Daiwa Securities GroupCSR Report
2011 Highlight Edition
Building a Sustainable Society

What we can do
What will the world be like when thesebabies become adults?
The precious faces of these infants—all
children of Daiwa Securities Group
executives and employees—express ourhopes for the future. At the Daiwa
Securities Group, we are determined
to take responsibility as individuals andto do our part as a company tocreate a sustainable society living inhappiness and in harmony with anunspoiled Earth.

Message from the President and CEO

Leveraging
financialcapabilities to help
Japan recover andAsia develop
We would like to extend our deepest sympathies tothose affected by the Great East Japan Earthquake.
We are supporting the solid recovery of the affected
region through financial and capital markets as wellas corporate citizenship initiatives.
The most important facet of corporate social
responsibility for the Daiwa Securities Group is touse our financial capabilities to contribute tosustainable development. The earthquake, which
was a national crisis, not only caused the loss ofmany precious lives, but also seriously hurt
communities in the Tohoku region, damaged theJapanese economy, and significantly affected theglobal economy.
As a group of Japan's leading comprehensive
financial service companies, we see it as our special
mission to encourage economic activity contributing
to the creation of a sustainable society and help
create future prospects through capital markets inJapan, Asia, and worldwide to revitalize theeconomies in Japan and other regions.
The Daiwa Securities Group has always been apioneer in reforming the Japanese securities
industry. We have developed and offered Eco Funds,
SRI Funds and other socially responsible investment(SRI) products with environmental or social elements
since 2001. In 2008, we introduced Vaccine Bonds
and other impact investment1 products in Japan,
1 Investment with social objectives such as poverty reduction and environmental
protection that also generates financial returns for investors.

1

Daiwa Securities Group CSR REPORT 2011

taking a leading role in this field. These products
are aimed at financially supporting social objectives
such as alleviating poverty and protecting
the environment.
We have been providing a steady flow of
information to investors through seminars andreports, seeking to foster a broad understanding of
microfinance2, poverty in developing nations, andother problems in society that need to be resolved.
This has also been important in creating broad
awareness among Japanese investors that bothsocial returns and financial returns can be achievablefrom investments. We are supporting thereconstruction through financial instruments, andthe Japan-version of impact investment products.
Another important social responsibility is tocontribute to the development of sound capital
markets by gaining the confidence of morecustomers through even stronger compliance.
Regarding business in Asia, we have strategicallyenhanced networks, systems and boosted ourhuman resources and capital to strengthen therelationships with regional communities and local
customers. We expect this to reinforce our businessand help it grow at an unprecedented speed.
Meanwhile, it is also important to consider resolving
environmental and other issues affecting
communities amid Asia’s economic growth. We arecontributing to sustainable development in theregion through impact investment products andservices funding the resolution of problems such as
climate change and poverty.
The cornerstone of these efforts is fostering
human resources. It is necessary to develop people
with a high awareness of global concerns such asenvironmental problems and poverty and regional
issues even for post-earthquake reconstruction. Also,
2 General term for small-scale financial services to encourage their economic
independence of impoverished people.

offering high-quality products and services able tohelp resolve problems gives executives andemployees a sense of pride.
We are actively encouraging employees toestablish a good work-life balance as we believe thisis the foundation for such high-quality personnel aswell as products and services. Part of our Asia
strategy is to put more effort into creating aworkplace that makes the most of the advantages of
a diverse staff.
The Daiwa Securities Group is highly consciousof the importance of maintaining long-termreconstruction support following major disasters. We
are carrying out a ten-year reconstruction support
program following the 2004 Sumatra earthquake
and tsunami. Daiwa Institute of Research has
proposed a reconstruction support fund scheme in
the wake of the recent earthquake in Japan. Using
the power of the whole group to provide long-term
support, we will contribute to social reconstruction
and development, for example by helping facilitate
regional financial institutions’ funding anddeveloping the Japan-version of impact investments.
We hope these efforts make our executives andemployees feel part of the Daiwa Securities Groupand help our stakeholders feel greater pride in
our companies.
We would like to ask for your understanding
and continued support because these efforts will
come to fruition only if we communicate with andhave the cooperation of our stakeholders.

Takashi Hibino

President and CEO
Daiwa Securities Group Inc.

2

Editorial Policy
The Daiwa Securities Group has been publishing thisreport annually since 2002 with the aim of clearly
disclosing our CSR activities, which are intended tosupport the creation of a sustainable society. We also
use this opportunity to evaluate the company’s current
status and the challenges it is facing.
The 2011 CSR Report focuses on SRI because wewish to convey to many stakeholders that the way
money is used is key to resolving society’s problems.
An important objective of this report is to prompt
awareness, thought, and action among stakeholders
reading the report to cause money to be channeled tocreating a sustainable society in order to resolve
problems such as global warming and poverty.
We strive to provide accurate, easily understoodinformation by publishing the information we would
most like to convey in the Highlight Edition andcomprehensive information based on the guidelines of
the global reporting initiative (GRI)* on our website toensure accountability.
* GRI (Global Reporting Initiative): An organization dedicated to proposing andpromoting common international guidelines for sustainability reports.

Scope of Report
Intended ReadershipThis report is intended for Daiwa Securities Group’s stakeholders, whichprimarily include customers, shareholders and investors, executives andemployees, 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 (see page 29). The report does not, however, include
all data from the Group’s principal companies on items reported; theinformation is selected based on the respective companies’ size andtype of business. Each set of numerical data specifies the scopeof coverage.

Period Covered by Report
Fiscal 2010 (April 1, 2010 to March 31, 2011). The report also includes
information on events and activities carried out prior to fiscal 2009, as
well as those scheduled to take place during fiscal 2011.

Date of Publication
August 2011 (The previous report was published in August 2010; thenext report is planned for August 2012).
Inquiries: Daiwa Securities Group Inc.
Corporate Communication Department, CSR GroupTel:+81-3-5555-1111 (main)
E-mail:daiwacsr@dsgi.daiwa.co.jp
Website: http://www.daiwa-grp.jp/english/csr/

CSR Report 2011 Highlight Edition

Contents
Message from the President and CEO ........................ 1
Editorial Policy............................................................ 3
Daiwa Securities Group Corporate Principles
and Key Issues........................................................ 4
Dialogue: Kumi Fujisawa and Shigeharu Suzuki
Leveraging financial capabilities to resolve
global issues ............................................. 5
SRI Highlights: The Role of Finance� Just Think about What You Can Achieve withYour Money ........................................................... 9� What Is Socially Responsible Investment? ............. 11� Daiwa Securities Group’s Engagement in SRI ........ 12
� SRI Efforts in Product Development andSales Teams .......................................................... 13

� Fulfilling Our Social Responsibilities as a Financial
Institution............................................................. 15
� Employee Round Table Discussion:Ways to Promote SRI ............................................ 17
Our Relationship with Money................................... 21
Creating a Rewarding Workplace for Employees ...... 23
Daiwa Aid after the Great East Japan Earthquake..... 24
CSR Also Becoming More Prominent inCommunications .................................................. 25
CSR Issues: Performance and Targets........................ 27
Daiwa Securities Group Profile ................................. 29
About CSR Report 2011........................................... 30

More detailed information is published in the full edition on our website. Please see page 30 for details

http://www.daiwa-grp.jp/english/csr/report/2011/3

Daiwa Securities Group CSR REPORT 2011

Daiwa Securities Group Corporate Principles and Key Issues
The Daiwa Securities Group’s mission is to contribute to the sustainable development of society and the economy through daily
operations, including wealth management for investors and supporting corporate clients’ activities with various financial tools.
The strong 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.

Daiwa Securities Group Corporate Principles
Building Customer Trust

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

Valuing Human Resources

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

Contributing to Society

Our mission is to contribute to society and the economy through ourdaily operation in the financial and capital markets. We will
maintain high standards of ethics and self-discipline and willcontribute to the sustainability of society.

Earning Sound Profits

Our fundamental objective is to enhance shareholder value throughsound business operations. We will offer valuable services to ourcustomers and earn adequate rewards for distribution to ourshareholders.

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

1. Leveraging financial capabilities tocontribute to a sustainable society.
2. Developing sound financial and capital
markets for the next generation.
People are the key to addressing these issues. We believe keeping
each and every one of our executives and employees motivated andproud of their work is essential for tackling these key issues.

In addition to these two issues,

the Group strives to create a rewarding
workplace in which our executives andemployees can take pride.
To achieve its corporate principles, the Daiwa Securities
Group anchors its CSR activities in these goals.

Daiwa Securities Group Stakeholders

� Issuers� Investors

Customers

We are committed to improving customer
oducts and services thatsatisfaction by offering pro
meet the needs of individu
ual investors, institutional
investors, and potential investors who are
he future.
considering investing in th

Investors

For private-sector enterprises, public corporations, andother entities seeking to raise funds through equity, debt, orother sources, we prop
propose optimal solutions from a wide
range of financing options and provide full-scale support,
from planning to execu
ution.

Issuers

Shareholders

� Business Partners
W maintain fair relationships with allWeou
ur business partners and worktoogether to create a sustainable society.

� Shareholders
To earn the confidence of ourshareholders, we aim to provide fullytransparent information disclosure, andmeet their expectations by continuallycreating value.

Shareholders

Daiwa
Securities Group

Business
Partners

� Government

We are endeavoring to create a workplacce where
our employees, who create added value for all otherstakeholders, are fully motivated and cann findsatisfaction in their work and lives. Our employees’
families are also important stakeholders.

oyees’ Fami

We fulfill our tax obligations andoffer policy suggestions to create
a better society.

Societys� Employees

pl

li e

Employees

Em

Government

NPOs/
NGOs

Employees
Local
Communities

� NPOs/NGOs
We collaborate with NPOs and NGOs in suchfields asa financial and economic educationand dissaster relief. We reflect social values inour maanagement through active dialogue.

� Local Communities
As members of their local communities, our branches
and ooverseas
erseas offices prom
promote community-based efforts.

