Daiwa Securities GroupCSR Report
2013
Building a Sustainable Society

What we can do
What will the world be like when these babies become adults?
The precious faces of these infants–all children of Daiwa Securities Group executives and 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 create a sustainable
society living in happiness and in harmony with an unspoiled Earth.

CSR Report 2013

Message from the CEO

The Daiwa Securities Group has opened a new chapter in its
history as a “new” Daiwa Securities through the merger of its
two securities subsidiaries. In addition, the Group concentrated
on returning to profitability by pursuing management
efficiencies during the fiscal year, based on “Turnaround” asa major theme in the first fiscal year of “Passion for the Best”
2014, the three-year Medium-Term Management Plan thatbegan in April 2012.
The business environment was challenging, especially in thefirst half of the fiscal year, with the TOPIX marking a new postbubble low in June 2012 amid prolonged economic stagnation.
After a new Japanese government administration was launchedfrom mid-November, however, the economy reached a turning
point as the unusually strong yen corrected and weak stock
prices began to recover. This turnaround picked up momentum
toward the end of 2012, spurring a foreign investor-led rally
in Japanese equity markets, which had been languishing withrock-bottom stock prices, to levels last seen before the Lehman
Shock in 2008. The strength of this rally is better understoodin terms of daily trading value on the First Section of the Tokyo
Stock Exchange, which had been around ¥1 trillion last year,
but surpassed ¥2 trillion in the first three months of 2013.
Among international equity markets, namely in the UnitedStates, the Dow Jones Industrial Average reached a historicalhigh on expectations for an economic recovery stemming from
improvements in the unemployment rate and housing market
statistics. Equity markets in Germany and other major countries
were also buoyant.
In this business environment, the Daiwa Securities Groupremained focused on reducing fixed costs and increasingorganizational efficiency, and executed distinct strategies
to create a unique business model with synergies between

securities and banking services, strengthen the earnings
capacity of the asset management business, enhance offerings
for high net worth individuals, strengthen coverage of the
middle market, and rebuild the wholesale business.
As a result of these initiatives, we fulfilled our commitment
to return to profitability in the first fiscal year of the MediumTerm Management Plan, with net operating revenues of ¥417.3
billion, ordinary income of ¥95.1 billion, and net income of¥72.9 billion.
“Growth” is the main theme for FY2013, the second yearof the Medium-Term Management Plan. A dynamic shiftingof household financial assets, Japanese people moving funds
from their savings accounts into investments, is anticipatedto transpire. The Daiwa Securities Group will focus all of its
energies on channeling this potential flood of risk money to thecorporate and public sectors, as it contributes to the recovery
and revitalization of the Japanese economy. Moreover, theGroup will continue to work to solve global issues, such as
climate change and the eradication of poverty in emerging
countries, through the provision of innovative financial products
and services.
The Daiwa Securities Group is advancing toward a new stageof growth while continuing to create corporate value andcontribute to the realization of a sustainable society. We would
not be able to accomplish this without the support of our
stakeholders, and would like to express our deep appreciation
for their continued support.

Takashi Hibino
President and CEO
Daiwa Securities Group Inc.

1

Message from the Chairman

Guided by “building trust” as one of its core corporate
principles, the Daiwa Securities Group believes that its public
mission is to contribute to social and economic development
through its involvement in financial and capital markets.
The trust that is placed on us by our customers and societyis the source of our sustainable growth. Our employees andexecutives accept their responsibilities with pride and integrityas they work in the financial and capital markets, and as thishigh level of dedication becomes palpable to our stakeholders,a sturdy bond of enduring trust is formed.
Corporate governance is also a key element of sustainablecorporate growth. The Daiwa Securities Group has instilled astrong sense of ethics and professionalism in its employees andexecutives through insight into its corporate principles, and,from this basis, the Group has strengthened governance bywelcoming outside directors who bring a wealth of experiencefrom a variety of fields, such as human rights and labor, legal
affairs, finance, and accounting.

Grounded in these ideals, our employees and executives workwith passion in an environment that the Daiwa Securities Grouphas created that allows them to fully apply their abilities andtalents. We are in a position to considerably strengthen ourcompetitiveness as a corporate group with the establishment ofa gender-neutral framework that enables employees to focus on
their careers, and we aim to provide a higher dimension in thework-life balance.
While nurturing a corporate culture of high transparency,
accountability, and solidarity, we will work to initiate andaccelerate the shift from savings into investments, andassertively propose products with social returns in addition
to investment returns. We are confident that these and otherinitiatives to contribute to society via investment activities willlead to greater corporate value. We will forge a path towardsustainable growth for the Daiwa Securities Group.

Shigeharu Suzuki
Chairman of the Board
Daiwa Securities Group Inc.

2

CSR Report 2013

Editorial Policy

Contents

The Daiwa Securities Group has been publishing this reportannually since 2002 with the aim of clearly disclosing our CSR
activities, which are intended to support the creation of asustainable society. We also use this opportunity to evaluate thecompany’s current status and the challenges it is facing.
In “CSR Report 2013“, we aim to explain in good faith
our activities about environment, society and governance(ESG) along with annual report 2013. We also aim to view
an integrated report that contemplates further enhance nonfinancial information.
We wish to convey to many stakeholders that the way money
is used is key to resolving society’s problems such as climatechange and poverty.
We post our “CSR report 2013“ only in the website by PDF,
since we published an annual report 2013 which contains
essential parts of our ESG activities. This CSR report is edited
based on the guidelines of the global reporting initiative (GRI)and ISO26000.

1 Message from the CEO/
Message from the Chairman
3 Editorial Policy
4 Daiwa Securities Group Profile
5 Daiwa Securities Group Corporate Principles
and Key Issues
Management Report
6 Social Responsibilities of the Financial Service
11 CSR Management
12 CSR Issues: Performance and Targets
15 Management
Corporate GovernanceCompliance

Scope of Report

Risk Management

Intended ReadershipThis report is intended for Daiwa Securities Group’s stakeholders,which primarily include customers, shareholders and investors,
executives and employees, as well as business partners,
government agencies, 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 the principal companies of the Daiwa
Securities Group. The report does not, however, include all datafrom the Group’s principal companies on items reported; theinformation is selected based on the respective companies’ size
and type of business. Each set of numerical data specifies thescope of coverage.
Period Covered by Report
Fiscal 2012 (April 1, 2012 to March 31, 2013). The report also
includes information on events and activities carried out prior to
fiscal 2011, as well as those scheduled to take place during fiscal
2013.
Date of Publication
October 2013 (The previous report was published in October
2012; the next report is planned for October 2014).

IT Governance, Disclosure,and Information Security
Social Report
21 Relationship with Customers
23 Relationship with Shareholders and Other Investors
24 Relationship with Executives and Employees
28 Human Rights Initiative
29 Relationship with Society
Environmental Report
33 Environmental Initiatives
Economic Report
35 Delivering Economic Value to Stakeholders
36 Third-party Opinion / Response to Third-party Opinion
37 Third-party Evaluations
38 G3.1 GRI/ISO26000 Content Index

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

46 CSR Related Data
50 Glossary3

CSR Report 2013

■ Daiwa Securities Group Profile
Corporate Data

Description of the Daiwa Securities Group’s Businesses● NameDaiwa Securities Group is a financial service company and operates in such fields
as Retail, Global Markets, Global Investment Banking, Asset Management andInvestment as its core businesses. Underpinned by the strong unity of the group, we
provide a broad range of services.

Daiwa Securities Group Inc.
● Head Office
GranTokyo North Tower
9-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-6751, Japan● Tel(81) 3-5555-1111 (main)● Established
December 27, 1943 (Founded 1902)● President and CEO
Takashi Hibino● Capital¥247.3 billion● Number of Employees (consolidated)
13,426● Number of consolidated subsidiaries
52● Number of equity-method affiliates
8● Shares issued and outstanding
1,749,378,772

1. Retail Division

4. Asset Management Division

Through its domestic network of
124 branches*, a call center and theInternet, Daiwa Securities offers tworetail services, Daiwa Consulting
and Daiwa Direct, which provide
a wide range of financial products
and services as well as support forcustomer asset management, mainly
for individuals and unlisted companies.

This business creates and manages
stock, bond, and private investment
trusts, and provides other investment
management services for real estate
investment trusts, pensions, and otherfunds.

2. Global Markets DivisionThis business, engaged in sales
and trading, provides brokerage of
securities and other financial products
mainly for institutional investors.

(As of March 31, 2013)

3. Global Investment Banking
Division
This business offers support forcorporations and financial institutions
in business expansion to finance andcapital strategies, by assisting theirfinancing activities.

5. Investment DivisionThis business invests in areas suchas private equity, venture capital
opportunities, business regeneration,monetary receivables, and real estateusing its own funds or through theformation of investment funds.
6. Others
The Daiwa Securities Group provides
information via research reports
and other documents, management
consulting, IT services, and otherofferings to institutional investors,
corporate clients, financial institutions,and public organizations in Japan andoverseas.
* As of June 30, 2013

Daiwa Securities Group Inc.

RetailWholesale
Global Markets

Global IB

Daiwa Securities Co. Ltd.

Daiwa Capital Markets Europe Limited

Asset Management

Investment

OthersDaiwa AssetManagement
Co. Ltd.

Daiwa Corporate
Investment Co., Ltd.

Daiwa Next
Bank, Ltd.

Daiwa SB
Investments Ltd.

Daiwa Securities
SMBC Principal
Investments Co. Ltd.

Daiwa Real Estate
Asset Management
Co. Ltd.

Daiwa Capital Markets Asia Holding B.V.

Daiwa PI
Partners Co. Ltd.

Daiwa Instituteof Research
Holdings Ltd.
Daiwa Instituteof Research Ltd.
Daiwa Institute of
Research Business
Innovation Ltd.
Daiwa Securities
Business Center
Co. Ltd.

Daiwa Capital Markets America Holdings Inc.

Daiwa Property
Co., Ltd.

4

CSR Report 2013

■ Daiwa Securities Group Corporate Principles and Key Issues
The Daiwa Securities Group’s mission is to contribute to the development of society and the economy through daily operations,
including wealth management for investors and support for the financial strategies and other aspects of corporations and public
institutions.
Deepening the bond of trust we share with our stakeholders, including customers, shareholders, employees and society, is essential
to the accomplishment of our mission and sustainable growth together with society.

Key Issues for Daiwa Securities Group
Corporate Principles of the Daiwa Securities GroupTo achieve its corporate principles and realize a sustainable society,
the Group seeks to initiate even more effective CSR activities. Based on therequests and opinions we have received from our stakeholders thus far, wehave addressed the following key issues:

Building trust
The trust and approval of customers forms the very foundation of the
Daiwa Securities Group. The Group will always place the needs ofcustomers first, and strive to develop the advanced, specialized skills
to offer them the most attractive products and services of any
securities group.

1. L everaging financial capabilities to contributeto a sustainable society

Placing importance on personnel
The source of the Group’s competitiveness lies in the capabilities of
its employees. The Group will promote the creativity of employees
by offering them a challenging and self-directed working
environment that encourages their abilities and appropriately
rewards their contributions.

2. D eveloping sound financial and capital
markets for the next generation

Contributing to society
The Daiwa Securities Group will seek to benefit the economy andsociety through the development of healthy financial markets. In
addition to scrupulously observing both regulations and internal
policies, the Group will strive to maintain a high sense of moralityand duty, endeavoring to continue contributing to the sustainablegrowth of the societies in which we operate.

Human resources are the key to addressing these issues. We believe keeping
each and every one of our executives and employees motivated and proud of
their work is essential for tackling these key issues.

In addition to these two CSR issues, the Group
strives to create a rewarding workplace in which
our executives and employees can take pride.

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

To achieve its corporate principles, the Daiwa Securities Groupanchors its CSR activities in these goals.

Daiwa Securities Group Stakeholders

Customers● Investors
We are committed to improving customer satisfaction
by offering products and services that meet the needsof individual investors, institutional investors, andpotential investors who are considering investingin the future.

Investors● Issuers
For private corporations, public institutions and otherentities seeking to raise funds through equity, debt, orother sources, we propose optimal solutions from awide range of financing options and provide full-scale
support, from planning to execution.

Issuers● Business Partners

Shareholders● Shareholders
To earn the confidence of our shareholders,we aim to provide fully transparent
information disclosure, and meet their
expectations by continually creating value.

Shareholders

Daiwa Securities
Group

Business
Partners● Government
We fulfill our tax obligations and offer policy
suggestions to create a better society.

● Employees
We are endeavoring to create aworkplace where our employees,
who create added value for all otherstakeholders, are fully motivatedand can find satisfaction in theirwork and lives. Our employees’
families are also important
stakeholders.

yees’ Famil

SocietyiesEm

Governmentplo

We maintain fair relationships with all ourbusiness partners and work together to create asustainable society.

NPOs/
NGOs

Employees
Local
Communities

Employees● NPOs/NGOs
We collaborate with NPOs and NGOs in such fields asfinancial and economic education and disaster relief.
We reflect social values in our management throughactive dialogue.

● Local Communities
As members of their local communities, our branches and overseas
offices promote community-based efforts.

5

CSR Report 2013

Management ReportSocial Responsibilities of the Financial Service
Approach and Basic Stance

The mission of the financial service companies is to contribute to the development of society and the economy
through daily operations that help build investors’ wealth and support financial strategies across the private andpublic sectors. We at the Daiwa Securities Group consider strong, trusting relationships with customers, shareholders,
employees and society–as expressed by our corporate principles are indispensable to the ongoing fulfillment of thismission and continuous growth.

■ Role and Social Responsibilities of the Financial
Serviceshape their policies. The Group pursues business activities
consistent with the UN Global Compact. Further, in line with
the United Nations Millennium Development Goals (MDGs) theGroup is endeavoring to develop products and services that
help resolve social issues.

The financial service company such as Daiwa Securities Groupplays a vital social role by building a bridge between, on the
one side, the need of companies to raise capital or the need ofgovernments to finance public work projects, and on the otherside, the need of individual and institutional investors, pension
funds, and others for efficient investment.
On the fund-raising side, the Group provides advice andassistance in implementation for companies raising money
for capital expenditures and R&D, as well as for national
governments, local governments, international institutions andpublic corporations seeking to raise funds for public works
projects. It does so by underwriting marketable securities suchas stocks and bonds, and by creating other securitized products.
On the investment side, the Group provides appropriate
investment information and advice tailored to each customer’ssituation and goals.
It offers a comprehensive and diverse line-up of financial
instruments and services to meet the various needs of individual
and institutional investors as well as pension funds. Financial
services industry has a social responsibility and plays a key roleof creating a flow of money in the economy mainly throughfinancial and capital markets, not unlike stimulating circulationof blood. In this manner, the industry helps industries,
countries, regions and other communities achieve a sustainable
development while paying close attentions to human rights,
labor and environmental issues.

Principles for Financial Action Toward a Sustainable
Society (Principles for Financial Action for the 21stCentury)
The Principles for Financial Action for the 21st Century weredrawn up by a committee comprising representatives from a
range of Japanese financial institutions that was tasked withdrafting a Japanese version of Principles for Environmental
Financial Action. This was based on a recommendation issued
by the Japanese environment ministry’s Central Environment
Council with the objective of promoting environmental
finance. Signatory institutions endeavor to embed ESG into
their activities to the extent that their business context allows.
The Group was involved in theestablishment of these principles fromthe drafting stage to laying out the
final framework. The Daiwa Securities
Group and Daiwa Asset Management
signed up in November 2011.
Our Impact Investment Initiative,“Shaping the future by Impact
Investing”, was selected as one ofgood practice at the 2nd general
meeting in March 2013.

■ Mission for Financial Institutions Towards
Solving the Global Social Issues■ Daiwa Securities Group Initiatives
Impact Investment Bonds
Impact Investing differs from SRI in that it places emphasis on
investments directly affecting society. It is a way to allocate
assets solely to activities targeted at resolving social issues
such as poverty and environmental issues, in combination withgenerating financial returns.
As a financial institution, we have supported the resolutionof problems in society by offering various types of Impact
Investment bonds.
We promoted six issues ¥72.1 billion, of Impact Investment
Bonds in fiscal 2012. Among them, we have engaged ininaugural “Agri Bonds“ Uridashi by Rabobank of Netherlands.
This was the first Impact Investment Bond issued by a private
financial institution. The second issuance took place in February
2013 as a result of the first successful tranche.
Cumulative offerings of Impact Investment bonds in Japanamounted to some ¥697.2 billion at the end of March 2013,of which ¥450.2 billion, or 65%, was arranged by the Daiwa

The business sector plays an important role more than everbefore in enhancing the sustainability of society. Financial
institutions have a social mission to make the most of their corecapacities to contribute to sustainable social development. At
the Daiwa Securities Group, we believe that our role is not only
to maintain and develop an equitable and dynamic financial
market, but also to reflect a socially conscious perspective infinance and facilitate the flow of money to build sustainable
societies.
On the basis of this philosophy, the Daiwa Securities Groupis a signatory to UNEP FI PRI and the Carbon Disclosure
Project (CDP) fulfilling this role a member of the international
community.
In January 2010, the Daiwa Securities Group became thefirst Japanese securities company to sign the United Nations
Global Compact (GC) a platform to help companies that havecommitted to sustainable and responsible business practices

6Securities Group (Source: Daiwa Securities).

and Osaka and Branch Seminar in Hiroshima and Nagoya.
The forum theme was “You are united with the world throughinternational cooperation” in Tokyo. President of JICA gave a
key-note speech. And panel discussion was conducted among avice president of JICA, representatives of an NPO and academia
regarding a safe and secure society.
The forum theme was “You are united with the world
through social contribution bonds” at the Osaka Forum.
We invited panelists from regional company and academia
to discuss about international contributions and sustainablebusiness model.

World Bank Group / Daiwa Securities Group
Impact Investment Forum“Green Bond” is one of the bonds issued by the World Bank.
We arranged it for Japanese retail investors for the first timein 2010. Its proceed is lent to “Green Project” through WorldBank to the prevention of global warming. This time, wearranged it again in accordance with IMF/World Bank Meeting(October 2012). During the same period, we hold an Impact
Investment Forum for Japanese retail investors in collaboration
with the World Bank Group. Main theme was “Toward solving
Global Issues such as climate change and poverty”. World Bankand International Finance Corporation (IFC) addressed theirinitiatives at the Forum.

Achievement of the 50th issueandce of World Bank
“Green Bonds”
World Bank “Green Bonds” issuance reached a total of 52
when the Bank issued three “Green Bonds” in October 2012.
Daiwa Securities as a sole lead manager arranged for thoseGreen Bonds. We have arranged 16 Green Bonds as a leadmanager so far. World Bank raised USD3.5 billion through 52
Green Bonds with 17 different currencies.

JICA Impact Investment Forum
JICA Bond was issued to retail investors in December 2012
again after its successful issuance in December 2011. Alongwith bond issuance, we hold Impact Investment Forum in Tokyo

Daiwa Securities Group’s History of SRI Funds and Impact Investment Bonds
Share in net assets of SRI funds in Japan
Daiwa Securities¥68.4 billion*1 (end-March 2013)● Daiwa Microfinance Fund
● Daiwa Nippon Support Fund21％

● Global Eco

Growth Fund
Course A● Global Eco
Growth Fund
Course B Sold
(redeemed)

Energy Fund● Next-Generation
Environmental Business Fund
● “Eco Business Japan Stocks
Open”

Technology Fund(limited open-type
fund)● Russell Global
Environmental
Technology Fund

Total ¥331.6 billion*2● Six Asset Balance● GlobalFund (distribution
type)● Six Asset Balance
Fund (growth type)● Daiwa Eco FundEnvironment
Equity Fund
● Global
Environment
Foreign Bond
Balance Fund

Fund
● DC Daiwa

2009● JICA Bonds● Ecology Bonds● Vaccine Bonds● Poverty Reduction● Ecology Bonds (2 times)● Microfinance Bonds (IFC)● Education Bonds for Africa● Poverty Reduction Bonds for Latin

2004

America and the Caribbean● Microfinance Bonds (EBRD)● Water Bonds● Vaccine Bonds● Green World Bank Bonds● World CO2L Bonds● Vaccine Bonds● CO2L Bonds● JICA Bonds● Microfinance Bonds● Green Bonds● Agri Bonds● Water Bonds

Bonds for Latin America
and the Caribbean

2006

2001

● Vaccine Bonds● Agri Bonds

2010

2007

SRI Fund

2012
2011

2008

● Daiwa SRI

2013● Daiwa/Blackrock Green New● Daiwa Energy● Microfinance Bonds (IFC)● Vaccine Bonds

Share in cumulative salesof Impact Investment bonds
for individual investors
Daiwa Securities¥450.2 billion*1 (end-March 2013)65％
Total ¥697.2 billion*1*1 Based on Daiwa Securities *2 Based on Daiwa Fund Consulting Co., Ltd.

