Daiwa Securities Group CSR Report
Building a Sustainable Society

2OO9
What we can do
What will the world be like when these 28 babies become adults?
The precious faces of these infants — all children of Daiwa Securities Group employees —express our hopes for the future. At the Daiwa Securities Group, we are determined
to take responsibility as individuals and to do our part as a company to createa sustainable society living in happiness and in harmony with an unspoiled Earth.

Daiwa Securities Group CSR
As employees of the Daiwa Securities Group, we carry out our duties with pride while feeling a significant sense of responsibility to society. And while enjoying an excellent quality of life, each employee iscommitted to doing the absolute best job possible.
Last year also marked the birth of new family members among many of our employees. We are giving serious consideration to what we can achieve through our financial capabilities and what actions
need to be taken to develop industry in harmony with the environment. In addition, we are providing
a higher quality of life for the next generation in Japan and the world, including the babies that grace
the cover page of this report.

To realize a sustainable society, the Daiwa Securities Groupseeks to initiate even more effective CSR activities.

Key Issues:

1. Leverage Financial Capabilities to Contributeto a Sustainable Society
2. Develop Sound Financial and Capital Markets
for the Next Generation

Based on the requests we have received from stakeholders thus far, the Daiwa Securities Group established a set of
key issues in 2007. The implementation of these issues wasgiven the utmost priority.
This time, the Group has reaffirmed the CSR initiatives
that need to be realized and has undertaken a revision of its
key issues with the aim of implementing CSR activities thatare even more effective.
To that end, we have integrated the existing four key
issues—(1) Adding a Social Perspective to Investment,(2) Commitment to the Development of a Sound Securities
Market, (3) Contribution to the Global Environment and(4) Providing Information for a Sustainable Society—into thetwo key issues listed above.

Contents

Daiwa Securities Group CSR
Key Issues/Table of Contents ........................................................... 1
Our Contribution ............................................................................ 2
Our Mission.................................................................................... 3
Our Initiative................................................................................... 4
Corporate Principles/Editorial Policy ......................................... 6
Description of the Daiwa Securities Group’s Business. ........... 7
Message from the President and CEO ....................................... 8
Management Summary ............................................................. 11
Discussion with Stakeholders ................................................... 12

Approaches to Key Issues
1. Leverage Financial Capabilities to Contribute to a Sustainable Society ... 16
2. Develop Sound Financial and Capital Markets for the Next Generation ... 20
Corporate Citizenship.................................................................. 24
CSR Issues: Performance and Targets ....................................... 26
Initiatives for Reducing Environmental Impact ...................... 28
Third-party Opinion ................................................................... 29
The Daiwa Securities Group’s CSR Activities/Inquiries ..........30
Third-party Evaluations
Daiwa Securities Group CSR Report 2009 Booklet and Web Edition ... 31
DAIWA CSR REPORT 20091

Daiwa Securities Group CSR
OUR CONTRIBUTION

1. Leverage Financial Capabilities
to Contribute to a Sustainable
SocietyModern society is faced with a multitude ofproblems that threaten the sustainability ofthe planet and communities worldwide,
including environmental issues such as climate change as well as the widening gulf
between rich and poor.
The Daiwa Securities Group promotes the flow of capital to solve
social problems and to realize a sustainable society through financial and capital markets in such areas as the development and salesof financial products that add a social perspective to investment.
Products such as vaccine bonds and World CO2L bonds developed through these efforts are not only attractive as investment
products but are also appealing because they open up an avenue
for investors to indirectly participate in finding solutions to problems related to the global environment and society.
In addition to these achievements, the Group actively provides
financial assistance to companies that have social value in areas
including environmental technology and offers investment information regarding these companies.

”
Kazuma Muroi
DCM Section
Capital Markets Department
Daiwa Securities SMBC Co. Ltd.

Mr. Muroi at 10 months old

2 DAIWA CSR REPORT 2009

Joining the company in 2005, Mr. Muroi
currently engages in the underwriting ofnonresident bonds, having worked in the
Planning Department of the Investment
Banking Business and other sections.
During the vaccine bond project, he was incharge of making recommendations to andcoordinating with the World Bank, which
was acting as a financial manager.

The vaccine bonds project was avaluable experience as it gave me theopp or t u n it y t hroug h my work tocontribute to saving the lives of children
in developing countries. At the sametime, it is critical that a system facilitating
cooperation within the Group be in placein order to make this type of global
project a success. Although I had to work
very hard to issue these bonds, I was able
to meet a number of people through theprocess and gained new insights. To me,
vaccine bonds are a financial product thatreveals the Group’s strong willingness tomeet the challenges associated with
undertaking new projects that have asocial perspective.

”

OUR MISSION

2. Develop Sound Financial andCapital Markets for the Next
Generation
In order to promote the move from savings
to investment and provide an abundant supply of funds vital for sustainable social
growth, we believe that the development ofsound and vigorous financial and capital
markets is essential.
For the Daiwa Securities Group, compliance is not limited simply toobserving the law but extends to actions that preserve the trust ofcustomers and society. Maintaining the highest ethical standards,
all executives and employees take it upon themselves to identify
and make improvements regarding operational risks and problems as they carry out their daily duties. In addition, the Group
undertakes thorough measures to reinforce its system for monitoring unfair transactions and to eliminate antisocial forces in order toestablish trustworthy financial and capital markets that are transparent and fair.
Taking advantage of the experience and knowledge developed
through its core business, the Daiwa Securities Group focuses on
economic and financial education for youth and the disseminationof information to society. By doing so, the Group will develop
sound financial and capital markets for the next generation.

”

Having been employed at Daiwa
Securities for over ten years, I haveworked earnestly to build relationships oftrust with customers at the Kunitachi
Branch. In order to foster long-term customer relations, it is important to establish routine communication. For example,
I believe that through various smallthings such as contacting customers
regarding paperwork and procedures,
they gain a greater sense of trust and feel
more at ease. Rather than being something extraordinary, I think compliancerevolves around the more fundamental
and straightforward idea of always thoroughly carrying out one’s duties in fullconsideration of the customer.

”

Amika Omi
Senior Assistant Manager
No. 2 Asset Consultant Department
Kunitachi Branch
Ms. Omi joined Daiwa Securities Co. Ltd. in1999 in a clerical position at the Kunitachi
Branch and then switched to a regular position with prospects for promotion in 2001.
Ms. Omi has received numerous awards inrecognition of her many exceptional
achievements as an account executive.

Ms. Omi at six months old

DAIWA CSR REPORT 20093

Daiwa Securities Group CSROUR INITIATIVE

Building a Rewarding Workplacefor Executives and Employees

Human resources are at the core of the Daiwa Securities Group’s
efforts to implement its CSR key issues.
To keep executives and employees highly motivated to contribute to the Group and society, it is imperative to have a rewarding
workplace. There is a direct link between the high level of satisfaction of executives and employees and that of customers and shareholders.
To get staff to carry out their duties with a high level of motivation and to take on challenges in the workplace, we believe that it
is important to generate greater vitality for work and enhance
work efficiency by striking a balance between work and private
life.
Regardless of gender or age, we will take active steps to promotea work-life balance with the aim of becoming the “the number one
company in terms of working conditions.””

At first, everyone considered worklife balance as an issue related to womenin the workplace. As I worked to promote this idea, there was a gradualchange in people’s attitudes towards long
working hours, which had long been
considered a virtue. With the understanding of customers, we establishedthe policy of leaving work before 7:00
p.m., which gradually made everyone
aware that they have control over theirown time. In addition, an increasing
number of men are taking childcare
leave. With the aim of becoming thenumber one company in terms of working conditions for all executives andemployees, we will continue to takesteps to establish effective systems.

”

Risa Murase
Manager
Work-life Balance Promotion Department
Daiwa Securities Group Inc.

Ms. Murase at one year old

4 DAIWA CSR REPORT 2009

Joining Daiwa Securities Co. Ltd. in 2001,
Ms. Murase worked in sales and the Sales
Planning Section at the Shibuya Branch.
She currently works as a manager in the
Work-life Balance Promotion Department,
which was established in April 2008, at
Daiwa Securities Group Inc.

Aiming to Realize a Work-life Balance
For any company that aims for sustainable growth, the attainmentof a work-life balance as well as the retention of exceptional people
is indispensable. To that end, the Daiwa Securities Group has
strengthened its initiatives to achieve a work-life balance for executives and employees under executive management leadership.
In April 2008, the Group established the Work-life Balance
Promotion Department within Daiwa Securities Group Inc. andholds the Work-life Balance Promotion Committee meeting on aregular basis under the leadership of President and CEO Shigeharu
Suzuki, who functions as the chief work-life balance officer (CWO).
From that same month onward, the Group began participating in awork-life balance project promoted by the Ministry of Health,Labour and Welfare as a model company.
Paid Leave Usage Rate
(Daiwa Securities Group Inc., Daiwa Securities Co. Ltd., Daiwa Securities SMBC Co. Ltd.)
FY

2006

2007

2008

Paid leave usage rate

35.6%

37.4%

57.0%

Policies for Promoting Work-life Balance
We have initiated a variety of measures to achieve a work-life balance for executives and employees.
A significant transformation of work practices in all offices andbranches of Daiwa Securities Co. Ltd. resulted from asking employees to leave the office before 7:00 p.m., a directive which began inearnest in July 2007. Not only do many executives and employees
now have more time to spend with their families and to pursue
their own interests, but also the work efficiency of the entire organization has increased. As a result, this policy directive has been
expanded to the other Group companies. Moreover, since 2008,
policies to encourage executives and employees to take paid leave
have been expanded with the aim of creating a work environment
where it is easy to take time off.
Beyond these measures, the childcare leave system has beenrevised to make it easier for male executives and employees to taketime off to care for their children. This approach garnered Daiwa
Securities Group Inc. the Ministry of Health, Labour and Welfare’sfamily-friendly employer certification in June 2008 as a company
that actively supports the development of the next generation. Thiscertification has been obtained by Daiwa Securities Co. Ltd., Daiwa
Securities SMBC Co. Ltd., Daiwa Institute of Research Holdings Ltd.,
Daiwa Institute of Research Ltd., Daiwa Institute of ResearchBusiness Innovation Ltd. and Daiwa Securities Business Center Co.,
Ltd. Beyond this, in December 2007, the Group began providing a
two million yen cash benefit for an employees’ third child or subsequent children to offset the financial burden of child-rearing.
Employee Welfare System Usage (Nine Principal Group Companies) (persons)
2006
2007
2008
FY
150
209
245
Number of employees taking Female
childcare leave*
Male
2
4
14
*Employees eligible for childcare leave include non-regular employees (contract
workers, part-timers, etc.).

A Supportive Work Environment for
Both Men and Women
Since establishing the Women’s Support Action Team in 2005, theDaiwa Securities Group has been expanding measures to support
activities undertaken by female employees. As of April 2009, of
Daiwa Securities Co. Ltd.’s 117 branches, eight are headed by
women. In addition, four new female executive officers wereappointed in the same month, invigorating the entire organization.
Daiwa Securities Group Inc. ranked 7th overall (and 1st in thefinance industry) among the Best 100 Companies for Women to
Work At in the May 2008 issue of Nikkei Woman Magazine andranked No. 1 in the Providing Opportunities for Women in the
Workplace category. In the survey of Companies with Best
Working Conditions, featured in the September 2008 issue of the
Nihon Keizai Shimbun and Nihon Keizai Sangyo Shimbun, theCompany placed 14th overall and 1st in the securities industry.
Furthermore, in the 2009 Career Search Survey ranking of financial
institutions conducted by the weekly magazine, Diamond, Daiwa
Securities Inc. placed 4th among men and 6th among women,
while coming in 5th in a similar survey undertaken by Nihon Keizai
Shimbun, and placing 1st in the securities industry.
Through the Daiwa Securities Group’s work-life balance policy,
continual efforts are being made to maintain a comfortable workplace environment for men and women.
Daiwa Securities Group’s Female Employee Ratio in Japan
Ratio of female employees to all
employees

March 31, 2007

March 31, 2008

March 31, 2009

33.3%

36.0%

36.8%

Communication with Families of
Executives and Employees
It is not only executives and employees themselves, but also theirfamilies that have a significant interest in the workplace of theirspouses, parents and/or children.
Considering the families of executives and employees as important stakeholders, the Daiwa Securities Group has held large-scale
events in which they can participate and has invited families ofaward recipients to the President’s Awards Ceremony. On top ofthis, families of employees and executives were invited to visit workplaces at all Group departments and branches for the first time inAugust 2008. This turned into a major event with approximately
4,400 people participating throughout the Group.