4

Dialogue: Kumi Fujisawa and Shigeharu Suzuki

Leveraging financial capabilities toresolve global issues
Changing the flow of money can change the world. Kumi Fujisawa, who is trying to create new social
systems as vice president of the think tank SophiaBank, and Daiwa Securities Group Chairman
Shigeharu Suzuki (then president & CEO) discussed how financial institutions are uniquely positioned
to make certain efforts, such as offering products and services for impact investing and that arecompliant with the Convention on Cluster Munitions.
(Interview date: February 15, 2011)5

Daiwa Securities Group CSR REPORT 2011

Finance is social infrastructure:
Fulfilling our own role contributes
to society
Fujisawa: When I attended the World Economic Forumat Davos this year, the term CSR was alreadyoutmoded—the focus has turned to how companies, as
global citizens, can help resolve society’s problems
through their core operations. What kinds ofopportunities are there in the financial business?
Suzuki: We do not treat CSR as an accessory to ourbusiness. We have positioned contributing to society
through our daily operations as the foundation of ouractivities. Companies have a role to play in society
because they operate in the public sphere. Finance issocial infrastructure and financial service companies’
role is to link unevenly distributed capital with thecompanies and countries that need it. I believe
companies’ core value lies in contributing to society inthe process of pursuing their own objectives.
Fujisawa: What can financial service companies do tohelp resolve the problems that exist in the world today?
Suzuki: Donations are the most widely recognized formof social contribution, but there are other options. The
impact investments we offer allow clients to pursue
profits while contributing to society and also generate
profit for our company. I believe it is the role ofcompanies to expand their business in areas that also
contribute to society.
Fujisawa: I recently mentioned the Daiwa MicrofinanceFund on Twitter because I thought it was fantastic when I
heard about it. It is possible to apply for amounts startingfrom ¥1,000 in-store or online. Comments I received
included, “It’s great that there is a company creating suchproducts” and “I would like to support this.”

Impact investment also for
employees
Fujisawa: Creating BRIC* Funds seems like a betteridea for generating revenues efficiently, but creating
and offering products that meet the criteria of socially
responsible investment has different advantages thanthose of ordinary financial products.

Suzuki: In some ways, these products are also for
employees. We do important work by offering financial
products and services that support the foundation ofsociety, but in our daily operation, often cannot easily
recognize the value it has in society.
Fujisawa: The significance of impact investment is clear
to both employees offering the products and customers
purchasing them.
Suzuki: I think employees prefer to find their jobs
meaningful, rather than just work to support themselves.
Also, customers who may want to make donations face
uncertainty about how and where the money will be
used. With our products, it is clear that the money will
be used where it is necessary. As financial products,
they naturally entail risks, but being investments rather
than donations, they also offer prospective returns. I
believe they are a positive product offering significant
benefits for our company, our staff, our customers, andthe recipients of the funds.
Fujisawa: I think it is difficult to take the first step
because impact investment type products are not highly
profitable products for a financial company.
Suzuki: A company has no reason to exist if it does not
generate profits. However, companies should meetvarious social responsibilities as well as pursuing profit.
We will keep working to offer products with high social
payoffs in line with our role, as a financial service
company, as a part of social infrastructure and toprovide our employees with rewarding work.
Fujisawa: You’re planning to offer more impact
investment products, right?
Suzuki:Yes. Our microfinance products werecommercialized from a plan created by a front-line
employee concerned about poverty. This example of agood idea being turned into a product has served as aninspiration to employees to put in their best effort,
creating a virtuous cycle.
Fujisawa: What has been the reaction from employees?
Suzuki: I think many employees in the sales
departments feel they play a meaningful role in society.
Fujisawa: It’s wonderful for the sales staff of a financial
service company to feel this way about their work,
isn’t it?
* BRIC stands for Brazil, Russia, India, and China.

6Impact investing—a good match forthe unmatched Japanese national
characterFujisawa: I’ve heard that doctors were major buyers of
Vaccine Bonds. I imagine that offering impact
investment products broadens your customer base.
Suzuki: I believe Japanese people are the mostkind-hearted in the world in terms of national character.
Impact investing is extremely well-suited to Japanesepeople because they provide the opportunity to pursue
social as well as financial returns. They are likely to
spread more as they become known to people who havenot previously been involved in investing.

Kumi Fujisawa
Cofounder and Vice President of the think tank SophiaBank

Established Japan’s first investment trust rating company in1996 after working at investment trust firms. Co-founded
the think tank SophiaBank in 2000. Trying to create newsocial systems through a wide range of media such as
seminars, TV, and magazines.

7

Fujisawa: It looks like you are developing products
based on a belief in the good qualities of Japanesepeople. Creating products valuable to society sends a
positive message to employees and to the Japanesepeople. It also sends a message abroad about thevirtues of Japan. I believe it enhances the Daiwa
Securities brand.

Exercising social responsibility by
not investing in undesirable
companies
Fujisawa: The Oslo Convention on Cluster Munitions
entered into force August 2010. On July 30, 2010,
Daiwa Asset Management publicly announced that it
would prohibit the inclusion of securities issued bycluster munitions producers in active funds. Thissurprised me when I first heard it, but it’s great, isn’t it?
Suzuki: We cannot invest in companies involved inunacceptable or banned products and services. We
exclude such companies at the due diligence stage prior
to underwriting and are putting in place procedures toensure sales personnel do not recommend them
to clients.
Fujisawa: That’s terrific. For a country like Japan,
which has the greatest financial assets, to create thesafety valve of not directing money to companies thatare not beneficial to society sends a strong message tothe world. This is another way in which the Daiwa
Securities Group is taking the lead.
Suzuki: I think more companies are taking social
responsibility seriously, but I am proud of ourleading role.
Fujisawa: The Daiwa Securities Group’s initiative isremarkable given the strong tendency of the Japanese,particularly in the financial and capital markets, toavoid uncharted territory. What has been the response
within the company? It is generally said that
middle-management opposes changes in corporate
strategy.
Suzuki: I believe and hope that there has been no
opposition. I have long said that we should not engage
in socially unacceptable businesses even if they are notagainst the law or other rules, and I believe this way of
thinking has permeated our company. Generalmanagers in particular showed strong support whenestablishing the principles for cluster munitions
producers.

Daiwa Securities Group CSR REPORT 2011

To create an atmosphere allowing
employees to work effectively is amanagement mission
Fujisawa: The number of female sales personnel seems
to be rising.
Suzuki: Female sales staff are highly effective indealing with individual investors, who require
meticulous service and explanations. Financial service
companies have a reputation for being male bastions,but this is now completely untrue.
Fujisawa: Has the increase in female employees been
deliberate or spontaneous?
Suzuki: Both, I think. We certainly deliberately set out
to create a rewarding work environment. This led togreater engagement by female employees and a gradualincrease in numbers.
Fujisawa: What prompted you to create a female
employee-friendly environment?
Suzuki: A few things struck me poorly when I entered
the company. One was the messy state of offices. Front
office spaces were different, but back offices were in anawful state. I ordered a company-wide revamp when I
took up the position of president.
Fujisawa: Your female employees must be happy tohave someone who cares about this leading
the company.
Suzuki: Another thing I didn’t like was that there wasno set time to leave the office. Employees are now
encouraged to go home before 7:00 p.m. It isparticularly difficult for women to work if they don’tknow what time they will return home.
Fujisawa: You have improved the things that you
personally observed needed improvement. It’s theleader’s job to also consider shaping the environmentand creating opportunities from various angles, don’t
you think?
Suzuki: We have been able to attract many excellent
employees because our company now ranks high insurveys of desirable employers. It just goes to showwhat can be achieved if you offer the proper workplace.
I believe it is the role of senior management to createsuch a workplace and atmosphere.
Fujisawa: I’ve learned that you have placed great
importance on employees enjoying their work. This isprobably why the Daiwa Securities Group can do workthat contributes significantly to society.

Shigeharu Suzuki
Chairman of the Board, Daiwa Securities Group Inc.

Global Compact principles also notan accessory
Fujisawa: Finally, I’d like to ask about the Daiwa
Securities Group’s commitments as a member of the
UN Global Compact.
Suzuki: The principles of the Global Compact arefactors that should be routinely considered in managing
a company. They are consistent with our mission anduseful in carrying out our activities aiming for asocial impact.
Fujisawa: So there was no reason not to join.
Suzuki: I think it is important for companies to be good
citizens even if they don’t go as far as becoming
members of the Global Compact. This should be naturalfor managers with a Japanese mindset.
Fujisawa: I am highly impressed with what I’ve heard
today. Thank you very much.

8

SRI Highlights: The Role of Finance

Just think about what you canachieve with your money

The Nature of Money and Finance
What is finance?

Financial textbooks define finance as “making money
available.” But what significance does making money
available have for the economy and society? The roleof finance in the economy is often compared to therole of blood in the body. Just as circulating blood
keeps the body functioning, the flow of money
through financial functions sustains the economy.

Changing money flows change
society

Veins in the body keep blood circulating through afixed route. Channels for money flow, though, change
according to the economy and society. To which fields
the money flows and in what form affects thefunctioning of the economy and society.
For example, investment has been increasing inemerging markets, such as China, as well as inenvironmental businesses over the past few years, due
to their growth potential. Increased investment boosts

9

production thanks to the accumulation of capital,
leading to higher incomes and accelerating economic
growth. If the industries of emerging nations andenvironmental businesses expand, it can generate
gains for investors. Progress can also be expected inenvironmental protection that reduces the burden on
the earth.
What happens if a preoccupation with highreturns leads to massive funds flow to companies andindustries cutting environmental protection costs byengaging in indiscriminate deforestation anddischarging waste with no effort to prevent pollution,
while reducing labor costs by using child labor at plants
in developing countries? Investors will no doubt
earn returns.
However, such money flows are highly likely tofurther destroy the environment, and expand theunderclass hurt by cheap child labor in developing
countries—burdening the earth and society. While
investors may earn the same profits regardless, theDaiwa Securities Group CSR REPORT 2011

The destination of money

Building a sustainable society
Financial/capital markets

Impact on society

Direct financeYou decide who
receives money(when your money is used to finance a company)

Company A

Solutions provided forenvironmental issues
and poverty

Investment

Company B

Indirect financeDepositBanks decide
who receives
money

Company C

Financial returns

Interests, dividends,
and capitalgains/lossesCnature of the businesses and industries in which they
invest could have a major impact on future society.