7

IFFIm transaction cited as among 25 most influential
Since we arranged Vaccine Bonds first time in Japan in 2008,
our total arrangement of the bonds reached ¥125.0 billion asof March 2013. The amount is over one third of the total fundraising by IFFIm through Vaccine Bonds. In a financial magazine,“Euro Week”, Vaccine Bonds have been elected to one of the
25 most influential and Social Contribution notes. IFFIm Vaccine
Bonds is regarded as the forerunner of impact investment whichmarket size is now several billion U.S. dollars in Japan today.

in January and February 2013, office efficiency training was
conducted for Central Bank employees.
The Daiwa Securities Group will continue to harness its
collective strengths to help cultivate a capital market in
Myanmar going forward.
ESG IR Meeting
With the increase of financial institutions to sign the PRI, fundmanagers and analysts who specialize in responsible investment
has been born. As an initiative to promote responsible
investment, we are planning and arranging ESG IR meetings.
Three meetings had been conducted as of January 2013. It
has received high marks from both issuers, investors who
participated in the meetings in order to understand deeply the
corporate value from ESG perspective. CSR and IR section of thecompany becomes the main speaker, and gave a question andanswer session with investors.

Participation in the Impact Investment by regionalbanks
In support to efforts to contribute to global warming throughinvestment, The Chugoku Bank purchased a “World BankGreen Bond”. The Chugin Securities, a subsidiary of the Bank, isselling a Green Bond with Daiwa Securities in the same period.
The Bank also donate a portion of revenues obtained fromselling the bond to an NPO.

Daiwa Asset Management ESG investment promotion
systemThe Daiwa Asset Management, in order to achieve thecommitment to ESG investment as a signatory member of the
21st century financial principles and PRI, we have a systemthat places fund managers to promote ESG investment in an
organized manner. In the company evaluation by analysts, wehave implemented the non-financial data valuation with anemphasis on the point of view of governance as well as financial
valuation. We are actively promoting ESG investment whenselecting external managed contractors, we check and monitor
the ESG investment policies and initiatives of contractors. In
addition, the engagement with investee companies throughmeetings with management and voting, we encourage them topromote ESG initiatives. We have been implementing internal
trainings and seminars on ESG investment.

Daiwa Microfinance Fund:
Lending to microfinance institutions (MFIs)
The “Daiwa Microfinance Fund” was launched in March 1,
2011 in order to support MFIs in developing countries by direct
lending in local currencies as well as to pursue financial returns
DWM Asset Management Inc., provides portfolio managementadvisory service to the fund. DWM is a company that specializes
in microfinance industry. The fund is lending to 25 MFIs as ofFebruary 2013.
Support for Cultivating a Capital Market in Myanmar
Daiwa Institute of Research Ltd. (DIR), Tokyo Stock ExchangeGroup, Inc. (currently, the Japan Exchange Group), and theCentral Bank of Myanmar concluded a memorandum of
understanding pertaining to cooperation toward establishing asecurities exchange and supporting the cultivation of a capital
market in Myanmar in May 2012. A major component of thememorandum is the establishment of a securities exchange
in 2015. This is expected to provide companies in Myanmar
with additional fund-raising opportunities while facilitating
investors’ wealth and support for financial strategies. In theensuing period, DIR has put in place a variety of measures
aimed at providing genuine support. In addition to providing
recommendations to government officials, DIR has held
seminars in Myanmar, and taken steps to accept trainees.
Cooperation is also being provided to JICA’s Myanmar
economic reform support survey. This initiative is designed to
put forward policy proposals and promote human resource
development to enhance policy proposal capabilities recognized
as essential in bringing about definitive economic expansion
in Myanmar. Together with the Japan Exchange Group, DIR is
responsible for providing training in connection with capital
markets. Support also takes the form of policy proposals
advanced by specialists throughout the Group in each of theeconomic and financial fields.
Working in conjunction with several Japanese companies,
steps have been taken toprovide a cloud computing
operating environment to theCentral Bank of Myanmar asa part of efforts to enhance
efficiency. Operations cameonline in December 2012. In
the same month, and again
Signing Ceremony

Daiwa Asset Management established investment policy
against cluster munitions producers
Since the implementation of the Oslo Convention on Cluster
Munitions in August 2010, Daiwa Asset Management, as an
asset management company operating in a signatory country,
has followed the principles outlined below when investing in orotherwise dealing with cluster munitions producers.
1. Do not include the securities of cluster munitions producers
in active funds. Promptly sell those already included.
2. In exercising voting rights associated with shares issued
by cluster munitions producers, vote in favor of any
shareholder proposals to withdraw from, or scale down,cluster munitions production.
Socially Responsible Investment (SRI) Funds
SRI funds evaluate and select potential component stocks andbonds for their social and environmental efforts, ethics, andother nonfinancial performance, as well as the level of sales
and profit. These include eco-funds, for which nonfinancial
criteria are limited to environmental performance or whichinvest exclusively in companies operating environmentrelated businesses. Investing in such funds enables investors
to indirectly support countries and firms actively engaged inenvironmental conservation efforts and CSR activities via thefinancial market.
Total net assets held in the Daiwa Securities Group’s SRI funds
stood at ¥68.4 billion at the end of March 2013 (Source: Daiwa
Securities).

8Daiwa SB Investments signed the PRI
Daiwa SB Investments has signed the PRI. Whilst we have been
keen to ensure that we fulfill our “duty to maximize profit witha long-term perspective for the beneficiaries” meaning that
we endeavor to improve our investment performance, we haveconcluded that utilizing the framework of PRI would contributeto our efforts to ameliorate our investment decisions. We set
up the ESG committee and rules to enhance our capacity toevaluate and analyze ESG issues of companies.

financing system, financial support system, a new regional
industrial recovery model through Fund. This briefing session
was arranged by Miyagi prefecture, government financial
institutions, and fund companies.

■ Value Chain Management
Approach, Basic Stance and Promotion system
For Securities firms, bonds and shares to be sold to investors(customers) are core financial products. We believe it isindispensable to build and maintain a transparent and fairvalue chain to investors from companies and organizations
which issue securities for a formation of a sustainable society.
To do this, we have established a proper promotion system tobe able to provide investors better quality financial products
and services with consideration to environment, society andgovernance. For example, for issuers seeking to raise funds,
Due Diligence Department examines the issuers rigorously inaccordance with the rules for the underwriting of the securities
self-regulatory rules of the Japan Securities Dealers Associationand its manuals.
The relevant departments work together; propose improvement
measures to the issuers if necessary. Fund raisings are carriedout through this process of vigorous checking system.
The Group is a signor of the 21st century financial principles.
We observe and comply with investment securities andinvestment banking guidelines.

Young Global Leaders selected from Daiwa Securities
Satoru Yamamoto has been elected to one of the “Young
Global Leaders 2012”. He engaged in expansion of Impact
Investment Initiatives of Daiwa Securities Group and involvedin many projects such as the launch of the “Micro finance
Bond”, He made a significant contribution to the expansionof impact investment. Young Global
Leaders elected and awarded by theWorld Economic Forum are from privatecompanies in regions around the world,
government agencies, academia, media,
non-profit organizations and the artsand culture community. He is working
on issues related to the public interests
for a brighter future.
Daiwa Securities
Satoru Yamamoto

Fund to support the non-listed companies in theaffected areas (Daiwa Corporate Investment)
The Daiwa Corporate Investment launched “The Great East
Japan Earthquake Reconstruction Support small business
investment limited partnership“ along with Aomori Bank,
Organization for Small & Medium Enterprises and Regional
Innovation, JAPAN, 77 Bank, Bank of Iwate, Ltd., and Toho
Bank, Ltd. Through the supply of risk money in a flexible
manner for unlisted companies in the affected region fromthis fund, the fund supports a new growth, entrepreneurship,
recovery and reconstruction from the disaster, new businessdevelopment, employment, restructuring of business,or inheritance, etc. We are intended to contribute to thesustainable development and reconstruction of the affectedareas. The Daiwa Corporate Investment founded the Tohoku
Branch in order to operate this fund, the use of an extensive
network of the Group, as well as aim to tight cooperation andregional financial institutions and the Organization the Daiwa
Corporate Investment will continue to support recovery andreconstruction from the disaster.
In addition, in November 2012, the company made apresentation to those in Ishinomaki and Sendai, Miyagi
Prefecture, targeting small and medium-sized enterprises
in Miyagi prefecture. The presentation explained various

Maruya Goyo fisheries immediately
after the 3.11 disaster• Financial Services Agency “Guidelines for disclosure ofcorporate information”• Financial Instruments Exchange “Securities Listing
Regulations” and “Enforcement Rules for Securities Listing
Regulations”• Financial Instruments Exchange “Preparation Guidelines for
the Report on Corporate Governance”• Expert committee on environment and finance under theCentral Environmental Council “Toward Green Finance, a newrole for the financial sector in building a low carbon society”(June 2010)• Principles for Responsible Investment (PRI)• Responsible Property Investment (RPI)• Japan Securities Dealers Association “Self-regulatory Rules(Articles of Association and others)”• The Investment Trusts Association, Japan “Self-regulatory
Rules (Articles of Association and others)”• Japan Securities Investment Advisers Association “Selfregulatory Rules (Articles of Association and others)”• Japan Securities Dealers Association “Undertaking Social
Contribution Activities within the Securities Industry (Basic
Concepts)” (September 2009)• Japan Securities Dealers Association “Securities Industry’s
Action Plan for Environmental Issues” (February 2008)

Maruya Goyo fisheries processing
plant under reconstruction

9

Value Chain Management

Research andDevelopment

Issuers

FinancingCompanyIssue

M & AsNational/Local
government
Public works,
etc.

Funds

Funding needs

Securitized
assets10

Investor

Investment

Equities
Bonds

Equities
Bonds

Internationalorganizations
Public corporation

Financial andcapital markets

Securities company

CapitalExpenditure

Investment
trust
Derivative
securitized
products

ReturnInvestment

Individual
investors

Institutional
investors

Asset management needs

CSR Report 2013

Management Report

CSR Management
Approach and Basic Stance

Daiwa Securities Group Management Vision is to become Asia’s leading financial services firm possessing andleveraging a solid business platform in Japan. In order to achieve the vision, we strive for active stakeholder dialogue
and employees awareness of ESG in the day-to-day operations. We aim to further penetration of CSR mind among
employees, we will continue to strengthen our ability to respond to our CSR key issues.

■ CSR Promotion System
Toward the achievement of our vision and a sustainable society,officers and employees are committed to the implementationsof corporate principles in its day-to-day business. We arepromoting the PDCA (planning, implementation, evaluation andimprovement) cycle that each department recognizes issues of
their own and reviews their challenges and achievements every
year, then set targets for the following year. We disclose theseissues and challenged results and next year targets in our CSR
report annually.
The CSR section of the Corporate Communication
Department at Daiwa Securities Group Inc. compiles
information in external and internal meetings and actively
holds dialogues to ensure that feedback from a wide rangeof stakeholders is reflected in the Group’s activities. As wellas through CSR lectures during the Group’s new hire training,
information on CSR is shared in department head meetingsand departmental liaison meetings, thus promoting awarenessof CSR throughout branches and departments across Japanand major overseas sites and building systems for cooperation.
The section also organizes
dialogues on various CSR
issues with opinion leadersin the broader society andposts them on the CSR
website of Daiwa Securities
Group Inc. as “CSR
Dialogue” (only selecteddialogues are available in
CSR Dialogue
English).

CSR Promotion System

Daiwa Securities Group Inc.
Foundations
Daiwa Securities Health Foundation
Daiwa Securities Foundation

President and CEO
Dialogue

Stakeholders

Executive officers

Customers
Shareholders

Daiwa Anglo-Japanese Foundation (UK)
Dialogue
CSR Promotion Group, Corporate
Communication Department

Business partners
Government
NPOs / NGOs
Local communities

Group companies

Dialogue
Departments within
Daiwa Securities Group Inc.

11

CSR Report 2013

■ CSR Issues: Performance and Targets
Rating indicates self-evaluation of fiscal 2012 results:◦ = success (significant), ◦ = success (moderate), △ = additional effort needed, × = not achieved.

Key Issue 1 Leveraging Financial Capabilities to Contribute to a Sustainable Society
Targets for Fiscal 2012

Results for Fiscal 2012

RatingTargets for Fiscal 2013

Develop and sell SRI and Impact Investment
products◦Sold ¥72.1 billion of Impact Investment bonds (across six securities)◦The 2008 Vaccine Bond named “one of the 25 most influential socially responsible
bonds” by Euro Week
◦Our Impact Investment initiative is recognized as a good practice in the Principles
for Financial Action for the 21st Century◎

Promotion of SRI and Impact Investments

Enhance provision of CSR and SRI
information◦Published the first edition of “Industry Trends and Market Leaders in New Energy at
a Glance“◦Ongoing publication of valuable information through ESG News website; Launch of
the ESG Square◦Offered on-demand Impact Investment Seminars○

Provision of expanded CSR and SRI information

Continue to provide reconstruction
assistance for the Great East Japan
Earthquake◦Commenced giving of grant by the Daiwa Securities Phoenix Japan program◦Selected the first recipients of Great East Japan Earthquake Small and Mid-Sized
Enterprise Reconstruction Support Fund◎Continuation of reconstruction support for theGreat East Japan Earthquake

Results for Fiscal 2012

RatingTargets for Fiscal 2013

Contribute to economic and financial
education◦Sponsored university lectures (including Keio Business School)◦Welcomed students and teachers from junior and senior high schools for corporate
study (seven groups)△

Contribute to improved economic and financial
education

Hold seminars and forums for customers (atleast three)◦Hosted a forum for individual investors coinciding with the IMF/ World Bank Annual
Meeting◦Hosted large symposiums in Tokyo and Osaka for the new JICA bond issue◦O ffered Finance Classroom for Beginners (with sign language and closedcaptioning)◎

Host forums and seminars for retail customers(five or more)

Results for Fiscal 2012

RatingTargets for Fiscal 2013

Hold dialogues with specialists on specific◦Presented four “Understanding CSR through Dialogues“ discussions
themes○

Topic-specific dialogues with experts in theirfieldsStrengthen relationships between related◦Cooperation in CSR efforts through our core businessdepartments and sections within the Group△

Building stronger internal bonds between theGroup's related departments

Key Issue 2 Developing Sound Financial and Capital Markets for the Next Generation
Targets for Fiscal 2012

CSR Management
Targets for Fiscal 2012

Corporate GovernanceTargets for Fiscal 2012

Results for Fiscal 2012

RatingTargets for Fiscal 2013

Strengthen crisis management system fordisasters◦Reviewed and reevaluated business continuity plans (BCP)◦Reinforced Group awareness of crisis management and readiness; conductedbusiness continuity and post-disaster safety confirmation exercise○

Strengthening crisis management in disasters

Continue efforts to reduce electricity
consumption◦Saved energy in both summer and winter through power reduction in each power
provider region◦Continued to achieve ongoing energy savings even in off-peak periods as well○

Efforts to reduce power consumption

12

ComplianceTargets for Fiscal 2012

Results for Fiscal 2012

RatingTargets for Fiscal 2013

Build effective and efficient internal control
systems for “new” Daiwa Securities◦Implemented systems integration for internal rules and programs following our merger
and made provisions for inspections◦Improved marketing procedures for complex and newly introduced products at boththe corporate sales and retail branch levels◦Reinforced international and domestic information security structures, including thedesignation of a global information security policy, and a transition to prior review ofoutgoing email messages◎

Provision and reinforcement of corporationwide internal controls; building awarenessof high standards of professional ethics andcomplianceFurther improve customer marketing andsolicitation systems◦Efforts to install longer-horizon oriented sales through improved guidance from theheadoffice led to a dramatic decline in the number of “flipping“◦Improved marketing for older customers, including the addition of family approvalto the existing system of approval by superior and reinforcement of rules for older
customers concerning use of agents◎

Further increases in sales service quality; full
adoption of "business from the customer's
perspective"

Raise the quality of internal control systems
through inspection◦Improved legal compliance systems within bank agency operations, including
the provision of internal control officers and compliance officers to the Banking
Business Office (currently Bank Business Division) and improved connections
between related divisions through feedback from voluntary inspections and reviews◦Improved efforts to reject organized crime through the adoption of Japan Securities
Dealers Association's Organized Crime Referral System and the consolidation of
databases of criminal syndicates from Daiwa Securities Group Inc. and the former
Daiwa Securities Capital Markets◎

Establishment of sound information security
policy and systems to exclude anti-social forces

Implement the improvement measures
set out in the Group’s press release dated
July 27, 2012, in a swift and steady◦August 7, 2012 press release: “Report on Corporate Information Management
manner (Investigation Committee’s
Systems“Investigation Report on the Securities◦Implemented all countermeasures to prevent relapse
and Exchange Surveillance Commission’s
Recommendations and Daiwa’s Improvement
Measures)◎—

Information Disclosure
Targets for Fiscal 2012

RatingTargets for Fiscal 2013

◦Shared clear and concrete information with stockholders, investors and the media
concerning the introduction of the “new“ Daiwa as well as progress reports on midFocus on conveying information on theterm management plans using management strategy briefings and other venues“new” Daiwa Securities Inc. and the “new” ◦In addition to changing the contents of financial statements due to the
mid-term management planinauguration of the “new“ Daiwa, expansion of data explaining the factors behind
any increases or decreases in results to improve investor understanding of our
financial situation◎

Improved communication of businessstrategies and results in the second year of the
mid-term management plan

◦Beginning this fiscal year, the compilation of a combined annual report that
integrates the functions of the existing annual report and CSR report of the Daiwa
Securities Group and Daiwa Securities Disclosure Journal; simplified the Group
newsletter to improve its readability and reduce redundant costs of production◎

Improved website functionality◦Improved the reader-friendliness and visual appeal of the individual stockholder
investor relations publication “Business Report“, and upgraded the selection of
products in the shareholder reward program while cost efficiency in mind
Implement IR activities that appeal to◦Improved communication with institutional investors through large meetings at DIC
investors’ every needTokyo and small meetings with domestic institutional analysts, including both thecorporate CEO and IR meetings in North America, Europe and Asia (where stock
holdings are comparatively low)◎

Greater responsiveness of IR activities todiverse investor needs

Implement cost reductions and optimization
regarding IR tools

Results for Fiscal 2012

Relationship with Customers
Targets for Fiscal 2012

Post-sales service

Results for Fiscal 2012

Rating◦Organized seminars on national and international market conditions at each sales
branch on the fifth day of every month; offered relevant seminars when markets
fluctuated◦Welcomed 6,136 participants to Daiwa New Year’s Investment Forums held at all
branches nationwide◦Responsive presentation of information on an ongoing basis via our website,
including day-to-day market reports and fund reports from issuing andmanagement companies◎

13

Targets for Fiscal 2013

Active Post-Sale Follow UpRelationship with Executives and Employees
Targets for Fiscal 2012

Results for Fiscal 2012

RatingTargets for Fiscal 2013◎

Human Resource Development by strategic
promotion and appointments○

The pursuit of a high standard of professional
competence to meet the trust of ourcustomers○

Improvement of the office environment inwhich all employees will continue working
with high motivation◦Continued improvement of internal training systems for young employees

Human Resource Development by strategic
promotion and appointments◦Implemented the new tutoring system for employees in their second years of
employment (introduced in 2013)◦Expanded opportunities for promotion for young employees to increase
motivation◦Increased number of female employees at management levels (190 as of the endof fiscal 2012)◦Increased numbers of female employees seeking improved career paths (750
employees have transferred to career-track positions in the four years from Fiscal
2009 to Fiscal 2012)◦Continued development and training of global professionals

Demand high levels of specialist skills tomerit customers’ trust◦566 employees hold CFP certification®
◦1,446 employees hold the CMA (Chartered Member of the Securities
Analysts Association of Japan)◦941 employees sat for the TOEIC examination internally; 1,593 of ouremployees hold TOEIC scores of 730 or higher◦Promoted family-friendly measures, including family visits to the workplace (4,296
families visited), support for child care leave (453 employees took advantage) andencouragement to leave the office before 7 p.m.
◦Developed deeper awareness about our fringe benefit programs

Create a working environment conducive
to high levels of motivation among all
employees◦Distributed a questionnaire on support for balancing work and child rearing to
all employees to build a better understanding of employee needs and uses ofour programs◦Increased the numbers of employees who took advantage of our workplace
relocation program (106 people as of March 31, 2013)◦Expanded our Senior Advisors program to encourage veteran employees◦Made revisions to our programs allowing reemployment of all employees whorequest it following recent revision of Japanese labor laws

Relationship with Society
Targets for Fiscal 2012

Results for Fiscal 2012

RatingTargets for Fiscal 2013

Raise awareness of volunteering–including
earthquake relief work–among staff andstrengthen dissemination of appropriate
information◦Publication of volunteer activities and events on our internal website (67 in total)◎

Building volunteer consciousness among
employees and improving communication ofvolunteer information

Strengthen coordination with employee
unionsPromote programs that the whole Groupcan get involved in◦Continuation of ongoing dialogues with employee unions◦Table for Two program products and meals instituted in the Toyocho Center
Building Cafeteria (March 2013) and vending machines installed at the Head Officebuilding (February 2013)○—

Enhance systems to enable employees to get ◦Collaboration with employee unions toward the introduction of Volunteer Leaves
involved in voluntary work
continued△

Promotion of Group-wide action programs

RatingTargets for Fiscal 2013

Environmental Initiatives
Targets for Fiscal 2012

Results for Fiscal 2012

Further exploit energy data management ◦Continued the expansion of energy data management systems and accumulation
systemof data, including billing statements as documentary data○

◦Reduced power consumption significantly by contracting some operations to
outside data centers and conducting strategic review of systems and operations at
the Daiwa Institute of Research◎Strengthen energy conservation efforts

14

CO2 emissions reduction by 1% compared withthe previous year (domestic consolidated basis)
as a part of the Group’s ongoing compliancewith the Law Concerning the Rational Use ofEnergy and Tokyo’s environmental protection
ordinances
Continuation of the “Cool Biz“ program aspart of energy saving initiatives

CSR Report 2013

Management Report

Corporate GovernanceApproach and Basic Stance

The Daiwa Securities Group clearly separates the supervisory and executive functions of management to create ahighly transparent and objective corporate governance system. The Group is pursuing a management structure that
improves the efficiency of head office operations and maximizes synergies between the Group companies. Under thisstructure, employees responsible for head office functions also perform similar roles for securities subsidiaries, inaddition to the corporate executive officers of Daiwa Securities Group Inc.

