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Environment

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Governance

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Environment

GovernanceSociety

Corporate GovernanceAction Plan
Risks

Opportunities
Improvement of transparency in decision-making, appropriate
response to changes and establishment of a stable basis of
growth enabled by the establishment of a firm governancesystem, and others.

Occurrence of business continuity risk or unexpected loss
resulting from the malfunction of corporate governance orinternal control, and others.

Materiality

Maintainrigorous
governancestructures

SDGs
Targets

Issues toAddress

Maintaining andreinforcing agovernancesystem forachievingsustainablegrowthBusiness
Area

Commitment

We will implement highly
effective supervision overthe management from an
independent and objective
standpoint and ensure theappropriate and efficient
execution of businessCorporate
operations by improving
governancethe transparency of ourdecision-making, aiming
to our sustainable growth
as well as the mediumand long-term
improvement of ourcorporate value.

Specific ApproachAppoint several outside Directors,
who have a high level of
independence that fulfills our
independence criteria and are
expected to contribute to thecompany management with a highlevel of knowledge in theirrespective fields.
Maintain a highly transparent andobjective Directors' and officers'
remuneration system, which canincrease their motivation tocontribute to our medium- andlong-term improvement of ourcompany's performance and theimprovement of our corporate
value.

Performance
Indicators

Continue to
implement
measures tostrengthen the
supervising
function of theBoard ofDirectors, throughan annualevaluation of theBoard ofDirectors.

Degree of Progress(1) The diversity of the Board of Directors (always a one
third or higher percentage of outside Directors; currently
four out of 10 Directors) and the ratio of women (ratio in
the previous fiscal year + 10%; currently two out of 10
Directors) have improved.
(2) We have increased the number of independent outside
members of the Board of Directors and outside Audit &Supervisory Board Members in the Nomination Committee
to a majority (four out of seven members; +7.1%
compared to the previous year). (Four out of eight
Directors: 50% → Four out of seven Directors: 57.1%)
We have almost completed the strengthening ofgovernance in structural terms with the implementation of(1) and (2). From the next fiscal year onward, we will
monitor the implementation of our Policy on the
Governance of its Listed Subsidiaries formulated in thisfiscal year and also deal with listing problems involving
ITOCHU and our subsidiaries.

Policy and Basic Concept
ITOCHU Group adopts the spirit of "Sampo-yoshi" (in Japanese, "yoshi" means "good", and "sampo" means threesides, and these three sides consist of (1) the seller ("urite"), (2) the buyer ("kaite") and (3) society ("seken").
"Sampo-yoshi" is therefore "urite-yoshi" (meaning "good for the seller"), "kaite-yoshi" (meaning "good for thebuyer") and "seken-yoshi" (meaning "good for society")) as our corporate mission, which spirit originates from themessage of our founder Chubei Itoh I (the merchant based in the former Ohmi Province of Japan (present-day
Shiga Prefecture). We sincerely wish to contribute to solving social issues by not purely seeking to maximize our
profits but also considering and responding to the expectations and trust of all of our surrounding stakeholders,
including our customers, our shareholders and our employees. "Sampo-yoshi" is the business spirit by which weaims to bring a positive effect into the world and to contribute to sustainable society for all. Furthermore, we adopt"I am One with Infinite Missions" as our guideline of conduct. These words mean that each individual employee
should consider his or her business conduct on his or her own initiative in order to complete our infinite missions
aim for better business operations which are good for the seller, good for the buyer, and good for society as well as
for a better future.
It is the fundamental management policy of ITOCHU Corporation ("ITOCHU" or the "Company") to build a fair andgood relationship with various stakeholders based on our corporate mission and our guideline of conduct and thus
improve our corporate value from a long-term perspective. In accordance with this policy, with the intention toensure proper and efficient execution by management, we will enhance the transparency of decision-making andestablish a corporate governance system in which monitoring and supervision functions are appropriately
incorporated.
A strong leadership and a transparent decision-making system are pillars of good corporate governance. ITOCHU
adopts an organizational structure with the presence of an Audit & Supervisory Board (kansayaku secchi kaisha).
In recent years, ITOCHU has gradually shifted to a governance model where executive officers decide and carry out
the day to day business under the direction and supervision of the Board of Directors, along with implementing
measures to strengthen monitoring.

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GovernanceIn order to separate execution by and monitoring over management, we reduced several executive Directors andthe percentage of outside Directors in our Board of Directors was increased to one-third or more from April 2017.
We keep this percentage of outside Directors also in FYE 2020 and onwards. Additionally, ITOCHU has established a
Governance and Remuneration Committee and a Nomination Committee as advisory committees to the Board of
Directors. Each committee is chaired by an outside Director and the majority members of each committee areoutside Directors and Audit & Supervisory Board Members. In appointing outside Directors and Audit & Supervisory
Board Members, ITOCHU places great importance on their independence, and in this connection, ITOCHU has
adopted its own independence criteria, augmenting the independence criteria established by the Tokyo Stock
Exchange.
This highly independent Board of Directors monitors execution by management as well as deliberates the executionof business that is of high quantitative or qualitative importance. The Company believes this arrangement
facilitates not only appropriate monitoring over execution by management but also the consideration of importantbusiness execution from an external perspective.
It is also vital that ITOCHU discloses its financial and non-financial information to the stakeholders as part of good
governance. For this purpose, ITOCHU adopts a "Basic IR Policy" to further promote a multi-party stakeholder
dialogue, and uses our best effort to timely and adequately disclose such information. Through the communication
with its stakeholders, ITOCHU aims to enhance its corporate value on a long-term basis.

Compliance with Corporate Governance Code
As of June 2020, ITOCHU complies with all principles set forth in Corporate Governance Code.
For details, please refer to Corporate Governance Report (https://www.itochu.co.jp/en/files/CG_e.pdf).
Establishment of the Governance and Remuneration Committee and the Nomination Committee as advisorycommittees to the Board of Directors
Establishment of policy and process for appointing executive officers, candidates for Directors and candidates
for Audit & Supervisory Board Members
Adoption of our own independence criteria regarding the judgement on the independence of outside Directors
and outside Audit & Supervisory Board Members

Reason for Adopting the Current System
The Company, as a company with Audit & Supervisory Board Members, endeavors to strengthen themonitoring/supervising function and ensure the transparency of decision making by having the Audit & Supervisory
Board Members (including outside Audit & Supervisory Board Members) fully monitor corporate management. In
addition to its corporate governance system primarily based on the monitoring of corporate management by Audit& Supervisory Board Members, the Company appointed outside Directors the percentage of which is one-third or
more of the total number of the Directors, and keep this percentage of outside Directors also in FYE 2021 andonwards. And, the Company has already appointed independent outside Directors and established the Governanceand Remuneration Committee and the Nomination Committee, as voluntary advisory committees to the Board
which are chaired by outside Directors and which comprise of majority outside members, for the purpose of further
increasing the effectiveness of the supervision of management by the Board of Directors and strengthening andimproving the transparency of decision making. In the process of appointing the outside Directors and outside
Audit & Supervisory Board Members, the Company focuses securing independency of the outside Directors and theoutside Audit & Supervisory Board Members, and in addition to the independence criteria established by the Tokyo
Stock Exchange ITOCHU has adopted its own independence criteria.
The Company believes that its current corporate governance system—which is based on the Board of Directors
consisting with the independent outside Directors for one-third or more of all Directors, the said voluntary advisorycommittees to the Board and the Audit & Supervisory Board, more than half of whom are outside Audit &Supervisory Board Members— accords with ITOCHU's Basic Policy stated in this report.

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Governance

Structures and Systems
Corporate Governance
1. As the decision-making body, the Board of Directors, consisting of Directors and Outside Directors, is to decide
important matters in accordance with laws and regulations, the Articles of Incorporation, the "Board of Directors
Regulations," and other internal regulations, and as the supervisory body, the Board of Directors is to supervise
the performance of the Directors.
2. Each Director is to carry out such Director's functions and duties as designated by the Board of Directors inaccordance with laws and regulations, the Articles of Incorporation, resolutions by the Board of Directors, andinternal regulations.
3. ITOCHU is to adopt the Executive Officer System to strengthen the decision-making function and supervisory
function of the Board of Directors, and to streamline executive decision-making. Based on the approval of theBoard of Directors, executive officers implement their designated duties based on delegation from the Board of
Directors and representative Directors.
4. The Audit & Supervisory Board Members are to oversee the performance of the Directors based on the "Audit &Supervisory Board Regulations" and "Auditors' Auditing Standards."
Overview of ITOCHU's Corporate Governance and Internal Control System (As of April 1, 2020)*1 HMC＝Headquarters Management Committee CEO＝Chief Executive Officer COO=Chief Operating Officer
CSO=Chief Strategy Officer CAO＝Chief Administrative Officer CFO＝Chief Financial Officer
CDO・CIO＝Chief Digital & Information Officer ALM＝Asset Liability Management*2 CAO is the chief officer for compliance. Also, each Division Company has a Division Company president.
*3 Internal control systems and mechanisms have been implemented at every level of ITOCHU. Only the maininternal control organization and committees are described herein.