Responsibilities in investing andlending

Investors need to treat their own returns seriously. At
the same time, they have a social responsibility to beaware that their investments wind up affecting society
in various ways. This also applies to banks’ lending
activities. Investments are made according to investors’decisions on where to invest their money based on risks
and returns, while lending involves banks making
decisions on depositors’ behalf about where to direct
their money.
If the money is provided to companies that are
reducing environmental impact through renewableenergy, preservation of forests, and development ofenvironmental technology, or those working to
improve society by helping reduce poverty indeveloping nations and providing educational andDaiwa Securities Group Inc.

medical support, it could generate returns for investors
and depositors while also resolving environmental andsocial problems.

Daiwa Securities Group’s
MissionFinance is commonly considered a method of asset
management by the party providing the money, but its
real role is to promote the development of society bydirecting funds to businesses resolving environmental
and social problems or to the development of newtechnologies. The mission of financial institutions is tomaximize the profits of the party supplying the money
while also creating money flows that contribute tosocial development.
At the Daiwa Securities Group, we consider it our
mission to offer investors financial products that
contribute to society and the environment. Providing
information about the environment and society that isuseful in investing is also a significant task.

10

SRI Highlights: The Role of Finance

What Is Socially Responsible Investment?
SRI mechanisms and concepts

Investment decisions that lead tomoney flows improving
environmental, social andcorporate governance (ESG) issues
SRI is an approach to making equity investment
decisions incorporating an assessment of a company’senvironmental and social efforts—i.e., corporate social
responsibility—in addition to financial data. It also
includes taking an active role as a shareholder inprompting a company to become involved in social
issues and operate ethically.
SRI started in the 1920s, when Christian churches
in the US wanted to exclude businesses incompatible
with their religious beliefs from their investments.
Amid the anti-war and civil rights movements in the
1960s, the scope of SRI expanded to include
shareholder advocacy—direct requests for companies
to contribute to improving environmental issues andhuman rights. In the late 1990s, ESG became
commonly accepted among investors as an essential
part of assessing corporate value as firms’ efforts
regarding environmental management, corporate
ethics, child labor in developing countries, andcorporate governance came into focus. These days it isalso known simply as responsible investing.
This approach of reflecting ESG issues is also
useful for bond and real estate investments. SRI,
characterized by ESG criteria in screening andshareholder advocacy activity, is now applied not only
to stock investments, but also to investments in bonds
and investment trusts, as well as to project finance,
real estate investment, and community investing(investment aimed at healthy development of local
communities).
SRI is aimed at gaining financial returns throughinvestments that take into account environmental andsocial issues. A new approach that has evolved from
SRI in recent years is impact investing—making
investments targeting clear and direct contributions tosolving social challenges.

World trends in socially responsible investment

US and Europe ahead in SRI,
Japan catching up

SRI has gradually transformed into investing with afocus on sustainability1. Sustainable activities are thosethat fulfill the needs of current generations without
reducing the capacity of later generations to meet theirown needs. The question is how to address issues that

11

could threaten humanity’s survival, such as the
problems of environmental destruction worldwide andpoverty in developing nations. In the US and Europe,
the SRI market is already worth several hundred trillion
yen, backed by laws requiring the disclosure of SRI
information to institutional investors and the spread oflifestyles of health and sustainability (LOHAS) amongindividuals. In Japan, the SRI market has not yet
reached ¥1 trillion (as of end-December 2010). One ofthe various reasons for this is that awareness of theability of finance to affect society is not as wellestablished as in the West. However, there has recently
been a renewed push for SRI. Japan’s Ministry of theEnvironment has decided to create guidelines forsustainable financial activities2 and the Japanese Trade
Union Confederation has issued Guidelines on
Responsible Investment of Workers’ Capital3 toencourage pension funds to make socially
responsible investments.
Another major reason SRI has not grown in Japanis that financial institutions have not developed
enough SRI products or provided enough information.
The Daiwa Securities Group has endeavored tocommunicate with various stakeholders, for example
participating in the UNEP Finance Initiative and otherinternational initiatives4 as well as in the drafting of the
Ministry of the Environment’s guidelines, while making
an effort to offer socially responsible investment
products that are able to pursue financial returns.
1 Sustainability (sustainable development): A concept raised in a 1987 report
entitled Our Common Future, published by the World Commission on
Environment and Development (a.k.a. Brundtland Commission).
2 Guidelines for sustainable financial activities: please see page 16.
3 Guidelines on Responsible Investment of Workers’ Capital: Guidelines on the
responsibility of workers (unions), as owners of financial assets, to support fairmarkets. The guidelines prohibit the investment of capital contributed by oron behalf of workers in corporate activities that are harmful to society or
the environment.
4 Other international initiatives: please see page 15.

Total Net Assets of Publicly Offered SRI Funds in Japanand Cumulative Placements of Impact Investment Bonds(¥ billion) 1,000

90

Total net assets ofpublicly offered SRI
funds in Japan

900
800
700
600
500
400

80

No. of funds (right)

70

Cumulative
placements ofimpact investment bonds

60

No. of bonds(right)

40

50

30

300
200

20

100

10

0

0
00

01

02

03

04

05

06

07

08

09

10

FY

Daiwa Securities Group CSR REPORT 2011

Daiwa Securities Group’s Engagement in SRIThe Daiwa Securities Group has developed and offered products aimed at promoting sociallybeneficial investment. This section introduces some of the innovative products we have offered so far
in SRI and impact investment.

SRI funds support companies
that exercise social
responsibility

Impact investment bonds help
resolve society’s problems
through bond issues

SRI funds evaluate potential component stocks andbonds for their social and environmental efforts, ethics,
and other non-financial performance as well as thelevel of sales and profit. These include eco-funds, forwhich the only non-financial criteria relate toenvironmental performance or those that invest only incompanies operating environment-related businesses.
Investing in such funds enables investors to indirectly
support countries and firms actively engaged inenvironmental conservation efforts and CSR activities
via the financial market.
Total net assets held in the Daiwa Securities Group’s
SRI funds stood at ¥74.3 billion at end-March 20111.

Impact investing differs from SRI in that it placesemphasis on investments directly affecting society. It isa way of allocating assets solely to activities targeted at
resolving society’s problems, such as poverty andenvironmental issues, in combination with generating
economic gains.
As a financial institution, we have supported theresolution of problems in society by selling various
types of impact investment bonds.
Cumulative sales of impact investment bonds inJapan amounted to ¥482.4 billion as of end-March
2011, of which ¥334.4 billion, or 69% was sold by the
Daiwa Securities Group2

Daiwa Securities Group’s History of SRI Funds and Impact Investment Bonds
Share in net assets of
SRI funds in Japan1
Daiwa Securities¥74.3 billion (end-March 2011)18%

Total ¥399.4 billion• Global Eco
Growth Fund
Course A• Global Eco
Growth Fund
Course B
Sold (redeemed)• Six Asset Balance
Fund (distribution
type)• Six Asset Balance
Fund (growth type)• Daiwa Eco Fund

• Daiwa Energy Technology
Fund (limited open-type
fund)• Russell Global
Environmental Technology
Fund

2011

• Global Environment
Equity Fund
• Global Environment
Foreign Bond
Balance Fund

• Daiwa SRI
Fund• DC Daiwa
SRI Fund

2010
2009
2008

2007
2006

• CO2L Bonds• Microfinance Bonds (IFC)• Vaccine Bonds• Poverty Reduction
Bonds for Latin
America and the
Caribbean
Share in cumulative
sales of impact
investment bonds2
Daiwa Securities¥334.4 billion(end-March 2011)

2004
2001

• Daiwa
Microfinance
Bonds• Daiwa/Blackrock GreenNew Energy Fund• Next-Generation
Environmental BusinessFund• “Eco Business Japan
Stocks Open”• World CO2L
Bonds
• Vaccine Bonds• Ecology Bonds (2 times)• Microfinance Bonds (IFC)• Education Bonds for Africa• Poverty Reduction Bonds
for Latin America and the
Caribbean• Microfinance Bonds(EBRD)• Water Bonds• Vaccine Bonds• Green World Bank
Bonds

69%

Total ¥482.4 billion

1 Based on Social Investment Forum Japan data.
2 Source: Daiwa Securities

12

SRI Highlights: The Role of Finance

SRI Efforts in Product Development and Sales Teams
Developing products acceptable to customers and investors and ensuring they are understood before
being purchased are important in promoting SRI. Here, we introduce how employees designing andselling SRI products view SRI.

In product development

Believing in the power ofmoney and developing
products with new themes
So far, I have been involved in designing vaccine andmicrofinance bonds. I was confident we would be able tosell these products because they have high credit ratings
and an easily understood structure in addition to thepotential to benefit society. Still, I was surprised at theextent of the response these bonds received—people intheir 30s and 40s, as well as female customers overall,showed especially strong interest. I also sensed that suchproducts capture the interest of people who have notpreviously considered securities investments.
In the future, I would like to develop products withnew themes or capacities to solve problems in Japanesesociety. For example, I am hoping to create mechanismsthat use the power of finance to alleviate food supply
problems and counter the declining birthrate, centered on
the private sector. I am alsointerested in products that are
low in risk and seem familiar tocustomers—for example,
products denominated in yen
rather than foreign currencies. I
hope to enliven the market byencouraging individual investors
Sayaka Ikegami
to buy more SRI products and by Director,
Product Planning Department,
cultivating SRI business from
Daiwa Securities Co. Ltd.
institutional investors.

Fine-tuning until bond issuanceto ensure money used forintended purpose
My job is to convince international institutions such as the
IFC to issue bonds designed in Japan.

Microfinance bonds
Bonds issued by the IFC to fund micro-entrepreneurs to foster
economic independence by offering small-scale financial services
without collateral. The Daiwa Securities Group arranged andsold the first microfinance bonds in November 2009.
1 Microfinance bond interest and principal paid based on
creditworthiness of IFC alone.
2 Financial institutions providing microfinance.