■ Features of the Corporate Governance System
In 1999, the Daiwa Securities Group became the first listed
Japanese company to adopt a holding company structure. Since
then, we have been pursuing a highly transparent and objective
corporate governance system that maximizes synergies
between Group companies while showcasing the independence
and unique expertise of each Group member.
In June 2004, Daiwa Securities Group Inc. made a transition
to a “Committee System” of corporate governance andaccelerated the decision-making process by transferring asubstantial portion of authority from the Board of Directors
to corporate executive officers. In addition, we strengthened
the supervisory functions of management by increasing thenumber of outside directors and establishing the Nominating
Committee, Audit Committee, and Compensation Committee.
The representative directors of the major Group companies also
serve as corporate executive officers of the holding company,
thereby allowing them to efficiently implement individual
business strategies based on Group strategies.
The Nominating Committee met three times in FY2012 todiscuss the composition of the Board of Directors and its effecton corporate governance, the basic policy for nominating
candidates for directorships, and the selection of thesecandidates. The Nominating Committee selects candidates for
directorships in light of the Group’s selection standards for theappointment of directors. These standards include criteria that
ensure the independence of outside directors.
The Audit Committee met 12 times during FY2012. The
committee evaluated the activities of directors and corporate
executive officers, audited documentation including financial
statements and business reports, and prepared an audit reportfor the period under review.
The Compensation Committee met five times in FY2012 todiscuss compensation policy and determine the compensationof each director, and also studied a Group-wide incentive plan
aimed at improving consolidated earnings results.
The Board of Directors met 10 times during FY2012, andoutside directors had a 90% record of attendance.

Corporate Governance System at Daiwa Securities Group
Shareholders’ Meeting

Board of Directors, 12 members(including 5 outside directors)
Basic management policy

Executive Management
Committee, 14 members
Group-wide business strategy
and management issues,
important financial matters

Representative Executive
Officer

Nominating Committee, 6 members(including 4 outside directors)

Audit Committee, 4 members(including 3 outside directors)

Compensation Committee, 5 members(including 3 outside directors)

Audits the activities of directors
and corporate executive officers,
audits business reports andfinancial statements, andprepares audit reports

Sets policy for compensation of
directors and corporate executive
officers, and determines
compensation amount for eachGroup Risk Management
Committee

Disclosure Committee

Group IT Strategy Committee

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

Determines scope of consolidated
financial reports, scope of evaluation ofinternal control reports and disclosure ofimportant information

Prepares original IT investment
budget, evaluates and monitors IT
investments

Nominates directors forselection, or recommends
dismissal

Overseas Management
Committee
Makes decisions on issues
related to the management ofoverseas offices and otheroperations abroad

Group Internal Audit
Committee
Makes decisions on issues
relating to the internal audit
system and the verification ofinternal control activities
Web

Report on Corporate Governance (available only in Japanese)15

■ Executive Compensation More Closely Linked
to Performance■ Supervisory function
The Board of Directors consists of 12 directors, including fiveoutside directors* of whom one is a female director. The Boardof Directors determines key management policy and supervises
executive duties. In order to perform this supervisory rolefrom multiple viewpoints in accordance with the demands ofsociety, the policy for selecting new board members states thatcandidates must have a strong sense of ethics and demonstrate
initiative and leadership. Additionally, outside directors areexperts in such fields as management and accounting. In
addition, the supervisory function of Daiwa Securities Group
Inc. is reinforced by the Audit Committee and the Office of
the Audit Committee. The Audit Committee, which consistsof a majority of outside directors,* plays a pivotal role in the
supervision of executive duties. The Audit Committee is assistedby the Office of the Audit Committee, which is an independent
department.

Compensation for directors and corporate executive officers
is determined by the Compensation Committee. It generally
has three components; basic compensation, performancebased compensation, and stock-price-linked compensation.
Comprehensive criteria used in calculating performance-based
compensation include consolidated ordinary income and ROE,
as well as other factors such as which of the management goals
outlined in the Medium-Term Management Plan have been
met.

■ Internal Control System and Internal Audit
In recognition that management is responsible for maintaining
an effective internal control system to ensure the sound andproper execution of business, the Group, under the main
initiative of Daiwa Securities Group Inc., has established asystem for managing the Group’s major business risks. The
Group also maintains this internal control system for ensuring“business effectiveness and efficiency”, “reliable financial
reporting,” “compliance with laws related to businessactivities,” and “asset preservation”. On April 1, 2013, a
portion of the Compliance Department was split off into a
newly established Compliance Control Department with theaim of strengthening internal control systems through greater
specialization and efficiency in compliance-related control
functions.
The Internal Audit Department verifies the internal control
system. This department, established independently fromall other departments and reporting to a full-time corporate
executive officer, ensures internal audits to act as an importantfunction of raising Group value through the creation of soundand efficient internal controls. The department’s internal
auditing plans and the results of internal audits are reported toand approved by the Group Internal Audit Committee, which is
directly under the control of the CEO of Daiwa Securities Group
Inc. Those are also reported to the Audit Committee.
Daiwa Securities Group Inc. seeks to raise corporate value
by effectively conducting internal audits, and implements
risk-based internal audits primarily through its Internal Audit
Department.
The Internal Audit Department pays special attention tocertain aspects of Group internal auditing activities, including
the internal control systems at Daiwa Securities Co., Ltd. and
the Group’s overseas business offices as a global financial
instruments firm, the internal control systems at Daiwa Next
Bank, Ltd. as a bank, the status of Group-related businesses,
and the status of controls at the parent over Group companies.
The Internal Audit Department collaborates with the internal
auditing section of each Group company within the context
of holding periodic meetings, monitoring activities, andperforming audits. It also formulates policies that apply to all
Group internal audits, plans risk-based audits, and monitorsthese activities.
The Internal Audit Department maintains communications
with the Audit Committee and accounting auditor, making any
necessary adjustments to ensure that audits are performed
efficiently. The Audit Committee on occasion asks the Internal
Audit Department to conduct an audit.

* Outside directors as defined by Article 2-15 of Japan’s Companies Act.

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

16

CSR Report 2013

Management ReportComplianceApproach and Basic Stance

The Daiwa Securities Group’s corporate principles identify “building trust” and “contributing to society” as among
the most important goals of our business operations. We believe that compliance is necessary to “build trust.” Thegoal of the Group’s compliance activities is not merely to “comply with laws and regulations,” but to earn the trust ofcustomers, the market, and society.

■ The Daiwa Securities Group’s Approach toCompliance■ Compliance Initiatives at Daiwa Securities Co., Ltd.
Daiwa Securities Co., Ltd. is taking measures, under thecompliance program, to ensure the effective operation of its
internal control system in order to ensure strict compliance withlaws and regulations.
In FY2012, the Daiwa Securities Group worked to build more
effective and efficient internal management systems, further
improve customer solicitation and sales systems, and makequalitative improvements through an overhaul of internalmanagement systems.
For FY2013, the Company decided to create the following
three compliance programs aimed at deepening understandingof the “true meaning” of internal rules, in moving towards
achieving its management targets. The Company will strive tobolster its internal management systems further.
1. Program for upgrading and reinforcing Company-wide
internal management systems, and for fostering betterawareness of professional ethics and compliance issues
2. P rogram for further improving quality of marketing, andfirmly establishing customer-oriented sales
3. P rogram for building robust information management
systems and system for eradicating antisocial forces

The Daiwa Securities Group is constantly taking steps to
educate and train executives and employees to uphold external
regulations, exercise self-discipline and appropriate conduct,
and thereby maintain high ethical standards to fulfill its rolein society. We aggressively conduct compliance training
programs for our employees. These programs commence
as soon as employees join the Group and continue throughregularly scheduled training sessions throughout their career,thus ensuring that every employee is aware of, and thoroughly
understands, compliance issues. As the Group pursues new
business ventures in areas where the regulatory structure is still
incomplete, employees are trained to approach all matters withstrong self-discipline and legal awareness, refer to existing legal
precedents whenever possible, and always adhere to acceptedsocial norms of proper behavior.
In FY2012, Group companies continued to hold training
related to insider trading regulations.
On April 1, 2013, compliance functions were divided
into the Compliance Control Department, which oversees
compliance controls throughout the Group, and the ComplianceDepartment, which is in charge of supporting compliancerelated to the business operations of Daiwa Securities Co., Ltd.
This new structure enhances the specialization and efficiency
of compliance functions and will lead to a more robust Group
compliance system.
Initiatives the Group took to eliminate any and all relations
with corporate racketeers and other antisocial groups involved
collecting information on their increasingly sophisticatedmethods by working in close contact with mainly police
organizations and legal experts, and enhancing the Group’s
various outward procedures for scrupulously severing contact
with such undesirable groups.
As a result, a system of cooperation among Group companies
to perform checks preventing the outflow of funds to antisocial
forces is now in place.
Web

Basic Policy on Avoiding Any Involvement with
Criminal Elements (available only in Japanese)17

CSR Report 2013

Management Report

Risk Management
Approach and Basic Stance

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

■ Risk Management Policy■ Types of Risks

The Daiwa Securities Group Inc. has established “The Ruleof Risk Management” governing all activities by the Group
companies to manage risk in order to ensure that they conformto the following basic policies:
1. M anagement’s proactive involvement in risk management.
2. Implementing a risk management system commensuratewith the nature of such risks in the Group’s management.
3. U
 nderstanding comprehensive risk based on integrated risk
management and strengthening capital adequacy.
4. C larifying the risk management process.
Limits are set for each type of risk so as to control risk within
an amount suitable for the management strength of the Group.

The Daiwa Securities Group faces various risks in the courseof its business activities. The Group therefore believes that it isimportant to properly identify, evaluate, and manage these risks
in order to maintain healthy financial and earnings structures.
Daiwa Securities Group Inc. engages in risk management toclearly identify risks based on the respective Group company’sbusiness characteristics and risk profile. The types of risks thathave been deemed important to manage include market risk,
credit risk, liquidity risk, operational risk, and reputation risk.

Risk Management System
Daiwa Securities Group Inc.

Group companies

Nominating Committee

Daiwa Securities

Board of Directors

Audit Committee

Daiwa Capital Markets Europe

Executive Management
Committee

Compensation Committee

Representative Executive
OfficerGroup Internal Audit
Committee

Policy formulationand instruction

Daiwa Capital Markets Hong Kong
Daiwa Asset Management

Group Risk Management Committee
ReportingDaiwa Office Investment Corporation

CRO

Daiwa Corporate Investment

Comprehensive risk management structure

Discussion and reporting

Operational risk
CreditRisk

Liquidity
Operations
Risk
Risk

Systems
Risk

Information Compliance
Security
Risk
Risk

Daiwa PI Partners
Daiwa Securities SMBC
Principal Investments

Risk Management Department

MarketRisk

Daiwa Capital Markets America

Legal
Risk

Human
Resources
Risk

Physical
Asset
Risk

Daiwa Next Bank
Other Group companies

18

■ Risk Management System■B usiness Continuity Plan

The Board of Directors of Daiwa Securities Group Inc. hasapproved “The Rule of Risk Management”. This rule defines
basic policies related to risk management, the types of riskthat are necessary to be managed, and the executive anddepartment for each major risk. Each subsidiary conducts
risk management suitable for the risk profile and size of eachbusiness in accordance with these basic policies related to risk
management. Daiwa Securities Group Inc. monitors the systemand situation of its subsidiaries’ risk management. Also, theGroup Risk Management Committee, as a sub-committee of
the Executive Management Committee of Daiwa Securities
Group Inc. receives reports about risk exposures obtained
via the aforementioned monitoring of subsidiaries and issues
concerning their risk management system and discusses andresolves them. In addition, major Group companies regularly
hold risk management committee meetings in order tostrengthen their risk management.

In envisioned emergencies to its sales branches or head
office/head office functions and/or data center due to social
infrastructure shutdowns caused by earthquakes, fires,storm and flood damage, and abnormal weather, as well as
serious outbreaks of infectious diseases, such as new strains
of influenza, the Daiwa Securities Group drew up a business
continuity plan (BCP) prioritizing important operations* to berestored or continued in the event of a natural disaster, in orderto keep the financial market functioning and protect customers’
economic activities.
In accordance with this plan, the Group will ensure the safetyof customers and Group executives and employees and protect
assets while continuing to pursue vital operations based on the
public-interest of its business as a financial services firm.
Specifically, the Group has promoted the digitization of datanecessary for its business operations to establish a state-of
the-art business continuity system in the financial industry.
Equipped with Japan’s highest-level backup center, Daiwa
Securities Group Inc. has already completed the installationof thin client technology. This enables the Group to easily
switch to the alternate system in case of emergencies at
the headquarters. We thereby can continue vital operations
through a substitute office location.
* Prioritized operations to be restored or continued:
1. M arket settlement of securities transactions contracted but not yet
delivered
2. Payment operations
3. N
 ew orders from customers to sell or to liquidate long positions on
margin transactions for the products below○ Domestic listed equities○ MRF (money reserve funds), MMF (money market funds), mediumterm government bond funds○ Japanese government bonds for individual investors○ Cash deposits

19CSR Report 2013

Management Report

IT Governance, Disclosure, and Information Security
Approach and Basic Stance

The Daiwa Securities Group aims to provide customers with high-value-added products and services quickly, precisely,
and reasonably priced. To this end, it uses IT strategically. As an active participant in the financial and capital markets,
the Group possesses information resources, including personal information. In order to protect these information
resources from outside threats, the Group is working to maintain and improve the level of its information security.

■ IT Governance System■ Measures for Maintaining Information Security

The Group has established the Group IT Strategy Committee asa subcommittee of the Executive Management Committee. This
committee deliberates and makes decisions on such issues asbudgets for IT investment and the allocation of IT functions. IT
investment budgets are drawn up after projects are rigorously
screened based on necessity, and funds are prioritized forinvestment budgets that contribute to the achievement ofGroup management targets and business strategies.
The Group IT Management Committee, which serves asa prior consultation mechanism for the Group IT Strategy
Committee, was established as a venue for executive officers to
discuss investment themes common to all Group companies.

In order to fulfill its social responsibility as an active participant
in the financial and capital markets, as well as gain thetrust of customers, the Group has adopted a full spectrumof information security policies at companies throughout
the Group to ensure that important personal information
received from customers and all other information resources
are managed in a secure and appropriate manner. Amongthe organizational measures that we have adopted is theInformation Security Group Minimum Standard, which dictates
the basic rules that all companies in the Group must adopt
for handling information. In addition to introducing theseinformation security rules at each company, we have appointed
a “Chief Information Security Officer” at each Group company
to oversee information management activities. A variety oftechnical and structural measures have also been introduced toenhance security and ensure that Group information resources
are managed appropriately, such as office automation throughthe use of thin client technology and high-security access
controls at the data center. The online trading systems of
Daiwa Securities Co., Ltd. employ highly advanced encryption
technology for data transmission and for user ID verification,
thereby ensuring that clients are able to use the system safely
and securely.

■ Disclosure System
The Daiwa Securities Group has formulated the Disclosure
Policy, which outlines the Group’s basic approach to
information disclosure and strives to provide information that isfair, prompt, and appropriate.
Daiwa Securities Group Disclosure Policy• The Daiwa Securities Group will disclose important financial, socialand environmental information about the Group (“Managementrelated Information”) in a prompt, fair and appropriate manner,so that our stakeholders, (including shareholders, investors andthe communities we operate in) may understand and maintainrealistic expectations of the Daiwa Securities Group.
• The Group will comply with the Financial Instruments andExchange Act and other laws and ordinances related to securities
transactions and the various rules of the financial instruments
exchanges on which our stock is listed.
• The Group will strive to disclose information fairly, in terms ofboth content and timing.
• The Group will utilize various communication channels including
presentations, telephone conferences, the Internet and printed
materials to disclose information in a manner that is easy forinvestors to comprehend.
• The Group will keep in mind its responsibility to set an example forother listed corporations, in terms of disclosure, and will strive topromote healthy markets.
• To ensure that these policies are implemented properly, the Grouphas established “Disclosure Regulations” which include guidelines
for disclosing management-related information and standards forestablishing a “Disclosure Committee”.

■ Efforts to Enhance the Level of Information
Security
The Group has put in place a self-assessment scheme for
employees in order to maintain and build upon the current
level of information security across the Group as a whole.
Each Group company has formulated further initiatives
tailored to meet the information security needs of the
products and services they offer. Additionally, in recognitionof the importance of human factors in effective information
security systems, the Group has introduced training programs
to educate all executives and employees in the basics ofinformation security. The programs are offered periodically asgroup training sessions, as well as through e-learning.

20

CSR Report 2013

Social Report

Relationship with Customers
Approach and Basic Stance

Daiwa Securities Group understands that customer trust is the foundation of our business, and our focus is always on
finding ways to deliver genuine customer satisfaction. We have adopted the idea of “hospitality” to enhance ourexisting concept of customer service. We aim to have the most satisfied customers in the financial services industry.

■ Building Deeper, Stronger Trust with Customers

Accessible Services for Diverse Customers

Appropriate Explanations for Customers

When Daiwa Securities renovates existing sales branches or plans
new branches, it works to ensure that its branches are accessible
to a wide range of customers, including measures such as
reducing the number of steps and installing wide counters.
The company also provides necessary explanations throughwritten communication and introduces its internet banking
services to customers with hearing difficulties.

We aim to build customer satisfaction through quality services,
built on understanding customer needs quickly and proposing
the best solutions for each customer. Providing faithful andappropriate explanations is one just aspect of that service.
Japan’s Financial Instruments and Exchange Law went into
effect in September 2007. The law prohibits “solicitation thatis improper in light of a customer’s knowledge, experience,
financial situation and objectives”. Daiwa Securities’ approachis rooted in this law, but as a part of our hospitality-based
service, we work to deliver explanations that go beyond legal
requirements when explaining the financial products we offer.
When selling Impact Investment products aimed at addressing
social issues, including Vaccine Bonds and Water Bonds, Daiwa
Securities explains to our customers how their investments
contribute to society, deepening their understanding of these
Impact Investments.

Daiwa’s Point Program
Daiwa’s Point Program awards customers with points based on
their transactions. These points can be exchanged for products
or used to make charitable donations. Daiwa Securities launched
the Great East Japan Earthquake Reconstruction Support
program through the Daiwa’s Point Program on March 18, 2011.
Donations from the program are used by the designated NPO,Japan Platform, to support those who suffered from the disaster.