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Board of Directors
Overview
The Company is a company with the Board of Directors and Audit & Supervisory Board Member (the Audit &Supervisory Board).
As from 1 April, 2018, Chairman of the Company is Chief Executive Officer and President of the Company is
Chief Operating Officer.
The Board of Directors, comprising 10 Directors including 4 outside Directors, is chaired by the Chief Executive
Officer. The Board of Directors is held, in principle, at least once a month, and it makes decisions on importantmatters in accordance with laws and regulations, the Articles of Incorporation, the "Board of Directors
Regulations," and supervises the performance of the Directors. Two of the outside Directors are female, and theaverage term of overseas assignment period of our internal Directors is 5.7 years (as of 19 June, 2020).
Each Director carries out functions and duties as designated by the Board of Directors in accordance with laws
and regulations, the Articles of Incorporation, resolutions by the Board of Directors, and the other internal
regulations.
The Executive Officer System has been adopted to strengthen the decision-making function and supervisory
function of the Board of Directors, and to streamline executive decision-making. Based on the decisions madeby the Board of Directors, executive officers implement their designated duties delegated by the Board of
Directors and representative Directors. As of 19 June, 2020, the Company has 36 executive officers (some ofwhom concurrently serve as Directors), comprising 34 male executive officers and 2 female executive officers.
The HMC (Headquarters Management Committee) and various internal committees have been established forthe purpose of contributing to appropriate and flexible decision making on management issues by the President
and Chief Operating Officer and the Board of Directors. HMC is, in principle, chaired by the President, and inprinciple consists of the Chairman, the President, and executive officers appointed by the President. The HMC is
a supporting committee to the President and Chief Operating Officer where companywide management policy
and important issues are discussed.

Corporate Governance System (As of June 19, 2020)
Type of system
Number of Directors (Of which, number ofoutside Directors)

Company with the Board of Directors and the Audit & Supervisory
Board
10(4*)

Number of Audit & Supervisory Board Members(Of which, number of outside Audit &5(3)Supervisory Board Members)
Term of office for Directors

1 year (the same for outside Directors)

Adoption of an Executive Officer System

Yes

Organization to support CEO decision-making
Advisory committees to the Board of Directors

Headquarters Management Committee (HMC) deliberates oncompanywide management policy and important issues
Governance and Remuneration Committee, Nomination Committee* Two of the outside Directors is female, and the average term of overseas assignment period of our internal
Directors is 5.7 years.

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Environment

GovernanceSocietyMembers of the Board

Current Position andResponsibility in
ITOCHU Corporation

Name

MasahiroOkafuji

ReelectionMale

FYE 2020
Number of
Attendance
at Meetingsof the Boardof Directors

Chairman & Chief

15/15

Executive Officer(100%)

Numberof
Yearsin
OfficeGovernanceandRemuneration
Committee

Nomination
Committee

16 years○○

4 years

○

○

–

–

–

–

5 years–○

5 years––

4 years–◎

3 years○○

2 years◎–

1 year○–President & Chief
Yoshihisa
Suzuki

Reelection

Male

Operating Officer;

15/15

Chief Digital &(100%)

Information Officer
Member of the Board,
Tomofumi
YoshidaExecutive Vice President
Reelection

Male

President, General
Products & Realty

15/15(100%)

5 years
and 9monthsCompany
Member of the Board,
Executive Vice President
Yuji
FukudaReelection

Male

CEO for East Asia Bloc;

11/11

CEO for Asia & Oceania(100%)

Bloc;(since his

Executive Advisory

appointment)

4 years
and 9months

Officer for CP & CITIC
Operations
Member of the Board,
Fumihiko
Kobayashi

Senior Managing
Reelection

Male

15/15

Executive Officer
Chief Administrative(100%)

OfficerMember of the Board,
Tsuyoshi
Hachimura

Reelection

Male

Senior Managing

15/15

Executive Officer(100%)

Chief Financial Officer
AtsukoMurakiHarufumi
Mochizuki

Masatoshi
KawanaMakikoNakamori

Reelection
OutsideFemaleMember of the Board

Male

Member of the Board

Male

Member of the Board

Independent
Reelection
OutsideIndependent
Reelection
OutsideIndependent(100%)

15/15(100%)

15/15(100%)
11/11

Reelection
Outside15/15

FemaleMember of the Board

Independent(100%)(since her
appointment)◎:Chair

173○:MemberSustainability at the ITOCHU Group

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History of the Board of Directors

P: Division Company President

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Governance

Policy and Process for Appointing Candidates for Directors
In order to effectively supervise management and decide important business matters as the Board of Directors of ageneral trading company with broad range of business, ITOCHU's Board of Directors consists of, in principle, theChairman, President, officers in charge of headquarters administrative functions, one appropriate Division Company
president, and such several outside Directors that the percentage of outside Directors in our Board of Directors is
one-third or more to improve supervisory function of the Board of Directors. In nominating outside Directors,
ITOCHU prioritizes candidates with higher independence, based on the criteria for "independent Directors"prescribed by the Tokyo Stock Exchange, and ITOCHU's "Independence Criteria for Outside Directors and Outside
Audit & Supervisory Board Members," who with his or her experience and knowledge in the relevant category, areexpected to contribute to the management of ITOCHU. Proposal on candidates for Directors is created by the
Chairman and Chief Executive Officer taking into consideration diversity such as knowledge, experience, genderand international experience, and submitted to the Nomination Committee for further deliberation before the Boardof Directors finally nominates the candidates for election at the General Meeting of Shareholders.

Name

Independent

Reason for Appointment as Outside Director (For Independent Directors,

Directors

Including Reason for Designation as an Independent Director)
Ms. Muraki is appointed as an outside Director in the anticipation that she will use her
wealth of experience and high-level knowledge she accumulated as a government
official and also monitor and supervise the corporate management of ITOCHU from an

AtsukoMuraki○independent perspective. According to the criteria for the independence of
directors/auditors prescribed by the Tokyo Stock Exchange, as well as our own
independence criteria, Ms. Muraki qualifies as an independent Director. Accordingly,
ITOCHU believes that she is unlikely to have conflicts of interest with general investors,
and she has been designated as an independent Director.
Mr. Mochizuki is appointed as an outside Director in the anticipation that, based on a
wealth of experience and high-level knowledge he accumulated as a government
official at the Ministry of Economy, Trade and Industry (and the former Ministry ofInternational Trade and Industry), his experience as a corporate executive at other

Harufumi
Mochizuki○

entities where he concurrently serves, he will monitor and supervise the corporate
management of ITOCHU from an independent perspective. According to the criteria for
the independence of directors/auditors prescribed by the Tokyo Stock Exchange, as
well as our own independence criteria, Mr. Mochizuki qualifies as an independent
Director. Accordingly, ITOCHU believes that he is unlikely to have conflicts of interest
with general investors, and he has been designated as an independent Director.
Mr. Kawana is appointed as an outside Director in the anticipation that, based on his
experience as a doctor at Tokyo Women's Medical University Hospital for many years
and as an important post such as the Deputy Director of the same hospital as well as

Masatoshi
Kawanahis high level of medical knowledge, he will monitor and supervise the corporate○

management of ITOCHU from an independent perspective. According to the criteria for
the independence of directors/auditors prescribed by the Tokyo Stock Exchange, as
well as our own independence criteria, Mr. Kawana qualifies as an independent Director.
Accordingly, ITOCHU believes that he is unlikely to have conflicts of interest withgeneral investors, and he has been designated as an independent Director.
Ms. Nakamori is appointed as an outside Director in the anticipation that, based on herhigh level expertise regarding finance and accounting as a certified public accountant
as well as her extensive experience as a corporate executive, she will monitor and

MakikoNakamori

supervise the corporate management of ITOCHU from an independent perspective.
○

According to the criteria for the independence of directors/auditors prescribed by the
Tokyo Stock Exchange, as well as our own independence criteria, Ms. Nakamori
qualifies as an independent Director. Accordingly, ITOCHU believes that she is unlikely
to have conflicts of interest with general investors, and she has been designated as anindependent Director.