Families visit Daiwa
Securities offices*Additional statistics and details will be released on the Daiwa Securities Group’s
CSR website in September 2009.
DAIWA CSR REPORT 20095

Corporate Principles/Editorial Policy

Daiwa Securities Group Corporate Principles

Building Customer
Trust

We stand on the trust of our customers. Prudently putting customer interests first and achieving a high standard of professional competence, we
intend to become Japan’s most appealing securities group at home andabroad.

Valuing Human
Resources

People are the source of our competence. We highly value creative initiative by the individual, we cherish the challenging spirit, and we appreciate
the capability and contributions of the individual.

Our mission is to contribute to society and the economy through our daily
in the financial and capital markets. We will maintain high stanContributing to Society operation
dards of ethics and self-discipline and will contribute to the sustainabilityof society.
Our fundamental objective is to enhance shareholder value through soundEarning Sound Profits business operations. We will offer valuable services to our customers andearn adequate rewards for distribution to our shareholders.

Editorial Policy

Scope of Report

The Daiwa Securities Group has been publishing this report yearly since
2002 with the aim of disclosing clearly and in good faith our CSR activities, which are intended to support the creation of a sustainable society. We also view the process of preparing this report as an important
opportunity for us to evaluate the Company status and challenges it isfacing. This report places a major emphasis on detailing the progress of
specific initiatives related to key issues, and our views toward them.
We position this CSR report as a material report that primarily discloses key issues facing the Group, emphasizing our strong focus onpromoting dialogue with stakeholders and raising the awareness of
CSR activities among executives and employees.
For detailed information that is not covered in this report, management and social reports disclosed on an ongoing basis and other related materials, please visit http://www.daiwa-grp.jp/ir/english/corporate/report/ (from September 2009).

Intended ReadershipThis report is intended for Daiwa Securities Group’s stakeholders, whichprimarily include customers, shareholders and investors, executives andemployees, as well as business partners, non-profits (NPOs, NGOs),
local communities where Daiwa Securities has offices, educational institutions, and the families of executives and employees.
Scope of Reporting
This report basically covers principal companies of the Daiwa Securities
Group (see “Description of the Daiwa Securities Group’s Business” on
the following page). The report does not, however, include all datafrom the Group’s principal companies on items reported; the information is selected based on the respective companies’ size and type ofbusiness handled. In addition, coverage areas of the environmentalload data included have been changed due to head office relocation in
fiscal 2007. Each set of numerical data specifies the area of coverage.
Period Covered by Report
Fiscal 2008 (April 1, 2008–March 31, 2009) The report also includes
information on events and activities carried out prior to fiscal 2007, as
well as those scheduled to take place during fiscal 2009.
Publishing Date
August 2009 (The previous report was published in October 2008; thenext report is planned for August 2010.)

6 DAIWA CSR REPORT 2009

Description of the Daiwa Securities Group’s Business
The Daiwa Securities Group is composed of Daiwa Securities Group Inc., the holding company controlling thegroup companies, and two securities companies, Daiwa Securities Co. Ltd. and Daiwa Securities SMBC Co. Ltd.,
along with various other companies providing securities-related services in order to offer a comprehensive
range of investment and financial services.

The Four Core Operations of the Group

4. Investment Business

1. Retail Securities Business

Using its own funds, the Daiwa Securities Group invests in private equity,monetary receivables, real estate, venture capital opportunities, and business regeneration. It also forms and manages investment funds.

Through its domestic network of 117 branches (as of April 2009), a callcenter and the Internet, Daiwa Securities Co. Ltd. offers two retail services,
Daiwa Consulting and Daiwa Direct, which provide a wide range of financial products and services as well as support for customer asset management, mainly for individuals and unlisted companies.
(Principal company: Daiwa Securities Co. Ltd.)(Principal companies: Daiwa Securities SMBC Principal Investments Co. Ltd.
and Daiwa SMBC Capital Co., Ltd.)Group Support Operations

2. Wholesale Securities Business

5. Research and Systems Business

Daiwa Securities SMBC Co. Ltd. provides sales and brokerage services, aswell as investment banking services, to institutional investors, corporateclients and financial institutions in and outside of Japan.
Sales and brokerage services: brokerage and trading of equities, bonds,
derivatives and other financial products, mainly for institutional investors
Investment banking services: support for corporate operations ranging from business expansion to finance and capital strategies by assisting
corporate clients and financial institutions to raise capital, issue bonds andmanage assets(Principal company: Daiwa Institute of Research Ltd.)The Group provides information via research reports and other documents,
management consulting, information technology and other services for
institutional investors, corporate clients, financial institutions and publicorganizations in Japan and overseas.

6. Support Services
Services are provided in such areas as securities-related administrative outsourcing and real estate consulting.
(Principal companies: Daiwa Securities Business Center Co. Ltd. and Daiwa
Property Co., Ltd.)(Principal company: Daiwa Securities SMBC Co. Ltd.)

3. Asset Management Business
The Group creates and manages stock, bond and private investment trusts,
as well as other investment management services.
(Principal companies: Daiwa Asset Management Co. Ltd. and Daiwa SB
Investments Ltd.)

Daiwa Securities Group Inc.
Holding company

Daiwa Securities
Co. Ltd.

Daiwa Securities
SMBC Co. Ltd.

Retailsecurities business

Wholesalesecurities business

Daiwa AssetManagement
Co. Ltd.

Daiwa SB
Investments
Ltd.

Asset management

Daiwa Instituteof Research
Holdings Ltd.*1

Daiwa Securities
Business Center
Co. Ltd.

Daiwa
PropertyCo., Ltd.

Research andsystems consulting

Administrative
outsourcing for
securities

Real estate
management, etc.

Daiwa Instituteof Research Ltd.

Daiwa SMBC
CapitalCo., Ltd.*2

Daiwa Securities
SMBC Principal
Investments
Co.
Co., Ltd.

Investment

Daiwa Instituteof ResearchBusinessInnovation Ltd.

*1: On October 1, 2008, Daiwa Institute of Research Ltd. changed its name to Daiwa Institute of Research Holdings Ltd., marking the transition to being an intermediate holding company.
At the same time, the Group implemented a company spin-off to establish the new Daiwa Institute of Research Ltd. and Daiwa Institute of Research Business Innovation Ltd.
*2: NIF SMBC Ventures Co., Ltd. changed its name to Daiwa SMBC Capital Co., Ltd. on October 1, 2008.
DAIWA CSR REPORT 20097

Message from the President and CEO

Sustainable Investment Bank Business
What is your assessment of the factors that led to the current
financial crisis?
There are two main factors. The financial crisis has shown that
there is a limit to how far management can go in pursuing returnon equity (ROE) through highly leveraged investments that could
be called excessive—particularly among European and U.S. financial institutions. In a favorable market, if you increase borrowings
using high leverage, ROE will generally rise. This way of conducting
business may rapidly push up revenues and profits, but the risk istherefore that much greater.
The second factor is a particular chink in the armor of thosefinancial conglomerates aiming for excessive expansion. I believethat the management of a number of financial institutions that
became bloated through repeated M&As* failed to build a sufficiently accurate picture of one aspect of their business, namely, theinherent risk contained in the financial products they sell.
Companies that show steady growth—including in terms of theemployment and training of human resources—and increase insize, share an awareness of the importance of self-discipline that isboth natural and nurtured.
So is the moral to be learned from the current financial crisis
that we need to be prepared to sound the alarm on ROEcentric management?
Although ROE is but one prominent management indicator, there
is a need to have some kind of underlying management credo.
Corporations are allowed to exist because they are of benefit tosociety. In doing business, we must ask, “How have we gone
about increasing profits?” rather than merely stating, “As long as
profits go up, everything is fine.” This process of undertaking thecreation of fair and sustainable profits is important. Granted, corporations must answer to shareholders, but shareholders should
not be allowed free rein. A corporation is a public entity and thus,
by extension, a part of society. If executives and employees share a

The Key Word Is “Sustainability”
President and CEO Shigeharu Suzuki discusses the Daiwa Securities Group’sbusiness and corporate social responsibility (CSR).
Interviewer: Professor Iwao Taka, Dean of the International School of Economics and Business Administration at
Reitaku University, Kashiwa City, Chiba Prefecture, Japan
8 DAIWA CSR REPORT 2009

sense of doing work that benefits society, meeting social expectations cannot be regarded as anything but natural.
The primary roles of investment banks are to assist corporations
in raising capital and to offer advisory services—corporate consulting in the business areas of initial public offerings and M&As, forexample. Although these business areas have been eclipsed by leveraged business and have escaped notice over the past few years, they
are socially meaningful business areas and produce commensurate
value. At the same time, investment banks play an important role
through the investment of their own capital. For example, by providing essential financing to corporations that possess unique andadvanced technologies but are struggling for funds, investmentbanks support the growth and revitalization of those corporations.
What direction will society as a whole take through theinvestment banking businesses? One role of investment banks
is to point the way, particularly with regard to a sustainable
society, environmental issues and global warming.
That’s correct. For example, U.S. President Obama’s Green New
Deal Policy aims at deriving 25% of U.S. energy from renewable
resources, promotes a smarter energy grid, and the developmentof green buildings and next-generation batteries, among othertargets. It also emphasizes that this policy has to be pursued withdetermination to ensure its achievement. Environment-related technologies could be called Japan’s greatest resource. These technologies are the main engines of Japan’s future economic recovery andgrowth. As there are many Japanese companies that possess highly
advanced environmental technologies or those peripheral to theenvironment, we will focus on environmental technologies as one
field of future growth.

Adding a Social Perspective to Investment
Would you please tell us more about the added impetus that’s
being given to socially responsible investment (SRI)?
Progress is currently being made with a project, based on

multi-governmental donations, to vaccinate children in developing
countries. The vaccine bonds** that the Daiwa Securities Group
has sold—on two occasions to date—enable the necessary funds
for the vaccinations to be raised in advance using financial mechanisms. The vaccine can thus be quickly administered to the children,
enabling more lives to be saved.
Furthermore, as it is geared toward individual customers, thisfinancial product also helps inform the wider world of the project’s
existence through sales of vaccine bonds.
The World CO2L bonds,*** which were sold last year, provided
individual customers with a valuable opportunity to find out more
about how emissions trading can significantly help to curb global
warming.
Unlike other industrial sectors such as manufacturing, part ofour work of “helping the world” is not readily recognized because it
does not exist in any physical form. Those responsible for underwriting and selling these financial products can easily explain the meaning and purpose of the financial products to customers and thereby
demonstrate that our profession includes “contributing to a betterworld.” This is of tremendous importance from the standpoint ofraising executive and employee motivation.
Today’s society is engulfed in problems, and we would like topromote the development and sale of financial products that willassist in solving the mounting issues that lie ahead.