Improving In-Branch Customer Service Quality
Active Post-Sale Follow Up
A great variety of customers visits Daiwa Securities’ sales branches.
This means that employees interacting with customers need
not only specialized knowledge of the market and financial
products, but polished service skills with an emphasis on customer
attentiveness as well.
At Daiwa Securities, our goal is to provide quality customer
services with a spirit of hospitality. In addition to group training,
the company gives regular check-up tests on an ongoing basis
using its internal e-learning system. Staff from Daiwa Securities’
head office performs on-site checks to provide guidance todrive greater improvements in quality.

Completing the sale of a product is only the beginning of asecurities company’s relationship with the customer. Follow up
is a key element in building the relationship of trust with thecustomer. This is especially true when the value of a productdeclines after purchase and customers feel dissatisfied andapprehensive. Daiwa Securities works to reinforce trust in its
customer relations and to alleviate customer apprehension
through appropriate explanations and proposals.
Informing Customers through Seminars and throughour Website
In addition to regularly scheduled investor seminars held on
the 5th of every month to provide information on domestic
and overseas markets, Daiwa Securities holds timely follow-up
seminars to address pronounced market fluctuations. Acrossall branches, over 5,000 people between August and October
2012 attended 236 follow-up seminars on investment trusts
and foreign currency markets. The Notice Box for users of theonline trading section of the Daiwa website presents videos on
portfolio management as well as trends and forecasts for trust
funds and exchange rates.

■ Working to Incorporate Customer Voices
Call Center Initiatives
The 480 telephone service representatives at Daiwa Securities’
Call Centers take orders, explain products and handle queries
about required procedures and requests for sales literature.
The Call Center is one of the main channels supporting thecompany’s business model, which is driven mostly by the Daiwa
Consulting and Daiwa Direct transaction channels. Call Center
employees have direct contact with customers and play a
critical role not only as transaction channels but also customer
support and marketing. Their role gives them access to direct
customer feedback that can lead to improved operations. In
order to maintain and improve call center operations to meetthe demand for high-quality service, Daiwa Securities Group
provides training and regular level checks for all telephoneservice representatives.

Follow Up Services for Impact Investment Products
Daiwa Securities provides customers who purchase Vaccine
Bonds with activity reports released by the bond issuer,
IFFIm. The company believes that it is important to provide
information on how customers are contributing to society byproviding information on how the money invested in Impact
Investment products is used to combat social issues.

21

Calls Received at the Customer Support Contact Center

The Center uses questions and other input from customers toanalyze data and identify the causes of any identified problems.
The Center provides feedback and information to Daiwa
Securities’ head office and sales branches as part of our workon improved services and customer interaction and increased
customer satisfaction.
Improvements to the service level of our interactive voice
response (IVR) system were made at the end of October
2012 to strengthen competitiveness and operating efficiency.
These have improved the detail of the automated service
and shortened the per-call time of the telephone service
representatives.

■ Inquiries■ Complaints

FY

2008

76％

2009

77％

23％

4,144

2010

80％

20％

4,224

2011

82％

24％

4,616

18％
83％

2012
0

1,000

2,000

5,119

17％
3,000

4,000

5,000

5,436
6,000
calls

Efforts to Improve Telephone Customer Service Quality
Strengthening BCP at our Call Center
From April to December 2012, Daiwa Securities took part ina telephone customer service competition* organized by theJapan Telecom Users Association, a Public Interest Incorporated
Foundation, taking the competition as a chance to significantly
improve Call Center service quality by receiving quality
evaluations from a third-party. In pursuit of high marks in thecompetition, we encourage our Call Centers to work constantly
to improve customer service and verbal skills; we believe this will
help strengthen the capacities and motivation of our telephoneservice representatives. Improving the level of remote service
provided by service representatives at the Call Center also helps
bring about increased customer satisfaction. Daiwa Securities
is proud of the employee who represented our company at theevent and went on to receive second place in the Japan-wide
tournament.

Until August 2011, all call center functions were located at asingle site in Tokyo (Koto Ward). Some of these functions havenow been transferred to our Osaka branch building. Of our
480 service points, 450 are now located in Tokyo and 30 are
located in Osaka. In the event of an emergency, we are now
capable of accepting orders at the new Osaka call center aswell as at sales branches. Splitting our call center functions
across multiple sites improves our ability to manage operationalrisks. We also anticipate that the Osaka call center will be able
to take over some of the functions of the Tokyo facility in theevent of electricity shortages in the Kanto area (Tokyo and its
surroundings).

Calls Received at the Customer Support Contact Center
Daiwa Securities’ Customer Support Contact Center also
handles customer feedback directly. The Contact Center works
to respond promptly and appropriately to customer complaints
and shares this input with Daiwa Securities’ sales branches
and head office to avoid repeat problems. In fiscal 2012, theContact Center received 5,436 calls – roughly 300 more thanthe preceding fiscal year. This rise was due to a large increase incalls concerning accounts and documentation due to improving
market conditions in the second half of the fiscal year. The
number of complaints held steady from previous years.
Contact Center employees appreciate the value of customer
feedback and will continue to work on improving customer
service.

* Japan Telecom Users Association Telephone Customer Service Competition:
This competition is a forum for companies to compare their telephonecustomer service with others and to increase customer satisfaction while
improving the verbal quality of their customer handling. At the yearly
competition, participating companies test the results of their many hours ofaccumulated telephone customer-service training and preparation as a part ofefforts to improve customer service and verbal skills. Nationwide, over 10,000
people compete in this well-recognized event.

Web

Japan Telecom Users Association (Public Interest
Incorporated Foundation) (available only inJapanese)

Daiwa Securities’ Systems for Utilizing Customer Feedback
Customers
Questionnaire postcards
available at branches

Opinions, comments and requests

Telephone

Customer Support Contact Center

Improvement

Sales branches

Improvement

Management

Improvement

Departments in charge

Business Process Planning &Administration Department
Gathering customer feedback ateach branch, to be shared by all
branches (weekly)
Improvement

All sales branches

22

CSR Report 2013

Social Report

Relationship with Shareholders and Other Investors
Approach and Basic Stance

The Daiwa Securities Group works hard to advance communication with shareholders and other investors.
As part of the ongoing shift from savings to investments, we believe that increasing the number of individual
investors is a part of the Daiwa Securities Group’s social responsibility, and we will work hard to provide stockholders
and investors with improved communications and information that is easy to understand.

■ Breakdown of Shareholders

reports for shareholders. Daiwa Securities Group Inc. willcontinue to strive to make its communications even moreaccessible and precise for shareholders.

As of March 31, 2013, 41.1% of Daiwa Securities Group’s
shareholders were foreign investors, up 1.5 points from theend of the previous fiscal year. The percentage of individual
investors decreased 2.2 points over the same period to 22.4%.

Questionnaire for Shareholders
The Daiwa Securities Group regularly distributes a questionnaire
to shareholders at the end of September, coinciding with
distribution of rewards under our Shareholder Rewards
Program, to gather and incorporate their views in management
and IR activities. The findings of these questionnaires are
utilized for improving our business operations while leading to
improvements such as higher satisfaction with the shareholder
reward program.

Breakdown by Investor Type (as of March 31, 2013)
Other
66,399thousand shares
3.8%

Individuals
in Japan392,401
thousand shares
22.4%

Foreign investors
718,989
thousand shares
41.1%
Other corporationsin Japan
78,595thousand shares
4.5%
Web

September 2012 Shareholder Rewards Questionnaire Contents
Q. Please list your age.
Q. When did you first purchase our shares?
Q. Why did you choose to buy stock of Daiwa Securities?
Q. What sorts of disclosure and corporate communication would you like to seeenhanced in the future?
Q. Are there any products you would like the shareholder reward program?

Financial
institutionsin Japan492,993
thousand shares
28.2%

Stock Information■ Shareholder Reward Program■ Dividend Policy

In September 2010, we improved our shareholder reward
program while keeping utilizing the catalog format.
Shareholders who qualify for rewards at the end of Marchand September have multiple reward options to choose suchas charitable donations, quarterly journal and the Daiwa’s
Point Program, in addition to the traditional local and regional
specialties. At the end of March, we also offer a calendar toshareholders who wish for it.

Daiwa Securities Group Inc. aims to continuously provide
improved value for shareholders, including distribution of
profits. In principle, dividends are paid semiannually (atthe middle and end of the fiscal year) at a payout ratioof approximately 30% based on consolidated financial
performance. Daiwa Securities Group Inc. also actively seeks
ways to increase returns to its shareholders, including sharebuybacks when it has sufficient accumulated capital to pursue
further growth.

Web■ Communication with Investors andShareholders
The general meeting of shareholders is an opportunity for directinteraction with shareholders, and we have many shareholders
to attend it. 2,082 shareholders attended the 76th regular
general meeting of shareholders, held on June 26, 2013. We
are also working to create new communication opportunities,
including telephone conferences on the day of quarterly
earnings announcements, spring and autumn management
strategy briefing sessions, one-on-one meetings with analysts
and investors, and by taking part in Daiwa Investment
Conferences (in Tokyo, Hong Kong and New York).
In addition, we are further developing information disclosure
on our IR web sites and publishing annual reports and business23

Investor Relations Information

CSR Report 2013

Social Report

Relationship with Executives and Employees
Approach and Basic Stance

The Daiwa Securities Group believes that maximizing the motivation of our executives and employees will improvecustomer satisfaction and consequently enhance shareholder value. We have instituted a variety of programs to help
not only our executives and employees, but also their families and friends, to feel a sense of job satisfaction and sharea feeling of pride to be part of the Group.
The Group distributes Daiwa Spirit to our employees, a booklet about what it means to be a Daiwa professional. The
booklet was developed to express our corporate principles and the philosophy and mindsets nurtured as our
corporate culture since the foundation of the Group. Our hope for Daiwa Spirit is that it will enhance employees’
sense of unity and togetherness and thereby increase the Group’s overall cohesiveness.

■ Hiring Initiatives

extended period (there are currently about 150 employees in
the program).
Daiwa also offers the Daiwa Masters’ Program for highly
motivated and skilled employees to continue their contributions
after retirement age. This system allows qualified employees
to work till the end of their extended retirement age as late as
65. Those who are not qualified for existing re-employment
programs, but who still wish to participate, are also able
to work until the prescribed age. For employees who show
remarkable achievement after re-employment, there is apossibility of further contract renewal even after the prescribedage.

Hiring Approaches and Trends
The Daiwa Securities Group would like all of its employees towork with high motivation and loyalty from their first days withthe company until retirement. We bring on all of the new college
graduates we recruit, including those with disabilities, as full, regular
employees. We believe that helps develop a sense of trust and pridein the company and a sense of solidarity with their colleagues for
new hires. In April 2013, 523 new employees were welcomed to
the Group.
Providing an environment in which diverse individuals can thrive
and perform to their full potential enables the recruitment ofhighly skilled employees. We are endeavoring to attract and secure
personnel who will be able to perform on the global stage to help
follow through on the Group’s strategy to strengthen our businessin Asia.

Recruitment of People with Disabilities
The Daiwa Securities Group currently has approximately 180
employees with disabilities working in a wide range of capacities at
Group headoffice, in sales branches and in call centers.
The Group first began recruiting new graduates withdisabilities as full, regular employees (general office staff) in
fiscal 2008. In fiscal 2011, we broadened recruitment into
the career-track, regional career-track and customer service
employment streams. We have also been actively expanding
recruitment opportunities by holding briefings about thecompany for new graduates, participating in career expos andimplementing job placement support for university students
with disabilities.
We work to support career advancement for people
with disabilities after they have entered the company aswell, creating, for example, opportunities for these existing
employees to enter the career-track and regional career-track
employment streams.

Fairness in Hiring
The Daiwa Securities Group has published its Guidelines for Fair
Hiring, composed of three fundamental principles for ensuring
fair hiring practices:
1. U
 tmost respect for the rights of the applicant.
2. E ligibility for all individuals who meet the hiring conditions.
3. M aking all hiring decisions based on a fair and objective
evaluation of the applicant’s ability, aptitude and motivation.
Web

Fairness in Hiring (available only in Japanese)

Recruitment of University Graduates■ Human Resource Development and Skills
Development

In fiscal 2011, we began hiring recent university graduates who
had finished school within the preceding three years. As part ofbuilding a diverse workforce, we have implemented year-roundhiring, to ensure that such graduates are able to start work
shortly after receiving tentative job offers, regardless of theirprior work experience. These recruits receive the same training
as new graduates.

Employee Training Approaches and Trends
We consider human resources to be the cornerstone of ourcompany’s competitive strength. Daiwa Securities is committed
to building human resources to become the sort of professionalorganization capable of fulfilling the corporate vision of “atop class Asian financial services group with a strong andsecure foundation in Japan”. In particular, we believe that thetime when new graduates are just entering the company andgetting their start as employees and members of society is a
critical period for establishing a solid foundation of learning.

Supporting Active Veteran Employees
Daiwa Securities has created a Senior Advisor System as anopportunity for veteran employees to put their many years ofexperience to use. Senior Advisors are dispatched to a regionof their choosing to offer community-based consulting over an

24

The varied curricula of our training programs ensure not onlythat employees acquire the fundamental knowledge needed
for their careers, but also that they learn about and adopt theGroup’s corporate philosophy and commitment to corporatesocial responsibility.
Our employees must have a firm understanding of corporate
ethics and compliance in order to ensure the developmentof sound financial and capital markets–an issue that Daiwa
Securities Group considers an important part of its corporatesocial responsibility. We offer regular training on information
security and compliance to reinforce this understanding.

Daiwa Securities also understands that financial planner
credentials (AFP and CFP) and securities analyst qualifications
are core qualifications for the financial sector. The Group aims tohave all employees acquire at least one of these credentials andis particularly keen to achieve the highest number of employees
in the industry with the Certified Financial Planner (CFP)
certification (the level above Affiliated Financial Planner (AFP)).
Daiwa Securities provides generous support including subsidies
for acquiring credentials so that employees can enhance their
specialized skills as professionals.

Intra-Group Job Postings and the Career Path Change Systems
Education and Training Systems
Daiwa Securities has instituted a Career Path Change Systemthat enables non-career-track employees to transfer to careertrack and regional career-track positions. In the four years from
FY2009 to FY2012, 750 people have moved to career-track andother positions through the system.
We have also instituted a system of intra-Group job postingsfor employees with skills and the desire to realize their potential
to open new career paths. Since the year 2000, 904 employees
have applied and 146 have succeeded.

The Daiwa Securities Group provides training tailored to
employees at each level, founded on the shared policies of
the Group. Each Group company provides its own training,reflecting the skills required within the company’s areas offocus. However, the Group also strives to foster ties acrossGroup companies and a feeling of solidarity by expanding
joint training sessions within the Group, while also improving
administrative efficiency.
One example is the advanced training for selected managers
offered through programs such as the Daiwa Management
Academy and Daiwa Leadership Program. The Group also
provides combined training for mid-level employees to develop
business skills including programs to enhance coaching,negotiation, communication and logical thinking skills.
Daiwa Securities has implemented the Daiwa Basic Program,a two-year intensive educational program for new hires. After
joining the Group, new hires study to build their knowledge ofthe industry and group products as well as skills in matchingcustomers with products and in business protocols throughAnnex Learning under full-time instructors. After this, the new
employees are partnered with employees of similar age butwith more experiences at their places of work in a tutoring
system that provides one-on-one guidance for day-to-day
business operations and offers the best fitting training for each
employee’s level.
In the 2013 fiscal year, we are working to better training
systems and environments for young employees, including the
expansion of our Annex Learning system to include the regional
career-track employees and the extension of the tutoring
system to include second year employees as well.
The Group has also worked to spur the motivation ofyoung employees through the introduction of new careeradvancement opportunities beginning in the third year of
employment.

Evaluations Systems
At the Daiwa Securities Group, we believe that a fair and wellaccepted evaluation system is an indispensable part of keeping
our employees highly motivated in their jobs. Managers within
the group are subject to multifaceted evaluations given by
their subordinates and other relevant departments. The systemseeks to improve the managerial quality and productivity ofthe entire Group by assessing the day-to-day job performanceof management and providing managers with direct feedback
from subordinates and associated staff. The comprehensive
evaluation system also takes into account compliance-related
performances.
We are working to design an evaluation system that motivates
employees at every stage of their careers, from entry and midlevel to veteran employees, and encourages them to reach forthe next stage in positions with greater responsibilities.

■ Initiatives to Create a Pleasant Workplace
Environment
Encouraging Work-Life Balance
One of the Daiwa Securities Group’s targets is to achieve ahigh standard of work-life balance. The Group is committed
to promoting and creating work styles that offer employees abetter balance between their private and professional lives, andwe are working to create an environment where both men andwomen can work in a variety of ways.
Not only do we seek to establish systems that enable diverse
work styles, but we also work to change employee awarenessby ensuring employees regularly leave the office before 7 p.m.,
encouraging them to take their paid holidays and welcoming
family visits to the workplace.
We have also introduced a system that goes beyond legal
minimums to make child or elder care and work mutuallycompatible. A questionnaire on support for balancing childrearing and work was distributed to all group employees infiscal 2012 to better understand how these systems are used
and what employees would like to see improved to aid in the

Support for Employees Earning Credentials
The Daiwa Securities Group strives to improve employee English
skills to adapt to continuing globalization and to shifting corporate
strategies emphasizing Asia. We help employees raise their
TOEIC scores and work to offer accessible test support systems
that apply to all employees, including e-learning platforms. In
addition, we offer group training focused on improving practicalEnglish skills as well as recommending subsidized e-learning
opportunities and English conversation schools for intermediatelevel and advanced learners. Staff members across the Groupare offered an opportunity every month to take the TOEIC exam.
In fiscal 2012, 941 Group employees took advantage of theseopportunities to take the test.

25

consultation services. There are also psychiatrists and clinicalpsychotherapists available to offer mental health consultations.
Because of these efforts, the Group has achieved a high levelof employee health awareness and 99% of employees receive
regular health checkups. When the Group gave presentations
on these results at symposiums held by the Ministry of the
Economy, Trade and Industry and the Tokyo Metropolitan
Government, other companies showed great interest in our
approach.

building of a more livable and pleasant work environment. To
support employees returning to work after parental leave andto ensure a smooth transition back into the workplace, wearrange for discussions between the returning employee and hisor her supervisors before returning to work.
We will continue to develop initiatives aimed at attracting
motivated and skilled employees capable of building an
successful enterprise.

Encouraging Women to Succeed
Mental Health
We are trying to cater better to the interests of our female
employees by introducing thriving female employees as rolemodels in internal publications and providing opportunities forcross-company communication with the aim of increasing thenumber of women in management positions.
Our internal Work-Life Balance website includes a forum
where female executives and department, office and branchmanagers make themselves available to address some of thequestions and concerns from female employees. As the numberof female role models has increased, career planning for womenin the Group has become easier and the number of women
setting their sights on improved careers by transferring to thecareer-track and regional career-track positions has greatly
increased in the last few years. In total, approximately 750
employees transferred to the career track in the four years fromfiscal 2009 to fiscal 2012. The number of women in executive
and managerial positions continues to increase every year.
Continuing to expand the ranks of female managers anddeveloping female leaders who will someday steer Japan’s
financial industry will continue to be an important goal for
Daiwa Securities Group.

Daiwa Securities Group’s Health Support Promotion
Department was established in August 2006 to help employees
maintain and manage their mental and physical health. The
Health Support Promotion Department has two certified clinicalpsychologists on staff to provide consultations to support
Group executives and employees, as well as their families. We
have also established arrangements with outside specialists
so that Group personnel and their families can receive prompt
attention.
We also arrange for occasional talks in all branches anddepartments to broaden awareness of mental health issues andoffer strong support for employees’ mental health.

■ Communication
Communication with Executives and Employees
We believe that communication with executives and employees
is vital to the creation of a healthy and functioning workplaceenvironment. Our communications programs include regularinterviews with the Personnel Department and semi-annual
self-assessment questionnaires. We also regularly conduct aquestionnaire survey on work-life balance. This unfiltered input
from our employees and executives helps us re-examine ourprograms and enhance ongoing improvements efforts.