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Principal Areas of Experience of Outside Directors
Principal Specialized Area of Experience
HealthControl andand/Compliance

Care

○

○

○

○

○

Vice-Minister of
Economy, Tradeand Industry○

Vice-president ofTokyo Women's
Medical University
Hospital
Doctor of Medicine

Overseas

Finance

HumanofAssignment

andResources

Management(Global)Accounting and Labor

Chair of the○Nomination Committee

Harufumi Mochizuki
Outside Director○○(NorthAmerica/
Europe)Masatoshi Kawana
Outside Director
Chair of theGovernance and

○

○

○

(NorthAmerica)Remuneration
Committee

Makiko Nakamori
Outside Director○○

History andLegal Affairs Medical Qualifications, etc.

Atsuko Muraki
Outside Director

Main Career

Internal

All Aspects

Name and Role○○

Vice-Minister of
Health, Labour andWelfareServed as outside
director and audit& supervisoryboard member atseveral companies
including ITOCHU
Techno-Solutions
Corporation
Certified Public
Accountant

Outline of Limitation of Liability Contracts
Pursuant to Article 427, Paragraph 1, of the Companies Act, ITOCHU has entered into limitation of liability contracts
with respect to liability as set forth in Article 423, Paragraph 1, of the Companies Act with outside Directors andoutside Audit & Supervisory Board Members. Under these contracts, their liabilities are limited to the lowest
amount of liability pursuant to Article 425, Paragraph 1, of the Companies Act if and so long as they have acted ingood faith and without gross negligence in performing their duties.

Remuneration
Overview of the Remuneration Plan for Directors
ITOCHU Corporations' current remuneration plan for
Directors is designed to be an incentive to growbusiness performance. Performance-linked bonus has ahigh proportion of overall remuneration, and thisremuneration plan, including the calculation method,has been previously disclosed publicly, making it highly
transparent. In order to increase awareness ofcontribution to raising business performance andenlarging corporate value over the medium to longterm, we are including stock remuneration as part of
the remuneration plan.

Remuneration Image of Directors(excluding Outside Directors)

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Remuneration Plan for Directors for FYE 2021 consists of (1) monthly remuneration, (2) performance-linked
bonuses, (3) share price-linked bonuses, and (4) performance-linked stock remuneration (trust type). Of these, (3)share price-linked bonuses is a revision of the market capitalization-linked bonuses, which were introduced in FYE
2019, and the share price-linked bonuses are not designed on the single year base used when the market
capitalization-linked bonuses was introduced. The bonus amount is calculated based on the evaluation of therelative growth rate of ITOCHU Corporations' share price during the period from FYE 2019 to FYE 2021 versus thegrowth of Tokyo Stock Price Index (TOPIX). The share price-linked bonuses are, like the stock remuneration, also
for further strengthening awareness of enlarging corporate value from a medium- to long-term perspective.
Net profit (consolidated) is of high interest to the stock market because it is an easy-to-understand indicator of
capital to growth-oriented investments and to returns to shareholders and we have an unshakeable belief in its
importance as an indicator going forward. In addition, bonuses for employees are linked to net profit (consolidated)
so we have net profit attributable to ITOCHU (consolidated) as the linked indicator for performance-linked bonuses((2) above) and performance-linked stock remuneration ((4) above). Also, regarding share price-linked bonuses((3) above), as stated above we have the growth rate of ITOCHU Corporations' share price during the period fromFYE 2019 to FYE 2021 as the linked indicator, but for the calculation of the growth rate of the share price, we use
the simple average of the daily final price for each fiscal year.

Type of
Remuneration

Fixed /
Variable

Remuneration Limits(1) Monthly
remuneration

Determined according tofactors that include degree ofcontribution to ITOCHU
Corporation, based on astandard amount for eachposition

Fixed¥0.8 billion per year as total
amount of monthly
remuneration (of thatamount, ¥0.1 billion per year
for Outside Directors)(2) Performancelinked bonuses

Total amount of payment isdetermined based on net
profit (consolidated), and theeach individual payment
amount is determined inrelation to the position points
for the Director

Variable(singleyear)(3) Share pricelinked bonuses(4) Performancelinked stock
remuneration

Details

June 21, 2019
¥2.0 billion per year as thetotal amount of bonus* Not paid to Outside
Directors

Bonus amount is calculated
based on an evaluation of therelative growth rate of
ITOCHU Corporation's shareprice during the period fromFYE 2019 to FYE 2021 versus
the growth rate of TOPIX*1

Total payment amount isdetermined based on net
profit (consolidated), andeach individual payment
amount is determined inrelation to the position points
for the Director used in
calculating the individual
performance-linked bonus*2

Resolution atGeneralMeeting of
Shareholders

Variable(mediumto longterm)

The amounts below are limits
for two fiscal years, for
Directors and Executive
Officers
Limit on contribution to trust by
ITOCHU Corporation: ¥1.5
billionTotal number of points granted
to eligible person: 1.3 million
points (conversion at 1 point =1 share)* Not paid to Outside Directors

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Remuneration Composition Ratios Image of Directors (excluding Outside Directors) (FYE 2020)* In the case of net loss (consolidated), Directors will receive neither performance-linked bonuses nor
performance-linked remuneration.

Formulas for Remuneration
Directors' Bonuses for FYE 2021
Performance-linked Bonuses
Director performance-linked bonuses for FYE 2021 will be paid in amounts calculated according to the methods
described below, following the conclusion of FYE 2021 Ordinary General Meeting of Shareholders.
a. Total Amount Paid to All Directors:
The total amount paid to all Directors shall be the lesser of the sum of the amount paid to an individual Director inb. below or ¥2.0 billion.
b. Amount Paid to an Individual Director
The formula to calculate the amount paid to an individual Director is below.
Total base amount paid to all Directors=(A+B+C) x Sum of Position points for all the eligible Directors/55
Where:
A=(Consolidated net profit attributable to the Company for FYE 2021 for the portion up to ¥200.0 billion) x 0.35%
B=(Consolidated net profit attributable to the Company for FYE 2021 for the portion more than ¥200.0 billion but
up to ¥300.0 billion) x 0.525%
C=(Consolidated net profit attributable to the Company for FYE 2021 for the portion exceeding ¥300.0 billion) x
0.35%(amount of less than ¥1 shall be rounded down)
The amount paid to an individual Director = (Total base amount paid to all Directors as above x Position Point/Sum
of Position points for all the eligible Directors) x 20% + (Total base amount paid to all Directors as above x Position
Point/Sum of Position points for all the eligible Directors) x 80% x the Rate (defined below) determined based onplan achievement rate of the consolidated net profit of the assigned division/department (amount of less than
¥1,000 shall be rounded up)
Provided, however, that
(1) The Rate: 100% + (plan achievement rate of the consolidated net profit of the assigned division/department-100%) x 2 (if negative, it will be 0%)(2) The assigned division of the Director utilized the Rate is the General Products & Realty Company of whichplanning of the consolidated net profit for FYE 2021 is 60 billion yen (announced at 8 May, 2020).
(3) The plan achievement rate shall be 100% for the eligible Director (not being the Division Company President)
for whom no plan achievement rate is measurable.