Work-life Balance
Mr. Suzuki, you’ve taken the lead in bringing a work-life balance to fruition throughout the Daiwa Securities Group. Pleasetell us about some of the thinking behind this.
Just to give one example, working overtime every weekday andworking on weekends will result in a short-term increase in performance. However, the benefits are not necessarily sustained. Evenif performance is momentarily increased, this means nothing if it is
not sustained. The fatigue from biting off more than you can chew
remains. You forget to pay attention to customers and in the end, if

DAIWA CSR REPORT 20099

Message from the President and CEO

What type of company would you like the Daiwa Securities
Group to become?

you look at the whole picture, the negative aspects become overwhelming. In other words, sustainability is the key word. It is vital toenjoy your life while striking a balance between working really hardand making improvements to your private life too.
You’ve also put efforts into promoting female employees,
haven’t you?
Speaking of securities companies, there is a strong impression of
their being male-dominated up until now. However, the numberof female employees who are branch and department managers is
now increasing. Moreover, four women were newly appointed as
executive officers in April 2009.
The reason why women can now work in these areas is because
the Daiwa Securities Group placed more emphasis on their working
in such areas as winning new customers, providing existing customers with valued care and taking custody of new funds. As aresult, everyone—that is to say not only men but also women—hasreached the stage where they have a sustainable career.

As a corporation, we have to increase profits in a proper manner. However, this effort will need to be achieved through steadyadvances rather than in a single stroke. I believe that we cannot sustain profits unless we grow while sharing the corporate culture andbusiness philosophy long fostered within the Group. A workplacealso needs to be enjoyable. As people spend a lot of time at work,
it is essential that executives and employees alike share a sense ofcommunity.
I would like to create an excellent company. That is my desire. To
date, I have visited 60 or 70 branches and have had young employees who have been with the Company only one or two years
eagerly discuss with me—reflecting their own opinions—issues that
I had raised before. At such times, I realized that my thoughts had
been communicated, and I was deeply moved.
Working on the front line is not without its difficulties; stressbuilds up at times. Even if you speak ill of a superior in such timesof stress, if in the end you can say, “Even though I said that, I still
believe that this is a fine company,” then that, in my view, is reallythe sign of an excellent company.

Shigeharu Suzuki
President and CEO, Daiwa Securities Group Inc.
* M&A: Merger and acquisition** Vaccine bonds—Please see page 17 for more details.
*** World CO2L (“Cool”) bonds—Please see page 19 for more details.

Closing

Iwao Taka
Dean of the International School of Economics and Business Administration,
Reitaku University

Speaking with President Suzuki, I was again impressed with hissense of commitment. Furthermore, I was able to fully understandeverything he means by the key word “sustainability.” I share hisstrong conviction that making profits in a proper manner leads toa sustainable business and society.

10 DAIWA CSR REPORT 2009

Management Summary

Aiming to Become Japan’s Top Securities GroupAs a provider of comprehensive investment and financial services, the Daiwa Securities Group is composed of
Daiwa Securities Group Inc.—a holding company—and various companies that provide securities-related services, centered on two securities companies in particular: Daiwa Securities Co. Ltd. in the retail business and Daiwa
Securities SMBC Co. Ltd. in the wholesale business.

Principal Management Indicators (Consolidated)(¥ million)

FY2004

FY2005

FY2006

FY2007

FY2008Operating revenues

519,337

845,659

917,307825,422413,936

Commissions

216,386

309,188306,736

294,424

208,880

Net gain on trading

151,117

224,912

157,332

103,361

40,921—

21,53932,818

19,160(79,477)

Net gain on private equity and other securities

171

—

—

—

—

Interest and dividend income

Net gain on operational investment securities

118,019245,210373,452

358,422

192,663

Service fees and other sales

33,64144,80846,96750,05250,948Net operating revenues

390,432

579,358

526,764

447,491

199,544

Ordinary income (loss)

120,433

260,651

195,415

90,143(141,150)

Net income (loss)

52,665

139,948

92,724

46,411(85,039)

Net assets

648,332

792,281

1,223,225

1,082,923

952,329

Total assets

12,378,961

14,898,890

14,411,265

17,307,119

14,182,579

Return on equity (ROE) (%)

8.4

19.4

10.8

5.3

(11.1)Net income (loss) per share (¥)

39.03

103.90

67.90

33.69

(63.16)

Net assets per share (¥)

486.70598.27665.98607.64534.99

13

34

28

22

8

Annual dividends per share (¥)

Corporate Profile (as of March 31, 2009)

Number of Employees (Consolidated)(persons)

Company nameDaiwa Securities Group Inc.
Headquarters
GranTokyo North Tower, 9-1,
Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-6751, Japan

15,224
14,45615,00012,00012,243

12,561

13,264

Established
December 27, 1943 (Founded 1902)
President and CEO
Shigeharu Suzuki
Common stock¥178.3 billion

Asia/
Oceania 4％

Segment by
Company

Segment by
Region3,000

0（Fiscal year end）FY2004

FY2005 FY2006 FY2007 FY2008

Operating Revenues and Net
Operating Revenues (Consolidated)

Daiwa Securities
SMBC Co. Ltd. 14％

Japan 89％

Daiwa Securities
Co. Ltd. 49％(As of March 31, 2009)

Breakdown of Net Operating Revenues
by Region (Consolidated)(¥ billion)

1,000

Number of consolidated subsidiaries
44

800

Shares issued and outstanding
1,404,664,772

Europe 5％

Other groupcompanies
in Japan
25％

9,000

Number of employees (Consolidated)
15,224

Number of equity-method affiliates
6

Daiwa Securities
Group Inc. 2％

Americas 2％

6,000

Telephone+81-3-5555-1111

Employee Composition
Group companies
outside Japan 10％

Europe 13,600

917
845

600

Americas 19,673
579

519

526
447

400

Asia/Oceania 9,625

825

390

Total
199,544413(¥ million)

199

200
0

Japan 156,644
FY2004 FY2005 FY2006 FY2007 FY2008(FY2008)

Operating revenues
Net operating revenues

DAIWA CSR REPORT 200911

Discussion with Stakeholders
Sustainable Finance Business and CSR

A discussion with Daiwa
Securities Group executives
and academics regarding thefuture of the finance business
and CSR in the aftermath ofthe current financial crisis(Held on March 5, 2009 and hosted by Mariko Kawaguchi,
General Manager of the Daiwa Institute of Research Ltd.’s
Management Strategy Research Department)
Right to left:

Toshiro Muto, Chairman of the Daiwa Institute of Research Ltd.
Takeshi Mizuguchi, Professor of Economics,
Takasaki City University of Economics

Kumi Fujisawa, Vice President of the think tank, SophiaBank
Masaaki Goto, Corporate Executive Officer,
Daiwa Securities Group Inc.

C

ould you elaborate on your perception of thecurrent financial crisis?

Muto: There are many factors that brought about this financial crisis.
The first factor lies in the significant development of securitization markets associated with further innovations made in the finance industry. A
significant amount of housing loans were included among the underlying
assets that had been used to formulate securitization products. However,
the housing bubble began to collapse beginning with the plunge inhousing prices in the United States around the middle of 2006, and thishas impacted financial markets worldwide.
The problem was that in the pursuit of globalization, there was a lackof rules and supervisory functions in financial markets. While new markets were emerging, an awareness of these problems remained unrealized. Despite the surfacing of the subprime loan problem in August 2007,
it was considered to be a regional problem only. As a consequence, no
one was able to imagine that global financial markets would be disrupted
to such an extent.

Mizuguchi: Investment is, so to speak, a type of fund that is set aside
for regular use for the future. However, housing by its very nature does
not lend itself to producing future cash flow. Although securitization
products are a means to disperse risk, is it not fair to say that excessively
concentrating funds in these products has gone too far, judging by thenature of the original investments?
Muto: Judging from the situation surrounding the global money glut,
surplus funds that exceeded demand for funds used in capital investment

12 DAIWA CSR REPORT 2009were being collected among financial institutions as savings, while thehousing market was drawing attention as one area of investment.
Demand for housing actually increased with a rise in the number of
immigrants moving to the United States during the 1990s. Consequently,
there was a need for investment in housing initially, making this a substantial area of business growth. However, intrinsic utility values and themarket values gradually began to diverge.
Yet, it is not appropriate to fundamentally deny market principles inrelation to these excesses. Based on the understanding that the market
makes mistakes from time to time, the problem pertaining to what typeof safety net needed to be installed has been raised.

Fujisawa: I believe that free markets must coexist with essential ethics
and morals. Since it is unusual for a majority of people to buy two or
three houses, I believe that governments and central banks should play
an important role in regulating markets and businesses from an ethicalpoint of view.

Muto: In order to prevent market failure, it is necessary for the market
to have a built-in, rational system that can function in a truly effective
manner, rather than simply relying only on ethics. Based on what has
been learned from this experience, it is critical to determine what measures will be useful in the future. In the midst of financial globalization, asingle regulatory body of an individual country is no longer able to understand the real situation underlying investment banks.* Consequently,
there has been a movement to make information exchanges based on
macro prudence more effective. Macro prudence refers to creating monitoring mechanisms not yet in place by sharing macro data and otherinformation to determine if there is excessive bloating within the market.

Furthermore, despite differences in each country’s laws and financial systems, deeper discussions on an international level are needed regarding
individual financial institutions’ own rules and behavioral principles.
Although this is one set of ideas that needs to be instituted, there are no
simple solutions for this.

Mizuguchi: Well-organized behavioral principles have everything to dowith the future shape of the market, rather than just preventing the market from overheating.

Goto: Information disclosure is also important. Including descriptions ofbusiness activities and profit sources, third parties are able to examine
information based on unequivocal and timely disclosure of information.

Fujisawa: While the severe strain placed on companies from regulations
and the pressure to disclose information could be dangerous, the realissue here is finding a balance.
Muto: The financial rules used by Europe and North America to date did
not work this time. On the other hand, if the market becomes overly regulated, it also becomes inefficient, or even dysfunctional, depending on
the circumstances.
Because disclosure is meant to increase the efficiency of market
mechanisms, this is not a matter of strengthening regulations. The market also needs negative information to be disclosed as well, since thisheightens transparency, and most likely saves businesses.
Mizuguchi: There is a tendency to associate ethics with simple justice.
However, I believe that it is more a matter of what is rational for society
as a whole. Individual financial institutions that placed a priority on short-term profits and acted accordingly caused the current situation. Becauseof this, it is rational to adhere to a policy of moderation and take actions
based on a long-term perspective.

As global rules are enhanced, what actions should
securities companies take?

Goto: The highly leveraged, ROE-driven management style practiced byinvestment banks, which involved investing huge amounts of borrowed
funds, needs to be corrected. As members of society, companies mustalso place importance on such responsibilities as paying taxes and hiring
employees rather than simply focusing on the market value of theirstocks.
The core businesses of securities companies include evaluating businesses and carrying out negotiations in relation to mergers and acquisitions, assisting in raising capital by underwriting stocks as risk money
intermediaries and providing advisory services for managing investors’
assets. These functions are also an integral part of financial and capital
markets. Securities companies assist in raising capital by steadily conducting market research and developing new businesses, which is definitely apart of their core business.
By undertaking this business on a sustainable basis, suitable profits
will continue to increase. There will also be a continual need in society forsuch companies. To be certain, there are important questions about sustainability. In terms of the social function of businesses and other organizations that raise capital, vaccine bonds and other similar products areperhaps one example of investments that can convince investors that
there is social meaning in investing and that investments can be helpful.
DAIWA CSR REPORT 200913

Discussion with Stakeholders
Kumi Fujisawa

Takeshi Mizuguchi

Vice President of the think tank, SophiaBank
Vice President, Japan Social Entrepreneur Forum
Visiting Professor, Hosei Business School, Hosei University

Professor of Economics, Takasaki City University of Economics
Member of the Management Research Group of the JapaneseInstitute of Certified Public Accountants
Chairman of the Special Committee on Sustainability andInformation Disclosure

Graduating from Osaka City University’s Graduate
School of Economics in 1989, Ms. Fujisawa has worked
for investment management companies in Japan andoverseas. In 1996, she founded Japan’s first company
for evaluating mutual funds and participated in thefounding of SophiaBank in 2000. Continuing efforts
to interview foreign and Japanese company managers,
provide on-the-spot coverage and convey information
via such media sources as television, radio and magazines, Ms. Fujisawa is making efforts to create a newsociety by way of the media.

