY2014
Amount used (t)FY2015179.6

FY2016

184.2

175.6

Environmental Accounting
Boundaries
Sales branches of Daiwa Securities and Group companies residing in Gran Tokyo North Tower

Environmental Preservation Cost*1
Description of Major
Initiatives

Type

Cost within
business area

Globalenvironment
preservation
Resource
recycling

Introduction and upgrading of energysaving air conditioners
Power receiving and transforming
facilities
Eco-car leasing fee (for five years)(Unit: million yen)

FY2014
Investment
Cost
Amount

FY2015Investment
Cost
Amount

510.6

274.1

139.6

FY2016
Investment
Cost
Amount
439.1

802.6

122.8

563.3

308.0

291.8

Waste disposal cost*2

19.2

20.5

20.9

Dissolution process cost*3

29.5

29.8

Total

650.2

611.9

1,076.7

358.3

Management activity cost

Management of environmental data, etc.

22Social activity cost

Environmental preservation, etc.

1

1

Total

650.2

614.9

1,076.7

361.3

29.7
561.9

342.4
2
1

561.9

345.4

*1 Other important facilities are partially included.
*2 Daiwa Securities branches*3 Gran Tokyo North Tower

Economic Effects Arising from Environmental Preservation Measures (Real Effects)
Amount of cost reduced
Amount of revenue (Recycle, etc.)
Total(Unit: million yen)

FY2014FY2015FY2016

72.3

36.4

23.9

0

0

0

72.3

36.4

23.9

CSR Related Data

Daiwa Securities Group CSR REPORT 201791

Report on Financial Capability
We report the deals we lead-managed by classifying them into items in an easy-to-understand way for our stakeholders in Japan in reference to the SASB’s FN102-17.
☆Industry Classification ... Classified based on the Tokyo Stock Exchange’s category of industry. Unlisted issuers are classified by Daiwa Securities Group Inc.
☆Scope ... Total amount of issues for which the Daiwa Securities Group served as lead manager.
For equity offerings, however, we include only the value of the Group’s book-runner deals and exclude the tranches for which the Group did not serve as book runner.
☆Figure ... There may be discrepancies in total amounts due to rounding.
(Unit: billion yen)

Large
Middle Classification
Classification
Fishery,
Agriculture &Forestry
MiningConstruction

IPO

PO

REIT
(Equity)CB

Bond
Issued by
Corporate Government- Municipal
Bond
Affiliated
Bond
SpecialCorporation

Samurai
Bond

Japan
Housing
Finance
Agency(RMBS)

Fishery, Agriculture &Forestry
MiningConstruction

2.5

165

Foods

2.8

30

0.8

230

Textiles & Apparel
Pulp & Paper

15

Chemicals
Pharmaceutical

Manufacturing

100

Oil & Coal Products

10

Rubber Products

20

Glass & Ceramic Products
Iron & Steel

30

Nonferrous Metals

60

Metal Products

45

Machinery

75

Electric Appliances

128

675

Transportation Equipment

90

Precision Instruments
Other ProductsElectric Power& Gas

Electric Power & Gas

1

715

Land Transportation
Transport &Information andCommunications

Commerce

Finance &Insurance

10662

Marine Transportation

20

Air Transportation
Warehousing & Harbor
Transportation Services
Information &Communication
Wholesale Trade

35

60.6

Retail Trade

94.4

57.7

Banks
Securities & Commodity
Futures
Insurance

0.8

965
20

15.3

10
277

3.7

350

Other Financing Business
Real Estate

Real Estate

Services

Services
Real Estate Investment
Corporation
Public Entity

Nonclassifiable
Total

786.2

137

518
2.2

215.9

2.7

190

92.1

90

248.7

10

312

30.4

312

5,564.4

100

738

1,536

135

1,278.5

738

1,536

1,021.2

1,278.5

Glossary

Daiwa Securities Group CSR REPORT 201792

Glossary●Active FundIn contrast to passive funds, which are managed to mirror certain indexes,
active funds are investment trusts and other funds managed by a fundmanager who makes decisions concerning the stocks, bonds, and other assets
to invest in and the investment ratios based on investment policies.

●ISO 26000
A worldwide standard that provides guidance for social responsibility oforganizations.
●Issuers
Entities that issues stocks/bonds to raise funds.

●AFP/CFP ®
Certifications for financial planners. AFP is a certification in Japan, while CFP isa globally recognized credential.

●LGBTAn initialism that stands for lesbian, gay, bisexual, and transgender.

●Biomass power generation plant
Facilities for generating power from water vapor and gas, generated byfermenting wood chips or sewage sludge and livestock excretion vulnerable tofermentation.