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Governance

The points assigned to each position are as per below:
Position Points
Chairman and Chief Executive Officer

10

President and Chief Operating Officer

7.5

Executive Vice President (resident in Japan)

5

Executive Vice President (resident outside Japan)

4

Senior Managing Executive Officer

4

Managing Executive Officer

3

Notwithstanding the calculation stated above, the amount paid to an individual Director shall not exceed the
maximum amount for each position as set forth below:(Millions of yen)
Maximum Amount Paid toan Individual Director
Chairman and Chief Executive Officer

560

President and Chief Operating Officer

420

Executive Vice President (resident in Japan)

280

Executive Vice President (resident outside Japan)

224

Senior Managing Executive Officer

224

Managing Executive Officer

168

Share Price-linked Bonuses
By resolution of Board of Directors held on 2 February, 2018 and for the purpose of the incentive towards
increasing the Company's corporate value, ITOCHU introduced market capitalization-linked bonuses structure which
is linked to the increased amount of the Company's market capitalization as compared to the last fiscal year.
In order to further strengthen awareness of enhancing corporate value from a medium- to long-term perspective,
the following changes were made, and the name was changed from market capitalization-linked bonus to shareprice-linked bonus:
Changed a design based on 3 years rather than on a single year
Changed a linked indicator from market capitalization to stock price in order to better align with shareholders
In order to secure fairness, included an index relative to the absolute amount
For share price-linked bonuses, the bonus amount for individual Director is calculated for FYE 2020 and FYE 2021
based on the following specific calculation formula for individual payment amounts, and when the Director retires
or, in the case of taking on the position of executive officer after retirement of the Director, the executive officer
retires, such amount will be paid.
a. FYE 2020[(The simple average of daily stock closing price of the Company ("Average of Daily Closing Price") in FYE 2020) –(Average of Daily Closing Price in FYE 2019)] x 1,300,000 x (Points assigned to each Director according to theposition ("Position Point") / 108.8 points x Relative Stock Price Growth Rate (Note 1)(Note 1) Relative Stock Price Growth Rate = (Average of Daily Closing Price in FYE 2020 / Average of Daily Closing
Price of FYE 2019) / (Simple average of daily TOPIX (Note 2) in FYE 2020 / Simple average of TOPIX in
FYE 2019)(Note 2) TOPIX = Tokyo Stock Price Index, the principal index consisting of all Japanese common stocks listed on
the First Section of Tokyo Stock Exchange.
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Governanceb. FYE 2021[(Average of Daily Closing Price in FYE 2021) – (Average of Daily Closing Price in FYE 2019)] x 1,300,000 x (Total
Position Points in FYE 2020 and FYE 2021) / (108.8 points x 2(years)) x Relative Stock Price Growth Rate (Note 3)– (share price-linked bonus for FYE 2020 calculated in the above a.).
(Note 3) Relative Stock Price Growth Rate = (Average of Daily Closing Price in FYE 2021 / Average of Daily Closing
Price of FYE 2019) / (Simple average of daily TOPIX in FYE 2021 / Simple average of TOPIX in FYE 2019)
The Position Points assigned to each position are same as those applied for performance-linked bonuses.
The share price-linked bonuses together with performance-linked bonuses are paid to the eligible Directors within
the Director bonuses limit of ¥2.0 billion. (If the amount of performance-linked bonus and share price-linked bonus
based on the above formula exceeds 2.0 billion yen, the performance-linked bonus is preferentially allocated to thelimit amount)

Performance-linked Stock Remuneration Plan
By resolution at the 92nd Ordinary General Meeting of Shareholders held on 24 June, 2016, ITOCHU introduced
the performance-linked stock remuneration plan (the "Stock Remuneration Plan") and, by resolution of theBoard of Directors held on 13 May, 2020, we continue this plan from FYE 2021. This plan is described below.
Under this plan, in June of ever year during the trust period, Directors who served as Directors from 1 July of
the previous year to the last day of June of the said year are granted points based on performance in the fiscal
year that ended on 31 March of said year and in accordance with the number of months of service during that
period.
The method of calculating the number of points granted to Directors (excluding outside Directors) in FYE 2021 is
described below. One point corresponds to one share in ITOCHU, and amounts of less than one point are
discarded.
Points = Individual stock remuneration amount (Note 1) / Average acquisition stock price of ITOCHU shares inthe trust (Note 2) × {(Number of months of service from July, the beginning month of the applicable period of
payment, to June of the following year (rounding up fractions of less than one month)) / 12} (rounding down
fractions)(Note 1) The individual stock remuneration amount is calculated on the basis of the total stock remuneration
amount, which is calculated as indicated below.
a. Total stock remuneration amount= (the amount of consolidated net profit attributable to ITOCHU for FYE 2021 - ¥300.0 billion) x
0.175% x Sum total of position points of eligible Directors / 55 (rounding up fractions of less than¥1)b. Individual stock remuneration amount= Total stock remuneration amount x Position points of each Director / Sum total of position points
of Directors (rounding down fractions of less than ¥1,000)
Position points for each Director are the same as the number used for calculating Director bonuses.
(Note 2) In the event that the trust period has been extended, this is the average acquisition stock price of
ITOCHU shares that were acquired by the Trust in accordance with the extension of the trust period.
(However, if no ITOCHU shares are acquired by the trust in accordance with the extension of the trust
period, then this is the closing stock price of ITOCHU shares on the market of Tokyo Stock Exchangeon the first day of the extended trust period).
The points assigned to each position are as per below:
Position Points
Chairman and Chief Executive Officer

10

President and Chief Operating Officer

7.5

Executive Vice President (resident in Japan)

5

Senior Managing Executive Officer

4

Managing Executive Officer

3
180Sustainability at the ITOCHU Group

Environment

GovernanceSociety

As the Stock Remuneration Plan, ITOCHU has adopted a framework called "Board Incentive Plan Trust (BIP)"("BIP Trust"). The BIP Trust is a stock incentive plan for executives, based on the performance share andrestricted stock plans in the United States. ITOCHU will conduct delivery and payment of ITOCHU sharesacquired by the BIP Trust and an amount of money equivalent of the conversion value of said shares ("ITOCHU
Shares, etc."), together with dividends derived from ITOCHU shares, to Directors, etc. following retirement fromoffice (or after death in the event of the death of a Director, etc.; the same applies hereinafter), based on
performance, etc.

Outline of the Stock Remuneration Plan is as follows:(1) Persons Entitled to Receive Stock Remuneration: Directors and executive officers of ITOCHU(excluding outside Directors and those who are non-residents of Japan, as of June 19, 2020, thenumbers of the Directors applicable is 5 and of the executive officers not being Director is 7)(2) Maximum Amount of Money Contributed by the Company to the Trust: a total of ¥1.5 billion for 2
fiscal years(3) Method for the Acquisition of Shares by the Trust: Scheduled to be acquired on the stock market (thusno dilution of shares is anticipated)(4) Upper Limit on the Number of Shares to be acquired by Directors, etc.: For the trust period, with anapplicable period of 2 fiscal years, the upper limit will be 1,300,000 points (an average of 650,000
points per year)(5) Performance Index under the Stock Remuneration Plan: Consolidated net profit attributable to theCompany (upon which the amount of total stock remuneration will be calculated. See above for moredetails)(6) Timing of Delivery of Shares: After retirement from Office(7) Voting Rights Concerning Shares in the Trust: Will not be exercised in order to ensure neutrality
toward management

Rules for Directors of Non-residents in Japan
A Director of non-residents in Japan is not eligible for performance-linked stock remuneration. As a substitute, such
Director is eligible for the Equivalent Amount of Individual stock remuneration. The Equivalent Amount of Individual
stock remuneration is calculated in accordance with the above formula (except the points assigned to such Director
being 15) as if such Director were subject to performance-linked stock remuneration, and the amount will be addedor subtracted according to a certain performance achievement rate. The remuneration will be determined and paid
following the conclusion of FYE 2021 Ordinary General Meeting of Shareholders as a performance-linked bonus,(round up less than ¥ 1,000), separately from the performance-linked bonus based on formula above.
This performance-linked bonus (the Equivalent Amount of Individual stock remuneration) will be paid within thelimit of 2.0 billion yen (a resolution of the general meeting of shareholders on June 21, 2019), the overallmaximum limit of the bonus including this performance-linked bonus, the performance-linked bonus calculated byformula above and the share price-linked bonus. If the total amount exceeds 2.0 billion yen, this performancelinked bonus and the performance-linked bonus calculated by formula above will be preferentially allocated.

Compensation Paid to Directors in FYE 2020
Details of the compensation paid to Directors in FYE 2020 are as follows.
Type

Number ofAmount Paid

People(Millions of yen)

Details(1) Monthly remuneration: ¥591 million

Directors(Outside Directors)(2) Performance-linked bonuses: ¥1,273 million
10 (4)

2,298 (59)(3) Share price-linked bonuses: ¥105 million(4) Special Benefits: ¥180 million(5) Stock Remuneration: ¥149 million(Rounded to nearest million yen)181

Sustainability at the ITOCHU Group

Environment

GovernanceSocietyNotes:
1. Maximum compensation paid to all Directors:¥800 million per year as total monthly remuneration (including ¥100 million per year for the outside Directors)and ¥2.0 billion per year as total bonuses paid to all Directors (resolved at the General Meeting of Shareholders
on 21 June, 2019.
2. Maximum compensation paid to all Audit & Supervisory Board Members:¥13 million per month (resolved at General Meeting of Shareholders on 29 June, 2005, as of the date hereof,
the numbers of the Audit & Supervisory Board Members applicable is 5)
3. Following deliberation by the Governance and Remuneration Committee, at a meeting of the Board of Directors
held on May 13, 2020 ITOCHU resolved to pay special benefits. This will be paid within the limit of bonuses for
Directors, and is based on ITOCHU's record profits despite the increasingly severe business environment.
4. The introduction of performance-linked stock remuneration for Directors (Board Incentive Plan Trust "BIP") wasapproved at the 92nd Ordinary General Meeting of Shareholders held on June 24, 2016. The total amount ofstock remuneration in the table is the recorded amount of expenses involving share granted points granted
during this fiscal year related to BIP.
5. The amounts of the share price-linked bonuses are calculated at the end of FYE 2021.
Name, position, and amount of compensation paid to Directors receiving compensation of ¥100 million or moreduring FYE 2020, are as follows.