Graduating from the University of Tsukuba’s College of
Policy and Planning Sciences, Professor Mizuguchi joined
Nichimen Corporation and Eiwa Auditing Corporationin 1984 and 1989, respectively, before becoming anlecturer at Takasaki City University of Economics in1997. Professor Mizuguchi specializes in environmental
accounting and CSR investments. He continues to makeproposals for the introduction of responsible investing insuch areas as disclosing information about climate risk
for investors and public pensions.

Fujisawa: Despite the fact that funding is truly needed, the ability ofcompanies to raise capital is difficult at the moment. While there aremany expected roles to be played by the government, if investmentbanks and nations are to cooperate with each other further, what are thefirst things that must be considered?

there needs to be a change towards bold ideas. Concerning the pursuitof profits, in leveraged management, major questions must be dealt
with. Although the desire exists to take on big projects to achieve profits,
this in itself is starting to come under question by a growing number ofpeople, particularly among the younger generation.

Goto: First, the areas that contribute to industrial growth must be thor-

Fujisawa: I believe that is important for Japan as a developed nation toshow the world its intent to find solutions for problems associated withan aging population and environmental issues. As China and India develop, they will likely be directly confronted with the same issues. It would
be great if Japan could make use of its financial tools to be an ideal socialrole model for the world 20 years from now. In order to do this, Japan
should start by changing the attitudes of its own citizens.

oughly analyzed, and subsequently, consulting should perhaps takeplace. On the basis of surveys, if our research shows that these markets
and companies can contribute to industrial growth, efforts should bemade to raise capital.

Mizuguchi: Taking a global perspective, the problems related to adequate food and safe water sources, ecological and other issues are enormous. Yet, because businesses do not feel that they have a duty toconfront such problems, the mechanisms for providing funds in theseareas have not been exploited. A social vision must emerge that aims to
make small changes in such attitudes, examines ways to allow people tolive securely and fosters a society that can provide prosperity for people
in developing countries. Is this not the role of countries and leading companies? For example, remarks have been made regarding overseas financial institutions creating networks to combat risks associated with climatechange. To that end, I would like to see Japanese financial institutions
creating links across industries and taking on a leadership role as well.

Fujisawa: Since wages in developing countries remain low, investment
efficiency tends to be low as well. If that is the case, can financial products be made by gathering tiny investments and using financial innovation? Cannot securitization and leverage be used in these areas?
For example, there is a fund in Switzerland that invests in microfinance** and manages the assets and pensions of wealthy Europeans.
This can be done in Japan as well.

Goto: Firstly, creating investment products out of micro finance investments poses challenges in such areas as risk/return and the amount offunds necessary to formulate these products. However, it is necessary, forexample, to develop mechanisms that contain incentives based on preferential tax systems and other factors, as well as fostering such things as
micro finance-specific venture capital. In the case of large companies,

14 DAIWA CSR REPORT 2009

Muto: Within the movement to reform global financial rules, what
contributions Japan can make to this in relation to America and Europe
has become another challenge. Although Japan has not shown muchskill in creating these types of international rules, the opportunity is at
hand to attempt this.
Moreover, because Japan makes excessive use of indirect financecompared with other countries, there is still a potential for securities businesses that support direct finance.

Mizuguchi: Just as Ms. Fujisawa mentioned, if solutions can be presented for social problems through the use of finance, understanding
regarding the nature of finance and investments will increase. As thisunderstanding spreads, business chances are sure to follow.
In the case of finance and investment, I believe the key word here istrust. In the past, business transactions were made based on face-to-facerelationships. With the spread of globalization, however, this is no longer
the case. In addition, although it takes a long time to develop trust, it canbe lost in an instant. Indeed, I believe that trust is gained through a multitude of actions based on very carefully devised behavioral principles.

Muto: The trust of consumers and investors cannot be gained overnight. Rather, it is a matter of how it is fostered. With CSR in mind, it isextremely important to gain and sustain the trust of local communities.

Could you share your thoughts about the futureof the Daiwa Securities Group?

Mizuguchi: I would like to see the spread of socially responsible investment and for the Daiwa Securities Group to make “leverage financial
capabilities to contribute to a sustainable society” an important issue.
With this in mind, the Daiwa Securities Group has many excellent
employees who have released numerous financial products that take theenvironment and society into consideration. However, I tend to wonder if
the Group is performing on an organizational level to carry out these
efforts and if they are taking root in society. I look forward to initiatives
undertaken by the entire Group to address this.

Fujisawa: It is important that the function of securities companies becommunicated throughout the world. For this reason, communicationmust be undertaken through their main business, above all else. This
involves securities companies providing citizens with tools that enable
them to participate in efforts to bring about a recovery of the economy—showcasing leading industries, for example. I would be very happy
to see the Daiwa Securities Group reveal its vision through its primarybusiness to raise awareness among citizens.
Vaccine bonds represent a major opportunity regarding this matter.
Even among people who hesitate to donate to charity, this bond will
strike a chord when people realize that they can get a return on theirinvestment while making a contribution to society. A broader social perspective can be gained via investment.

Muto: Education related to savings has been taken throughout the post
war period by those affiliated with indirect finance. In elementary
schools, there were programs for making entries in bank account books.
However, education programs that allow children to gain experience in
the investment business have become more prevalent in the UnitedStates.

Mizuguchi: This type of education is vital for allowing people to consider making long-term investments. As it is important to take a longterm perspective of 10 to 20 years, I believe that it is necessary forsecurities companies to take this stance when dealing with customers.
Fujisawa: It would be better for this CSR report in the future to be
more of a strategic report, or more specifically, a manifesto: “This is how
we were in the past but this is what we aim to be in the future.” In thecase of workforce development as well, it would be fantastic if the Daiwa
Securities Group could communicate its corporate vision and align thiswith its main business.
Mizuguchi: Although there is the tendency to consider CSR as thebusiness of the CSR Department, it is really an issue for the entire company to deal with. I would like the Group to evolve more in terms of analysts and fund managers doing their work while giving full consideration
to the environment and society, and this in turn would reinforce the concept of being a socially responsible company without the need for labels
such as CSR or SRI.

Goto: I would like to develop the Daiwa Securities Group into a compaGoto: That is excellent advice. We must make an even greater effort toput forth proposals on what direction society should take.

Muto: The Daiwa Securities Group values its workforce as a part of its
corporate principles. Because people are the greatest asset any company
has, I would like to see this tradition continue and for further efforts to
be made in this area.
Goto: Education is also critical for encouraging people to view investing
as a regular activity. To this end, the Group is making efforts in the areaof economic and finance education. This concerns children learning
about how to make judgments about the future so that they can think
clearly about how to invest their money when they become adults.

ny in which CSR is an inherent part of our actions, rather than specificallymentioning the term, “CSR.” I think it is important to undertake sustainable initiatives with a long-term perspective. I have been reminded todayof the importance of the hearts and minds of all employees. Thank youvery much.
* Investment banks: Financial institutions that assist in the raising of funds from
capital markets by issuing financial instruments for companies and provide
advice pertaining to such financial strategies as mergers and acquisitions.
** Micro finance: Financial services of limited sums that target people who are
not eligible for such services as loans from commercial banks due to a lack ofcollateral, stable employment and verifiable credit records based on suchfactors as their impoverished circumstances.

Toshiro Muto

Masaaki Goto

Chairman of the Daiwa Institute of Research Ltd.

Corporate Executive Officer, Daiwa Securities Group Inc.

Graduating from the University of Tokyo Facultyof Law in 1966, Mr. Muto joined Japan’s
Ministry of Finance that same year. He became
director-general of the Budget Bureau in 1999,
administrative vice minister of finance in 2000,
deputy governor of the Bank of Japan in 2003
and visiting professor at the University of Tokyo’s
Research Center for Advanced Science andTechnology in 2008. That same year, he began
serving in his current position as chairman of the
Daiwa Institute of Research Ltd.

Graduating from Keio University’s Faculty of
Economics in 1982, Mr. Goto entered Daiwa
Securities. In 2005, he was appointed generalmanager and head of the Structured Finance
Department at Daiwa Securities SMBC Co. Ltd.
He became general manager and head of the
Corporate Communications Department at Daiwa
Securities Group Inc. in 2006. He assumed the postof corporate executive officer at Daiwa Securities
Group Inc. in 2007, which is his current position asof April 2008.
*As of April 2009, Mr. Goto serves concurrently as acorporate executive officer at Daiwa Securities Group
Inc. and chairman of Daiwa America Corporation.

DAIWA CSR REPORT 200915

Approaches to Key Issues

1 Leverage Financial Capabilities toContribute to a Sustainable Society

16 DAIWADAIWACSR
CSRREPORTREPORT2009
2009

The Second Round of Sales of Vaccine Bonds
The Daiwa Securities Group conducted sales of vaccine bonds in February 2009, continuing efforts that began in
2008. The amount of bonds issued increased from ¥22.0 billion in the previous fiscal year to ¥42.9 billion. With
the introduction of online offerings this time, the Group is providing opportunities for an even wider array of
individual investors to buy vaccine bonds.
Carrying Out Vaccinations of Children in
Developing Countries
Every year, 2.3 million children in developing countries in Asia and Africa
die from infectious diseases that are easily preventable. To address thissocial issue, the Global Alliance for Vaccines and Immunisation (GAVI),a global public-private partnership (PPP) carrying out vaccination programs, was formed in 2000. The GAVI Alliance provides free medical
and vaccination services in 70 developing countries. The International
Finance Facility for Immunisation (IFFIm), the international financial
procurement institution of the GAVI Alliance, issues vaccine bonds with
AAA rating obtained from Fitch Ratings, Moody’s Investor Services andStandard & Poor’s. Furthermore, the World Bank administers the IFFIm’s
overall financial activities as a financial manager.

Purpose of Vaccine Bonds
The vaccination programs for children in developing countries assistedby the IFFIm are supported by donations pledged by the governmentsof seven countries (the United Kingdom, France, Italy, Spain, Sweden,
Norway and South Africa) as of May 2009. The total amount of donations
is US$5.2 billion and will be paid over an extended period until 2026.
It is evident that these vaccinations are required right now in order toprevent more needless loss of life among these children. Consequently,
the IFFIm borrows pledged donations from affiliated countries inadvance by issuing vaccine bonds to establish a system to procure thefunds required for the vaccines.

Generating a High Level of Interest among Individual
Investors
With the aim of widely disseminating information about programs to
supply vaccines and other items, as well as about vaccine bonds, theDaiwa Securities Group held vaccine bond seminars for individual investors for the second consecutive year. With Alan Gillespie, Chairman of

the Board of Directors of the IFFIm, the GAVI Alliance’s Chief Financial
and Investment Officer, Alice Albright, and Kenneth Lay, Vice President
and Treasurer of the World Bank in attendance, the Group held a vaccine bond seminar for approximately 200 individual investors at the
Daiwa Conference Hall in Tokyo on January 16, 2009. During the seminar, participants asked a number of questions regarding vaccination
programs administered by the IFFIm and GAVI Alliance as well as themechanism underlying vaccine bonds.

Expanding Investor Awareness of “Profit and Beyond”
By purchasing vaccine bonds, investors will be able to indirectly participate in providing humanitarian aid in the medical and healthcare
sector—which includes the proliferation of vaccinations and other services—in addition to enjoying a return on their investments. Clarifying
how these invested funds are used and by whom, we believe that theawareness gained concerning the social role of such investments leads
to an understanding of the significance of “profit and beyond” forinvestors through their purchase of vaccine bonds.