13

To determine which is the most important of the
projects under way at international institutions, we holdrepeated discussions with the institutions’ employees. The
most important thing is that structures are put in place toensure the money raised is used appropriately. We
repeatedly discuss and revise plans to ensure this happens.
I expect to see more
microfinance and other products
funding water supply andeducational support for poor
communities, as well as climatechange mitigation. Before issuingbonds, I research exhaustively,
together with the employees of Carlos Perezgrovas
the issuer entities, to assess how Executive Director
Capital Markets Europe
effectively the bonds can rectify Daiwa
Limitedsocial problems so that the issuer
can fully appreciate the significance of the bonds.
We first give explanations to the organization issuing the
SRI bond, to have them understand our aims regarding
things like providing finance to poor people andsupporting developing countries, and then hold repeatednegotiations to converge our aims and those of thatorganization. Microfinance bonds have so far made thestrongest impression on me. I have heard many times
about the importance of education and clean water frommy parents who are migrants
from Cuba. I keep my parents andrelatives in Cuba in mind when I
explain such things to bondissuers.
I am proud that my workmakes a contribution in areas likethese, and consider it my mission
Jose Padilla
Executive Director,
to keep facilitating the issuance ofDaiwa Capital Markets
bonds that solve problems.
America Inc.
Microfinance bond structure
Direct financial support

MicrofinanceMicrofinance 2
institutions, etc.

Investors

1

1

IFC

Average loans
below $10,000

Indirect financial support
Listed companies
Equity funds
Investment vehicles

Microfinance 2
institutions, etc.

Entrepreneursin developing
countries

Daiwa Securities Group CSR REPORT 2011

In salesProposing meaningful ways to
use money in simple terms

Reconfirming our own positionin the flow of money

I believe SRI products are essential in conveying the roleand importance of financial service companies asproviders of social infrastructure and ensuring people
know about our efforts to contribute to society.
When offering microfinance bonds, I felt manycustomers agreed with the bonds’ objectives, but felt
uneasy about providing finance in developing countries or
could not imagine how the product could produce profit.
My customers are individual investors and many are
elderly. I see it as my job as a professional to give people
a deeper understanding of the bonds and convince themthat the bonds duly provide returns. There is no
obligation to provide bond buyers with performance
reports, but I believe it is important to report to buyers of
impact investment bonds the use to which money has
been put to demonstrate
their effects. I think such
efforts will help spread
SRI products andincrease confidence in
Daiwa Securities.
I hope sales
personnel and the
product-planning staff
continue to cooperate todevelop proposals thatwill make meaningful use
of customers’ money.

SRI products easily catch people’s interest when I start to
explain, but even if they support the aim of the product,
this does not readily turn into a decision to buy. For
example, many customers, when told that microfinancebonds are designed to provide funds to poor people indeveloping countries, become doubtful about borrowers’
capacity to repay. There are also customers that say the
explanations are difficult to understand because there aremany unfamiliar terminologies. These factors suggest the
products are not yet well understood.
Customers are most interested in investment returns,
but many would also like to know how the money they
have invested is being used. I think mechanisms for
feedback to clients about the use of the capital areneeded to further increase uptake of SRI products.
Meanwhile, I would liketo continue providing
customers with correct
information about SRI andcommunicating the Daiwa
Securities Group’s vision.
In our day-to-day
sales activities, we tend toforget the ability ofmoney flows to solve
problems troubling theworld and our own part inthat money flow. I am
happy that SRI products
have given me a renewed
Aki Takeuchi
opportunity to appreciate
Asset Consultant Department,
how meaningful my
Ikebukuro Branch,work is.
Daiwa Securities Co. Ltd.

Takeshi Yaguchi
Executive Director,
Asset Consultant Department,
Daiwa Securities Co. Ltd.

Not only bonds—Daiwa Microfinance Fund launched
We launched the Daiwa Microfinance Fund in February 2011.
The fund directly invests in microfinance institutions (MFI) and in bonds issued by international institutions working tochange MFI’s operating environment. The fund thus directly contributes capital to alleviate poverty in developing countries.
It combines the advantages of a strong social contribution, convenience, and reliability—customers who buy shares in
the fund are sent asset management reports, and day-to-day trading is possible. The fact that the fund targets investmentsthat contribute to society makes it no less beneficial for investors compared to conventional foreign bond funds.
It should be possible to use money flows to correct society’s flaws and change the world. Finance has that power. We
are hoping to spread this idea among more people.

Shuichiro Tanaka

Director, Investment Trust Department, Daiwa Securities Co. Ltd.
Please visit our website for more details. http://www.daiwa.jp/products/fund/microfinance/

14

SRI Highlights: The Role of FinanceFulfilling Our Social Responsibilities as a Financial Institution
The Daiwa Securities Group has agreed to international initiatives to create mechanisms to directmoney flows to activities supporting the creation of a sustainable society. As a financial service
company, we have also integrated our research analysis unit into our ESG unit in order to provide
information useful for investing.

Corporate social responsibility

Participant in UN Global
Compact
In 2010, the Daiwa Securities Group became the firstJapanese securities company to join the UN Global
Compact, which is a global framework to create
sustainable growth.
Members are required to work to adhere to thecompact’s ten principles. These principles are in accord
with the Daiwa Securities Group’s principles and most of
their spirit is already reflected in our practices. However,
we continue to make a group-wide effort to become ahigher-quality company trusted by society.
On April 25 and 26, 2010, the UN Global Compact
held a “Public Forum on the Role of the Private Sector for
Peace and Development.” Mariko Kawaguchi, Managing

Director of CSR Promotion at the Daiwa Securities Group,joined an expert workshop on day one. Also, as a panelist
in a panel discussion, then-Executive Officer Keiko Uehara
spoke about the impact investment products we havedeveloped and offered.

Keiko Uehara speaks during panel discussion

Promoting SRI

Participating in Carbon
Disclosure Project
The Carbon Disclosure Project (CDP), which has been set
up by institutional investors interested in climate change,
requires global companies to disclose their stance on andactions regarding environmental problems. The Daiwa
Securities Group became a member of the CDP as aninvestor in March 2004. Daiwa Asset Management has
been a member since July 2009.

Joined UNEP Financial Initiative
The United Nations Environment Programme Financial
Initiative (UNEP FI), a partnership between UNEP and theglobal financial sector, works to identify and promote theadoption of the best environmental and sustainability
practices in operating financial institutions based on theknowledge that environmental problems cannot besignificantly improved without the participation offinancial institutions.
Having become a UNEP FI member in November
2004, the Daiwa Securities Group also signed the
Declaration on Climate Change by the Financial Services
Sector in May 2007.

15

Signatory to Principles for
Responsible Investment
The Principles for Responsible Investment (PRI),
announced in April 2006 by the UNEP FI and the UN
Global Compact, is a set of investment principles for
institutional investors incorporating ESG into thedecision-making process.
Daiwa Asset Management signed on to the PRI in
May 2006 in the belief it should take the initiative as an
asset management company. It had established many SRI
funds and other investment trusts incorporating ESG
considerations. Signing on to the principles also
prompted Daiwa Asset Management to revise its
guidelines for exercising shareholder voting rights,
promote internal communications, and organize a
non-financial information evaluation system. There were
18 Japanese signatories as of April 2011.

Daiwa Securities Group CSR REPORT 2011

Daiwa Securities Group’s efforts

Established investment policy
against cluster munitions
producers
Since the implementation of the Oslo Convention on
Cluster Munitions in August 2010, Daiwa AssetManagement, as an asset management company
operating in a signatory country, has followed theprinciples outlined below when investing in or otherwise
dealing with cluster munitions producers.
1. Do not include the securities of cluster munitions
producers in active funds. Promptly sell thosealready included.
2. In exercising voting rights associated with sharesissued by cluster munitions producers, vote infavor of any shareholder proposals to withdraw
from, or scale down, cluster munitions production.
Specialist lectures were given to units in the field.
Further, we have removed companies to which thecriteria apply from lists of stocks allowed to be offered tocustomers and those eligible for investment.

Helped draft principles forsustainable finance
The principles for sustainable finance are aimed atpromoting financial activities that take into account ESG
in the Japanese context. The Daiwa Securities Grouphas been involved in drafting the principles from theearly stages.

Providing information useful in resolving
society’s problems

Daiwa Institute of Research’s
ESG Research Section

The world we live in is facing major challenges such as
the rising risk posed by global warming and other climatechange and global energy and food shortages as
emerging nations’ economies grow. These conditions arechanging the roles and functions expected of companies
in creating sustainable social and economic systems.
Meanwhile, investors, who underpin corporate finance,are engaging with SRI, which uses a multifaceted
approach to valuing companies.
With the limited supply of natural resources available
for human use, it will be increasingly important forcompanies to create true wealth on a global scale bytackling human rights problems and social inequalities.
We believe capital markets should correctly value
companies adopting a proactive stance on such issues.

In August 2010, Daiwa Institute of Researchestablished an ESG Research Section within its CapitalMarket Research Department. Its main purpose is toenliven capital markets by presenting the new role andactivities of companies, stating new approaches tovaluing companies, and providing information about
new methods of communication between companies
and investors.
There are many solutions to the many problems
facing society. SRI, which attempts to provide solutions
through finance, also encompasses many themes andactivities. To make SRI more familiar without sacrificing
any of that diversity, the ESG Research Section of theCapital Market Research Department aims to provide
information to promote investments that will create abetter society while also focusing on value and theinterests of customers.
Selected research reports
Is There Further Upside to Green Stocks?
Current ESG Data Disclosure and Issues—Effectively Using
Information
China’s Social Problems and CSR—Government-driven CSR
Measures Spreading
Monthly ESG News
This is just a sample of the reports published.

Exploiting information in asset management
and product design

Daiwa Asset Management
research structure

Daiwa Asset Management has directed asset
management and research staff, among others, toundertake research and development for evaluation of
non-financial information since March 2010. Purposefully
evaluating non-financial information, which has been
merely one indicator of corporate value, makes
evaluations more accurate.
In fiscal 2010, we held internal and external
discussions as part of preparation to install a non-financial
information evaluation system befitting an asset
management company. We carried out in-depth
discussions on evaluation of Japanese stocks with ouranalysts and fund managers, referring to studies of ESG
and other non-financial information disclosures. It will benecessary to evaluate the corporate value provided by
non-financial measures such as reducing environmental
impact or contributing to society from a long-term
perspective. We hope to focus on building a foundationfor evaluating the intrinsic value of companies byanalyzing non-financial information.