Initiatives to Improve Employee Health
The Daiwa Securities Group considers employee health an
indispensable asset for both the company and society. Our
Personnel Departments, General Health Development Centerand health insurance associations work closely together toimprove employee health.
The Group has set up an online system for employees toconfirm results and analysis from regular health checkups andfull medical checkups online. The Group also uses internal
communications to educate employees on health information.
Company wellness programs also include a walking program,a smoking cessation program and programs encouraging
employees to undergo cancer exams as well as targeted
programs for female employees encouraging breast cancer anduterine cancer exams and vaccination relevant to some formsof cervical cancer. Beginning in fiscal 2009, employees whose
health checks found problems will find a follow-up confirmation
form (known as a “yellow paper”) enclosed with the resultsof the regular health checkup, to ensure that they seek further
medical advice. Those employees are required to visit a medical
facility within two weeks and submit the completed form to
one of the Group’s General Health Development Centers withthe doctor’s comments. As a result, the majority of employeeswith such findings in their medical exams now visit medical
facilities.
The Daiwa Securities Group has established General Health
Development Centers at the main Group offices. Doctors at
the in-house Centers provide medical services, while staff
industrial physicians and health nurses provide general healthCommunication Among Employees
In October 2007, Daiwa Securities introduced a program forsupporting club activities. This program was created to help
employees enjoy their time off and to deepen their friendships
with colleagues, building more opportunities to share a sense of
camaraderie and solidarity. It is also intended to support worklife balance and facilitate a fuller social life for employees. The
program was expanded and enhanced in fiscal 2009. Under
this program, employee groups that meet certain conditions
are recognized as Daiwa Clubs and Daiwa Circles, which receive
subsidies to cover some of their activity costs. As of March
2013, 18 clubs and four circles are active in the Group.

Relationship with Employee Unions
The questionnaires conducted by the employee’s union amongits members have given the Group greater opportunities
to learn about the opinions of its employees and improve
communication. Employee union membership in 2012 was
6,490.

26

Initiatives for Families
We work to ensure that families share in our executives’ andemployees’ pride to be part of the Group.
Since fiscal 2008, we welcome employees’ families to theworkplace on family visit day to give family members a better
understanding of our company and their jobs. In fiscal 2012,
4,296 family members participated in this program.
Other systems for supporting our employees’ families include
family day leave and the extension of mental health support toemployee families.

27

CSR Report 2013

Social Report

Human Rights Initiative
Approach and Basic StanceIn light of our Corporate Principles and the United Nations Global Compact, we aspire to further improve our corporate
culture, which emphasizes respect for human rights in our basic principles, and improve human rights awarenessactivities. We will continue to implement initiatives relating to recruitment, human resources, and the workforce toensure that our systems are fair and free from discrimination or prejudice.
seeks to address social integration and other human rights issues
from the perspective of industry and is composed of 125
companies (mostly headquartered in Tokyo) with over one million
employees (as of March 2013). Federation members work to
improve their human rights and awareness programs throughmutual research and communication.

Basic Policy for Initiatives Addressing Human Rights
and Social Integration Issues(1) T he Daiwa Securities Group supports and complies with theprotection of human rights as advocated internationally anddoes not infringe on human rights within the limits of its
influence.
(2) T he Daiwa Securities Group educates and instructs Group
employees with accurate information on human rights andsocial integration issues.
(3) A t the same time, the Group views human rights and social
integration issues as our own problem, not somebody else’s
problem and fosters a sensitivity that enables empathy withthe pain of others.
(4) W e provide an equitable working environment that values
people and is free of discrimination.
(5) E ach employee is a member of society unburdened by
prejudice.

■ Initiatives in Fiscal 2012
Immediately following the induction ceremony in April 1, 2012,
365 new employees attended a group training program. The
program sought to not only instill a fundamental
understanding of human rights in the new members of theGroup but also ensure that they all understood andappreciated why our company places such great value onhuman rights. An expanded training program on theunderstanding and appreciation of human rights from a variety
of standpoints was held in July. The program included middle
management level employees (445 people) as well as 143
employees from the management level (department chairs andvice chairs). A contest to draft a Group-wide Human Rights
and Awareness Slogan promoting broader and deeper
understanding of human rights was held from October toDecember. The contest was held among Group employees,
executives and their families, with the winning slogans
featured in the Group magazine. Our Human Rights Week
program (November–December) encouraged multifacetedreflection on human rights. All Group employees andexecutives viewed films on human rights and then adjourned
to Human Rights Awareness Workshops for group discussions
within their divisions. New films with new themes are shown
every year. In 2012, The Internet and Human Rights was
selected as the theme to reflect the rapid increase in theviolation of individual rights via the Internet. In 2012, 11,630
people viewed the video and9,997 executives andemployees took part in theworkshops.
In a new training initiative,
168 Group chief sales managers
attended a one-hour lecture on
human rights by Péter Frankl.

Specific Efforts(1) W e highly value the human rights of every stakeholder andour staff will always address clients, local communities andtheir members with great awareness of human rights.
(2) W e work to ensure that our hiring and recruiting, personnel
evaluations and labor management practices are always fair.
(3) T he Group is continually improving internal human rights
education and awareness programs, including regular training
and feedback and response loops.
May 18, 2011: Human Rights Awareness Promotion Committee■ Human Rights Education and AwarenessIn 1984, Daiwa Securities Group Inc. set up a Human Rights
Awareness Promotion Committee with the objective of extending
our company culture and its core principle of respect for humanrights. The committee is currently chaired by the head officedirector in charge of HR, with the head of HR as deputy chair,along with six division leaders including the heads of thecompliance control division, the communications division and thegeneral affairs department—all active in pursing the committee’s
goals. Outside of the committee, all Group managers (at theoffice, division or branch level) act in a promotional role, working
in line with the Committee’s plans and programs to ensure that
employees correctly understand and acknowledge human rights
and social integration issues through education and awarenessactivities. The Committee revised and released the Group’s Basic
Policy for Initiatives Addressing Human Rights and Social
Integration Issues in May 2011.
Daiwa Securities Group has been a member of the Industrial
Federation for Human Rights, Tokyo, since 1998. The Federation

New Employee Training

28

CSR Report 2013

Social Report

Relationship with Society
Approach and Basic StanceGood corporate citizenship means working together with the local community and engaging in consistentcollaboration with NPOs and NGOs to foster sustainable development. We group our diverse corporate citizenshipinitiatives into four key categories.
1. Education and research activities in economics and finance2. ESG/CSR and Encouraging Volunteerism among executives and employees
3. Support for Culture and the Arts
4. Assistance to area communities inside and outside of Japan through foundations and NPOs

■ 1. E ducation and Research Activities in the
Fields of Economics and FinanceCapitalizing on its accumulated financial and economic
expertise to make public contributions, the Daiwa Securities
Group engages in business-academia collaborations andsupports programs for junior and senior high school students

as well as teachers. We believe that economic and financial
education is important in helping young people build thecapacity to shape the world.

Economic and Financial Education

Sustainable Development of the Japanese Economy in the 21st Century
Educational institutions

Research institutions

Understanding of socialand economic principles

Improve economic andfinancial knowledge

Develop financial
specialists

Disclose research results
Create practical applications

Commercial and businessapplication of research results

Elementary/junior/highschool students

Undergraduate students

Graduate students

ResearchersIntellectual property (IP)/patents

Support teachers
Participate in classes

Provide or endow classes
Dispatch instructors

Provide or endow classes
Dispatch instructors

Joint research
Research support

University-launched venturesand IP headquarters

Group Employee Cooperation

Joint programs with Junior Achievement Japan(Public Interest Incorporated Association)
(1) F inance Park
Junior Achievement Japan established a Finance Park in
Shinagawa, Tokyo in June 2005 and another in Kyoto in January
2007 with the goal of providing a space where junior andsenior high school students can develop and practice lifeplanning skills. The Daiwa Securities Group provides funds for
Junior Achievement’s simulated shops and offices as well as
personnel support.
In fiscal 2012, 2,401 young
people took part in programs
at the Shinagawa Finance Parkand 5,320 participated at the
Kyoto Finance Park.

( 2)Council for Economic Education Japan (CEE-Japan)
CEE-Japan was established in January 2009 to provide
economic education training for schoolteachers. The Daiwa
Securities Group is CEE-Japan’s main sponsor, providing boththe inaugural funding and ongoing support, together withseven other influential companies. As of March 31, 2013, 1,450
teachers have participated in workshops and forums, including
the trial run in 2009.

Finance Park

29

Cooperation with KidZania
KidZania is a theme park built around simulated career
experiences for children. Daiwa presents the Securities
Consulting Pavilions in both the Tokyo and Koshien KidZania
locations. At the Pavilion, children act as securities company
consultants and do field research in neighboring pavilions
including interviews about congestion and hot-selling products,
in response to consultations from their investor customers. The
consultant experience then asks the children to think about thebest investments to recommend to their customers based on
their findings and finally to help their customers to make theirinvestments.
WebEmployees and Executives Involved in Corporate
Citizenship Activities, Donation and Recycling Initiatives
Group employees and executives participate in a wide
range of corporate citizenship activities including local
and international exchanges and charity events. In fiscal
2012, 82 employees voluntarily participated in corporate
citizenship activities on the weekends or after work. Re-use
and recycling activities generated ¥176,164 for donation.

■ 3. Support for Culture and the ArtsThe Daiwa Securities Group provides ongoing support for awide range of cultural and artistic activities. The Group has
been the special sponsor of the Mainichi Shimbun Central
Contest for Book Review Painting for nineteen years, a
tradition that began with the sixth contest. The contest aims
to encourage reading and improve children’s reading skills
by awarding prizes for drawings that express the reader’s
impressions of a book. Prizes are awarded by age group toelementary, junior and senior high school students. The winningdrawings from 2012 were exhibited at 10 Daiwa Securities
branches.
Since 2005, the Group has also been supporting traditional
Japanese cultural activities, including sponsorship of the
top title matches in Shogi and Go (Japanese chess and thegame of Go), the Meijin Title Match (Shogi) and the Honinbo
Tournament (Go).

KidZania Activity Introduction: Securities Company(available only in Japanese)Financial Planning Classroom for Beginners (with sign
language and written interpretation)
Daiwa offers seminars on understanding financial planning andbasic economic knowledge(with sign language and written
interpretation) as a componentof our CSR initiatives. From2013 to 2014, a series of fiveseminars are planned, one
every three months, each withFinancial Planning Classroom fora different theme.
Beginners
Web■ 4. Assistance to communities on both the local
and the international level throughfoundations and NPOs

Financial Planning Classroom for Beginners(available only in Japanese)■ 2. P roviding ESG/CSR topics and Encouraging
Volunteerism among executives and employees

Daiwa Securities Health Foundation (Public Interest
Incorporated Foundation)
The Daiwa Securities Health Foundation was established in1972, in commemoration of the Group’s 30th anniversary,to support medical research. Since 1973, the Daiwa
Securities Health Foundation has supported 30 outstanding
research projects focusing on improved health, medical careand welfare for middle-aged and older people. Since its
founding, it has disbursed ¥30 million every year, composedof 30 separate grants of ¥1 million each. Fiscal 2012 marked
the 39th year of this program, with a cumulative 1,072
recipients having received ¥1,057 million in total.

In addition to economic, financial and ESG information, ourpublic and internal websites provide information on independent
volunteer projects planned and/or managed by the Group as wellas collaborative activities performed with NPOs and community
groups. In our work to encourage as many of our people toparticipate in corporate citizenship initiatives as possible, wewill seek ongoing collaborations with external organizations,strengthen internal communications on volunteering andvolunteer opportunities and continue to pursue increased
opportunities for executives and employees to engage.
CSR Dialogues
We have been engaged in an ongoing series of dialogues on
CSR with specialists from a range of fields, focusing especially on
economy, finance and ESG. The Group has organized over 40
dialogues since the first was conducted in 2004. Please visit our
website for details (Only selected dialogues have been translated
into English). We held four CSR Dialogues over the course of fiscal
2012 on a series of contemporary issues.

Web

Daiwa Securities Health Foundation (available
only in Japanese)

Daiwa Securities Foundation (Public Interest
Incorporated Foundation)
The Daiwa Securities Foundation was established in 1994 tocommemorate the Group’s 50th anniversary. The Foundation
provides grants for volunteer activities in the fields of welfare andmedicine to fulfill its mission of using corporate profit to returna contribution to society. As of fiscal 2012, the Foundation has
given a cumulative total of ¥586 million in Volunteer Activities
Grants to 2,541 organizations.
Since fiscal 2011, the Foundation has focused primarily onorganizations and groups involved in volunteer work responding
to the Great East Japan Earthquake. It has distributed ¥58.31
million in Disaster Volunteer Activities Grants among 127
organizations.

Volunteer Awards
Daiwa Securities issues the President’s Award to recognize
outstanding achievements by executives and employees. The
Group also introduced the Volunteer Award in fiscal 2007,
which is given twice a year to employees and groups involvedin volunteer initiatives and activities that provide ongoingsupport to communities.

Web

30

Daiwa Securities Foundation (available only inJapanese)Daiwa Securities Phoenix Japan Program
In May 2012, Daiwa Securities Group established its Great East
Japan Earthquake Relief Assistance program. The program
donates a portion of management fees from the Daiwa Nippon
Support Fund Vol. 3–Phoenix Japan to local designated NPOs
through Japan NPO Center’s Japan Earthquake Local NPO
Support Fund. The Fund supports NPOs working in the affectedareas to help people reconstruct their lives and communities.
In 2012, the first year of the program, a total of ¥31 million was
distributed to seven different recipients (including a ¥1.5 million
grant for joint training).

Daiwa Anglo-Japanese Foundation (Chartered in the UK)
The Daiwa Anglo-Japanese Foundation is a UK charity
established in 1988 in part with contributions from Daiwa
Securities, for fostering closer ties between Britain and Japan.
Principal activities include:(1) A warding grants to individuals, institutions andorganizations working to promote ties between the UK
and Japan(2) E nabling British and Japanese students and academics tofurther their education by providing opportunities for joint
research and supporting exchanges and other bilateral
initiatives(3) A warding Daiwa Scholarships for British graduates tostudy Japanese and undertake work assignments in Japan(4) O rganizing a year-round calendar of events to improveunderstanding of Japan in the UK
The Foundation’s Tokyo Office provides local assistance to
Daiwa Scholars (students from the UK), administers grantapplications from Japan and collaborates with other institutions
promoting Anglo-Japanese relations. The Daiwa Scholars
program has accepted 147 UK students since its establishment.
The Foundation has to date awarded grants for 2,615 projects,
with overall funding, including other grants and seminars heldat the London headquarters’ Japan House totaling around¥3,481 million (as of March 2013).
Web

Web

Daiwa SRI Fund Grant Program
The Daiwa SRI Fund Grant Program provides grants to JapaneseNPOs working in fields involving human security. The programsupports resource and capacity development for designatedNPOs by subsidizing personnel and training program costs.
The program is operated in collaboration with the designated
NPO Civil Society Initiative Fund and sponsored by donations
from the management fees of the Daiwa SRI Fund. In 2012,
the Daiwa SRI Fund continued its support for the Big Issue
Foundation designated NPO.
Grants Awarded: 26 projects (16 new grants and 10 ongoing)
to 35 staff across 16 groups, totaling ¥45.8 million (as of March2013).

Daiwa Anglo-Japanese Foundation

Daiwa Securities Group Tsunami Reconstruction FundWe established the Daiwa Securities Group Tsunami
Reconstruction Fund on March 9, 2005, to provide recovery
assistance to regions affected by the December 26, 2004
Sumatra Earthquake and Indian Ocean Tsunami. Beginningin fiscal 2005, this fund has provided long-term support forrecovery, disbursing ¥10 million annually for a ten-year period
for a total of ¥100 million. Established as a part of the Asian
Community Trust (ACT), the Daiwa Securities Group Tsunami
Reconstruction Fund provides grants to local NPOs in the threehardest hit countries: Indonesia, Sri Lanka and India. These
efforts offer assistance across four fields: mental health carefor children, implementation and utilization of microfinancing,
provision of educational opportunities for children and sharing
and dissemination of tsunami disaster prevention knowledge
and exchange and cooperation activities among those who
suffered. Asian Community Center 21 (ACC21, a designatedNPO) functions as the executive office for ACT, undertaking
program selection and activity monitoring, while the Sumitomo
Trust & Banking Co., Ltd., acts as fund custodian. Bothorganizations are leveraging their skills and capacities to provide
better assistance. The Fund’s objective is to provide long-term
recovery assistance measures rather than offering temporary
donations, and it utilizes financial systems to provide assistancethrough charitable trusts, microfinance and other avenues. In
addition, ACC21’s oversight and monitoring makes it possible to
make a detailed assessment of the aid activities.
Web

Daiwa Securities Phoenix Japan Program (available
only in Japanese)Web

Daiwa SRI Fund Grant Program (available only inJapanese)3keys Program
In 2012, Daiwa Securities Group began offering support to the
3keys Program, a designated NPO working to improve learning
opportunities in child protection facilities. The program, which
also receives some funding under the Daiwa SRI Fund, helps tofoster greater confidence and ambition in children.
Kopernik Program
Kopernik is a US-based NPO established in 2009 with the goalof improving quality of life and reducing poverty in developing
countries; its Japan operations were activated in 2010. Kopernik hasdeveloped a program to enable contributors in developed countries
to go online and donate to NPOs in developing countries or areasof their own choosing by selecting needed products such as simple
water purifiers and solar lamps. Kopernik shares details of recipient
NPO activities supported by the donation on its website to ensuretransparency. Some of the Daiwa Eco Fund and Russell Global
Environmental Technology Fund’s donations to Kopernik are used tocover the organization’s administrative costs. Products and recipientsare selected in light of their consistency with the principles of thesefunds.
Web

Daiwa Securities Group Tsunami Reconstruction Fund(available only in Japanese)31

Kopernik Program (available only in Japanese)Daiwa Securities Capital Markets Co., Ltd. Hong Kong
Ltd. First Class Program
Daiwa Securities Capital Markets Hong Kong established a CSR
panel in 2012, as a forum for interested members to discuss andpromote CSR initiatives.
The panel composed of employees and executives discussed
ways that the company can make new contributions to society
and selected “Children and Education” as its focus. The panel
wants to contribute toward addressing the issues of poor accessto formal education and a lack of teachers and school facilities
that burden many countries in Asia.
The program was given the name “First Class,” and iscurrently being advised by intermediary aid groups to assess
their needs. Plans are underway to involve our employees in the
project on a voluntarybasis in the future.

Social Business College
The Daiwa Securities Group helped to create the Social BusinessCollege as a space to examine sustainable business models
and finances for social businesses. Since October 2010, theprogram has held seminars in alternate months in association
with Music Securities Inc. The final seminar in the two-year
program was held in September 2012. The seminar welcomed
Music Securities CEO Masami Komatsu and played host to lively
discussions on the topic of “Social Business: Examining 21stCentury Business.”
Web

Social Business College

Table for Two Program
The Daiwa Securities Group contributes to the Table for Two(TFT) Program. The program is organized by Table for Two, aninternationally designated NPO, and aims at tackling “foodimbalance”: the recognition that developed countries are
suffering from obesity and lifestyle diseases while hunger
persists in developing countries.
23 vending machines in the Group’s Tokyo Head Office were
stocked with healthy drinks in February 2013; the purchase of
one of these drinks makes an automatic donation of ¥10 tothe charity. The Toyocho Center Building employee cafeteria,
used by employees of the Daiwa Securities Business Center,also began participating in the program in March 2013. Whencustomers order an item from the TFT menu, or purchase theirmeals with a TFT card, a ¥20 donation is made to pay for aschool lunch in a developing country.

32

CSR Report 2013

Environmental Report

Environmental Initiatives
Approach and Basic Stance

The natural environment is the very foundation of human life, so protecting it is essential to sustainable societies. We
strive to help resolve environmental issues through our financial capabilities in the development of products that can
reduce environmental burden, and also by making investments that help to make environmental technologies andinfrastructure more widely available. We are working to establish a system that efficiently collects data on Daiwa's
environmental impact. We are also focused on raising employees' environmental awareness to empower them toreduce environmental burden in daily business operations.

■ Environmental Management

Environmental Vision

Each company in the Group adopts and implements anenvironmental management policy. Every other month, a
representative from each Group company attends meetingsof the Environmental Management Council to share data,
ideas and views on environmental issues. This Council, and theGroup as a whole, is constantly seeking ways to improve andimplement environmental management systems.
The Group compiles and reports quantitative data on its
environmental impact each year, including details such asenergy and water consumption, CO2 emissions, paper usage,
waste disposal and recycling volume.
Daiwa Institute of Research Business Innovation Ltd.’s strives
to run its operations environmental friendly and complies with
ISO14001.

The Group is dedicated to protecting the precious global
environment and preserving it for future generations byleveraging financial capabilities.

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

Basic Environmental Policies

1. M
 ake positive environmental contributions through ourcore business activities
We shall seek to develop and provide financial products andservices that promote a low-carbon, recycling-oriented andsymbiotic society.