The Development of Financial Products for the Future
In recognition of such achievements as its approach to socially responsible investment (SRI) thus far, underwriting World Bank bonds and its
ability to sell to individual investors, the Daiwa Securities Group became
the first financial institution in Japan to deal in vaccine bonds. Although
it was also the first attempt in the world to develop and sell vaccine
bonds to individual investors, the Group received high praise from anumber of international organizations, including the World Bank, andsucceeded in strengthening mutual trust. As a CSR activity carried out
through its main business, the Daiwa Securities Group will continue tomake proactive efforts in the development and sale of financial products that add a social perspective to investment. By doing so, we willcontribute to finding solutions to social issues.

Donations from each country and amount procured by vaccine bonds issued by the IFFIm

Supply of fundadvances necessary toprovide vaccines
By issuing vaccine bonds, the IFFIm
is able to secure cash flows based on
future donations promised bycontributing countries.

(Millions of U.S. dollars)
1,000
900
800
700
600
500
400

Amount raised by the initial bond issuance by the IFFIm

Bond issue
United Kingdom

Amount raised by the second bond issuance by the IFFIm(the first issuance of vaccine bonds in Japan)
Amount raised by the third bond issuance by the IFFIm(the second issuance of vaccine bonds in Japan)

FranceDonationsfrom
eachcountry

Italy
Spain
NorwaySwedenSouth Africa

300
200
100
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

DAIWA CSR REPORT 200917

Approaches to Key Issues

Developing Effective Responses to Environmental Problems
Countries worldwide are currently focusing on the formulation and steady implementation of various measures inareas including alternative energy sources and environmental technologies—the Green New Deal Policy is but one
example—in order to develop a sustainable society. Beyond being used to simply stimulate the economy, these measures hold the potential to bring about a fundamental change in the economy of the 21st century. We believe that it
is our foremost mission to promote investment in companies that possess superior environmental technologies.

Daiwa Energy Technology Fund (Limited Open-Type Fund)The global economic paradigm of the 20th century was based on adependence on fossil fuel energy sources such as oil, coal and naturalgas. However, there are concerns regarding such risks as the environmental impact of fossil fuel use as well as the future depletion of theseresources. Consequently, efforts have been made worldwide to search
for ways to develop alternative, stably accessible energy sources which
will have minimal environmental impact. Efforts are also under way to
improve and spread environmental technologies.
The demand for alternative energy from such non-fossil sources aswind, solar power and fuel cells has been increasing steadily in various
regions, including the United States, Japan and Europe. It is expectedthat Japanese technologies accumulated
over many years in various industries andthe alternative energy industry itself willdevelop into one of Japan’s key industries.
Daiwa Asset Management Co. Ltd.
established the equity investment trust,Daiwa Energy Technology Fund (limited
open-type fund) in December 2008, targeting investment in Japanese companies
that possess a high degree of technologicalcapability in the field of alternative energy.

Next-Generation Environmental Business Fund
In Japan, there are numerous companies that have a superior level oftechnological capability and competitiveness (with a high market share)in such fields as alternative energy and energy efficiency, not only inreference to finished products but also in the component and materials industries. For example, components and technologies used in the
manufacture of semiconductors and liquid crystals—which include
silicon wafers, glass substrates, and films for polarizers and filter technologies—can find use as components in solar power generation andother related areas. Accordingly, business opportunities are expected

to increase for the manufacture of finished products as well as for businesses that produce components in these areas.
Daiwa SB Investments Ltd. established the open-ended equity
investment trust, the Next-Generation Environmental Business Fund,in February 2009, targeting investment in Japanese companies thatpossess a high level of reliability and technological capability in relation
to the two pillars of the Green New Deal Policy: the field of alternative
energy and energy efficiency/environmental countermeasures.

Investment Themes of the Next-Generation Environmental Business Fund
Investment in Japanese companies that are expected to enjoy profitability as a result of environmental policies undertaken by major countries worldwide
Alternative energy

Renewable energy sources
Solar, wind and hydropower generation andthe utilization of solar thermal and snow-and-ice
cryogenic energies
Biomass
Recycled energy (waste power generation,
production of waste fuels and others)

Fuel cells
Nuclear power generation
Other

Energy efficiency/
Environmental countermeasures

Clean energy automobiles
Eco-friendly homes, buildings and low-carbon
infrastructure
Smart grid (next-generation, energy-efficient powertransmission networks) and lighting
Greenhouse gas reclamation and retention technologies
Emissions credit trading
Water-related
Pollution clean-up and prevention
Recycling
Other

18 DAIWA CSR REPORT 2009

Providing Information Regarding Environment-related Fields
In order to promote investment in companies that possess superior
environmental technologies, it is important to provide the latest information regarding trends in individual companies, the impact of government policies and other issues in a form that can be easily accessed byvarious investors, including individual investors.
Recognizing that environmental fields are growth fields that cannot
be categorized by such simple terms as CSR and SRI, the Daiwa Instituteof Research Ltd. has assigned strategists specializing in the environment
to the Investment Strategy Department.
In addition to issuing the comprehensive report, “Cool Earth: Future
Environmental Technologies and Japanese Companies” in July 2008 tocoincide with the Toyako Summit, the Daiwa Institute of Research Ltd.
began publishing “Environment Report” and “Environment Investment
Strategy” in August and November 2008, respectively, and issued
numerous environment-related reports thanks to the cooperation ofanalysts from various companies in the Daiwa Securities Group.
Beyond institutional investors, a wide range of investors—including
individual customers—can make use of these reports via Daiwa Direct.*Moreover, active efforts are being made to hold seminars with environmental themes to heighten investor awareness of environmental issues.
*Daiwa Direct: An online trading service provided by Daiwa Securities Co. Ltd.

Environmental booklets and reports issued by the Daiwa Institute of Research Ltd.

World CO2L Bonds
Emissions credit trading is an effective mechanism for achieving targets
related to the greenhouse gas reductions set by the Kyoto Protocol.
Within the Daiwa Securities Group, Daiwa Securities SMBC Principal
Investments Co. Ltd. began investing in emissions credits in August 2004.
Following this, Daiwa Institute of Research Ltd. established a team of specialist consultants to this end, and Daiwa Securities SMBC Co. Ltd. used
the implementation of the Financial Instruments and Exchange Act in
September 2007 as an opportunity to make a full-fledged entry into theemissions credit business.
In June 2008, we launched sales of the Certified Emission Reduction(CER)-Linked, USD-Denominated Uridashi Bond (World C02L Bond)co-developed with the World Bank. It pays interest to individual investors calculated according to the amount of greenhouse gas emissions
reduced by and the market prices of emissions credits purchased froma small-scale hydropower generation project in Hongyang, Guizhou
Province, China. The bond has the advantage of offering individual
investors, who cannot usually participate directly in emissions credit
trading, a chance to do so indirectly, further encouraging a greater
vitalization of the emissions credit trading market.

The small-scale, hydroelectric power generation project in Hongyang,
China, which provides emissions credits relating to World CO2L bonds,
utilizes aqueducts built on steep slopes to generate power.

Exercising the Daiwa Securities Group’s comprehensive capabilities
to the maximum extent possible—from the identification of projects that
help reduce greenhouse gases to the composition and sales of applicablefinancial products—the mechanisms supporting World CO2L bonds havegarnered attention from other issuers and financial institutions.

DAIWA CSR REPORT 200919

Approaches to Key Issues

2 Develop Sound Financial and CapitalMarkets for the Next Generation
Establishing Truly Investor-Friendly Financial and Capital Markets
Working in earnest to contribute to the establishment of highly transparent, fair and trustworthy financial
and capital markets, the Daiwa Securities Group is undertaking various activities with the highest possiblelevel of compliance awareness. By passing on to generations to come our economic and financial expertiseand the knowledge that we have nurtured through our business, we are aiming to contribute further to thesustainable growth of these markets well into the future.

20 DAIWA CSR REPORT 2009

reinforcing systems for monitoring unlawful transactions. Throughthese and other initiatives, the Daiwa Securities Group has accelerated
its efforts to take this mission to a higher level.
Looking ahead, we are endeavoring to construct a collaborative
structure that creates closer links between the Daiwa Securities Group’s
sales and compliance departments. Such a structure will enable theGroup to achieve responsibility in financial and capital markets with agreater sense of harmony, and in this manner we are bolstering activities to satisfy demands from society at large.

Improvements in Compliance
System EffectivenessCompliance Measures of
the Daiwa Securities GroupThrough the provision of wide-ranging financial products and services,
the Daiwa Securities Group not only continues to pursue healthy profits
but also has made this its mission, and it has assumed responsibility toassist in developing sound financial and capital markets where transparent and fair transactions can be promoted. In other words, the Group isoperating as a market intermediary that connects investors and issuers,
while boosting liquidity in financial and capital markets. Through suchoperations, we are ultimately aiming to serve as a driver of sustainable growth of these markets, which have a role to play in the areas ofsocial capital and infrastructure. In order to carry out this function, it isindispensable for the Group to maintain effective compliance and internal control systems. It is also vital for the Group to listen and respond to
customers, while offering investments and engaging in marketing activities in compliance with “principles of suitability” as stated in Article 40of the Financial Instruments and Exchange Act.
In fiscal 2008, Daiwa Securities Co. Ltd., which is in charge of theretail securities business, conducted comprehensive reviews and revisions of various internal rules relating to product sales, while recently
establishing the Trade Surveillance Department, which is tasked with

To promote compliance and improve operational quality in all of its
marketing activities, Daiwa Securities acknowledges the necessity of
training its employees to gain a high degree of compliance awarenessas well as of maintaining compliance-oriented organizational structures.
At the same time, high-level systems that enable effective utilization oftrained personnel and compliance-oriented organizational structures
are required. Based on such systems, we aim to strike an optimal balance between cost reductions and efficiency enhancement in order toprevent human errors and eliminate redundancies in operations. These
initiatives are intended to contribute to the achievement of our ultimate
goal of developing sustainable financial and capital markets.
In addition to promoting the use of electronic statements, steadyprogress is being made to introduce “thin client” technology as one
measure for establishing an efficient system infrastructure base. Thin client is a new type of personal computer system consisting of a terminal
without a hard disk, with applications such as Microsoft® Word or Excel
as well as all data being stored and administered on a central server.
The three primary goals for introducing this system are listed below.
The first goal involves the reduction of unnecessary system usage
based on the integration of End-User Computing (EUC) environments—
namely, sharing (virtualization) personal computers and servers among
departments and Group companies rather than keeping these on an
individual or unit basis. Often, such development results in reductions
in environmental impact related to such areas as power usage frompersonal computers and servers. The second goal focuses on increasing security. Ensuring that records do not remain in individual terminals
leads to a reduced risk of information physically leaking to outside parties. The third goal is to work towards business continuity. Actually, theaim is to facilitate the continuity of not only main systems, but also EUC
environments at each department that promotes business operations.
Presently, with the installation of thin client terminals at head office
departments completed, we are currently examining the viability of
introducing them at all sales branches. Going beyond steps to augment linkages between and the efficiency of the Daiwa Securities
Group’s business systems among sales branches, the head office, andGroup companies, we will aim to develop lean and powerful financial
and capital market infrastructures with an eye on introducing thinclient and electronic paper to those parties that do business in thesemarkets, such as affiliated companies and customers.

*Details will be made available on the Daiwa Securities Group Inc. CSR website in
September 2009.
DAIWA CSR REPORT 200921

Approaches to Key Issues

Educational Activities for a Sustainable Society
In addition to an obligation to impart its knowledge and experience of the economic and financial sectors to thenext generation, the Daiwa Securities Group proactively supports educational and research activities in order toshare an awareness of the issues facing the development of a sustainable society.