Name

CategoryMonthly
Remuneration

Share

Performancelinked
Bonuses**
Masahiro Okafuji

Director¥153 million¥351 million

Yoshihisa Suzuki

Director¥90 million¥263 million

Tomofumi Yoshida

Director¥85 million¥171 million**
Yuji Fukuda

Director¥66 million¥207 million

Fumihiko Kobayashi

Director¥71 million¥140 million

Tsuyoshi Hachimura

Director¥68 million¥140 million

Price-

SpeciallinkedBenefits Remuneration

Stock

Total

Bonuses¥30¥50

millionmillion¥22¥40

millionmillion¥15¥25

millionmillion¥15¥25

millionmillion¥12¥20

millionmillion¥12¥20

millionmillion¥49 million¥37 million¥24 million¥0 million¥20 million¥20 million¥632
million¥452
million¥320
million¥313
million¥263
million¥259
million(Rounded to nearest million yen)
Note: The remuneration paid to Directors (excluding outside Directors) in FYE 2020 comprised monthly
remuneration, performance-linked bonuses, Share price-linked bonuses, special benefits, and performancelinked stock remuneration for Directors (Board Incentive Plan Trust). Monthly remuneration is determined by
the contribution to ITOCHU of each Director according to a base amount set by position, the total amount of
performance-linked bonuses is determined on the basis of consolidated net profit attributable to ITOCHU,
and the amount of the share price-linked bonuses is determined based on relative evaluation of the stock
price growth rate of ITOCHU with the TSE stock index (TOPIX).
(**) Monthly remuneration includes housing allowance.

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GovernanceEvaluation as to the Effectiveness of the Board of Directors
ITOCHU conducted the evaluation as to the effectiveness of the Board of Directors targeting Directors and Audit &Supervisory Board Members in FYE 2020.
As a result of this evaluation, in terms of the structure of the Board of Directors and its advisory committees aswell as the roles and duties, operation status, information provision to Directors and Audit & Supervisory Board
Members, and training, the Board of Directors of ITOCHU confirmed that the effectiveness of the Board of Directors
was secured.
According to an external consultant, it is evaluated that ITOCHU's score has improved in the majority of thequestionnaires, and the effectiveness of the Board of Directors has made further progress through means including(1) progress in external form such as improvement of diversity and the structure of advisory committees, (2)invigoration of discussions in the Board of Directors through improvements in proceedings and operation of
meetings, and (3) enhancement of information sharing.
With regard to the operation of the Board of Directors based on the transition to a Monitoring-Focused Structure,
which was recognized as an ongoing issue in the previous evaluation, discussions were held with the goal of
improving medium- to long-term corporate value, which ITOCHU seeks in its management strategy and corporate
philosophy, and steady progress was observed.
At the same time, the findings also noted that, as remaining issues, there is a need for initiatives to address (1)further diversity in the Board of Directors, (2) the further enhancement of medium- to long-term discussions in the
Board of Directors, and (3) the strengthening of provision of information to outside Directors and outside Audit &Supervisory Board Members.
Based on the above survey results, ITOCHU intends to continue investigations aimed at increasing the diversity ofoutside Directors and outside Audit & Supervisory Board Members, and to enhance discussions by the Board of
Directors on major themes.
Based on the results of this evaluation of the Board of Directors, we will continue to maintain and improve theeffectiveness of the Board of Directors.
For your reference, please see the result in our homepage at:https://www.itochu.co.jp/en/files/board_evaluation_2019e.pdf

183Sustainability at the ITOCHU Group

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GovernanceSociety

Advisory Committees
We have established Governance and Remuneration Committee and Nomination Committee under the Board of
Directors as voluntary advisory committees to raise the transparency of the decision-making process andstrengthen the supervisory function of the Board of Directors. Each committee is chaired by an outside Director
and the majority members of each committee are outside Directors and Audit & Supervisory Board Members.

Advisory Committees to the Board of Directors
Name

Function
Deliberates and advises on proposals related to remuneration system for Directors andexecutive officers and other matters on corporate governance

Governance andRemuneration

This committee was held for 3 times with the participant of all members, and the remuneration

Committee

plan for Directors, evaluation as to the effectiveness of the Board of Directors in FYE 2019 andFYE 2020, Policy on the Governance of Listed Subsidiaries, and Reorganization of Nomination
Committee.
Deliberates and advises on proposals related to nomination and dismissal of executive officers,
nomination of candidates for Directors and Audit & Supervisory Board Members, dismissal of
Directors and Audit & Supervisory Board Members, and appointment and dismissal ofNomination

responsible Directors and officers

Committee
This committee was held for 4 times with the participant of all members (except one time withthe outside members limited), and the executive management appointment, and the plan forthe successor were deliberated therein.

Composition of the Governance and Remuneration Committee and the Nomination
Committee (As of June 19, 2020)
Governance and
Name

Title

Remuneration
Committee

Nomination
Committee

Masahiro Okafuji

Chairman & Chief Executive Officer○○

Yoshihisa Suzuki

President & Chief Operating Officer○○

Fumihiko Kobayashi

Director

Atsuko Muraki

Outside Director

Harufumi Mochizuki

Outside Director○

Masatoshi Kawana

Outside Director◎ (Chair)

Makiko Nakamori

Outside Director○

Shuzaburo Tsuchihashi

Audit & Supervisory Board Member

Makoto Kyoda

Audit & Supervisory Board Member

Shingo Majima

Outside Audit & Supervisory Board Member○

Kentaro Uryu

Outside Audit & Supervisory Board Member○

Kotaro Ohno

Outside Audit & Supervisory Board Member○◎ (Chair)*○○(7 members)* Shuzaburo Tsuchihashi, Audit & Supervisory Board Member, attends as an observer184○(7 members)

Sustainability at the ITOCHU Group

Environment

Society

GovernancePrincipal Internal Committees
The HMC (Headquarters Management Committee) and various internal committees have been established forthe purpose of contributing to appropriate and flexible decision making on management issues by the President
and Chief Operating Officer and the Board of Directors. HMC is, in principle, chaired by the President, and inprinciple consists of the Chairman, the President, and executive officers appointed by the President. The HMC is
a supporting committee to the President and Chief Operating Officer where companywide management policy
and important issues are discussed.
Various internal committees carefully screen and discuss management issues in their respective fields. Severalof the internal committees including the Internal Control Committee work to support the decision making by the
President and Chief Operating Officer and the Board of Directors by incorporating external opinions withmeasures such as designating outside key figures.
The roles of the main internal committees are as follows (as of June 19, 2020).

Name

ChairmanObjectives

CAO

Deliberates on issues related to the development of internal control
systems

Disclosure Committee

CFO

Deliberates on issues related to business activity disclosure and on
issues related to the development and operation of internal control
systems in the area of financial reporting

ALM Committee

CFO

Deliberates on issues related to risk management systems andbalance sheet management

Compliance Committee

CAO

Deliberates on issues related to compliance

CAO

Deliberates on issues related to sustainability and ESG, including
environmental problems and social contribution initiatives, excluding
governance related issues

CFO

Deliberates on issues related to investment and financing

CAO

Deliberates on issues related to New Headquarters ProjectInternal Control
Committee

Sustainability
Committee
Investment
Consultative Committee
New Headquarters
Project Committee

Policy and Process for Appointing Executive Officers
Executive Officers are appointed annually by the Board of Directors among, in principle, employees regarded as
candidates for executives based on our HR system with high integrity and exceptional ability (or those who havealready been appointed as Executive Officers) who are judged to be capable of assuming the role as the Executive
Officers. Candidates for Executive Officers are first selected by the Chairman and Chief Executive Officer based on,among others, recommendations from other officers (or in terms of incumbent Executive Officers, based on theirrespective performance) and submitted to the Nomination Committee for further deliberation. Based on the
deliberation and advice of the Nomination Committee, the Board of Directors appoints Executive Officers by its
resolution. In case that an Executive Officer breaches the Executive Officers' Regulation of the Company orotherwise his or her performance is judged to be not appropriate, the Chairman and Chief Executive Officer (or thechairman of the Nomination Committee) firstly makes a proposal of dismissal, and the Board of Directors dismissessuch Executive Officer by its resolution based on the deliberation and advice of the Nomination Committee.