■ Carbon dioxide emissions
Energy consumption at the Daiwa Securities Group’s
domestic offices (on a carbon dioxide emissions basis)
fell by 17.4% in fiscal 2012 compared with the previous
year as a result of initiatives to conserve energy. Electricity
consumption at overseas offices fell by 14.3% from theprevious fiscal year. (see CSR Related Data>Environment for
details)

2. Implement an environmental management system
We shall implement an environmental management systemand constantly seek new ways to improve environmental
activities. In addition, we shall support environmental
education and publicity efforts, while promoting
environmental protection efforts by employees.
3. T ake steps to save natural resources, reduce energy
consumption, and promote biodiversity
We shall continue to progress in our efforts to reduce the useof natural resources and energy, and seek ways to improvematerials-and energyefficiency (including efforts to improvebusiness efficiency). We shall also take steps to reducewater use and reduce, reuse and recycle other materials
to contribute to a more environmentally friendly society.
Furthermore, considering the importance of biodiversity, we
shall seek a symbiotic relationship with the environment anduse safe, clean methods of materials procurement.

■ Other Environmental Impacts
Volume of Copy Paper / Forms used
We facilitated the transition to a paperless office by appointing
an employee to be in charge of the paperless transition at
Daiwa Securities Group Inc. As a result of these endeavors, thevolume of copy paper used fell about 8.1% from the previous
fiscal year. Moreover, about 32.9% (based on monetary value)of the copy paper used consisted of Green Procurement
Network (GPN) compatible products.

4. P
 romote environmental communication
Working in concert with business partners, the local
community, NGOs and NPOs, we shall actively disseminate
information about environmental issues, and communicate
our concern for the environment to customers and society atlarge.
5. S trictly observe environmental regulations
We shall always endeavor in environmental assurance,
observing environmental laws and regulations in addition to
the Group’s environment policies.
(May 22, 2012)

Takashi Hibino
Daiwa Securities Group Inc.
President and CEO

33

e-Member Services (Daiwa Securities)■ Information dissemination

Daiwa Securities offers its customers the e-Member service,
which allows them to receive document transmissions (including
account balance statements and transaction reports) electronicallyinstead of in paper format. In general, these electronic records aremaintained for five years and can be accessed at any time. They
can also be saved locally to the client’s computer or printed out.
Members who have applied for the e-Member service areoffered benefits, including no management fees on domestic
stock trading accounts and no transaction fees on deposits andwithdrawals made via internet.
The paperless system not only saves natural resources but also
adds to customer convenience.

Dissemination of ESG Reports by Daiwa Institute of Research■ Initiatives to Reduce Environmental Impact■ Environmental Products and Services

Energy-Conscious Building Facility Renewals

Our Impact Investment products are part of our contribution
to solving global environmental issues. These products offer
customers opportunities to contribute to solving social andenvironmental issues through bond investments and investment
trusts.
Impact Investment bonds handled during fiscal 2012 included
Agri Bonds and Green Bonds. We offered a total of 38.8 billion
yen worth of these bonds, primarily to retail investors. We also
underwrite Impact Investment bonds aimed at institutional
investors.
Our investment trust products focusing on environment
include the Daiwa SRI Fund and the Daiwa Eco Fund.

The Daiwa Institute of Research carries out research in areas
such as renewable energy, emissions trading, SRI, and corporate
governance. It publishes the findings commentary via its
quarterly research review and on its website. The ESG News
section of the website specifically devoted to topics our analysts
find worthy of attentions. As of the end of March 2013, theDaiwa Institute of Research had published 59 articles on issues
relating to ESG.
Web

Daiwa Securities sales branches use equipment certified under
the Top Runner standards when building facilities (including airconditioning, electric substation equipment and water supply/
sewage facilities) are installed or replaced, to ensure reduced
environmental impact. The Top Runner standards are stipulated
under the Japanese Act on the Rational Use of Energy to establish
criteria for energy saving products that manufacturers will strive
to meet. The certification is intended to spur manufacturers to
produce higher levels of efficiency than are available in commercial
products today.

DIR>Research>ESG (available only in Japanese)■ Climate Change Initiatives

Installation of Building Specific Heat Sources(Shinjuku Maynds Tower)

Daiwa Securities Group promotes public-private partnerships
to mitigate climate change through the Group’s core business
functions.
We are working to help raise funds needed for climatechange countermeasures in developing countries. Specifically,
we are marketing the Green Bonds and Water Bonds issued by
the World Bank and the Asian Development Bank and helping
redirect Japanese risk-taking funds toward renewable energy
and water infrastructure projects in developing countries. We
are also developing our own mega-solar energy generation
project to contribute to the reduction of CO2 emissions. On
March 19, 2013, the Japan Securities Dealers Association
published its “Action Plan for Environmental Issues from Fiscal
2013”. The plan calls for all member securities dealers to reduce
their per square meter electricity consumption in all business
functions by 10% from 2009 levels by the year 2020. We haveadopted this goal as a component of our ongoing efforts to
reduce our environmental impact.

Building specific heat sources were installed and put into use inJune of 2012 in the Shinjuku Maynds Tower building (owned by
Daiwa Office Investment Corporation and operated by Daiwa
Estate Asset Management). These heat sources will allow thebuilding to produce a portion of its air-conditioning coolingwater, which is otherwise provided by the district heating
and cooling company. This change has a potential to reduce
annual CO2 emissions by an estimated 833 tons (compared to asingle tower with over 7,000m2 of floor area). The installationcompany, ESCO services, provides ongoing maintenance anda guarantee of reduced energy consumption. With thesechanges, the Shinjuku Maynds Tower is expected to achieve thePhase 1 CO2 reduction targets under the Tokyo Metropolitan
Ordinance on Environmental Protection.

Joining a Green Purchasing Network(Daiwa Real Estate Asset Management)
Daiwa Real Estate Management joined a green purchasing networkand enacted Green Procurement Guidelines in April 2012 topromote the procurement of products with lower environmental
burdens.

34

CSR Report 2013

Economic Report

Delivering Economic Value to Stakeholders■ Revenues in the Economic Report

Revenue Breakdown in the Economic Report in fiscal 2012
Non-operating income¥14,500 million
2.6%

For the purpose of this Economic Report, revenues represent
the total of all revenues received by the Daiwa Securities
Group (consolidated) in fiscal 2012—operating revenues,
non-operating income and extraordinary gains. In fiscal 2012,
operating revenues accounted for 95.6% of revenues.

Extraordinary gains¥9,753 million
1.8%

Operating revenues¥525,411 million
95.6%■ Distribution of Economic Value to Stakeholders
Economic value for the purpose of this Economic Report iscalculated as revenues minus interest expenses (less interest
paid to our stakeholders), other operating expense, thecost of sales, selling, general and administrative expenses(less personnel costs, taxes, and expenditure for corporate
citizenship activities), non-operating expenses (less interestpaid), and extraordinary losses.

Shareholders
In fiscal 2012, the Group paid an interim dividend of ¥3 pershare and a year-end dividend of ¥12 yen per share, for a total
annual dividend of ¥15 yen per share.

Executives and Employees
The distribution of economic value to executives and employees
is the figure for personnel expenses (including reserves forsalaries and bonuses, as well as welfare program benefits
and social insurance contributions). Daiwa has built a faircompensation system that is highly acceptable to all, in order toimprove employee motivation and maximize the value provided
to all stakeholders.

Government
According to the Daiwa Securities Group’s financial accounting,the tax amount paid is the sum of current income taxes,
deferred income taxes, and other taxes and duties including
consumption tax.

Creditors
The Group pays interest to creditors.

Minority Shareholders
This is the profit and loss returned to the minority shareholdersof the Daiwa Securities Group companies.

Society
Regardless of the ups and downs of the business cycle, we aim
to provide stable funding for our corporate citizenship activities.
See “CSR Related Data>Corporate Citizenship Initiatives andExpenditures” in the “Relationship with Society” section for abreakdown of these expenditures.
Distribution of Economic Value to Stakeholders in FY2012

Revenues in the
Economic Report¥549,664 million

Economic value¥304,370 million

Dividends to shareholders
3.4%Interest expenses¥23,269 million
Other operating expense¥37,972 million

Government
6.0%

Costs related to sellingand general administrative
expenses¥170,269 million
Revenues

Expenditure

Other expenses¥13,784 million

35

Creditors
15.9%
Internal reserves
20.6％

Minority shareholders
2.4％
Society
0.2%

Executives
and employees
51.5%

CSR Report 2013

■ Third-party Opinion
with concrete and direct stakeholders in the Group’s activities
and for reflecting that input in CSR objectives and evaluations. I
believe the Group should also give a clear indication of how thesuggestions and comments in this third-party opinion piece would
be reported and acted upon. Regarding due diligence, I would liketo see an avenue for the company’s risk management frameworks,
which currently center on a financial perspective, to incorporatea societal impact frame of reference as well. Therefore, I
recommend the development of a due diligence frameworkfor social responsibility to mitigate the risks of Group initiatives
creating adverse impacts on society.
Relations with customers, specifically the Group’s stateddedication to proactive post-sale service (aftercare), arevery important in adapting to coming shifts in the economic
environment from savings to investing. Investor trust obviously
must be gained by first using appropriate guidance and solicitation
practices. To further strengthen this trust, I recommend asystematic implementation of clear explanations for market
fluctuations and losses, as well as appropriate services for older
customers.
In the Group’s relationships with its employees, I am happy to
see the Group being proactive in the promotion of women to
management levels as well as increasing the number of employeestransferring to career-track positions. However, the ratio of
women in executive and management positions remains lower
than the industry average, and it will be necessary to renew andreinforce these efforts.
The Group’s efforts to make societal contributions throughthe financial system are worthy of praise, especially the Daiwa
Tsunami Reconstruction Fund public trust and its associatedapplication of micro-financing and the Daiwa Securities Phoenix
Japan Program’s use of a portion of investment income to provide
disaster recovery assistance. However, the level of support for
employee participation in volunteer activities remains weak.
Having a variety of socially beneficial experiences outside of work
has a great influence on employee social consciousness and ethics
in the workplace as well. I would like to see the Group pursue
greater participation among employees in volunteer activities that
contribute to staff training and development.

Sachiko Kishimoto
Executive Director,
Public Resources Foundation(Public Interest Incorporated Foundation)

The Daiwa Securities Group currently reports on its environmental,social, and governance practices in two separate documents:
its CSR report and its Annual Report. The Group is currently
considering a shift to a single integrated report in the future. I
would like give my opinion here on the contents of the CSR Report
2013.
The Group’s CSR reports are comprehensive and follow the GRI’s
sustainability reporting guidelines and supplementary documents
for financial services sector businesses. They clearly and faithfully
describe the Group’s efforts to address the guidelines of
ISO26000.
The CSR specifically addresses the Group’s efforts to take anactive lead in increasing impact investment in Japan by bothunderwriting and selling a variety of related bonds and hosting
impact investment forums to increase public awareness. I findthese efforts to direct their financial capacities into contributions
toward sustainable society highly commendable. The Group’s
newly established “Great East Japan Earthquake Small and MidSized Enterprise Reconstruction Support Fund” is also doing goodwork by starting a program of long-term financial support forunlisted companies in areas still recovering from the disaster.
I would also like to recommend some future improvements toenhance the Group’s specific initiatives.
I would like to see the Group’s CSR management include
deeper dialogues with stakeholders, along with the creation ofa due diligence framework for social responsibility. Currently,
dialogues with stakeholders appear to be limited to the Group’s“Understanding CSR through Dialogues” interviews with experts
in relevant fields. I recommend establishing a process for dialogue■ Response toThird-party Opinion

We will revisit what ISO26000 aims for, not being satisfied withjust checking boxes in producing our CSR report, and endeavor
to engage in dialogues with our stakeholders to grasp better the
influences our activities, both business and corporate citizenship,
may have upon the society to seek appropriate measures.
We believe that continuing the promotion of work-lifebalance and supporting the careers of our female employees byhelping them to reach management-level positions is importantto building the value of our business.
We are proud to continue our efforts to turn our financial
capabilities toward contributing to building a sustainable
society. Our Group is working to encourage employee
volunteerism. We are implementing volunteer awards to giverecognition to employee volunteer work Daiwa Securities
Group will continue to pursue new opportunities to makebetter and more diverse contributions to society.

Koichi Matsushita
Executive Managing Director

We are grateful for your valuable opinion on the Daiwa
Securities Group’s CSR Report 2013. Receiving andacknowledging frank opinions and honest suggestions is an
important part of the ongoing process of understanding andliving up to society’s expectations in order to earn its trust andrespect.
You suggested a system for due diligence in social responsibility.

36

CSR Report 2013

■ Third-party Evaluations
Name

Evaluation

Dow Jones Sustainability World
Indexes Member 2012/13

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 UnitedStates and Sustainable Asset Management (SAM) of Switzerland. Daiwa Securities
Group Inc. has been included in DJSI World for 14 consecutive years.

FTSE4Good Index

FTSE is a subsidiary of the UK’s Financial Times and the London Stock Exchange. It
develops global indexes and provides data for investment. Daiwa Securities Group
Inc. has been included in the FTSE4Good, an index of socially responsible companies
compiled by FTSE, for seven consecutive periods since September 2006.

Certified Family-friendly Employer

Shown at left is the certification symbol for family-friendly employers provided by
Japan’s Ministry of Health, Labour and Welfare’s based on the Act on Advancementof Measures to Support Raising the Next Generation of Children. In addition to
Daiwa Securities Group Inc. obtaining certification as a family-friendly employer onJune 9, 2008. Daiwa Securities, Daiwa Securities Capital Markets, Daiwa Institute of
Research Holdings, Daiwa Institute of Research, Daiwa Institute of Research Business
Innovation and Daiwa Securities Business Center also received this certification.

Work-Life Balance

The Daiwa Securities Group has earned high praise from a range of externalorganizations for its initiatives to provide employees with a more supportive work
environment that is conducive to work-life balance.
• Ministry of Health, Labour and Welfare organized in “evenly-balanced promote
enterprise award” family-friendly corporate sector, “Tokyo Labor Bureau ExcellenceAward” (2012)• Ranked 7th in “the best 100 company for women to play an active role” Nikkei
WOMAN (June 2012 issue)• The Work-Life Balance Award winner sponsored by Toyo Keizai Inc. at “the Third
Diversity Management Award” (February 2012)GRESB 2012 “Green Star”

The Global Real Estate Sustainability Benchmark (GRESB) awarded its highest
recognition, a Green Star, to Daiwa Real Estate Asset Management subsidiary Daiwa
Office Investment Corporation.

SMBC Sustainability Certification

The Daiwa Ginza Building, owned by Daiwa Office Investment Corporation, wasgiven a “gold” ranking under the SMBC Sustainable Building Assessment Loan
Program (performed by Sumitomo Mitsui Banking Corporation). The E-Space Tower
received a “silver” certification.

Principles for Financial Action for the
21st Century-Good Practices

Daiwa Securities Group’s Impact Investment initiatives received “Good Practices”
recognition in the Asset Management, Securities and Investment Banking Sector,
under Principles for Financial Action Towards a Sustainable Society (the Principles for
Financial Action for the 21st Century) promoted by the Ministry of the Environment.

37

CSR Report 2013

■ G3.1 GRI/ISO26000 Content Index
GRI Application Levels
In compiling the Daiwa Securities Group Sustainability Report 2013, reference was made to Global Reporting Initiative (GRI) Guidelines(3.1 Edition) and the Financial Services Sector Supplement (2008).
The guidelines set out a series of standard levels (GRI application levels) based on regulations outlined therein that companies compilingreports may apply to ensure that their reports are compliant with GRI guidelines. We believe that the Daiwa Securities Group
Sustainability Report 2013 meets the reporting standards for GRI Report Application Level B.

G3.1 GRI/ISO26000 Content Index
Item

Indicator

Link

ISO26000
Core Social Responsibility Subjects & Themes

Clauses

1 Strategy and Analysis

1.1Statement from the most senior decisionmaker of the organization (e.g., CEO, chair, or
equivalent senior position) about the relevance of sustainability to the organization and its
strategy.

Message from the CEO/
Message from the Chairman

1.2

Description of key impacts, risks, and opportunities.

Message from the CEO/
Message from the Chairman
CSR Management: Performance and Targets

Organizational governance

6.2

Organizational governance

6.2

2 Organizational Profile
2.1

Name of the organization.

Daiwa Securities Group Profile

2.2

Primary brands, products, and/or services.

Daiwa Securities Group Profile
Social Responsibilities of the Financial Industry

2.3

Operational structure of the organization, including main divisions, operating companies,
subsidiaries, and joint ventures.

Daiwa Securities Group Profile

2.4

Location of organization’s headquarters.

Daiwa Securities Group Profile

2.5

Number of countries where the organization operates, and names of countries with either major operations or thatare specifically relevant to the sustainability issues covered in the report.

Daiwa Securities Group Profile

2.6

Nature of ownership and legal form.

Daiwa Securities Group Profile

2.7

Markets served (including geographic breakdown, sectors served, and types of customers/
beneficiaries).

Daiwa Securities Group Profile

2.8

Scale of the reporting organization, including:・Number of employees;
・Number of operations;
Daiwa Securities Group Profile
・Net sales (for private sector organizations) or net revenues (for public sector organizations);・Total capitalization broken down in terms of debt and equity (for private sector organizations);
and・Quantity of products or services provided.

2.9

Significant changes during the reporting period regarding size, structure, or ownership including:・The location of, or changes in operations, including facility openings, closings, andexpansions; and・Changes in the share capital structure and other capital formation, maintenance, andalteration operations (for private sector organizations).

Daiwa Securities Group Profile

2.10

Awards received in the reporting period.

Third-party Evaluations

3 Report Parameters
Report Profile
3.1

Reporting period (e.g., fiscal/calendar year) for information provided.

Contents/Editorial Policy

3.2

Date of most recent previous report (if any).

Contents/Editorial Policy

3.3

Reporting cycle (annual, biennial, etc.)

Contents/Editorial Policy

3.4

Contact point for questions regarding the report or its contents.

Contents/Editorial Policy

Report Scope and Boundary
3.5

Process for defining report content, including:・Determining materiality;
・Prioritizing topics within the report; and・Identifying stakeholders the organization expects to use the report.

Daiwa Securities Group Corporate Principles
and Key Issues

3.6

Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures,
suppliers).

Contents/Editorial Policy

3.7

State any specific limitations on the scope or boundary of the report.

Contents/Editorial Policy

3.8

Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, andother entities that can significantly affect comparability from period to period and/or between
organizations.

CSR Related Data

3.9

Data measurement techniques and the bases of calculations, including assumptions andtechniques underlying estimations applied to the compilation of the Indicators and otherinformation in the report.

CSR Related Data

38

3.10

Explanation of the effect of any restatements of information provided in earlier reports, and thereasons for such re-statement (e.g., mergers/ acquisitions, change of base years/periods, natureof business, measurement methods).

Not applicable

3.11

Significant changes from previous reporting periods in the scope, boundary, or measurement
methods applied in the report.

Not applicable, because there have been no
significant changes since the previous report

GRI content index
3.12

Table identifying the location of the Standard Disclosures in the report.

This table references GRI content

Policy and current practice with regard to seeking external assurance for the report.
If not included in the assurance report accompanying the sustainability report, explain the scope andbasis of any external assurance provided. Also explain the relationship between the reportingorganization and the assurance provider (s).

Third-party Opinion

Assurance
3.13

Verification

7.5.3

Organizational governance

6.2

4 Governance, Commitments, and Engagement
Governance
4.1

Governance structure of the organization, including committees under the highest governance body responsible
for specific tasks, such as setting strategy or organizational oversight.

Corporate Governance

4.2

Indicate whether the Chair of the highest governance body is also an executive officer (and, if so, their function
within the organization’s management and the reasons for this arrangement).

Corporate Governance

4.3

For organizations that have a unitary board structure, state the number and gender of members of the highest
governance body that are independent and/or non-executive members.

Corporate Governance

4.4

Mechanisms for shareholders and employees to provide recommendations or direction to thehighest governance body.

Corporate Governance

4.5

Linkage between compensation for members of the highest governance body, senior managers,
and executives (including departure arrangements), and the organization’s performance(including social and environmental performance).

Corporate Governance

4.6

Processes in place for the highest governance body to ensure conflicts of interest are avoided.

Corporate Governance

4.7

Process for determining the composition, qualifications, and expertise of the members of thehighest governance body and its committees, including any consideration of gender and otherindicators of diversity.

Corporate Governance

4.8

Internally developed statements of mission or values, codes of conduct, and principles relevant toeconomic, environmental, and social performance and the status of their implementation.

Daiwa Securities Group Corporate Principles
and Key Issues

4.9

Procedures of the highest governance body for overseeing the organization’s identification andmanagement of economic, environmental, and social performance, including relevant risks andopportunities, and adherence or compliance with internationally agreed standards, codes ofconduct, and principles.

CSR Management (CSR Promotion System)

4.10

Processes for evaluating the highest governance body’s own performance, particularly withrespect to economic, environmental, and social performance.