Daiwa—JFS Youth Sustainability College
In partnership with the non-profit organization (NPO) Japan for
Sustainability (JFS), the Daiwa Securities Group sponsors a series of lectures for students. The amount the Group donates is determined by therevenue obtained from the sales and management of the “Daiwa EcoFund” investment trust.
Held over the space of a year, the lectures cover a variety ofthemes, and those who attend over the four years of the program areable to build up a complete picture of sustainability.
At the lectures, which are held monthly, speakers—including
university professors, researchers, corporate executives, businesspeople, members of NPOs and nongovernmental organizations, politicalleaders and people at the top of their respective professions—talkabout approaches and practices related to sustainability in a mannerthat is easy for students to understand. Nearly 250 students are currently registered in the program, which serves as a place for learningwith colleagues beyond the confines of the university. In addition, thelectures are translated into English and transmitted via the JFS website
to 191 countries and regions throughout the world.
Also, fair trade products and food products such as candies andtomato juice produced at social welfare facilities are showcased in a
“Sustainable Ordering” display, which is held after the lectures and is
one of the highlights.

Four-Year Program Offered by the Sustainability College
First Year: Capacity/Resources and Sustainability (Oct. 2006 to Sept. 2007)
Awareness of the fact that all human social activities are carried out within Earth’s limited resources and capacity and understanding global
issues according to the mottainai approach
Second Year: Intergenerational/Interregional Fairness and Sustainability (Oct. 2007 to Sept. 2008)
Having inherited the legacy of past generations, we have a duty to pass that legacy on to the next generation. How can wealth and resources
be fairly distributed internationally and between regions? Students study how to create a society in which nobody is exploited.
Third Year: Diversity and Sustainability (Oct. 2008 to Sept. 2009)
Students learn to respect all kinds of diversity for its inherent value—for example, the value of an animal’s life and the diverse races and cultures of human beings.
Fourth Year: Intention/Connections and Sustainability (Oct. 2009 to Sept. 2010)
Building a better society requires individual reflection as well as connecting with others. Students study how to best have a flexible and open
dialogue to create a wealth of connections as well as learn about the meaning and know-how underlying social engagement.

Economic and Financial Education for Young People
In order to impart its accumulated know-how and experience throughthe Company’s principal line of business, the Daiwa Securities Group
conducts business-academia collaboration and offers a variety of educational programs on economics so that young people, who will be
the next generation’s leaders, have a proper knowledge of economics
and finance and are able to take an active part in society. In the areaof business-academia collaboration in universities, Group executives
and employees teach practical business seminars covering a wealth ofsubject matter, ranging from basic economics to cutting-edge finance.
These activities are sponsored by the Daiwa Securities Group as well
as by other organizations. Through the University of Tokyo and Peking
University in particular, we have recently forged horizontal links with
universities throughout Asia and engage in a lively exchange of views.

To enable students at junior high and high schools to easily learn about
the mechanisms of finance and business, the Group participates inhands-on economic study programs such as the Student Company*Details will be made available on the Daiwa Securities Group Inc. CSR website in
September 2009 .

The Daiwa Securities booth at Finance Park, where students have the opportunity to learn and experience personal finance

22 DAIWA CSR REPORT 2009

Program and Finance Park—offered by Junior Achievement Japan, an
association involved in economic education for young people. In addition, in the area of on-the-job training as part of the social educationof school teachers and students, staff from the various departments of
the Daiwa Securities Group cooperate through such activities as providing on-site study visits to actual dealing rooms and branch offices.

Cooperation on the Porter Prize
With the aim of contributing to the rejuvenation of the Japanese
economy, the Daiwa Securities Group actively promotes businessacademia collaboration in the economic and financial sectors. As partof this contribution, the Group has been cooperating with Hitotsubashi
University’s Graduate School of International Corporate Strategy (ICS) in
the organization and management of the Porter Prize since 2001.
The Porter Prize, which aims to bring about improvements inJapanese corporate competitiveness, was established by ICS in 2001.
The name of the award is derived from Professor Michael E. Porter, aleading authority on competitive strategic theory.
The prize was established to recognize Japanese companies thathave implemented brilliant and unique strategies to achieve and maintain high profitability and to disseminate the methods behind thosestrategies throughout the world to ensure that their competitive strategic theories and practices take root and widely benefit other Japanese
corporations.

In fiscal 2008, the Porter Prize presentation ceremony was held at the
Hotel Okura Tokyo in Minato Ward, Tokyo, on December 4, 2008. Since
its creation in 2001, the award has been presented to 26 companies.

Professor Porter (second from right) with representatives from the awardwinning corporations

On the Occasion of the Porter Prize
Akira Kiyota, Chairman of the Board, Daiwa Securities Group, Inc.
Through the finance and capital markets and under its policy ofcontributing to the development of a robust society and economy,
the Daiwa Securities Group undertakes a wide range of CSR activities based on its key securities business.
Part of these activities involves proactively working to advanceeducation in economics and finance through, for example,
involvement in business-academia collaboration with universities
and graduate schools as well as in finance education programs
designed for young people.
With the aim of contributing to the rejuvenation of theJapanese economy, the Group has cooperated on the Porter Prize
since its inception in 2001, based on its business-academia collaboration with ICS. The Porter Prize has been awarded to many corporations that have implemented unique, high-quality management
strategies, and it is our desire to facilitate and to support as many
corporations of such quality as possible.
Today, with the possibility of creating a sustainable society
being called into question, it is becoming increasingly necessary forsecurities companies, as finance and capital market leaders, to takea principal role. Through its principal securities business, the Daiwa
Securities Group will remain dedicated to the robust developmentof society and of the economy.

Akira Kiyota, Chairman of the Board, Daiwa Securities Group, Inc. withProfessor Porter

DAIWA CSR REPORT 200923

Corporate Citizenship

The Daiwa Securities Group
Tsunami Reconstruction Fund
Four years have passed since the tsunami occurred.

On March 9, 2005, the Daiwa Securities Group Tsunami Reconstruction Fund was established to provide ongoing recovery assistance to survivors of the Sumatra Earthquake and Indian Ocean Tsunami, which occurred on
December 26, 2004.

India

Nagapattinam

Galle

Sri Lanka

24

DAIWA CSR REPORT 2009

Aceh Besar

Indonesia

The Daiwa Securities Group Tsunami Reconstruction Fund wasestablished to provide assistance to regions stricken by the Sumatra
Earthquake and Indian Ocean Tsunami of December 26, 2004.
Beginning in fiscal 2005, this fund provides long-term support forrecovery over a 10-year period, disbursing 10 million yen annually for a
total of 100 million yen.
Established within the Asian Community Trust (ACT), the Daiwa
Securities Group Tsunami Reconstruction Fund provides grants to local
NGOs that offer assistance in the fields of mental health care for children, utilization of microfinance and provision of educational opportunities for children in Indonesia, Sri Lanka and India, the three countries
hardest hit by this disaster. Leveraging expertise in their respective
areas, Asian Community Center 21 (ACC21), which functions as theexecutive office for ACT, undertakes program selection and activity
monitoring, while The Sumitomo Trust & Banking Co., Ltd. acts as thecustodian of this fund.
There are three key characteristics to this fund. First, it provides
long-term recovery assistance measures rather than offering temporary
donations. Second, it utilizes financial systems to provide assistancethrough charitable trusts, microfinance and other avenues. And finally,
it is possible to grasp every detail of the activities being conducted
through monitoring undertaken by ACC21.

Aceh Besar, Indonesia
Mental Health Care for Children
In Indonesia, the Aceh branch of the locally based NGO, Indonesia Planned
Parenthood Association (IPPA), undertakes medical procedures and follow-up
activities for children who suffer from symptoms that include speech disorders
and extreme emotional disturbance thought to be a result of the trauma inflicted by the tsunami. In Aceh Besar, volunteers recruited from local villages aretaught methods of caring for children, establishing a system that makes it possible for children to be treated within their own villages in a self-reliant manner.

Galle, Sri Lanka
Skill Training and Microfinance for Women
In Sri Lanka, the regionally based NGO, Women’s Saving Effort (“Wilpotha”),
conducts skill training activities to ensure that female disaster victims are able toearn a living for themselves and provides micro-level financing for the purchaseof the materials necessary to run a business. Women learn everything from savings mechanisms to methods for producing and selling products and bookkeeping. They also receive loans for the purchase of machines to produce garments,
for telephone lines to start up telephone rental businesses and other endeavors.
While still small in scale, these financial mechanisms are being used as one stepin the provision of recovery assistance in this region.

Nagapattinam, India
Occupational Training for Young People with Disabilities
In India, the locally based NGO, Social Service Sericulture Project Trust (SSSPT),
provides occupational training to enable people with disabilities—who are themost in need of assistance among all of the victims of this disaster—to establish
sustainable livelihoods for themselves. Aiming to foster their independence,
participants receive technical training in such areas as the manufacture of bags
from jute fiber as well as clothing, candle making and the creation of documents using personal computers.

Corporate Citizenship Activities
1. Education and research activities in the fields of economics andfinance
For more information, please refer to page 22.

2. Encouraging volunteerism among executives and employees
Group executives and employees organized such activities as sign language classes
and a hands-on environmental conservation experience on Tokyo’s Mount Takao.
In addition, the Volunteer Awards were established under the President’s Awards infiscal 2007 with the purpose of enlightening executives and employees regarding thevalue of volunteerism.

3. Support for culture and the arts
As part of our support for the arts, we were the special sponsors of such events as the“Renoir + Renoir” exhibit, the Japanese premier of the Paris National Opera, the2nd Daiwa Securities Cup Go Internet Title Match and the 2nd Daiwa Securities
Cup Shogi (Japanese chess) Internet Saikyo Tournament.

4. Contributing to communities both on the local and theinternational level through foundations and NPOs
The Daiwa Securities Foundation, Daiwa Securities Health Foundation andDaiwa Anglo-Japanese Foundation
Disaster Recovery Assistance Activities
Daiwa-JFS Youth Sustainability College (please see page 22 for more details)
Daiwa SRI Fund Assistance Program
Daiwa CI Biodiversity Conservation Fund
Daiwa, Russell, GEF Asia Environmental Technologies Promotion Assistance
Project*Details regarding Corporate Citizenship Activities 1 through 4 will be madeavailable on the Daiwa Securities Group Inc. CSR website in September 2009.

DAIWA CSR REPORT 200925

CSR Issues: Performance and Targets
This section reports the fi scal 2008 results and fi scal 2009 targets for the wide range of initiatives conducted by the Daiwa Securities Group forthe creation of a sustainable society.
Targets for Fiscal 20 0 8
Continue to develop and spread financial products with a social perspective and SRI.
Adding a Social Perspective to Investment
Key Issue 1

Provide more information on investment from a social perspective (continued).

Leverage Financial Capabilities
to Contribute to a Sustainable
Society

Raise awareness of environmental issues among executives and employees.
Contribution to the Global Environment

Reduce the environmental burden by setting temperatures appropriately, reducing use of
paper and other means.
Promote reuse and recycling of fixtures when moving to new headquarters building.

Key Issue 2

Commitment to the Development of aSound Securities Market

See “Compliance.”

Develop Sound Financial andCapital Markets for the Next
Generation

Providing Information for a Sustainable
Society

Provide more information about sustainability on our CSR website.
Expand and promote economic and financial education initiatives for students from junior highschool to university.
Establish a system for evaluating internal control.

Corporate Governance

Organize and expand the Group’s management system, including systems for new businesses.
Promote Business Continuity Plan (BCP).
Promote dialogue with stakeholders.