16

SRI Highlights: The Role of Finance
Employee Round Table Discussion

Ways to Promote SRI
Using finance to support sustainable social systems—socially responsible investment is the key toaccomplishing this important task. On February 15, 2011, Daiwa Securities Group employees exchanged
opinions on why SRI has not taken off in Japan as well as future challenges and possibilities.
* Positions are those held at time of discussion

SRI a return to basics for valuing
companies; yet to gain popularity,
momentum
Moderator: What are your impressions of SRI in
your work?
Kikuchi: I have been involved in SRI since weestablished our Eco Fund in March 2006. The strongest
impression I have of managing SRI funds is that itconstitutes a return to basics. It is a fund manager’s job
to gauge companies’ value. Rather than just looking at
profits, SRI gives us the opportunity to revisit
companies’ characteristics and strengths, which are thesource of those profits.
Suzuki: I also see SRI as a return to basics. Among thevariety of factors that need to be considered in
evaluating companies’ profit are ESG activities that
could present risks. With investors now using a broader
range of factors to evaluate companies, I think theimportance of environmental and social factors
is growing.

Tanaka: My approach to SRI incorporates an NPO
perspective, as I am a director at an NPO bank in a
private capacity. I also take into consideration the direct
effects on society. For the first time, we have been able
to establish a fund that contributes directly to society bychanneling capital straight to microfinance institutions.
I would like to create a structure in which we are able tocontribute directly to social objectives through core
operations, like this microfinance fund.
Yanagisawa: I believe institutional investors havebecome aware of concepts such as CSR and ESG
through seminars for institutional investors andcorporate IR officers. However, their views and what
they put into practice differ widely.
Saito: Right now, the sales teams are putting effort into
selling microfinance funds. It seems that the importanceof such funds is now much better appreciated. But it
seems that, in contrast to the sales staff’s high sense of
purpose, awareness of SRI is still limited amongindividual investors.

Sluggish Japanese issues one
reason SRI not growing;
this offers potential for
breakthroughModerator: Why do you think SRI hasn’t caught on
in Japan?
Yanagisawa: One possible reason, for products centeredon the stock of Japanese firms, exists at a more basic
level than SRI—the prolonged unpopularity ofJapanese issues.

Katsuya Kikuchi

Senior Fund Manager, Equity Management Department,
Daiwa Asset Management Co. Ltd.

17

Daiwa Securities Group CSR REPORT 2011

Kikuchi: Japanese stocks have been among the mostsluggish in major global markets for the past five years.
But a focus on SRI could trigger renewed interest. In
Japan, the environmental and social components of
ESG still tend to be viewed in terms of costs, but it isquite likely this is exactly where firms’ unrecognizedefforts lie. The SRI perspective could be the catalyst foran end to the despair enveloping Japanese companies.
Suzuki: ESG factors certainly come into play in the low
valuations of Japanese issues. In rankings based on
quantified measures of governance, Japanesecompanies rank behind not only European and US
companies, but also most emerging countries. I believe
governance in Japan being seen as so poorinternationally means improvement could attract
new investment.
Recently announced requirements by the Tokyo
Stock Exchange for reporting on governance and thepossible reform in the presentation of financial
statements means new information will be available for
evaluating companies. This should provide more fertile
ground for investment decisions incorporating
ESG considerations.

Moderator: The word “SRI” gives the wrong
impression, as many people have been saying. I think itgives the impression that you sacrifice your own returns
to contribute to society.
Tanaka: None of the SRI funds I have designed haveeven slightly sacrificed returns. Unfortunately though,
SRI funds as a whole have not performed well. Many
funds concerned with global warming set up before theglobal financial crisis have declined steeply since thecrisis. This is because they had a high proportion ofsmall-cap venture stocks, which are more sensitive tomarket conditions. That is, their decline had nothing to
do with their being SRI funds.
Moderator: How do individual investors react to theterms “SRI” and “social contribution?”
Yanagisawa: We have the responsibility to provide
proper explanations to individual investors to help themunderstand financial products and make investment
decisions. Yet the fact is that SRI is still not widely
understood or even known.

Presentation of information,
ambivalence of term “SRI”; further
improvements necessary
Suzuki: There is probably some ambivalence about theterm “SRI.” I think it tends to lead to misconceptionthat the products give more weight to social
contributions and disregard investment returns, creating
hesitation among investors seeking to maximize theirinvestment gains.

Naoko Saito

Senior Managing Director,
Daiwa Securities Co. Ltd.

18

Hiroshi Suzuki

Senior Researcher, Environment and CSR Research Section,
Capital Market Research Department, Daiwa Institute of Research Ltd.

Kikuchi: I have recently become painfully aware of theneed for a change in the way information is presented.
For example, I feel investment sentiment has beenfrozen by overblown claims about the direconsequences for the earth of not reducing CO2
emissions. I believe information should be presented ina way people can relate to—indicating how intertwined
our daily lives and companies’ activities are with
global issues.

Consideration of non-financial
gains to expand SRI
Moderator: Daiwa held a seminar for institutional
investors and invited representatives from the JapaneseTrade Union Confederation, which released the
Guidelines on Responsible Investment of Workers’
Capital. What are these guidelines, and how was the
response from investors?
Yanagisawa: The guidelines relate to pension funds,
which is, in a broad sense, workers’ capital. Aimed at
establishing workers’ governance over the funds, theycall for ESG considerations to be incorporated into
decision making, and performance monitored andfollowed up. While most participants responded
positively, some were negative. Naturally, some asset
management companies insisted that performance isinevitably the focal point in managing assets.
Institutional investors’ main mission is to maximize
performance. While it is ideal to take long-term growth
into account when evaluating companies to makeinvestment decisions, they actually need to deliver
performance in a month or two.

19

Still, if fund managers at representative
institutional investors such as GPIF1 and influential
pension funds refer to SRI factors when selecting
stocks, I think it will have a domino effect andinstantaneously change the environment.
Suzuki: I believe most investors’ true opinion is that
performance is everything in managing funds, but I
think that investment gains are not limited to just
performance, but also the positive feedback theinvestment creates. People that invest for such feedback
are probably interested in generating positive returns forsociety rather than being purely money-orientated. I
think SRI will spread when investors consider profitsthat cannot be measured numerically.
Saito: That said, it remains the case that investors exist
because there are profits to be made. On the other hand,
we have recently witnessed the social phenomenon ofpeople spontaneously sending school backpacks toorphanages around Japan. I think this shows that people
need to feel connected with others even in a so-calledfragmented society. By explaining in simple words toindividual investors that connecting with society is asocial contribution and that participation in society canoccur through investment, we can probably create awin-win relationship, which will probably help
spread SRI.
Tanaka: Customers can directly relate to themicrofinance funds I am currently selling. I think thereis extremely strong potential demand for the funds
among customers ranging from individuals with astrong interest in the market to business investors.
1 Government Pension Investment Fund: The world’s largest institutional investor,
said to be managing ¥88.5 trillion in Japanese bonds (end Dec. 2008).

Giving meaning to money;
much expected of financial
institutions
Moderator: The lack of financial education in Japanmeans many people believe making money is theantithesis of contributing to society. However, the twoare compatible and using money meaningfully can build
a sustainable society. I believe money flows will change
if we educate people about this.
Kikuchi: I am currently participating in theMulti-stakeholder Forum on Social Responsibility for a
Sustainable Future2, which has brought together diverse
stakeholders to resolve society’s problems. The
composition of stakeholders is unique in that theDaiwa Securities Group CSR REPORT 2011financial sector is grouped separately from othercompanies. This stems from the idea that financial
institutions, which are responsible for money flow, act
as infrastructure.
To me, this shows that there are extremely highexpectations of financial institutions to give meaning tomoney flow. I received the extremely strong impressionthat actors from non-financial sectors such as
government, NPOs and NGOs, consumer groups, andlabor organizations expect financial institutions toredirect money flows and gradually change the world
through proactive initiatives and the creation offrameworks such as impact investing.
2 Multi-stakeholder Forum on Social Responsibility for a Sustainable Future: Pleasesee page 22.

Examples of successful group
coordination; the shortcut tospreading SRI
Moderator: What should the Daiwa Securities Group do
to spread SRI?
Kikuchi: I think it is extremely important to broaden
the range of products offered. This could be bonds ordirect capital flows, but I think the important thing is todevelop a wide range of products and devise aneffective way of communicating information. Also, weshould provide basic information such as an
explanation of impact investing rather than just productinformation, using whatever means possible tocoordinate information between group companies andsteadily pump out information.
Tanaka: I want to continue steadily developing funds
that benefit investors and play a useful role in business.

Shuichiro Tanaka

Director, Investment Trust Division,
Daiwa Securities Co. Ltd.

Shiko Yanagisawa

Managing Director, Global Equity Sales,
Daiwa Securities Capital Markets Co. Ltd.

However, I think we need to raise awareness even
within the Daiwa Securities Group, as there arevariations in the understanding of, and interest in, SRI
even in our company.
Saito: I strongly feel that we need to make acoordinated effort to create examples of win-win
investments generating profit for investors, employees,
and the Daiwa Securities Group as a whole.
Suzuki: Changes in capital flows should also change
the stance of companies. I think we should therefore
also facilitate positive communication between
investors and companies.
Yanagisawa: I think it is also important to offer
investors information on companies that are at theleading edge of socially responsible activities, butwhose initiatives are not widely known, and educate
equity analysts who carry out corporate research.
Suzuki: In my opinion, when we provide information to
institutional investors, we need to indicate how changes
in society affect individual companies’ value. The mostpowerful way to appeal to investors would be toprovide examples of successful investments in which
positive social returns rebounded in investment gains.
Still, because there are as many examples of failure as
success, it would also be acceptable to urge customers
to make such investments with an understanding of thisoverall picture.
Moderator: Thank you all for your highly constructive
insights. We will take them into account in the Daiwa
Securities Group’s future activities.

Moderator: Mariko Kawaguchi
Managing Director of CSR Promotion,
Corporate Communication Department,
Daiwa Securities Group Inc.

20

Our relationship with money
A key function of financial institutions is to generate money flows that lead to a sustainable society,but providing education about the impact of money on the economy and society is also important.
We highlight the importance of the fact that the money we each hold has meaning.