Corporate GovernanceCommitments to External Initiatives
Compliance
Risk Management
IT Governance, Disclosure, and Information Security

4.11

Explanation of whether and how the precautionary approach or principle is addressed by theorganization.

4.12

Externally developed economic, environmental, and social charters, principles, or other initiatives
to which the organization subscribes or endorses.

Social Responsibilities of the Financial Industry

Memberships in associations (such as industry associations) and/or national/ international
advocacy organizations in which the organization:
・Has positions in governance bodies;・Participates in projects or committees;
・Provides substantive funding beyond routine membership dues; or・Views membership as strategic.

Principal Member Qualifications- Nippon Keidanren- Japan Securities Dealers Association- Work-Life Balance Promotion Model
Project by the Ministry of Health, Labour andWelfare- The Multi-stakeholder Forum on Social
Responsibility for a Sustainable Future- UNEP-FI
- PRI
- CDP
- Global Compact Japan Network

4.13

Stakeholder Engagement

4.14

List of stakeholder groups engaged by the organization.
・Civil society;・Customers;
・Employees, other workers, and their trade unions;・Local communities;
・Shareholders and providers of capital; and・Suppliers.

Daiwa Securities Group Corporate Principles
and Key Issues

4.15

Basis for identification and selection of stakeholders with whom to engage.

Daiwa Securities Group Corporate Principles
and Key Issues

4.16

Approaches to stakeholder engagement, including frequency of engagement by type and by
stakeholder group.

Daiwa Securities Group Corporate Principles
and Key Issues
Relationship with Customers
Relationship with Shareholders and Other Investors
Relationship with Executives and Employees
Relationship with Society

4.17

Key topics and concerns that have been raised through stakeholder engagement, and how theorganization has responded to those key topics and concerns, including through its reporting.

Relationship with Customers
Relationship with Shareholders and Other Investors
Relationship with Executives and Employees
Relationship with Society

39

5 Management Approach and Performance Indicators
Economic
Disclosure on Management Approach

Message from the CEO/
Message from the Chairman
Delivering Economic Value to Stakeholders

Organizational governanceCommunity involvement and development

6.2
6.8

Performance Indicators
Economic Performance
EC1.

CORE

Direct economic value generated and distributed, including revenues, operating costs, employeecompensation, donations and other community investments, retained earnings, and payments tocapital providers and governments.

CSR Related Data
Delivering Economic Value to Stakeholders

Community involvement and development
Community involvement
Wealth and income creation
Social investment

6.8
6.8.3
6.8.7
6.8.9

EC2.

CORE

Financial implications and other risks and opportunities for the organization’s activities due toclimate change.

Social Responsibilities of the Financial Industry

Climate change mitigation and action

6.5.5

EC3.

CORE

Coverage of the organization’s defined benefit plan obligations.

Annual Report 2013

EC4.

CORE

Significant financial assistance received from government.

Impact is insignificant

Market Presence
ADD

Range of ratios of standard entry level wage by gender compared to local minimum wage atsignificant locations of operation.

Impact is insignificant, due to the nature of ourbusiness

Discrimination and vulnerable groups
Conditions of work and social protection
Community involvement and development

6.3.7
6.4.4
6.8

EC6.

CORE

Policy, practices, and proportion of spending on locally-based suppliers at significant locations ofoperation.

Impact is insignificant, due to the nature of ourbusiness

Promoting social responsibility in the value
chain
Community involvement and development
Employment creation and skills development
Wealth and income creation

6.6.6
6.8
6.8.5
6.8.7

EC7.

CORE

Procedures for local hiring and proportion of senior management hired from the local community
Not reported
at locations of significant operation.

Community involvement and development
Employment creation and skills development
Wealth and income creation

6.8
6.8.5
6.8.7

Relationship with Society (2. Providing ESG/CSR
topics and Encouraging Volunteerism among
executives and employees)

Economic, social and cultural rights
Community involvement and development
Community involvement
Education and culture
Employment creation and skills development
Technology development and access
Wealth and income creation
Social investment

6.3.9
6.8
6.8.3
6.8.4
6.8.5
6.8.6
6.8.7
6.8.9

Not applicable

Economic, social and cultural rights
Promoting social responsibility in the value
chain
Respect for property rights
Access to essential services
Community involvement and development
Employment creation and skills development
Technology development and access
Wealth and income creation
Social investment

6.3.9
6.6.6
6.6.7
6.7.8
6.8
6.8.5
6.8.6
6.8.7
6.8.9

Environmental Initiatives(Approach and Basic Stance)
Environmental Initiatives(Environmental Management)

Organizational governance
The Environment

6.2
6.5

The Environment
Sustainable resource use

6.5
6.5.4

The Environment
Protection of the environment & biodiversity,and restoration of natural habitats

6.5
6.5.6

EC5.

Indirect Economic Impacts

EC8.

EC9.

CORE

ADD

Development and impact of infrastructure investments and services provided primarily for publicbenefit through commercial, inkind, or pro bono engagement.

Understanding and describing significant indirect economic impacts, including the extent of
impacts.

Environmental
Disclosure on Management Approach
Performance Indicators
Materials
EN1.

CORE

Materials used by weight or volume.

Not applicable

EN2.

CORE

Percentage of materials used that are recycled input materials.

Not applicable

EnergyEN3.

CORE

Direct energy consumption by primary energy source.

CSR Related Data

EN4.

CORE

Indirect energy consumption by primary source.

CSR Related Data

EN5.

ADD

Energy saved due to conservation and efficiency improvements.

CSR Related Data

EN6.

ADD

Initiatives to provide energy-efficient or renewable energy based products and services, andreductions in energy requirements as a result of these initiatives.

CSR Related Data

EN7.

ADD

Initiatives to reduce indirect energy consumption and reductions achieved.

CSR Related Data

EN8.

CORE

Total water withdrawal by source.

CSR Related Data

EN9.

ADD

Water sources significantly affected by withdrawal of water.

Impact is insignificant

EN10.

ADD

Percentage and total volume of water recycled and reused.

Not reported

Water

Biodiversity
EN11.

CORE

Location and size of land owned, leased, managed in, or adjacent to, protected areas and areasof high biodiversity value outside protected areas.

Not applicable

EN12.

CORE

Description of significant impacts of activities, products, and services on biodiversity in protectedareas and areas of high biodiversity value outside protected areas.

Not applicable

EN13.

ADD

Habitats protected or restored.

Not applicable40

EN14.

ADD

Strategies, current actions, and future plans for managing impacts on biodiversity.

Not reported

The Environment
Protection of the environment & biodiversity,and restoration of natural habitats
Community involvement

6.5
6.5.6
6.8.3

EN15.

ADD

Number of IUCN Red List species and national conservation list species with habitats in areas
affected by operations, by level of extinction risk.

Not applicable

The Environment
Protection of the environment & biodiversity,and restoration of natural habitats

6.5
6.5.6

The Environment
Climate change mitigation and action

6.5
6.5.5

The Environment
Prevention of pollution

6.5
6.5.3

Not applicable

The Environment
Prevention of pollution
Sustainable resource use
Protection of the environment & biodiversity,and restoration of natural habitats

6.5
6.5.3
6.5.4
6.5.6

Emissions, Effluents, and Waste
EN16.

CORE

Total direct and indirect greenhouse gas emissions by weight.

CSR Related Data

EN17.

CORE

Other relevant indirect greenhouse gas emissions by weight.

CSR Related Data

EN18.

ADD

Initiatives to reduce greenhouse gas emissions and reductions achieved.

CSR Related Data

EN19.

CORE

Emissions of ozone-depleting substances by weight.

Impact is insignificant

EN20.

CORE

NOx, SOx, and other significant air emissions by type and weight.

Impact is insignificant

EN21.

CORE

Total water discharge by quality and destination.

Impact is insignificant

EN22.

CORE

Total weight of waste by type and disposal method.

CSR Related Data

EN23.

CORE

Total number and volume of significant spills.

Not applicable

ADD

Weight of transported, imported, exported, or treated waste deemed hazardous under the termsof the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shippedinternationally.

Not applicable

ADD

Identity, size, protected status, and biodiversity value of water bodies and related habitats
significantly affected by the reporting organization’s discharges of water and runoff.

EN24.

EN25.

Products and Services		
EN26.

CORE

Initiatives to mitigate environmental impacts of products and services, and extent of impact
mitigation.

Environmental Initiatives (Initiatives to Reduce
Environmental Impact)

The Environment
Sustainable resource use
Promoting social responsibility in the value chain
Sustainable consumption

6.5
6.5.4
6.6.6
6.7.5

EN27.

CORE

Percentage of products sold and their packaging materials that are reclaimed by category.

Not applicable

The Environment
Prevention of pollution
Sustainable resource use
Sustainable consumption

6.5
6.5.3
6.5.4
6.7.5

Monetary value of significant fines and total number of non-monetary sanctions fornoncompliance with environmental laws and regulations.

Not applicable

The Environment

6.5

Significant environmental impacts of transporting products and other goods and materials used
for the organization’s operations, and transporting members of the workforce.

Not reported

The Environment
Sustainable resource use
Promoting social responsibility in the value chain

6.5
6.5.4
6.6.6

Total environmental protection expenditures and investments by type.

Not reported

The Environment

6.5

Relationship with Executives and Employees

Organizational governanceLabour Practices
Fundamental principles and rights at work

6.2
6.4
6.3.10Labour Practices
Employment and employment relationships

6.4
6.4.3

Compliance
EN28.

ADD

Transport
EN29.

ADD

Overall
EN30.

ADD

Society
Labor Practices and Decent Work
Disclosure on Management Approach
Performance Indicators
Employment
LA1.

CORE

Total workforce by employment type, employment contract, and region, broken down by gender.

Daiwa Securities Group Profile
CSR Related Data

LA2.

CORE

Total number and rate of new employee hires and employee turnover by age group, gender, andregion.

CSR Related Data

LA3.

ADD

Benefits provided to full-time employees that are not provided to temporary or parttime
employees, by significant locations of operation.

Relationship with Executives and Employees(Creating a Workplace Supportive of Work-life
Balance)Labour Practices
Employment and employment relationships
Conditions of work and social protection

6.4
6.4.3
6.4.4

LA15.

CORE

Return to work and retention rates after parental leave, by gender.

Relationship with Executives and Employees(Creating a Workplace Supportive of Work-life
Balance)Labour Practices
Conditions of work and social protection

6.4
6.4.4

Labour Practices
Employment and employment relationships
Conditions of work and social protection
Social dialogue
Fundamental principles and rights at work

6.4
6.4.3
6.4.4
6.4.5
6.3.10Labour Practices
Employment and employment relationships
Conditions of work and social protection
Social dialogue

6.4
6.4.3
6.4.4
6.4.5

Labor/Management Relations

LA4.

CORE

Percentage of employees covered by collective bargaining agreements.

Relationship with Executives and Employees(Communication with Employees’ Union)

LA5.

CORE

Minimum notice period(s) regarding operational changes, including whether it is specified incollective agreements.

Not reported

Occupational Health and Safety

41

LA6.

ADD

Percentage of total workforce represented in formal joint management–worker health and safety
Not reported
committees that help monitor and advise on occupational health and safety programs.

LA7.

CORE

Rates of injury, occupational diseases, lost days, and absenteeism, and number of workrelated
fatalities, by region and by gender.

Not reported

Labour Practices
Health and safety at work

6.4
6.4.6

Labour Practices
Health and safety at work
Community involvement and development
Community involvement
Education and culture
Health

6.4
6.4.6
6.8
6.8.3
6.8.4
6.8.8
6.4
6.4.6

LA8.

CORE

Education, training, counseling, prevention, and risk-control programs in place to assist
workforce members, their families, or community members regarding serious diseases.

Relationship with Executives and Employees(Creating a Workplace Supportive of Work-life
Balance)

LA9.

ADD

Health and safety topics covered in formal agreements with trade unions.

Not reported

Labour Practices
Health and safety at work

Training and Education
LA10.

CORE

Average hours of training per year per employee by gender, and by employee category.

Not reported

Labour Practices
6.4
Human development and training in the workplace 6.4.7

LA11.

ADD

Programs for skills management and lifelong learning that support the continued employabilityof employees and assist them in managing career endings.

Relationship with Executives and Employees(Human Resources Development and Skill
Development)

Labour Practices
Human development and training in the workplace
Employment creation and skills development

LA12.

ADD

Percentage of employees receiving regular performance and career development reviews, bygender.

Relationship with Executives and Employees(Human Resources Development and Skill
Development)

Labour Practices
6.4
Human development and training in the workplace 6.4.7

CSR Related Data

Discrimination and vulnerable groups
Fundamental principles and rights at work
Labour Practices
Employment and employment relationships

6.3.7
6.3.10
6.4
6.4.3

Not reported

Discrimination and vulnerable groups
Fundamental principles and rights at work
Labour Practices
Employment and employment relationships
Conditions of work and social protection

6.3.7
6.3.10
6.4
6.4.3
6.4.4

Human Rights Initiative

Organizational governance
Human Rights
Due Diligence
Human rights risk situations
Resolving grievances
Promoting social responsibility in the value chain

6.2
6.3
6.3.3
6.3.4
6.3.6
6.6.6

6.4
6.4.7
6.8.5

Diversity and Equal Opportunity				
LA13.

CORE

Composition of governance bodies and breakdown of employees per employee category
according to gender, age group, minority group membership, and other indicators of diversity.

Equal Remuneration for Women and Men

LA14.

CORE

Ratio of basic salary and remuneration of women to men by employee category, by significant
locations of operation.

Human Rights

Disclosure on Management Approach

Performance Indicators
Investment and Procurement Practices
CORE

Percentage and total number of significant investment agreements and contracts that include
clauses incorporating human rights concerns, or that have undergone human rights screening.

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

Human Rights
Due Diligence
Avoidance of complicity
Promoting social responsibility in the value chain

6.3
6.3.3
6.3.5
6.6.6

HR2.

CORE

Percentage of significant suppliers, contractors, and other business partners that haveundergone human rights screening, and actions taken.

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

Human Rights
Due Diligence
Avoidance of complicity
Employment and employment relationships
Promoting social responsibility in the value chain

6.3
6.3.3
6.3.5
6.4.3
6.6.6

HR3.

CORE

Total hours of employee training on policies and procedures concerning aspects of human rightsthat are relevant to operations, including the percentage of employees trained.

Human Rights Initiative

Human Rights
Avoidance of complicity

6.3
6.3.5

Not applicable

Human Rights
Resolving grievances
Discrimination and vulnerable groups
Fundamental principles and rights at work
Employment and employment relationships

6.3
6.3.6
6.3.7
6.3.10
6.4.3

Human Rights
Due Diligence
Human rights risk situations
Avoidance of complicity
Not applicable, due to the nature of our business
Civil and political rights
Fundamental principles and rights at work
Employment and employment relationships
Social dialogue

6.3
6.3.3
6.3.4
6.3.5
6.3.8
6.3.10
6.4.3
6.4.5

HR1.

Non-Discrimination

HR4.

CORE

Total number of incidents of discrimination and corrective actions taken.

Freedom of Association and Collective Bargaining

HR5.

CORE

Operations and significant suppliers identified in which the right to exercise freedom of
association and collective bargaining may be violated or at significant risk, and actions taken to
support these rights.

42

Child Labor
HR6.

CORE

Human Rights
Due Diligence
Human rights risk situations
Avoidance of complicity
Discrimination and vulnerable groups
Fundamental principles and rights at work
Promoting social responsibility in the value chain

6.3
6.3.3
6.3.4
6.3.5
6.3.7
6.3.106.6.6

Impact is insignificant, due to the nature of ourbusiness

Human Rights
Avoidance of complicity
Employment and employment relationships
Promoting social responsibility in the value chain

6.3
6.3.5
6.4.3
6.6.6

Total number of incidents of violations involving rights of indigenous people and actions taken.

Not applicable

Human Rights
Resolving grievances
Discrimination and vulnerable groups
Civil and political rights
Respect for property rights

6.3
6.3.6
6.3.7
6.3.8
6.6.7

Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments.

Not reported

Human Rights
Due Diligence
Human rights risk situations
Avoidance of complicity

6.3
6.3.3
6.3.4
6.3.5

Number of grievances related to human rights filed, addressed and resolved through formal
grievance mechanisms.

Not reported

Human Rights
Resolving grievances

6.3
6.3.6

Relationship with Society (Approach and Basic
Stance)Compliance

Organizational governanceFair Operating Practices
Community involvement and development

6.2
6.6
6.8

Economic, social and cultural rights
Community involvement and development
Community involvement
Social Investment

6.3.9
6.8
6.8.3
6.8.9

Economic, social and cultural rights
Prevention of pollution
Protection of the environment & biodiversity,and restoration of natural habitats
Community Involvement and development

6.3.9
6.5.3
6.5.6
6.8

Fair Operating Practices
Anti-corruption

6.6
6.6.3

Fair Operating Practices
Responsible political involvement
Community involvement

6.6
6.6.4
6.8.3

Operations and significant suppliers identified as having significant risk for incidents of childlabor, and measures taken to contribute to the effective abolition of child labor.

Our business entails no risk of using child labor

Forced and Compulsory Labor
HR7.

CORE

Operations and significant suppliers identified as having significant risk for incidents of forced orcompulsory labor, and measures to contribute to the elimination of all forms of forced orcompulsory labor.

Our business entails no risk of using forced labor

Security Practices
HR8.

ADD

Percentage of security personnel trained in the organization’s policies or procedures concerning
aspects of human rights that are relevant to operations.

Indigenous Rights

HR9.

ADD

Assessment
HR10. CORE
Remediation
HR11. CORE

Society
Disclosure on Management Approach
Performance Indicators
Local Communities
SO1.

CORE

Percentage of operations with implemented local community engagement, impact assessments,
and development programs.

Impact is insignificant, due to the nature of ourbusiness

SO9.

CORE

Operations with significant potential or actual negative impacts on local communities.

Not applicable

SO10.

CORE

Prevention and mitigation measures implemented in operations with significant potential or
actual negative impacts on local communities.

Not applicable

Corruption
SO2.

CORE

Percentage and total number of business units analyzed for risks related to corruption.

Risk Management
IT Governance, Disclosure, and Information Security

SO3.

CORE

Percentage of employees trained in organization’s anti-corruption policies and procedures.

Compliance

SO4.

CORE

Actions taken in response to incidents of corruption.

Not applicable

CORE

Public policy positions and participation in public policy development and lobbying.

Not reported

ADD

Total value of financial and in-kind contributions to political parties, politicians, and related
institutions by country.

Not reported

Public Policy
SO5.
SO6.

Anti-Competitive Behavior
SO7.

ADD

Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices
and their outcomes.

Not applicable

Fair Operating Practices
Fair competition
Respect for property rights

6.6
6.6.5
6.6.7

Monetary value of significant fines and total number of non-monetary sanctions fornoncompliance with laws and regulations.

Not applicable

Fair Operating Practices
Anti-corruption
Respect for property rights
Wealth and income creation

6.6
6.6.3
6.6.7
6.8.7

IT Governance, Disclosure, and Information Security Organizational governance
Relationship with Customers (Approach and Basic Fair Operating Practices
Stance)Consumer Issues

6.2
6.6
6.7

Compliance
SO8.

CORE

Product Responsibility
Disclosure on Management Approach43Performance Indicators
Customer Health and Safety
PR1.

CORE

Life cycle stages in which health and safety impacts of products and services are assessed for
improvement, and percentage of significant products and services categories subject to suchprocedures.

PR2.

ADD

Total number of incidents of noncompliance with regulations and voluntary codes concerning
health and safety impacts of products and services during their life cycle, by type of outcomes.

Economic, social and cultural rights
Not applicable, due to the nature of our business Promoting social responsibility in the value chain
Consumer Issues
Protecting consumers’ health & safety
Not applicable, due to the nature of our business Sustainable consumption

6.3.9
6.6.6
6.7
6.7.4
6.7.5

Product and Service Labeling
PR3.

CORE

Type of product and service information required by procedures, and percentage of significant
products and services subject to such information requirements.

Relationship with Customers (Accountability tocustomers)

PR4.

ADD

Total number of incidents of non-compliance with regulations and voluntary codes concerning
product and service information and labeling, by type of outcomes.

Not applicable

PR5.

Practices related to customer satisfaction, including results of surveys measuring customer
satisfaction.