CSR Management

Raise awareness of CSR among executives and employees.
Improve coordination among related internal departments.
Raise awareness of corporate ethics and compliance at Group companies.
Entire GroupStrengthen monitoring to eliminate criminal elements.
Strengthen the internal control system.

Compliance

Daiwa Securities

Create an enhanced internal control structure for systems and IT.
Enhance the monitoring system for unfair transactions.
Improve the system for handling the Comprehensive Guidelines for Supervision of Financial
Instruments Business Operators, etc.

Daiwa Securities SMBC

Implement new risk management for the Financial Instruments and Exchange Act.
Enhance the information management system.
Expand and make good use of IR channels.

Information Disclosure

Implement effective IR directed to individual investors.
Enhance disclosure of non-financial information (continued).
Actively pursue post-sales follow up (continued).

Customer Satisfaction

Improve employees’ skills (continued).
Improve customer-interface skills of branch counter staff interacting with customers (continued).
Reassess all employees’ working hours/time management (encourage employees to take yearly paid leave, etc.).

Respect for People and Human Resource Utilization

Change employee attitudes through child-rearing (encourage male employees to take childcare leave, etc.).
Continue hiring persons with disabilities as regular employees.

Corporate Citizenship

Promote an environment encouraging executives and employees to participate in volunteer
work.
Communicate information about volunteering and volunteer activities in-house.

Environmental Impact of the Daiwa Securities Group

26 DAIWA CSR REPORT 2009

See “Contribution to Global Environment.”

Results for Fiscal 20 0 8
Sold vaccine bonds, Russell Global Environmental Technology Fund, Daiwa Energy Technology Fund (limited open-typefund), Next-Generation Environmental Business Fund.
Increased the number of analysts at Daiwa Institute of Research Ltd. who provide business-related CSR information.
Daiwa Institute of Research Ltd. published “Environment Report.”
Upgraded systems at Group companies for the revised Energy Conservation Law.
Implemented thorough “Cool-Biz” (open collars and shirtsleeves in the office) and adjusted office temperatures appropriately throughout the Group.
Promoted paperless meetings and enforced reductions in paper use by monitoring copying paper usage.
Achieved a 98% recycling ratio by utilizing reuse and recycling measures.
See “Compliance.”
Increased publishing of sustainability reports and other documents. Expanded English language CSR website.
Strengthened links among overseas universities—primarily in Asia—through the Daiwa Securities Group Asian Student
Scholarship Fund (created with the University of Tokyo) and other initiatives.
Established a structure to evaluate the effectiveness of internal control systems, for which the internal audit department
takes a central role, coordinating with independent auditors.
Daiwa Institute of Research Ltd. was reorganized to perform functional decision making that is responsive to the particularcharacteristics of customer segments.
Revised the BCP manual, sharing assumed scenarios common to main Group companies.
Added countermeasures for outbreaks of new influenza strains.
Held meetings between management and stakeholders that included academics as well as CSR study groups for executive
officers of Daiwa Securities Group Inc.
Encouraged executives and employees to participate in CSR and other related seminars that are held in cooperation with
the Group.
Strengthened links among departments responsible for the development and sale of SRI-related products.
Implemented employee training regarding insider trading regulations.
Formulated the Basic Policy Against Criminal Elements.
Encouraged the dissemination of this policy to all Group companies.
Implemented monitoring activities to counter criminal elements.
Expanded the systemization and rationalization of rules from the standpoint of “fundamental principles” and implemented
revisions to organizations and personnel to improve linkage among head offices and branches.
Took steps to improve effectiveness by promoting systemization and IT in areas where these measures are consideredeffective in terms of rationalization and efficiency.
Established the Trade Surveillance Department to operate an even more advanced system for monitoring unlawful transactions, analyzing transactions from multiple perspectives.
Implemented measures to eliminate gaps between the current situation and the standards required by the Guidelines.
Implemented internal examinations to eliminate legal and compliance risks and select items to be examined through selfassessments.
Conducted a field survey to strengthen robust, corporate-related information control systems.
Created an English language “Fact Sheet” that summarizes the Group in an easy-to-understand format. This information
can be easily accessed on the website.
Participated in large-scale IR events for individual investors.
Highlighted our qualitative strengths in a straightforward manner in such categories as active implementation of work-lifebalance measures as well as in career search and IT rankings.
Provided ongoing information by monitoring market prices/rates in Japan and overseas.
Expanded timely provision of information on the Daiwa Securities website.
Expanded training program curriculums to facilitate the acquisition and sharing of various types of knowledge.
Implemented training programs to foster a more practical mindset among new employees.
Adopted a practical approach to training that encompasses output-based and other types of training.

Target for Fiscal 20 09

Enhance links among Group companies concerning SRI.
Expand information dissemination related to environmental problems.

Communicate more information about sustainability on our CSR
website (continued).
Expand and promote economic and financial education initiatives.
See “Compliance.”

Documentation of internal compliance systems pertaining to financial reports and increase efficiency and rationalization concerning
verification of these operations.

Collect and provide CSR-related information.
Expand CSR-related information dissemination throughout theGroup.
Undertake CSR questionnaires for executives and employees anduse CSR activities effectively.
Continue to implement compliance training programs.
Enhance initiatives to eliminate criminal elements.

Make ongoing improvements to management quality.
Improve the effectiveness and efficiency of the internal control
system.

Maintain management systems based on a review of firewall regulations and other measures.
Strengthen the information safeguard system (continued).

Improve and make effective use of IR channels.
Continue to disclose non-financial information.

Actively pursue post-sales follow up (continued).
Improve skills of sales force (continued).
Improve customer-interface skills of branch counter staff.

Implemented practical hospitality training targeting new branch counter staff.
Established Work-life Balance Promotion Committee and Work-life Balance Promotion Department, with the President
and CEO serving as chief work-life balance officer (CWO).
Promoted efforts to change employee attitudes through such measures as encouraging employees to leave the office
before 7 p.m., take yearly paid leave and by holding internal seminars.
Increased number of male employees took child care leave due to revisions to the child-rearing system.
Seven Group companies obtained the Certified Family-friendly Employer designation in fiscal 2008.
Continued efforts in fiscal 2008 to provide part-time employees with disabilities the opportunity to become full-time
employees and commenced recruitment of graduates for full-time positions with the aim of increasing retention rates infiscal 2008.
Showcasing 40 volunteer projects, the number of participants making an extended volunteer commitment rose year-onyear from 569 to 644 in fiscal 2008.
Featured volunteer activities undertaken by individual branches in internal bulletins that were distributed throughout theGroup. Highlighted donation activities by providing explanations of activities taken under by NPOs.
See page 28 “Initiatives for Reducing Environmental Impact”

Develop a professional workforce that combines expertise withloyalty.
Achieve a far-reaching work-life balance program.
Accelerate the expansion of female managers who will assume
leadership roles in the Japanese financial industry.

Enhance information dissemination of corporate citizenship activities within the Group.
Reduce environmental load in concert with business activities(continued).

DAIWA CSR REPORT 200927

Initiatives for Reducing Environmental Impact

Energy Conservation at the Workplace
The Daiwa Securities Group is making efforts to reduce environmental impact on an ongoing basis as well as
raising environmental awareness among executives and employees.

Reductions in Environmental Impact during
Relocation
Giving full consideration to the environment during the relocationthat took place in fiscal 2007, we made every possible effort to reuse
and recycle unneeded items, aiming to achieve a “zero waste” move.
We made an effort to reduce landfill waste through such measures as
breaking up and compressing fixtures and equipment that could not
be used again, undertook material recycling by sending metal components to electric furnace manufacturers, non-metal components torefineries and waste plastic and other materials to thermal recycling*facilities. In addition, documents have been converted into materials to
make paper after being processed. Ultimately, of total waste weighing
958,350kg, 942,547kg was turned into recyclable materials. Deducting
the amount of waste materials transported to final disposal sites, weachieved a final recycling rate of 98%.
*Thermal recycling: Thermal energy that is produced during the incineration
process is collected and used in such areas as electric
power and hot water generation.

Promoting Paperless Meetings
A paperless meeting system was introduced using liquid crystal pen
tablets installed in executive meeting rooms at the Daiwa Securities
Group’s head office building located in the GranTokyo North Tower. Asa rule, meetings have been paperless since May 2008.
Meeting materials are displayed on screens provided within easyreach of participants, and presenters are able to display in real time
written remarks made on materials from their location onto participants’ screen displays. Participants can also write comments directly
over materials displayed on their screens and both the materials andwritten memos can be saved.
This system has not only reduced copying and related expenses
but also increased efficiency in such tasks as material distributions andkeeping meeting records. It is also possible to maintain a high level of
security thanks to the ability to consolidate the management of meeting materials.
With the installation of screens that can be used as both whiteboards and projectors in a portion of the visitor and meeting rooms,
paperless systems are being promoted throughout the Group.
In addition to these initiatives, a “Paper Reduction ProjectManager” has been appointed to promote related activities at Daiwa
Securities Group Inc., and awareness is being raised about reducing
paper usage at each Group company. Thanks to these and other measures, the amount of copying paper purchased by the Group during
fiscal 2008 fell approximately 19% compared with the previous fiscal
year. Detailed data regarding these measures will be made available on
the Group website in September 2009.

28 DAIWA CSR REPORT 2009

Daiwa Securities Group Head Office Relocation
Reuse/Recycle Results
Electronics recycling
5,660kg (1%)
Documents
18,890kg (2%)

Non-recyclable materials
15,803kg (2%)
Reused fixtures and equipment
75,070kg (8%)

Reuse/Recycle
942,547kg (98%)

Recycled fixtures and equipment
842,927kg (87%)

Third-party Opinion
I think the phrase that perhaps best sums up
this report is “taking CSR to a higher level.”
The Daiwa Securities Group has previously issued seven sustainability reports andwas one of the very first Japanese companies involved in CSR activities. This being theeighth report to be issued, the Group haschanged the title to “CSR Report.” Not only
has the title changed, but the standpoint
has changed as well.

financial institution by issuing a “Declaration from the Heart,” asking, “Whatcan be accomplished through financial capabilities?” and by giving serious
consideration to what actions must be taken to address the situation.
The Daiwa Securities Group’s changed standpoint can be seen in therefining of the four CSR-specific key issues—established in the report issued
two years ago—into two key issues developed for the current report:“Leverage Financial Capabilities to Contribute to a Sustainable Society” and“Develop Sound Financial and Capital Markets for the Next Generation.”
Together with these changes is a reaffirmation by the Group of what a financial institutions’ primary business is.

Bringing Employees to the Fore
Until now, the pattern for explaining CSR
activities had been fundamentally guided
by top management, beginning with thevery first report when then President and CEO Yoshinari Hara established thisformat by using the term “To Our Stakeholders.” CSR activities hinged on theextent to which top management took this seriously.
However, although the cover, featuring the smiling faces of babies, follows the pattern previously established, a peek at the pages of this reportshows employees at the workplace being featured from the very first pageonward, which sends a clear message. Also included is the phrase: “initiate
CSR activities that are even more effective.” For his part, President Shigeharu
Suzuki does not appear until page eight, rather than at the beginning of
the report.
This of course is not a denial of the leadership role played by top management or the concept of sustainability. In fact, the subtitle, “Building a
Sustainable Society” makes it clear that this has not changed. Moreover,presenting this section as a dialogue has increased the quality of President
Suzuki’s message compared to last year. So, is this merely a case of a change
in the title and arrangement of contents?
This appears not to be the case. In general, decisions taken by top management regarding CSR activities remain important. However, for the conceptof CSR to spread, it is a given that dissemination is based on everything fromleadership exhibited by top management to actions taken by each employee.
By demonstrating that the Daiwa Securities Group is taking CSR to a higher
level, they are able to emphasize how they differ from other companies.