Economic and financial
educational activities
Learning about the economy when you are young
enables you to better understand the relationship withothers and society in general and how economic activities
and finance can affect society.
The Daiwa Securities Group exploits its own specialist
knowledge and knowhow and cooperates witheducational institutions and NPOs to support practical
economics education for elementary, junior high, andsenior high school students and offer programs at
educational institutions.
Results in Economic and Financial Education
Activity

Description

StartedParticipants

Support for theStudent Company
Program (SCP)*

A program that gives
high school students
hands-on experiences withcorporate management by
simulating real-world
business conditions

September
2003

174

Personal finance planningworkshop teaching students
June 2005
about society and economics bymanaging household finances.

23,936

Support for
Finance Park*
Sponsorship of JA’s
mainstay Global
Leadership Forumfor elementary,
middle, and highschool teachers*

Case studies on recent
developments in the global
economySupport for
operation of Japan Promoting use of Life is a Series
Council forof Choices hands-on economics
Economic
textbook for economic
Education
education of teachers(CEE-Japan)

July 2001

3,182

January
2009

577* Programs of Junior Achievement, the world’s largest non-profit organization
promoting economic educational activities for youth

Describing how money relates to daily
life, and the philosophy of finance
Finance is closely intertwined with our daily lives. We comeinto contact with it every day, for example, through banks,
securities companies, insurance companies, and statepensions. Despite this, there are likely few people concerned
about the ways money entrusted to financial institutions(deposits, insurance, shares, pension reserves) is used.
We undertake various educational activities to inform
investors and depositors that money has meaning and thepower to move society and companies to action. We use
lectures at high schools and universities as well as various
bodies’ venues for communicating with the public toteach financial literacy and the philosophy of finance,broadening understanding of SRI.

21

We actively engaged in financial education in fiscal
2010, holding lectures for students and working adults (atcommunity colleges and the Junior Chamber International
Osaka) on a sustainable society and the significanceof money.
Examples of Financial Education Activities in Fiscal 2010
Date held

Participants

ThemesMay 14

Employment Study Group, Ministryof Health, Labour and Welfare

Realities of SRI

November 5

Junior Chamber International
Osaka

Future of money

November 10

Hitotsubashi University

CSR and capital providers

November 12

Seminar for community college

Sustainable society and social
responsibility for seniors

November 17

Sakai High School

Future of money

Talk on the future of money at
Future Expo
The Daiwa Securities Group had a stand featuring impact
investing at the Future Expo 2010 for the Blue Planet held
November 4-6, 2010 by the Junior Chamber Internationalat the Osaka International Convention Center. At a panel
discussion on “SRI—Innovations Creating Sustainable
Money Flows,” Mariko Kawaguchi, Managing Director of
CSR Promotion, Corporate Communication Department,
Daiwa Securities Group, acted as moderator, and Satoru
Yamamoto, Director, Product Planning Department,
Daiwa Securities, participated as a panelist discussing thefuture of money. Participants’ reactions such as, “It was
the first time I heard that money can be used to change
society,” and “I would have thought of a more usefulway to use my money if I had heard these things when
I was a child,” reiterated the importance of oureducational activities.

Introducing impact investing at the Future Expo

Daiwa Securities Group CSR REPORT 2011

Participation in Multi-stakeholder Forum on Social Responsibility
as steering committee member
The Multi-stakeholder Forum on Social Responsibility
for a Sustainable Future, in which many bodies
participate as equals, was established in 2008 with theaim of building a coordinated response to problems insociety that cannot be solved by government alone.
Katsuya Kikuchi, Senior Fund Manager, Daiwa AssetManagement, participates in the forum, which
includes business and consumer associations, labor
unions, NPOs and NGOs, and government, as arepresentative of the financial sector and steeringcommittee member (as of March 2011). In the forum’s
first two years, discussions centered on factors needed
to create a safe and stable sustainable society. Hereon,
the forum plans to devise a coordinated strategy tocreate a safe and sustainable future and work on
concrete actions spanning four issues: developing
social infrastructure to nurture humanity, creating asociety in which everyone can live together,
participating in the resolution of global-scale
problems, and developing sustainable communities.

Holding “Social Business College” lectures
The idea of social businesses, which aim to resolve
specific problems affecting society as well as togenerate sustainable profits, has gained attention.
However, social businesses themselves are not yet
widely known. At the Daiwa Securities Group, we
regard providing a forum for discussion of sustainablebusiness models and financing as highly important. In
October 2010 we began the “Social Business College”
series of lectures for university students and adults.
We hold the lectures in cooperation with Music
Securities, a next-generation financial businessproviding financing to social businesses via theInternet, and we publish the proceedings and casestudies on our website.

Future lectures will also highlight social businesses
with a unique business model. We plan to hold overtwelve lectures during the two years of the series,
ending in September 2012.
1st: October 28, 2010
Lecturer: Natsuko Shiraki, President,
HASUNA Co., Ltd.
2nd: December 7, 2010
Lecturer: Eriko Yamaguchi, CEO,
Motherhouse Co., Ltd.
3rd: February 14, 2011
Lecturer: Yoshiteru Takemoto, CEO, tobimushi Inc.

http://www.daiwa-grp.jp/csr/citizen/support/college/backnumber.html

The second lecture, held on December 7, wasconducted by Eriko Yamaguchi, CEO, Motherhouse.
Ms. Yamaguchi spoke frankly about making bags—of
a quality acceptable to customers in advanced
nations—in the developing nation of Bangladesh(which was not being reached by international aid)
and her efforts to establish the company’s brand. The
lecture was received enthusiastically, with theaudience empathetic and asking real questions about
Motherhouse’s business model.

First Social Business College lecture

22Creating a Rewarding Workplace for Employees
Making Work as Fulfillingas Possible

secure diverse personnel by recruiting year-round so thatsuch graduates can be employed soon after receiving
tentative job offers, regardless of whether they have priorwork experience. These recruits receive the same level oftraining as new graduates.

At the Daiwa Securities Group, we believe maximizing
each employee’s motivation increases customer
satisfaction and in turn raises shareholder value. We aremaking efforts to ensure that individual employees feelsatisfied in their jobs and that they, together with theirfamilies and all others concerned, feel proud to be amember of the group.

Recruitment of people with disabilities

Our efforts
Achieving a good work-life balance
We are working to ensure employees have a goodwork-life balance as part of our business strategy. As agroup, we have made concerted efforts to introduce
employees to new ways of thinking about work. We have
put in place systems that deliver a variety of work
practices, encouraged employees to leave work by 7:00
p.m. and to take their annual leave, and instituted
workplace visits by employees’ families.

Encouraging women to succeed
We are trying to appeal more to women’s individualinterests, by introducing thriving female employees as rolemodels in internal publications and providing opportunities
for cross-company communication, in order to increase thenumber of women in management positions. These efforts
have resulted in five female directors joining the board andwomen heading up about 10% of branches since fiscal
2009. The number of women transferring to thecareer-track employee and regional career-track employee
streams has also increased significantly.

Recruitment of previous years’ graduates
In fiscal 2011, we began hiring university graduates who
had graduated up to three years earlier. We hope to

The Daiwa Securities Group has around 200 employeeswith disabilities working in a wide range of roles at its
headquarters, in sales branches, and in call centers.
The group started recruiting new graduates withdisabilities as regular employees (general office staff) in
fiscal 2008 and in fiscal 2011, broadened recruitment into
the career-track employee, regional career track employee,
and customer service employment streams. We actively
increased recruitment opportunities, holding briefings
about the company for new graduates, participating incareer expos, and implementing job placement support
programs for disabled university students.
Once people with disabilities are hired, we provide
support for career advancement, for example creating
opportunities for them to enter the career-track andregional career-track employment streams.

Efforts to ensure and improve
employees’ health
We consider our employees’ health essential capital forour company and society. Our human resources
department, General Health Development Centers, andhealth insurance association have worked together tomore actively promote health.
Our efforts include thorough health education, awalking campaign, joining the Cancer Screening
Corporate Action project, a program to help people quit
smoking, breast and uterine cancer screening, cervicalcancer vaccinations, and metabolic syndrome-specifichealth guidance.

Past Measures and Results
MeasuresFebruary 2005
October 2005〜

Establishment of Women’s
Support Action Team1
Expansion of childcare andnursing care programs

Progress
Indicator
Number of female managers

1

Number of employees taking childcare leave

BeforeAfter (as of FY2010)

75

162

115 people (no men) 383 people (incl. 25 men)

April 2007〜

Job relocation system2

Number of users (cumulative since FY2007)–

69

June 2007〜

Directive asking executives and employees toleave office before 7:00 p.m.
Policy to encourage executives and employees
to take paid leave
Recruitment of people with disabilities
as regular employees
Expansion of program forchanging career path

Overtime working hours (monthly avg.)

26.2 hours

24.0 hours

Paid leave usage rate (per year)

37%

55%

Proportion of employees with disabilities (allemployment streams)
Number of employees transferring tocareer-track roles (total since FY2009)

1.87%

2.08%

October 2009〜

682 people

June 2008 〜
April 2008 〜
October 2009 〜

1 Director or higher
2 Offers position in new location when an employee must relocate due to marriage or spouse’s job transfer (eligible to employees who are not subject to transfers that requirechange of residence).
Note: For scope of data, see: http://www.daiwa-grp.jp/english/csr/report/2011/23

Daiwa Securities Group CSR REPORT 2011

Daiwa Aid after theGreat East Japan Earthquake
We extend our deepest condolences to the victims of
the earthquake that took place on March 11, 2011.
The following is a report on our donations to
help reconstruction and provide aid to affected areas
and the direct support the Daiwa Securities Group isproviding, as well as our future plans.

� Donations¥100 million (Daiwa Securities Group)¥30 million each to Iwate, Miyagi, and Fukushima prefectures¥10 million to Ibaraki Prefecture� Policy Proposal(Daiwa Institute of Research)
The Daiwa Institute of Research announced a proposal for theestablishment of a reconstruction fund and a reconstruction
solidarity tax.
(Proposal for Establishment of Reconstruction Fund andReconstruction Solidarity Tax to Finance Rehabilitation after
Great Earthquake of Unprecedented Scale).
Please see the following website for more information(in Japanese).
http://www.daiwa-grp.jp/data/current/press-2955-attachment.pdf

� Subsidies for volunteer activities� Support through financial products¥35 million (Daiwa Securities Foundation)¥5 million (¥1 million each) to disaster volunteer centers in
Iwate, Miyagi, Fukushima, and Ibaraki prefectures, and Sendai
City¥30 million in grants to disaster volunteer action groups(maximum ¥500,000 per grant)
Recipients are students and specialist groups engaging in
activities needing specialized skills.