●Materiality
The themes and aspects companies particularly focus on over the long term ina wide range of corporate activities. It is recommended that companies issuingsustainability reports should select and announce them according to the typeof business and risk. (Refer to “GRI Index”)●Blockchain
A system of distributed ledger recording/managing transaction history acrossmultiple computers on the network. Participants share all the data, whichmakes it difficult to falsify data. Blockchain is used in transactions using virtual
currency, such as Bitcoin. The use of blockchain is being expanded to otherapplication areas.
●CDP
This project is an affiliation of institutional investors concerned about climatechange who demand that companies disclose information about their stanceon environmental problems and initiatives addressing such problems.
●Cluster Munitions
A bomb containing multiple bomblets in a large shell that acts as a container.
One bomb causes explosions over a wide area, enlarging the scope of damage.
It has also been indicated that dealing with multiple unexploded bombletsfrom cluster bombs presents difficulties.
●Color Universal Design
A method of design that takes into consideration the use of color so that
information can be conveyed to more people, keeping in mind people withvaried color perception.
●Corporate Governance
The mechanism that allows for sound and efficient corporate management.
●Corporate Governance Code
Guidelines established by the Tokyo Stock Exchange with the aim to enhance
corporate governance, which is a framework for companies to carry outtransparent and fair, as well as prompt and decisive decision making, from theperspective of stakeholders. Securities Listing Regulations of the Tokyo Stock
Exchange set out provisions requiring listed companies to comply with the
Corporate Governance Code.
●Engagement
Dialogue and exchange of opinion between businesses and stakeholders.
●Environmental Accounting
To quantify necessary investment in corporate activities and its effect in aneffort to reduce the environmental load of those activities.
●FintechFintech is an abbreviation of financial technology and refers to innovative
products and services that make use of cutting-edge information technologies.
●GRI
Global Reporting Initiative. An organization dedicated to proposing andpromoting common international guidelines for sustainability reports.
●Human Rights Due Diligence
Verification performed to minimize adverse effects on human rights issues that
could arise from business activities.
●iDeCo (individual-type defined contribution)
Corporate-type and individual-type defined contribution pension plans
have been in place, and iDeCo is a nickname for the individual-type defined
contribution pension plan with a broadened scope of eligibility. iDeCo is a
private pension plan in which participants make contributions and decide
which investment products to invest in and receive benefits based on the
total of their contributions and investment returns. Special tax breaks apply tocontributions.
●Impact Investment
A method of investment that, in addition to producing economic benefit,
invests in assets with the intention of addressing social issues such as poverty
and environmental problems.

●Microfinance
A form of financial services for people on low incomes.
●Nippon Individual Savings Account (NISA)Dividends and capital gains from stocks, investment trusts, and otherinvestments are subject to ordinary income tax and local taxes, but thisprogram exempts dividends and capital gains from new purchases up to 1.20
million yen for a maximum of five years.
●Principles for Financial Action toward a Sustainable Society(Principles for Financial Action for the 21st Century)
Aims to expand investment and financing with the environment in mind,
formulated as voluntary efforts of financial institutions in Japan.
●Principles for Responsible Investment (PRI)
PRI is a set of six principles launched by the UNEP Finance Initiative and the
UN Global Compact in April 2006. This initiative asks corporate investors toincorporate ESG into their investment decision making practices.
●Risk Control Self-Assessment (RCSA)
The process whereby staff assess potential risks and related controls in theworkplace. Typically, this method exposes potential risks through workshops
and surveys.
●SRI
Socially responsible investment. An investment strategy where both financial
return and social good are sought.
●Stewardship CodeThe code of conduct established for institutional investors concerning theirfiduciary duties. The Japanese version was formulated by the Financial Services
Agency in February 2014.
●Supply Chain Management
To investigate issues involving a company’s suppliers of raw materials andservices, including their environmental and social challenges, to select suppliers
based on the results of such investigations, and urge them to resolve theissues.
●Sustainability Accounting Standards Board (SASB)
A nonprofit organization established in 2011 in the United States. This
organization aims for increased disclosure of non-financial informationof companies traded on U.S. exchanges, and proposes industry-basedsustainability standards.
●Sustainable Development Goals (SDGs)
An international agenda adopted at the September 2015 U.N. Summit
comprising 17 goals and 169 targets aiming for the eradication of poverty andthe creation of a sustainable world.
●UN Global Compact
A global initiative established through the advocacy of then-Secretary General
Kofi Annan. Members support 10 principles in the fields of human rights,
labor, environment, and anti-corruption in their business activities.
●Value Chain
Interlinked value-adding activities that convert inputs into outputs which, inturn, add to the bottom line and help create competitive advantage.
●Work-Life Balance (WLB)
Balance between an individual's work and personal life.

Independent Assurance Report

Independent Assurance Report

Daiwa Securities Group CSR REPORT 201793