185

Sustainability at the ITOCHU Group

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GovernanceSociety

Corporate Auditors and the Audit & Supervisory Board
Overview
Audit & Supervisory Board Members and the Audit & Supervisory Board endeavor to enhance cooperation with
the independent external auditors, for example through active exchange of information and opinions on thestatus and results of each other's audit plans and audits along with other important auditing matters with theaim of improving the quality and efficiency of auditing and of enhancing corporate governance.
Audit & Supervisory Board Members and the Audit Division (internal audit division) endeavor to closelycooperate and exchange information by discussing internal audit plans regularly to exchange opinions on the
results of each internal inspection, issues and recommendations, etc.
The Audit Division and independent external auditors endeavor to cooperate by holding regular meetings to
exchange information, etc.
The Audit & Supervisory Board is comprised of 2 full-time internal Audit & Supervisory Board Members and 3
outside Audit & Supervisory Board Members. In addition, the Audit & Supervisory Board Members' Office (5members as of 19 June, 2020), which directly reports to the Audit & Supervisory Board, is set with employees
dedicated to the duties of the Audit & Supervisory Board Members.
Following the Ordinary General Meeting of Shareholders, the Audit & Supervisory Board determines the audit
policy, the allocation of audit work, and the audit plan for the period until the next Ordinary General Meeting of
Shareholders. Each Audit & Supervisory Board Member audits the appropriateness of the performance of theduties by Directors and Executive Officers in accordance with the "Audit & Supervisory Board Regulations,""Auditors' Auditing Standards".
Mr. Shingo Majima, Auditor, is qualified as a certified public accountant in Japan and Unites States of America,and has adequate knowledge and experience in the fields of finance and accounting. In addition, Mr. Kentaro
Uryu and Mr. Kotaro Ohno, both Audit & Supervisory Board Members, are qualified as a lawyer in Japan andhave adequate knowledge and experience in the field of law.
The results of audits by the Audit & Supervisory Board Members, Audit Department and independent external
auditors are reported to the Board of Directors, HMC, internal committees, etc. in a timely and appropriatemanner, and are fully taken into account in decision making and used to improve management.

Members of the Audit and Supervisory Boards

Position in
ITOCHU
Corporation

Name

Full-time Audit
Shuzaburo Tsuchihashi& Supervisory
Board Member

FYE 2020
FYE 2020
Number of
NumberNumber of
GovernanceAttendance atofAttendance atandNomination
Meetings of the Years
Meetings ofRemuneration Committee
Audit &
inthe Board ofCommittee
Supervisory
OfficeDirectors
Board

15/15
(100%)

13/13 (100%)

Full-time Audit
Makoto Kyoda& Supervisory––

Board Member

Shingo Majima

Kentaro Uryu

Kotaro Ohno

OutsideIndependent

OutsideIndependent

OutsideIndependent

Audit &
Supervisory
Board Member
Audit &
Supervisory
Board Member

15/15(100%)

15/15(100%)

13/13 (100%)

13/13 (100%)

Audit &
Supervisory

13/15 (87%)

Board Member

186

13/13 (100%)

2
years

–
years

7
years

5
years

3
years

–

*

○

–

–

○

–

○

○

–

○:Member*:Observer

Sustainability at the ITOCHU Group

Environment

Society

Governance

Policy and Process for Appointing Candidates for Audit & Supervisory
Board Members
As Audit & Supervisory Board of a sogo-shosha with broad range of business, for effective monitoring and audit,
candidates for Audit & Supervisory Board Members are selected from those with understanding about ITOCHU's
management and with high expertise and extensive experience in the relevant area such as accounting, finance,
legal and risk management. Among the members of ITOCHU's Board of Audit & Supervisory Board Members, half
or more of the members always consist of outside Audit & Supervisory Board Members. In appointing outside Audit& Supervisory Board Members, ITOCHU prioritizes candidates with higher independence based on the
independence criteria prescribed by the Tokyo Stock Exchange, and ITOCHU's own independence criteria who are
expected to effectively monitor and audit ITOCHU's activities. In addition, ITOCHU selects at least one Audit &Supervisory Board Member with adequate expertise in finance and accounting. Candidates for Audit & Supervisory
Board Members are selected by the Chairman and Chief Executive Officer after the discussion with the executive
Audit & Supervisory Board Members and submitted to the Nomination Committee for further deliberation before theBoard of Directors (with consent of the Audit & Supervisory Board) finally nominates the candidates for election at
the General Meeting of Shareholders.

Name

Shingo Majima

Kentaro Uryu

Kotaro Ohno

Independent
Auditors

Reason for Appointment as Outside Audit & Supervisory Board Member (For
Independent Auditors, Including Reason for Designation as an Independent Auditor)○

Mr. Majima is appointed as an outside Audit & Supervisory Board Member in the
anticipation that he will monitor management and provide auditing from an
independent perspective by utilizing his wealth of experience and expertise on financeand accounting audit as a certified public accountant for many years.
According to the criteria for the independence of directors/auditors prescribed by the
Tokyo Stock Exchange, as well as our own independence criteria, Mr. Majima qualifies
as an independent Audit & Supervisory Board Member. Accordingly, ITOCHU believes
that he is unlikely to have conflicts of interest with general investors, and he has been
designated as an independent auditor.

○

Mr. Uryu is appointed as an outside Audit & Supervisory Board Member in the
anticipation that he will monitor management and provide auditing from an
independent perspective by utilizing his high level of expertise in law and extensive
experience as an attorney-at-law for many years. According to the criteria for the
independence of directors/ auditors prescribed by the Tokyo Stock Exchange, as wellas our own independence criteria, Mr. Uryu qualifies as an independent Audit &Supervisory Board Member. Accordingly, ITOCHU believes that he is unlikely to haveconflicts of interest with general investors, and he has been designated as anindependent auditor.

○

Mr. Ohno is appointed as an outside Audit & Supervisory Board Member in the
anticipation that he will monitor management and provide auditing from an
independent perspective by utilizing his advanced specialized knowledge in law and theextensive experience he accumulated while serving in important positions at the
Ministry of Justice, including Vice-Minister of Justice, Superintending Prosecutor ofTokyo High Public Prosecutors Office and Prosecutor-General. According to the criteria
for the independence of directors/ auditors prescribed by the Tokyo Stock Exchange,
as well as our own independence criteria, Mr. Ohno qualifies as an independent Audit &Supervisory Board Member. Accordingly, ITOCHU believes that he is unlikely to haveconflicts of interest with general investors, and he has been designated as anindependent auditor.

187

Sustainability at the ITOCHU Group

Environment

Society

GovernancePrincipal Areas of Experience of Outside Audit & Supervisory Board Members
Principal Specialized Area of Experience
Name and Role

Internal
All Aspects
Overseas
Finance
HumanControl andof
Assignment
andResources
Legal Affairs
Management(Global)Accounting and Labor/Compliance

Shingo Majima
Outside Audit &Supervisory

○

○

○

(North○○Managing Partner, URYU &ITOGAAttorney-At-Law○

Prosecutor-General
Vice-Minister of Justice
Attorney-At-Law

Kentaro Uryu
Outside Audit &Supervisory○○(Asia)

Board Member

Kotaro Ohno
Outside Audit &Supervisory○○

Qualifications, etc.

Executive Director, Chuo
University
Senior Partner, KPMG LLP
Certified Public Accountant inJapan and the United States(New York State)

America)

Board Member

Main Career History andBoard Member

Outline of Limitation of Liability Contracts
Pursuant to Article 427, Paragraph 1, of the Companies Act, ITOCHU has entered into limitation of liability contracts
with respect to liability as set forth in Article 423, Paragraph 1, of the Companies Act with outside Directors andoutside Audit & Supervisory Board Members. Under these contracts, their liabilities are limited to the lowest
amount of liability pursuant to Article 425, Paragraph 1, of the Companies Act if and so long as they have acted ingood faith and without gross negligence in performing their duties.