The Daiwa Securities Group is giving a portion of trust feesfrom the Daiwa Nippon Ouen Fund (Phoenix Japan)1 toearthquake victim support groups.
The group is also supporting finance aspects of themassive reconstruction funds and developing impact investment
financial products.

� Subsidies for research into disaster medicine¥10 million (Daiwa Securities Health Foundation)¥10 million (maximum ¥1 million per grant) to universities,
research centers, hospitals, and other individuals and groups
engaged in research into disaster medicine or medical care in
the disaster-stricken areas of the Tohoku region and Ibaraki,
Miyagi, and Chiba prefectures.

� Daiwa Foundation Tohoku Scholarships₤250,000 (Daiwa Anglo-Japanese Foundation)
The foundation has decided to establish a ₤250,000 scholarshipfund for students from the Tohoku region whose educational orother circumstances were affected by the earthquake.

� Daiwa Point Program
Donations through point exchange(Daiwa Securities)¥7.18 million raised by 7,005 participants(as of April 30, 2011)
Used to support reconstruction in affected areas through NPO
Japan Platform.

� Charity collection(Daiwa Securities Group)¥40.57 million raised from executives and employees in Japanand abroad (as of April 27, 2011)
Used for reconstruction of affected areas and to support victims
through Japan Platform and the Japanese Red Cross Society.

1 Daiwa Nippon Ouen Fund (Phoenix Japan): Japanese stock fund offered by
Daiwa Asset Management. Invests only in Japanese stocks to support strong
Japanese companies and invigorate the Japanese economy.

� Future support
Interest in building a sustainable economy has grown since theearthquake and accident at the Fukushima Daiichi Nuclear
Power Plant brought into focus sustainable energy and regional
economies that take into consideration the surrounding
environment and communities. We strive to offer companies
and investors information spanning a wide range of perspectives
such as the environment and CSR.
There are many additional ways, such as the Daiwa
Institute of Research’s policy proposal, for the Daiwa Securities
Group to contribute through capital markets.
We plan to share our experiences in the reconstruction of
Sumatra, using knowledge gained in our project supporting
reconstruction after the 2004 tsunami2.
We also plan to encourage employee’s activities long-termby providing employee volunteer information through our
intranet.
2 Daiwa Securities Group Tsunami Reconstruction Fund

Please see the following websites for more information
about the Daiwa Securities Group Tsunami Reconstruction
Fund (in Japanese).
http://www.daiwa-grp.jp/csr/citizen/support/tsunami/
http://www.acc21.org/act/act-specialfund-daiwa.html

24

CSR also becoming more prominent in communications
We report all our CSR activities on our website.

Daiwa Securities Group CSR web pages
Impact investment efforts

Learning about CSR and SRI

Impact investments

Exploring CSR through dialogues

Investments building the future■ No. 32: CSR and biodiversity

Impact investments

Exploring CSR through dialogues

Contributing to society
through investment
Providing information
about investments
intended to alleviate
poverty, environmental
problems, and other social
issues while delivering
economic gains.

Serial publication of dialogues between frontline CSR
experts and Mariko Kawaguchi, Managing Directorof CSR Promotion,
Corporate Communication Department.
Transcripts of 36
dialogues spanningeight years available.

http://www.daiwa.jp/impact/(As of end March 2011)

http://www.daiwa-grp.jp/english/csr/dialogue/

Resolving social issues throughbond investments■ Ecology Bonds■ Microfinance Bonds■ Poverty Reduction Bonds for
Latin America and the
Caribbean■ Education Bonds for Africa■ Vaccine Bonds■ Water Bonds■ CO2L Bonds■ World CO2L Bonds

ESG reports■ Environment■ Society (CSR and SRI)

Collection of Daiwa
Institute of
Research reports on
ESG from multiple
perspectives.
Includes ESG
glossary.

■ Daiwa Microfinance Fund

Daiwa Microfinance Fund
A Japanese first!*
Introduces investment
trust features designed toalleviate poverty andexamples of loans.

http://www.daiwa.jp/products/fund/microfinance/■ Russell Global Environmental
Technology Fund■ Next-Generation Environmental
Business Fund

http://www.dir.co.jp/souken/research/esg/index.html

Eco2
reports* According to Tokio Marine
Asset Management, as ofend-December 2010

■ Daiwa SRI Fund
■ Daiwa Eco Fund

Regular Web updates!
We regularly publish information and reports.
Please have a look.

■ Corporate governance

ESG reports

Resolving social issues throughinvestment trusts

25■ No. 26: Inhumane weapons and SRI

Eco2 reports
Seeking to draw
together two “ecos,”
ecology and economy,
Daiwa Asset Management fund managers
introduce ecocompanies and topics.
http://www.daiwa-am.co.jp/guide/eco/eco_index.html

Get involved!
Participation is free. You can view schedules andapply online.

I

Daiwa Securities Group CSR REPORT 2011

Social engagement
Joined UN Global
Compact(January 2010)

Corporate citizenship activities
Economic and financial education■ Economic and financial education for young people■ Daiwa-JFS Sustainability College

Encourage employees
to volunteer
Sign language classes in Tokyo,■ Engaging with Forests 2010
■ Sign language classes inTokyo, Osaka, and Nagoya

Supporting UN
Millennium
Development Goals
Daiwa Asset Management
signed on to Principles for
Responsible Investment(May 2006)

Joined United Nations
Environment Programme
Finance Initiative(November 2004)

Signed on to Carbon
Disclosure Project (CDP)(March 2004)

Forumsheld(since 2010)● February 13, 2011
● September 9, 2010
● July 21, 2010
● March 19, 2010

Osaka, and Nagoya

We hold sign language
classes for novices inthree cities. Participant
numbers are rising
annually, as are thenumber of people passing
higher-grade skills tests.
http://www.daiwa-grp.jp/csr/citizen/
support/volunteer/sign.html

Major culture and arts support■ Central Contest for Book Review
Painting■ Todaiji Otobutai, 1250th Buddhist
memorial ceremony for Empress Komyo■ Design to Change the World Exhibition■ Tomomi Nishimoto Conducts “Romeo& Juliet” presented by Daiwa
Securities Group Inc.
■ Post-Impressionism: 115 Masterpieces
from the Musée d’Orsay■ Other events

Aid and support to regional and international
communities through foundations and NPOs
■ Social Business College

Social Business College
Provides a forum fordiscussing healthybusiness models andfinancing methods for“social businesses,”
which resolve social
issues while generating
sustainable earnings.
http://www.daiwa-grp.jp/csr/citizen/support/college/■ Daiwa Securities Health Foundation■ Daiwa Securities Foundation■ Daiwa Anglo-Japanese Foundation■ The Daiwa Securities Group Tsunami
Reconstruction Fund

■ Daiwa SRI Fund Financial Assistance
Program■ Daiwa CI Biodiversity Conservation
Fund■ And other programs

Daiwa Microfinance Fund Forum 2011
Impact Investment Forum
Daiwa Africa Forum 2010—For Better Access to Education and Medical Care
Daiwa Water Forum 2010—Water for All—
Videos of these forums are available on Daiwa Internet TV.

26

CSR Issues: Performance and Targets
This section reports the fiscal 2010 results and fiscal 2011 targets for the wide range of initiatives conductedto help build a more sustainable society.
Targets for Fiscal 2010
Key Issue 1
Leveraging Financial Capabilities to Contributeto a Sustainable Society

Key Issue 2
Developing Sound Financial and Capital Markets
for the Next Generation● Arrange and distribute at least ¥100 billion in impact investment bonds● Consider other impact investment products such as investment trusts● Strengthen ties with domestic and overseas universities and also monitor and further promote the performance of these relationships● Provide employees with training in financial philosophy (ethics as financial supporter)● Pursue wide distribution of the “Life is a Series of Choices” text to teachers● Hold study sessions for students on the topic of social business● Communicate more information about environmental issues (continued)● Enhance information dissemination through Daiwa Securities Information TV and website● Establish a firmer global internal control scheme to further strengthen the trust of stakeholders and thus ensure sustained growth

Corporate Governance● Establish groupwide BCP scheme● Hold dialogues with experts at least once a month to improve executive and employee awareness, and promote internal andexternal communication through the dissemination of information

CSR Management● Further ensure thorough awareness of corporate ethics and compliance

Entire Group● Strengthen efforts to eradicate organized crime and block relationships with any such elements● Make ongoing improvements to operating quality (continued)● Revise internal rules, operating procedures, and other guidelines

Compliance

Daiwa Securities● Strengthen scheme to eliminate unfair trade● Support branch efforts to beef up internal controls

Daiwa Securities
Capital Markets● Take actions to address amendments to the Financial Instruments and Exchange Law● Step up related initiatives, including actions against organized crime● Actively disclose information, including non-financial content, demonstrating the unique or differentiating features of the Group(continued)

Information Disclosure● Carry out efficient IR activities (continued)● Improve and make effective use of IR channels (continued)

Relationship with Shareholders and Other Investors
Relationship with Customers● Take actions to expand shareholder reward program (continued)● Actively pursue post-sales follow-up (continued)● Improve customer-interface skills of branch counter staff (continued)● Develop professional workforce that combines expertise and loyalty (continued)

Relationship with Executives and Employees● Achieve a far-reaching work-life balance program (continued)● Accelerate appointment of female managers who will assume leadership roles in the Japanese financial industry (continued)

Relationship with Society● Collaborate with external NPOs to provide richer information internally and increase opportunities for action, with the aim ofallowing more executives and employees to participate in corporate citizenship activities

Environmental Initiatives● Establish system to increase green purchases. Promote efforts internally and work with suppliers● Establish system for efficiently gathering environmental impact data

Rating indicates self-evaluation of fiscal 2010 results: ◎ = success (significant), ○ = success (moderate), △ = additional effort needed,27= not achieved.