Accumulating Achievements
As part of taking CSR to a higher level, the Daiwa Securities Group has madenotable achievements. The ratio of female employees has risen to nearly 40%,
while the ratio of female executives continues to increase yearly. To be certain,
being ranked in surveys related to best working conditions and best working
conditions for women has served to heighten the Daiwa Securities Group’slevel of trust as a financial institution.
Regarding financial products for individual investors, the Group has
steadily connected its main business to such successes as the continued salesof vaccine bonds, which prevent the spread of infectious diseases amongchildren in developing countries. Consumers who purchase financial products
can make a determination of the quality of the product as well as whom thisproduct affects. Indeed, sharing the point-of-view of consumers has become
increasingly important.

Yoshihiro Fujii

Professor, Sophia University
Graduate School of Global
Environmental Studies

Reaffirming Finance as Daiwa Securities Group’s Main Business
Perhaps one reason why the Daiwa Securities Group is placing an emphasison making these changes stems from the crises and turmoil confronting thefinance industry on a global scale. All executives and employees of the Daiwa
Securities Group have shown an awareness of being members of a first-choice

The Challenges of Increasing Trust and Profitability
It is a given that consumers seek profitability. Profitability in this case is basedon a long-term view that takes into account the future of the babies featured on the cover, rather than focusing on short-term market fluctuations.
However, accumulating achievements in the areas of trust and profitability
borne of this expectation continues to be a major challenge.
The coordinated use of the Group website is another characteristic of thisreport. Other companies are also in the process of moving CSR-related data
to their websites on a considerable scale. In view of the expansion of CSR
activities and the accumulation of yearly achievements, the ability of a printed
report to convey all of this information is limited. Yet, I would have preferredpaper-based reports on such topics as environmental load information thatbriefly displays CSR achievements and economic reports that indicate profitability and distribution balance, even if they were significantly reduced in size.
Having made the decision to take CSR to the next stage, it is appropriate
to be able to disclose data that supports these efforts. For this reason, I am
looking forward to further readjustments in the next CSR report.

Acknowledgement of Third-party Opinion
Keiko Uehara, Corporate Executive Officer, Daiwa Securities Group Inc.
In addition to revising the title and CSR Key Issues, the 2009 CSR Report contains many areas in which innovations havebeen tried, including employees telling their own stories with a focus on workplace realities as well as providing informationin separate booklet and website-based forms.
These actions have made me aware of the greater appeal inherent in making this report easy for the reader to understand and fully profiling the concept underlining the Daiwa Securities Group’s approach to CSR. To be specific, each
executive and employee has become more serious about making a contribution to a sustainable society through finance,
which is our primary business.
The comment made by Professor Fujii, as a third-party, that we have “taken CSR to a higher level” serves as a constantevaluation of these new initiatives and has left me with a feeling of empowerment to face the future.
Regarding CSR activities to be undertaken from now on, because we are determined to take on new challenges, we will
strive to make improvements based on the opinions of Professor Fujii and the evaluations received from our stakeholders.
DAIWA CSR REPORT 200929

The Daiwa Securities Group’s CSR Activities
2004
July Daiwa Securities Group Inc. establishes the CSR Promotion Department.
Nov. Becomes a member in the United Nations Environmental Programme Finance Initiative (UNEP FI).
2005
Decides to offer long-term support for areas devastated by the Sumatra earthquake and Indian Ocean tsunami (Daiwa Securities
Feb. Group Tsunami Reconstruction Fund).
Daiwa Securities Co. Ltd. begins Electronic Statement Promotion Project.

June

Provides support to Finance Park, a hands-on economics education program offered by Junior Achievement Japan.
Daiwa Asset Management Co. Ltd. participates in a GRI G3 project working group to study the usefulness of sustainability reporting from the perspective of fi nance and investors.

Oct.

Daiwa Securities Co. Ltd. begins the Daiwa e-members service, through which customers can ask to receive electronic transaction
reports.

Nov. Begins the Daiwa SRI Fund Assistance Program to support NPO staff.
2006
The Daiwa Securities Group Sustainability Report 2005 wins the Sustainability Report First Prize (Minister of the Environment
Jan.
Award) awarded by the Global Environmental Forum.

Develops Euro-dollar Bonds with Emissions Credit Value Referenced Coupons (CO2L [Cool] Bonds).

http://www.daiwa-grp.jp/ir/english/corporate/report/(from September 2009)

Reference to GRI Guidelines
This report was created by the Daiwa
Securities Group with reference to the GRI*

Begins sales of the Daiwa Eco Fund.

Sustainability Reporting Guidelines 2006.

Announces new Medium-term Management Plan, “Passion for the Best 2008,” which includes the Group’s basic CSR strategy.

Excerpts of these guidelines will be madeApr. The Daiwa Securities Group Sustainability Report 2005 wins the Excellence Prize in the sustainability report category awarded by
Toyo Keizai Inc.

May

Daiwa Asset Management Co. Ltd. signs the Principles for Responsible Investment (PRI), jointly created by the United Nations
Environment Programme Finance Initiative (UNEP FI) and the UN Global Compact.

Oct.

Opens Daiwa-JFS Youth Sustainability College with environmental NPO Japan for Sustainability (JFS) as a grant program of the
Daiwa Eco Fund.

The Daiwa Securities Group Sustainability Report 2005 ranked 34th (fi rst in rankings for Japanese companies) in the Global
Nov.
Reporters 2006, an international comparative survey.

2007
Jan.

Thank you for taking the time to read the
Daiwa Securities Group CSR Report 2009.
We are conducting a survey on this report on
the website below. Please let us know youropinions or comments about this report.

Begins support project for women entrepreneurs.

July

Feb.

Daiwa Securities Group CSR Report 2009
Reader Questionnaire

The Daiwa Securities Group makes it into the Global 100 (the world’s 100 most sustainable companies).
Attends at World Economic Forum (WEF) in Davos, Switzerland.

The Daiwa Securities Group Sustainability Report 200 6 wins the Sustainability Report Excellence Prize (the President’s Award)
Feb.
awarded by the Global Environmental Forum.

available on the Group website in September
2009.
* Global Reporting Initiative（GRI）：
An organization founded in 1997 to draw up anddisseminate international guidelines forsustainability reporting. Participants include avariety of stakeholders, such as businesses, nongovernmental organizations (NGOs), consultants,
accounting groups, and trade associations fromdifferent parts of the world.
http://www.globalreporting.org/HomeThe Daiwa Securities Group Sustainability Report 2006 wins the Excellence Prize in the sustainability report category awarded by
Apr. Toyo Keizai Inc.
Holds CSR seminar for individual investors titled “New Trends in Investing: The Search for Sustainable Growth Companies.”

May Holds environmental seminar for customers titled “Daiwa Environmental Forum 2007: What Is Happening to the Earth Now?”
July Implements “Cool Biz” policy (open collars and shirtsleeves in the offi ce) group-wide as an initiative to combat global warming.
Aug. Establishes the Global Environment Foreign Bond Balance Fund and the Global Environment Equity Fund.
2008
Feb.

Daiwa Securities Group Inc. participates as a special sponsor in a global environment symposium held jointly by the Tokyo offi ce of
the United Nations Development Programme (UNDP), the World Bank and Conservation International Japan (CI Japan).
Daiwa Securities SMBC and the Daiwa Institute of Research, Ltd. hold the “Eco-innovation: What Industry Needs to Do on Global
Warming Issues and Creating a Low-carbon Society” seminar.

Mar. First in Japan to sell vaccine bonds.
Creates the Daiwa Securities Group Asian Student Scholarship Fund with the University of Tokyo.

Apr.

Begins sales of the Russell Global Environmental Technology Fund.
Establishes the Work-life Balance Promotion Committee and the Work-life Balance Promotion Department.
Participates in the Ministry of Health, Labour and Welfare’s model project promoting work-life balance.

May
June
July

Inaugurates a sponsored course at Peking University.
Agrees to support commercialization of iPS cell research at Kyoto University.
Begins sales of World CO2L [Cool] Bonds.
Obtains the Certifi ed Family-friendly Employer designation established by the Ministry of Health, Labour and Welfare.
Contributes ¥6 million to the community chests of Iwate and Miyagi prefectures to contribute to Iwate-Miyagi Inland Earthquake
disaster relief efforts.

Aug. Holds family workplace visits throughout the Group.
Ranked 14th, and 1st in the securities industry, in Nihon Keizai Shimbun’s 2008 survey of Companies with Best Working

Sept. Conditions, the Group’s highest ranking to date.
Included in the SRI index, Dow Jones Sustainability World Indexes (DJSI World) for the 10th consecutive year.
Daiwa Securities Business Center Co. Ltd. awarded the Leading Offi ce for Hiring People with Disabilities Prize in fi scal 2008 at theOct. Award Ceremony for Excellence in Employment of People with Disabilities Association held by the Kiba branch of the Employment
Development for Citizens, Tokyo.

Dec. Releases the Daiwa Energy Technology Fund (limited open-type fund).
2009
Feb.

Begins the second round of sales for vaccine bonds.
Releases Next-Generation Environmental Business Fund.
Announces the Group’s new Medium-term Management Plan, “Passion for the Best 2011.”

Apr. The Daiwa Securities Group Sustainability Report 2008 wins the prize for excellence in the sustainability report category awarded
by Toyo Keizai Inc.

May Included in the FTSE4Good, an index of socially responsible companies, for the fourth consecutive year.

30 DAIWA CSR REPORT 2009

Please direct inquiries to:Address: GranTokyo North Tower, 9-1, Marunouchi
1-chome, Chiyoda-ku, Tokyo 100-6751,
Japan
TEL: +81-3-5555-1111
E-mail: brand@dsgi.daiwa.co.jp
URL: http://www.daiwa-grp.jp/ir/english/corporate/report/Third-party Evaluations
Dow Jones Sustainability Indexes
Member 2008/09

FTSE4Good Index

Certified Family-friendly Employer

The Dow Jones Sustainability World Index (DJSI
World) is a stock index of companies with sustainable practices selected by Dow Jones & Company,
Inc. of the United States and Sustainable AssetManagement (SAM) of Switzerland. Daiwa
Securities Group Inc. has been included in DJSIWorld for ten consecutive years.

FTSE is a subsidiary of the UK’s Financial Times andthe 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, since September 2006.

Certification symbol for family-friendly employers based on the Ministry of Health, Labourand Welfare’s Law for Measures to Support theDevelopment of the Next Generation. In addition
to Daiwa Securities Group Inc. obtaining certification as a family-friendly employer in fiscal 2008,
Daiwa Securities Co. Ltd., Daiwa Securities SMBC
Co. Ltd., Daiwa Institute of Research Holdings Ltd.,
Daiwa Institute of Research Ltd., Daiwa Instituteof Research Business Innovation Ltd. and Daiwa
Securities Business Center Co. Ltd. also received
this certification.

Daiwa Securities Group CSR Report 2009 Booklet and Web Edition
Daiwa Securities Group CSR Report 2009 discloses information in abooklet and on its website in accordance with the policies below.
Booklet
•Produced
in a format that narrows the focus on key issues and presents
contents in an easy-to-understand and readable format
Website•Reportsa broad range of Daiwa Securities Group activities, emphasizing content comprehensiveness/continuity, and discloses management,social, economic and environmental load reports
Online versions of these documents will be made available on the Groupwebsite in September 2009.
http://www.daiwa-grp.jp/ir/english/corporate/report/(from September 2009)

Topics presented on thewebsite edition only

|Management Report
Corporate Governance
CSR Management
Compliance
Information Disclosure|Social Report
Customer Satisfaction
Respect for People andHuman Resource Utilization
Corporate Citizenship|Environmental Report
Environmental Impact of the
Daiwa Securities Group|Economic Report
Distribution of Economic Value to
Stakeholders|Excerpts from GRI Guidelines

DAIWA CSR REPORT 200931

Printed in Japan