Compensation Paid to Audit & Supervisory Board Members in FYE 2020
Details of the compensation paid to Audit & Supervisory Board Members in FYE 2020 are as follows.
Type

Number of People

Audit & Supervisory Board
Members (Outside Audit &Supervisory Board Members)

Amount Paid
(Millions of yen)

5 (3)Details131 (45) Only monthly remuneration(Rounded to nearest million yen)

Checking and Balancing System by the Independence Executives
Criteria for the Independence of Directors/ Auditors
ITOCHU has adopted its own independence criteria (augmenting the independence criteria established by the
Tokyo Stock Exchange), which is disclosed at our homepage. Please refer to the following URL:
https://www.itochu.co.jp/en/about/governance_compliance/governance/pdf/independence_criteria.pdf
All of the Company's outside Directors and outside Audit & Supervisory Board Members who qualify as anindependent Director/ Audit & Supervisory Board Member are designated as independent Directors/ Audit &Supervisory Board Members.

188

Sustainability at the ITOCHU Group

Environment

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Governance

Performance of the Independent Executives
Ms. Muraki attended all of the 15 meetings of the Board of Directors held during the current term. She mainly
made statements from an objective and neutral position as an outside Director. During the current term, shechaired the Governance and Remuneration Committee and led discussions on executive remuneration and othertopics. Furthermore, she provided many beneficial suggestions in the areas of internal control, compliance,
human resource utilization, and organizational revitalization.
Mr. Mochizuki attended all of the 15 meetings of the Board of Directors held during the current term. He mainly
made statements from an objective and neutral position as an outside Director. During the current term, hechaired the Nomination Committee and offered a practical perspective while leading discussions on theappointment and dismissal of key management members and succession plans. Furthermore, he provided many
beneficial and broad-minded suggestions on internal control, compliance, and reinvented business.
Mr. Kawana attended all of the 15 meetings of the Board of Directors held since his appointment. He mainly
made statements from an objective and neutral position as an outside Director. During the current term, he wasa member of the Governance and Remuneration Committee and contributed to the further enhancement ofgovernance at ITOCHU. Additionally, he used his expertise to provide many beneficial suggestions in the areasof health management and medical care-related business.
Ms. Nakamori attended all of the 11 meetings of the Board of Directors held since her appointment. She mainly
made statements from an objective and neutral position as an outside Director based on her experience as acompany manager in multiple executive positions, in addition to her expertise on finance and accounting andher extensive experience as a certified public accountant. During the current term, she was a member of theGovernance and Remuneration Committee and contributed to the further enhancement of governance at
ITOCHU. She drew on her experience and expertise to provide many beneficial suggestions in the areas ofinternal control, compliance, and reinvented business.
Outside Directors actively advise and provide recommendations, from a neutral and objective position, at theBoard of Directors and at the voluntary advisory committee of the Board of Directors, and ensure and enhancethe effectiveness of the monitoring and supervising function of the Board of Directors and transparency ofdecision-making by appropriately demonstrating to the internal Directors their supervisory functions based on
various perspectives and their management advice function of the outside Directors.
Mr. Majima attended all of the 15 meetings of the Board of Directors and all of the 13 meetings of the Audit &Supervisory Board held during the current term. He mainly made statements from an objective and neutral
position as an outside Audit & Supervisory Board Member based on his wealth of experience and expertise on
finance and accounting as a certified public accountant and over many years as a university professor. During
the current term, he was a member of the Nomination Committee and made contributions toward improving theobjectivity of ITOCHU's officer nomination process.
Mr. Uryu attended all of the 15 meetings of the Board of Directors and all of the 13 meetings of the Audit &Supervisory Board held during the current term. He made statements from an objective and neutral position as
an outside Audit & Supervisory Board Member, based on his wealth of experience and expertise as an attorneyin wide-ranging fields of corporate legal matters. During the current term, he was a member of the Nomination
Committee and made contributions toward improving the objectivity of ITOCHU's officer nomination process.
Mr. Ohno attended 13 of the 15 meetings of the Board of Directors and all of the 13 meetings of the Audit &Supervisory Board held during the current term. He mainly made statements from an objective and neutral
position as an outside Audit & Supervisory Board Member based on his expertise in legal systems andoperations and his high-level knowledge developed through many years of experience in the Ministry of Justiceand public prosecutor's office. During the current term, he was a member of the Governance and Remuneration
Committee and contributed to the further enhancement of governance at ITOCHU.
Outside Audit & Supervisory Board Members actively provide an opinion, from a neutral and objective position,at the Board of Directors and at the voluntary advisory committee of the Board of Directors, and enhance thetransparency of decision-making by appropriately demonstrating their supervisory functions of the outside
Directors against the performance of the internal Directors.

189

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Environment

Society

GovernanceSignificance of Holding and ITOCHU's Policy on the Governanceregarding its Listed Subsidiaries
ITOCHU has 203 consolidated subsidiaries (as of the end of 2019) and is expanding our diverse businesses inJapan and all over the world. As the core of the Group, ITOCHU formulates management policies as well as shortand medium-term management plans on a group basis, and regularly monitors the progress of each segment. In
order to appropriately deal with various risks as a group, we have the internal control systems on a group basis,
which are necessary to ensure that Directors' implementations of duties are in compliance with laws and statutory
regulations and the Articles of Incorporation, and to ensure the appropriateness of other operations.
In particular, ITOCHU makes conscientious efforts to ensure execution of duties by directors and employees at eachsubsidiary to comply with laws and regulations and the Articles of Incorporation by means of the directors andcorporate auditors dispatched to each subsidiary supervising and auditing the execution of duties. In addition, inorder to deal with various risks such as market risk, credit risk, country risk, investment risk, etc. of the Group,
ITOCHU maintains and manages risks comprehensively and individually. For that purpose, various internal
committees and responsible departments have been established, and the necessary risk management system andmanagement method are group-based. Furthermore, ITOCHU formulates a group compliance program, establishes
and operates the system required to prevent the occurrence of any violations of laws and regulations, and strives
for continuous improvement through regular reviews.
ITOCHU respects the autonomy of listed subsidiaries, ITOCHU Techno-Solutions Corporation, ITOCHU ENEX CO.,LTD., ITOCHU-SHOKUHIN Co., Ltd., CONEXIO Corporation, C.I. TAKIRON Corporation, FamilyMart Co., Ltd., andPrima Meat Packers, Ltd., and prohibits any acts that contradict the principle of shareholder equality. In particular,
with the recognition that there is a potential conflict of interest between ITOCHU and the minority shareholders ofthese listed subsidiaries and in order to secure the independent decision-making of these listed subsidiaries, werequest these listed subsidiaries to set up the governance structure under which the independent outside Directorsof these listed subsidiaries are well functioned. Specifically, ITOCHU encourages each listed subsidiary that (1)independent outside directors should be one-third or more of the total number of directors, (2) an independent
board advisory committee should be established, and (3) independent outside corporate auditors should be half ormore than the total number of corporate auditors. It is recognized that each of the listed subsidiaries haveestablished a governance system that is generally in line with the request.
On the premise of the above-mentioned governance system, the significance of holding a listed subsidiary is
including: (1) expansion of business partners based on our name recognition, creditworthiness and independence;(2) the expansion of synergies within the Group; (3) reduction of the Company's financial burden on the listed
subsidiary; and (4) securing excellent human resources. In addition, the significance of holding each listed
subsidiary from the perspective of the Group's management strategy and sales perspective is as follows:

Company

ITOCHU TechnoSolutions
Corporation

ITOCHU ENEX CO.,LTD.

Significance of Holding
It is expanding its business by developing solutions utilizing the Group's domestic andoverseas networks and developing services for group companies, and ITOCHU and
ITOCHU Techno-Solutions Corporation have an appropriate commercial relationship as
business partners. It was established and founded by inheriting part of ITOCHU's
information industry business as an independent company. There has been nocompetitive relationship with the ITOCHU's business, and has been few transactions
between us.
Utilizing its wide and diverse domestic customer base, ITOCHU ENEX CO., LTD. isdeveloping new fuel sales, logistics efficiency business, next-generation business, etc. inaddition to existing energy business and power business. It is important andindispensable presence for the Group in order to build a stable profit base both in Japanand overseas. It was established and founded by inheriting ITOCHU's existing subsidiaryas an independent company. There has been no competitive relationship with the
ITOCHU's business, and has been few transactions between us.