ADD

Relationship with Customers (Initiatives Make
Use of Customer Views)

Consumer Issues
Fair marketing, factual and unbiased
information and fair contractual practices
Protecting consumers’ health & safety
Sustainable consumption
Consumer service, support and complaint anddispute resolution
Education and awareness

6.7
6.7.3
6.7.4
6.7.5
6.7.6
6.7.9

Consumer Issues
Protecting consumers’ health & safety
Sustainable consumption
Consumer service, support and complaint anddispute resolution
Access to essential services
Education and awareness

6.7
6.7.4
6.7.5
6.7.6
6.7.8
6.7.9

Consumer Issues
Fair marketing, factual and unbiased
information and fair contractual practices
Consumer service, support and complaint anddispute resolution
Education and awareness

6.7
6.7.3
6.7.6
6.7.9

Marketing Communications
PR6.

PR7.

CORE

Programs for adherence to laws, standards, and voluntary codes related to marketing
communications, including advertising, promotion, and sponsorship.

Relationship with Customers (Building Even
Deeper Trust in Relationships with Customers)

ADD

Total number of incidents of non-compliance with regulations and voluntary codes concerningmarketing communications, including advertising, promotion, and sponsorship by type ofoutcomes.

Not applicable

Customer Privacy
PR8.

ADD

Total number of substantiated complaints regarding breaches of customer privacy and losses ofcustomer data.

Not applicable

Consumer Issues
Consumer data protection and privacy

6.7
6.7.7

Monetary value of significant fines for noncompliance with laws and regulations concerning theprovision and use of products and services.

Not applicable

Consumer Issues
Consumer service, support and complaint anddispute resolution

6.7
6.7.6

Compliance
PR9.

CORE

Sustainability Reporting Guidelines & Financial Services Sector Supplement
Item

Indicator

Link

Product and Service Impact (Financial Services Sector Specific Disclosure on Management Approach)
FS1.

CORE

Policies with specific environmental and social components applied to business lines.

CSR Management (CSR Promotion System)

FS2.

CORE

Procedures for assessing and screening environmental and social risks in business lines.

Not reported

FS3.

CORE

Processes for monitoring clients’ implementation of and compliance with environmental andsocial requirements included in agreements or transactions.

Compliance

FS4.

CORE

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

CSR Management (CSR Promotion System)
Relationship with Executives and Employees(Human Resources Development and Skill
Development)

FS5.

CORE

Interactions with clients/investees/ business partners regarding environmental and social risks
and opportunities.

Relationship with Customers (Building Even Deeper
Trust in Relationships with Customers)
Relationship with Shareholders and Other Investors

Product and Service Impact (Performance Indicators)
Product Portfolio
FS6.

CORE

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

Daiwa Securities Group Profile
Social Responsibilities of the Financial Industry

FS7.

CORE

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

Social Responsibilities of the Financial Industry

CORE

Monetary value of products and services designed to deliver a specific environmental benefit foreach business line broken down by purpose.

Social Responsibilities of the Financial Industry

CORE

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

Corporate Governance

FS8.
Audit
FS9.

Active Ownership
FS10.

CORE

Percentage and number of companies held in the institution’s portfolio with which the reportingorganization has interacted on environmental or social issues.

Not reported

FS11.

CORE

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

Social Responsibilities of the Financial Industry

FS12.

CORE

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

Social Responsibilities of the Financial Industry

Society (Performance Indicators)
Community
FS13.

CORE

Access points in low-populated or economically disadvantaged areas by type.

Not applicable44

FS14.

CORE

Relationship with Customers (Building Even
Deeper Trust in Relationships with Customers)
Relationship with Society (4. Assistance tocommunities on both the local and theinternational level through foundations and NPOs)

Initiatives to improve access to financial services for disadvantaged people.

Product Responsibility (Performance Indicators)
FS15.

CORE

Relationship with Customers (Building Even
Deeper Trust in Relationships with Customers)

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

Product Responsibility (Performance Indicators)
Product and Service Labeling

FS16.

CORE

CSR Management (CSR Issues: Performanceand Targets)
Relationship with Society (1. Education andresearch activities in the fields of economics andfinance)

Initiatives to enhance financial literacy by type of beneficiary.

45

CSR Report 2013

CSR Related DataManagement Report
Compensation Paid to Directors and Corporate Executive Officers of Daiwa Securities Group Inc. in FY2012
Directors
Amounts based on resolution of the Compensation Committee

Recipients

Corporate Executive Officers
Amount7 persons

Recipients¥120 million

Total

Amount12 persons

Recipients¥807 million

Amount19 persons¥927 million

Notes: 1. Performance-based compensation was paid in this fiscal year.
2. The above compensation amounts include a total of ¥102 million in stock acquisition rights granted as stock options to directors and corporate executive officers.
3. Compensation paid to the five outside directors totaled ¥84 million.
4. Seven directors also served as corporate executive officers; their total compensation is included in the “Corporate Executive Officers” category.

Social ReportCompanies covered by data
Consolidated: E ntire Group aiwa Securities Group Inc., Daiwa Securities Co., Ltd., Daiwa Asset Management Co., Ltd., Daiwa Institute of Research Holdings Ltd., Daiwa Institute ofGroup of 10 companies: D

Research Ltd., Daiwa Institute of Research Business Innovation Ltd., Daiwa SB Investments Ltd., Daiwa Securities Business Center Co., Ltd., Daiwa Property
Co., Ltd., and Daiwa Corporate Investment Co., Ltd.
 aiwa Securities Group Inc., Daiwa Securities Co., Ltd., Daiwa Asset Management Co., Ltd., Daiwa Institute of Research Ltd., Daiwa Institute ofGroup of eight companies: D

Research Business Innovation Ltd., Daiwa SB Investments Ltd., Daiwa Securities Business Center Co., Ltd., and Daiwa Corporate Investment Co., Ltd.
 aiwa Securities Group Inc., Daiwa Securities Co., Ltd.,Group of two companies: D

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

As of the end of FY2011
FA*1

Japan

Employees

As of the end of FY2012
Temporary employees

Employees

FA*1

Temporary employees

Male

7,662

81

−

7,452

71

−

(Career track*2)

7,076

−

−

7,011

−

−

(Managers)

3,754

−

−

3,773

−

−

Female

4,348

166

−

4,117

122

−

(Career track*2)

2,374

−

−

2,360

−

−

(Managers)

170

−

−

190

−

−

Japan total

12,010247

471

11,569193

391

Overseas

2,175

−

157

1,664

−

88

Total

14,185247

628

13,233

193

479*1 F inancial advisors*2 Includes regional career-track employees and specialist positions

Number of New Graduates Recruited by the Daiwa Securities Group

Career-track employees/regional career-track
employees(Unit: persons)April 2011

April 2012

April 2013

Male

245

186

296

Female

201

168

227

446

354

523

FY2010FY2011FY20128.88 million

Total
This data pertains to eight group companies

Workforce Statistics
Average annual salary*(Unit: yen/years)

8.50 million

8.11 million

Average age

37.1

39.9

40.5

Average number of years of service

12.2

13.7

14.3

This data pertains to Daiwa Securities Group Inc. only
Numbers include additional posts at Daiwa Securities Co., Ltd* Average annual salary includes bonuses and other remuneration

Re-employment under the Daiwa Master System

No. of employees hired under the Daiwa Master System(Unit: persons)

FY2010FY2011FY201258

63

61

This data pertains to two Group companies

Employment Rate for Persons with Disabilities
Employment Rate for Persons with Disabilities（Unit: %）As of the end of FY2010

As of the end of FY2011

As of the end of FY2012

2.07

2.09

2.08

This data pertains to 10 Group companies

46

Achievements of Selected Participants in Management Training(Unit: persons)

FY2010Daiwa Management Academy: Eligible for Department managers
Number of trained (cumulative)
Daiwa Leadership Program: Eligible for Deputy general managers

FY2011FY2012

248

269

291

FY2010FY2011FY2012

568

599

631

FY2010FY2011FY2012

Number of trained (cumulative)
This data pertains to 10 Group companies

Participants in Business Skill Training(Unit: persons)

Number finishing program (cumulative)*

1,916

2,469

2,862

This data pertains to eight Group companies. Three companies Daiwa Securities Group Inc., Daiwa Securities, Daiwa Securities Capital Markets is as of FY 2011. Daiwa Securities Capital Markets is integrated in Daiwa Securities in April 2012
* The number of people completing presentation training, coaching training, negotiation skills training, communication training, logical thinking training, and facilitation training

Persons Earning Credentials*1(Unit: persons)Credentials

As of March 31, 2011

As of March 31, 2012

As of March 31, 2013

Associated Financial Planner (AFP)

4,981

5,255

Certified Financial Planner (CFP)

360

452

566

1,414

1,440

1,446

Chartered Member of the Securities Analysts Association of Japan(CMA)
Chartered Financial Analyst (USA credential)*2
TOEIC（730-990）

Overseas MBA program graduate, etc.

5,183

43

41

42

1,127

1,249

1,593

165

158

154

*1 This data pertains to 10 Group companies（based on declaration from employees）*2 Data as of March 2012 includes some group companies that did not conduct summary countSuccessful Applicants in Internal Recruiting System(Unit: persons)

Positions offered

No. of applicants

No. of successful
applicants

M&A, SMA consultants, Analysts, internal wholesalers, Compliance, dealers, derivatives, traders, fundmanagers, principal finance specialists, venture capitalists, money managers, research, underwriting,sale, product development, proposals and planning, investment advisors, investment information,pension consultants, etc.

904

146

Held

Cumulative from FY2000

This data pertains to 10 Group companies

Working Hours and Paid Vacation Usage Rate
FY2010
Annual regular working hours (hours)

FY2011FY2012

1837.51822.51837.5

24.0

25.1

25.7

Paid vacation usage rate (%)

54

49

48

Paid vacation usage rate (%) (including special summer vacation)*2

58

54

52

Average monthly overtime hours (hours)*1

This data pertains to two Group companies*1 Figures indicate employees at the two companies who are members of the Daiwa Securities Group Employees’ Union*2 In addition to annual paid vacation, the Daiwa Securities Group offers three days of special summer vacation. These figures show 52% usage rate for annual paid vacation when special summer vacation is included in FY2012

Employee Welfare System Usage

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

FY2010FY2011FY2012

Female

326

396

436

Male

26

12

17

Female

5

8

8

Male

1

0

0

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

Main Initiatives for Work-Life Balance and Female Employee Support Plan
Program name

Program description

Professional Return Plan (rehiring of sales staff)

Offers opportunities for re-employment to former full-time employees who left their jobs after marriage or childbirth.

Job Location Change System*

Offers a position in a new location when an employee must relocate after marriage or spouse’s job transfer.

Childcare leave

Employees can take childcare leave until their child’s third birthday.

Exemption from or restricted overtime work

Employees can apply for an exemption from overtime work until their child completes the third grade of elementary school. Employees
can also apply for restricted overtime work until their child completes elementary school.

Daycare subsidy

The company offers subsidies for daycare expenses until the employee’s child begins elementary school.

Expanded leave system

The company encourages employees to take paid vacation and has introduced leave for marriage preparations or "family day" leave togive employees a chance to spend quality time with their families.

Follow-up on program use

The Personnel Department keeps track of individual employees’ childcare-related schedules and notifies them of programs available atthe appropriate time.

Support after returning to work

Enables employees to return to work after a period of childcare leave. The return to work guidelines were revised in fiscal 2011. Daiwa
WLB Station, a work-life balance promotion website that focuses on various support systems related to childrearing and nursing care,provides information for employees on childcare leave and helps facilitate their smooth return to the workplace.

* Number of employees using the program at Daiwa Securities as of FY2012 end, 106 (cumulative)47

Female Employees and Managers at the Daiwa Securities Group（Unit: %）As of the end of FY2010

As of the end of FY2011

As of the end of FY2012

Percent of employees who are female

36.7

36.2

35.6

Percent of managers who are female

4.1

4.3

4.8

This data pertains to all consolidated Group companies.

Number of Employees’ Union Members(Unit: persons)

As of the end of FY2010
Employees’ union membership

7，590

As of the end of FY2011

As of the end of FY2012

6,907

6,490

Of the eight Group companies (this does not include Daiwa Asset Management Co., Ltd., which has its own employees’ union, and Daiwa Property Co., Ltd., which has no employee union)

Corporate Citizenship Initiatives and Expenditures
Type of Activity
1. E conomy and Finance Education Initiative (Universities,
Graduate Schools and industry-academia partnership)
2. Contributing to communities

Expenditure (Unit: ¥1,000)

FY2010FY2011FY2012

73,24965,43563,525

7,464

31,0532,328

3. Culture and Arts

410,132

269,869

272,500

 onation and Grant to NGOs and foundations (include
4. D
membership dues and reconstruction support)

184,807

133,457

165,851

Total

675,652

499,814504,204

Results in Economic and Financial Education
Program

Duration

Participants

Support for Finance Park

June 2005–March 2013

39,185 persons

Support for Japan Council for Economic Education (CEE-Japan)

January 2009–March 2013

1,450 persons

Sponsorship of JA’s mainstay Global Leadership Forum for elementaryand junior and senior high school teachers

July 2001–March 2011

3,182 persons

Support for the Student Company Program (SCP)

September 2003–March 2011174 persons

Environmental Report
Energy Consumption
FY2010

Domestic offices

Overseas offices

FY2011FY2012

Electricity (1,000 kWh)

109,157

93,402Natural gas (1,000 m3)

696

582

76,247503

Gasoline (kiloliters)

1,137

1,117

1,111

Heavy oil (kiloliters)

8.6

7.9

10.8

Diesel fuel (kiloliters)

0.2

0.1

0.1

Electricity (1,000 kWh)

13,137

15,841

13,566This data pertains to all consolidated Group companies
At overseas offices, only electricity consumption was calculated（Unit: 1,000 kg-CO2）

CO2 Emissions from Energy Consumption
FY2010

Domestic offices

Overseas offices

FY2011FY2012

Electricity

60,582

51,838Natural gas

1,448

1,210

1,147

Gasoline

2,639

2,593

2,579

Heavy oil

25.7

23.7

32

Diesel fuel

0.6

0.2

0.2

Total for domestic offices

64,69655,66546,075

Electricity

7,291

8,792

7,529

71,69464,45753,604

Total for domestic andoverseas offices

CO2 Emissions per Employee (Domestic)（Unit: 1,000 kg-CO2）

FY2010Per employee
Number of employees in Japan

42,317FY20115.0

4.5

12,868 persons

12,257 persons

FY2012
3.9
11,762 persons（Unit: 1,000 kl）

Changes in Clean Water Consumption
Consumption volume

FY2010FY2011FY2012

188

162

130

48

Volume of Copy Paper/Forms Used

(Unit: 1,000 kg)

FY2010FY2011FY2012

Daiwa Securities Group Inc.

11

24

28

Daiwa Securities

325

303

374

Daiwa Securities Capital Markets

132

95

−

Daiwa Institute of Research Group

77

84

59

Daiwa Asset Management

50

35

23

Daiwa Business Center

35

31

36

Daiwa SB Investments

28

28

28

Daiwa Property

3

3

3

Daiwa Sanko

3

3

1

Daiwa Corporate Investment

6

6

7

Other

22

16

20

Copy paper total

691

629

578

FY2010FY2011FY2012This data pertains to consolidated Group companies
Daiwa Securities Capital Markets is integrated in Daiwa Securities in April 2012

Changes in Waste Generated and Recycling Volume
Amount generated (1,000 kg)

Paper waste

751.0

601.0

96

88

88

335.9

390.4

276.0

33

37

43

Recycling rate (%)
Amount generated (1,000 kg)

Non-paper waste

Recycling rate (%)

361.9

Calculated based on the Reuse Plan for Large-Scale Buildings Used for Business, as specified by each local government

Economic Report
Segment Information(Unit: ¥ million)

FY2012Net Operating Revenues

Ordinary Income

Retail

184,415Wholesale Division

133,10949,251
12,034

Asset Management

43,591

19,089Investment

17,495

14,161Others26,862（4,302）
90,234

Total (unadjusted)

405,474

Adjustment

11,834

4,941

Consolidated total

417,308

95,176

Due to a change in the method of classification of reportable segments from 2012, described only a single year

Changes in Distribution of Economic Value to Stakeholders
Stakeholders
Executives and employees(Unit: ¥ million)

FY2010FY2011FY2012

Tabulation method

160,234

158,297

156,987

560

475

504

Expenditure for corporate citizenship activities (p48)

Dividends to shareholders

10,386

10,281

10,281

Interim and year-end dividends for the fiscal year

Creditors

35,64239,082

48,471

Interest expense and interest paid on non-operating expenses
Income taxes, resident and business taxes, deferred income taxes, othertaxes and duties

Society

Personnel costs within selling and general administrative expenses

Government

16,75530,98018,296

Minority shareholders（6,907）（1,838）

7,203

Minority shareholder profit/loss

Internal reserves（47,717）（49,715）62,628

Balance after deducting dividends for the term from net income for the
fiscal year

Total economic value

168,953

187,562304,370

Total of the above

Comparison of Economic Report and Consolidated Financial Statements

Economic Report
Consolidated financial
statements(Unit: ¥ million)

FY2010FY2011FY2012

Economic Report revenues

427,755474,839549,664

Economic value

168,953

187,562304,370

Operating revenues

403,042422,374

525,411Net income/loss（37,331）（39,434）

72,909This data pertains to consolidated Group companies

49CSR Report 2013

Glossary
BCP
Business Continuity Plan

RecycleTo put or pass through a cycle again, as for further treatment

Carbon Disclosure ProjectThis project is an affiliation of institutional investors concerned about climatechange who demand that companies disclose information about their stanceon environmental problems and initiatives addressing such problems

ReduceTo bring down, as in extent, amount, or degree; diminish of off-scourings andwaste materials
Reuse
The act or process of using again

Compliance
Legal compliance

SRI
Socially Responsible Investment—An investment that is considered governancesocially, environmentally responsible because of the nature of the business thecompany conducts

Corporate governance
The mechanism that allows for sound and efficient corporate management
CS
Customer Satisfaction

Stakeholders
A person, group or organization that has interest or concern in an organization

CSR
Corporate Social Responsibility
Due Diligence
Duty of a firm's directors and officers to act prudently in evaluating associatedrisks and negative impacts in transactions

Thin client
A technology for the storage and administration of the totality of data on asingle server instead of having individual employees control application
software and files distributed among various terminals. This can streamline
administration processes and costs while reducing operational risks

ESG
Environment/Social/Governance

TSR
Telephone Service Representative — Telephone Operator with the expertiseGreen procurement
To buy environmentally-friendly products for reducing environment load of
producers

UN Global Compact
The UN Global Compact was established in 2000 under the UN secretariat
after an initiative launched in 1999 by then-Secretary General Kofi Annan. The
membership consists of global corporate leaders who are expected to aligntheir business practices with ten principles in the fields of human rights, labor,
environment, and anti-corruption in their business activities, in partnershipwith UN agencies, labor, and civil society. Signatory members are required to
implement these principles with a top management commitment

GRI
Global Reporting Initiative—An organization dedicated to proposing andpromoting common international guidelines for sustainability reports
IFFIm
International Finance Facility for Immunisation

United Nations Environment Programme Finance Initiative (UNEP FI)
UNEP FI is a partnership between the United Nations Environment Programme,
which is a UN organization, and financial institutions around the world. Basedon the recognition that the money handled by the financial industry has amajor impact on the world, this initiative pursues better ways of doing
business, taking into account the environment and sustainability, and seeks tospread and encourage this commitment

Impact Investment
A form of investment which pursues financial profit while also working toresolve social issues such as poverty and environmental protection’IR
Investor Relations

United Nations Millennium Development Goals (MDGs)
The MDGs consist of eight goals that 189 representatives from UN Member
States, including 147 heads of state, participating in the UN Millennium
Summit held in New York in September 2000, designated as 21st century goals
for the international community. It aims to achieve numerical goals in eight
fields such as Poverty alleviation, education and public healthcare and so on by
2015

ISO14001
A global standard for Environmental Management Systems (EMS). The goal of
the ISO14001 standard is to give the top management of any organization aframework for managing environmental impacts
ISO26000
A worldwide standard that provides guidance for social responsibility oforganizations

Value Chain
Interlinked value-adding activities that convert inputs into outputs which, inturn, add to the bottom line and help create competitive advantage

Low Carbon Society
A society that carbon dioxide emissions is lessWork-Life Balance
Balance between an individual's work and personal life

Microfinance
A form of financial services for the poor entrepreneurs and small businesses
lacking access to banking and related services
NPO/NGO
Non Profit Organization/Non Governmental Organization
Principles for Financial Action towards a Sustainable Society(Principles for Financial Action for the 21st Century)
Aims to expand investment and financing with the environment in mind,
formulated as voluntary efforts of financial institutions in Japan
Principles for Responsible Investment (PRI)
PRI is a set of six principles launched by the UNEP Finance Initiative and the UN
Global Compact in April 2006. This initiative asks corporate investors toincorporate ESG into their investment decisionmaking practices

50