Daiwa Securities Group CSR REPORT 2011by the Daiwa Securities Group
RatingTargets for Fiscal 2011

● Distributed around ¥334.4 billion in impact investment bonds● Arranged and distributed Daiwa Microfinance Fund◎

● Expand design and sales of impact investment products relating to earthquakes,
the environment, poverty, and other issues in Japan and abroad● Enhance disclosure of environment and CSR information to investors● Offered course endowments, dispatched group employees as lecturers, and engaged in university venture support
and other industry-education collaborations● Social Business College (3 lectures since October 2010, with 286 participants)
13 lectures at universities and other institutions○● Continue alliances with Japanese and foreign universities and continue theSocial Business College (participation target of 80 people per lecture)● Established ESG Research Section (6 people) at Daiwa Institute of Research. Improved provision of environmental
and CSR information to investors and general public○● Bolster environment and CSR research conducted by group research departments (atDaiwa Securities, Daiwa Securities Capital Markets, and two asset management firms)● Broadcast footage of microfinance and Africa education forums on Daiwa Internet TV and published ESG reports
written by the ESG Research Section on company website. Published proceedings and case studies of Social
Business College lectures○● Hold seminars and forums for ordinary customers (at least 3)● Reorganize presentation of group environment, CSR, and SRI information on
website and increase quality and volume of information● Revised risk rules in internal control system to match global standards○● Maintain healthy business by disclosing adequacy of capital● Two group companies began using Tama Training Center as back-up office● Improved methods for checking employee safety during disasters◎● Increase awareness of crisis management system for disasters● Reduce group-wide power consumption by 15% in response to power shortage
this summer● Held 14 dialogues with experts on specific CSR themes (Exploring CSR Through Dialogues)● Established group policy banning investment in cluster munitions producers◎● Maintain dialogues with specialists in specific themes and strengthen relationships withdepartments and sections responsible within group (target of at least 12 dialogues)● Established internal rules regarding prohibition of insider trading and conducted training● Conducted compliance training though e-learning◎● Ensure thorough awareness of corporate ethics and compliance (continued)● Established rules on avoiding all contact with organized criminal elements● Assessed situation by exchanging information with public bodies● Increased effectiveness by gathering data and using systems◎● Further coordinate group measures to avoid contact with organized criminal
elements● Used PDCA cycle to improve quality of operations● Improved system of checking by superiors● Provided support tools for branch counter staff themselves to review transactions◎● Overhauled internal rules● Changed rules for dealing with customer information● Revised sales branches’ data management methods◎● Strengthened unfair trading monitoring systems● Beefed up training opportunities and contents of programs such as training on insider trading regulations◎● Provided guidance and support through personal visits to branches● Held group training sessions for internal control managers● Provided guidance and support in daily operations◎● Responded to amendments to the Financial Instruments and Exchange Law such as revision of disclosure rules forsecondary offering of securities and rules for designating investors as professional or general investors and thecreation of the alternative dispute resolution system◎● Newly established rules on avoiding all contact with organized criminal elements and strengthened systems for
identifying them◎

● Establish rules relating to the Financial Instruments and Exchange Law● Actively disseminated non-financial information such as strengthening the company’s Asia business, work-lifebalance, and social contributions in annual reports and other brochures and company briefings◎● Actively disclose information, including non-financial content, demonstrating
the unique or differentiating features of the Group (continued)● Bolstered communication with Japanese and foreign investors by expanding IR site and holding company briefings◎● Carry out cost-conscious, efficient IR activities (continued)● Improved IR site, emphasizing user-friendliness◎● Improve and make effective use of IR channels (continued)● Tailored approach to shareholders, expanding shareholder reward program◎● Take actions to expand shareholder reward program (continued)● Routinely provided timely information through seminars and website○● Actively pursue post-sales follow-up (continued)● Installed hospitality representatives in all 120 branches, undertaking group training and direct guidance and supervision● Disseminated information through intranet◎● Improve customer-interface skills of branch counter staff (continued)● Established human resource system to create a work environment creating high level of motivation among all employees● Introduced focus on business skill training, supported and promoted gaining of qualifications, and expanded language training◎● Develop professional workforce that combines expertise and loyalty(continued)● Encouraged change of attitude among employees by encouraging them to leave the office before 7:00 p.m. andtake their annual leave, instituting family visits to the office, and encouraging men to take parental leave● Newly established short-time working system and expanded vacation and nursing care system, and increased awareness of these systems◎● Achieve a far-reaching work-life balance program (continued)● Increased number of women in management positions● Increased number of people transferring to career-track and regional career-track employment streams● Work-life balance promotion committee and female employee success promotion team considered additional measures● Started career counseling◎● Accelerate appointment of female managers who will assume leadership rolesin the Japanese financial industry (continued)● In FY2010, 732 employees participated in 39 volunteer and educational activities for employees● 71 employees attended Social Business College lectures○● Raise employees’ interest in volunteering, including in earthquake relief efforts,
and improve provision of appropriate information regarding volunteering● Enhance volunteering system● Improve coordination with employee unions● Started considering rebuilding environment management system● Planned to report 2010 environmental impact data on website△● Introduce new environment management system● Enhance energy conservation efforts

Results for Fiscal 2010

● Further strengthen self-monitoring of ethics at branches● Strengthen commitment to internal control in all headquarter departments andsections● Strengthen commitment to preventing unfair trading● Create and strengthen a global compliance system● Strengthen systems to eradicate organized crime28Daiwa Securities Group Profile
Description of the Daiwa Securities Group’s Businesses

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

The Daiwa Securities Group is composed of Daiwa Securities Group Inc., the holding
company controlling the group companies, and two securities companies, Daiwa
Securities Co. Ltd. and Daiwa Securities Capital Markets Co. Ltd. along with various
other companies providing securities-related services in order to offer a comprehensive
range of investment and financial services.
1. Retail Securities Business
Through its domestic network of 120 branches (asof April 2011), a call center, and the Internet,
Daiwa Securities offers two retail services, Daiwa
Consulting and Daiwa Direct, which provide a wide
range of financial products and services as well as
support for customer asset management, mainly
for individuals and unlisted companies. (Principal
company: Daiwa Securities)

Telephone+81-3-5555-1111 (main)
Established
December 27, 1943
(Founded 1902)
President and CEO
Takashi Hibino
Capital¥247.3 billion

2. Global Markets BusinessThis business, engaged in sales and trading,provides brokerage of securities and other financial
products mainly for institutional investors. (Principal
company: Daiwa Securities Capital Markets)

Number of employees(consolidated)
15,310
Number of consolidated
subsidiaries
58

3. Global Investment Banking GBusinessThis business offers support for corporations andfinancial institutions in business expansion tofinance and capital strategies, by assisting financing
activities. (Principal company: Daiwa Securities
Capital Markets)

Number of equity-method
affiliates
6
Shares issued and outstanding

1,749,378,772(As of March 31, 2011. President andCEO as of April 1, 2011)

4. Asset Management Business

investment management services for real estate
investment trusts, pensions, and other funds.
(Principal companies: Daiwa Asset Management,
Daiwa SB Investments, Daiwa Real Estate AssetManagement)

5. Investment BusinessThis business invests in areas such as private equity,
venture capital opportunities, business
regeneration, monetary receivables, and real estateusing its own funds or through the formation of
investment funds. (Principal companies: Daiwa
Corporate Investment, Daiwa Securities SMBC
Principal Investments, and Daiwa PI Partners)

6. Other Businesses
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 inJapan and overseas. (Principal companies: Daiwa
Institute of Research, Daiwa Institute of ResearchBusiness Innovation)

This business creates and manages stock, bond,and private investment trusts, and provides other

Daiwa Securities Group Inc.
Retail Securities
Business

Daiwa
Securities

Global Markets
Business

Global IB
business

Daiwa Securities
Capital Markets

Asset
Management
Business

Investment
Business

Other
Businesses

Daiwa AssetManagement

Daiwa
Corporate
Investment

Daiwa Next
Bank

Daiwa Capital Markets
Europe Limited

Daiwa SB
Investments

Daiwa Capital Markets
Asia Holdings B.V.

Daiwa Real
Estate AssetManagement

Daiwa
Securities
SMBC Principal
Investments

Daiwa PI
Partners

Daiwa Instituteof Research
Holdings
Daiwa
Institute of
ResearchDaiwa Institute of
Research Business
Innovation
Daiwa Securities
Business Center

Daiwa Capital Markets
America Inc.

Daiwa Property*Daiwa Next Bank began operation on May 13, 2011.

29

Daiwa Securities Group CSR REPORT 2011

About CSR Report 2011
This is the Highlight Edition. More detailed information relating to specific stakeholders is available in the Full Edition.

Highlight
EditionFull Edition
Detailed information on our CSR
management as well as social andenvironmental activities

Message from the
President and CEO
Highlights

Full Edition [Information

Disclosure, Tool for Accountability]

� Breakdown of CSR initiatives, challenges,
and goals for each stakeholder group� Report based on GRI Guidelines

CSR Report 2011 Full Edition

Highlight Edition[Communication Tool]� Easy-to-read format
� Focused on key issues

http://www.daiwa-grp.jp/english/csr/report/2011/
Available September 2011

Contents
Report Overview / Editorial Policy
Daiwa Securities Group Profile
Message from the President and CEO
Dialogue: Kumi Fujisawa and Shigeharu Suzuki
SRI Highlights: The Role of Finance
Daiwa Securities Group CSRManagement Report● CSR Issues: Performance and Targets● CSR Management

Environment Report:● Environmental Initiatives
Economic Report● Delivering Economic Value to Stakeholders
Third-party Opinion
Third-party Evaluations
CSR Milestones at the Daiwa Securities GroupGRI Guidelines Content Index
PDF Download● Corporate Governance● Compliance● Information Disclosure
Social Report● Relationship with Customers● Relationship with Shareholders andOther Investors● Relationship with Executives and Employees● Relationship with Society

Please submit any comments regarding CSR Report
2011 at our website
Third-party Opinion
Toshihiko Goto, Chief Executive,
Sustainability Forum Japan, a nonprofit
organization, comments on CSR Report
2011 Highlight and Full Editions. Hiscomments and opinions are available in
the Full Edition.

30