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Company

ITOCHUSHOKUHIN Co.,Ltd.

CONEXIO
Corporation

C.I. TAKIRON
Corporation

FamilyMart Co.,Ltd.

Prima Meat
Packers, Ltd.

Environment

Society

GovernanceSignificance of Holding
The principal and main business of ITOCHU-SHOKUHIN Co., Ltd. is the sale anddistribution of alcoholic beverages and processed foods. Based on the existence of it,
ITOCHU secures stable contact points with various domestic retailers, and we aim to
maximize profit in the food distribution field by utilizing this sales channel. Whilepursuing synergies by strengthening cooperation with it, a business relationship on thepremise of pursuing mutual economic rationality has been established and maintained.
It is expanding its business by utilizing the Group network to promote mobile accessory
sales and cross-industry collaboration, etc., and ITOCHU and CONEXIO Corporation havean appropriate commercial relationship as business partners. It was established andfounded by inheriting ITOCHU's mobile device sales business as an independentcompany. There has been no competitive relationship with the ITOCHUs business, andhas been few transactions between us.
C.I. TAKIRON Corporation is positioned as a core enterprise in the Group's plastic resin
business, due to its advanced technological capabilities and large-scale production
capacity. We aim to maximize the Group's profits through synergies such as support foroverseas expansion of the products handled by C.I. TAKIRON Corporation utilizing
ITOCHU's diverse overseas network. While pursuing synergies by strengthening
cooperation with it, a business relationship on the premise of pursuing mutual economic
rationality has been established and maintained.
FamilyMart Co., Ltd. operates convenience store businesses in eight countries including
Japan. It assumes key functions of our consumer-related business, and aims to further
strengthen Group's business foundation by jointly developing new products and services
that capture diversifying consumer needs and promoting digital strategies that
contribute to improving customer convenience. A business relationship on the premiseof pursuing mutual economic rationality has been established and maintained.
The main and principal business of Prima Meat Packers, Ltd. is to sell meat andprocessed livestock products, and it assumes an important role in supplying final
products in ITOCHU's livestock value chain. While pursuing synergies by strengthening
cooperation with it, ITOCHU is strengthening our value chain by conducting a wide rangeof transactions with other companies. A business relationship on the premise of
pursuing mutual economic rationality has been established and maintained.

To enhance the corporate value of the overall ITOCHU Group, ITOCHU, as their parent company and major
shareholder, regularly pays adequate attention to the legal compliance systems and status of these listed
subsidiaries. ITOCHU provides appropriate advice and support as needed on specific compliance-related matters,
creation of internal control systems, and other managerial issues.

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Environment

Society

GovernanceInternal Control System
On April 19, 2006, ITOCHU's Board of Directors established the Basic Policy regarding the Internal Control System,
which was most recently partially revised as of April 1, 2020. ITOCHU intends to revise and improve the internal
control system tirelessly in order to build a system that is even more appropriate and efficient.
The following highlights two noteworthy initiatives under this policy.

Basic Policy Regarding the Internal Control System and its Operational Status
The Company has established the following internal control systems, which are necessary to ensure that
executive officers' implementation of duties are in compliance with laws and statutory regulations and the
Articles of Incorporation and ensure the appropriateness of other operations. Below is a summary of the Basic
Policy regarding the Internal Control System and its Operational Status as of June 19, 2020. ("Basic Policy
regarding the Internal Control System" was approved by Board of Directors on April 19, 2006, and the latest
revision was made on April 1, 2020).
Notes

1. System to Ensure Compliance by Directors and Employees to Laws, Regulations andthe Articles of Incorporation(1) Corporate Governance
1. As the decision-making body, the Board of Directors, consisting of Directors and Outside Directors,
is to decide important matters in accordance with laws and regulations, the Articles ofIncorporation, the "Board of Directors Regulations," and other internal regulations, and as thesupervisory body, the Board of Directors is to supervise the performance of the directors.
2. Each director is to carry out such director's functions and duties as designated by the Board of
Directors in accordance with laws and regulations, the Articles of Incorporation, resolutions by the
Board of Directors, and internal regulations.
3. ITOCHU is to adopt the Executive Officer System to strengthen the decision-making function andsupervisory function of the Board of Directors, and to streamline executive decision-making. Basedon the approval of the Board of Directors, executive officers implement their designated duties
based on delegation from the Board of Directors and representative directors.
4. The corporate auditors are to oversee the performance of the directors based on the "Board of
Corporate Auditors Regulations" and "Auditors' Auditing Standards."(2) Compliance
1. Directors, executive officers and employees are to conduct themselves in accordance with the
ITOCHU Group Corporate Mission and the ITOCHU Group Guideline of Conduct.
2. ITOCHU is to designate a representative director as the chief officer responsible for supervisingcompliance and also establish the Compliance Committee and a department that oversees allcompliance matters. In addition, the "ITOCHU Group Compliance Program" is to be created tofurther enhance our compliance system.

(3) Internal Control to Ensure Reliability of Financial Reporting
1. ITOCHU is to have in place internal regulations concerning commercial transactions management
and accounting, and is to create the position of CFO to ensure the reliability of financial reporting.
2. ITOCHU is to establish the Disclosure Committee and regularly review and improve thedevelopment and implementation status of the internal control systems to ensure the reliability offinancial reporting.

(4) Internal Audits
ITOCHU is to establish the Audit Division under the direct control of the President and Chief Executive
Officer. The Audit Division is to regularly implement internal audits of all aspects of business
operations based on the "Audit Regulations." Such internal audits are to examine compliance withlaws and regulations, the Articles of Incorporation, and internal regulations, as well as, among othermatters, the appropriateness of the procedures and nature of the exercise of duties andresponsibilities.
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Environment

Society

Governance

2. System for the Storage and Preservation of Information Related to Director Duties
The directors are to appropriately store and preserve important documents and related materials
concerning the performance of their duties, including the minutes of the General Meeting of Shareholders,in accordance with the "Information Management Regulations," the "Document Management Rules" andother internal regulations. All documents and information so stored and preserved are to be subject toinspection by the directors and auditors at any time. Further, the Company will establish departments
responsible for the timely disclosure of important corporate information and other information. At thesame time, directors will rapidly and comprehensively gather information that requires disclosure andimplement timely and appropriate disclosure in compliance with laws and statutory regulations.

3. Regulations Concerning the Management of the Risk of Loss and Other Relevant Risk
Management System
To adequately address the various risks associated with our business operations, such as market risk,
credit risk, country risk, and investment risk, ITOCHU is to establish internal committees and responsible
departments, and is to develop the necessary risk management system and risk management techniques,for example establishing a full range of management regulations, investment criteria, risk limits andtransaction limits, and developing reporting and monitoring systems, and managing company-wide as wellas matter-specific risks . Furthermore, ITOCHU is to regularly review the effectiveness of the risk
management system.

4. System to Ensure Efficient Performance of Directors(1) The HMC and Other Internal Committees
The HMC as a supporting body to the President and Chief Executive Officer, and a number of otherinternal committees, are to facilitate the proper and agile decision-making by the President and Chief
Executive Officer and the Board of Directors.

(2) Division Company System
Under the Division Company System, the position of Division Company president is to be created ateach Company, and each Company is to manage its business autonomously in accordance with laws
and regulations, the Articles of Incorporation, and internal regulations. Furthermore, each Company is
to establish its own numerical targets, and regularly evaluate its performance by comparing against
such numerical targets.

(3) Clearly Define the Scope of Authority and Responsibilities
In order to ensure the appropriateness and efficiency of the performance of the management,
ITOCHU is to develop internal regulations to clearly define the scope of authority and responsibilitiesof each corporate officer and divisional manager.

5. System to Ensure the Adequacy of Operations of the ITOCHU Group (Consisting of
ITOCHU and Its Subsidiaries)(1) Subsidiary Management and Reporting System
1. ITOCHU is to establish a department that oversees all the subsidiaries. Furthermore, relevant
departments within ITOCHU are to exercise jurisdiction over their responsible subsidiaries, andprovide managerial guidance to such subsidiaries in accordance with the internal regulations
concerning consolidated company management. In principle, ITOCHU is to send directors andcorporate auditors to each subsidiary to ensure the adequacy of the subsidiary's operations.
2. With respect to subsidiaries that ITOCHU owns indirectly through its directly-owned subsidiaries,
ITOCHU is to strive to ensure the adequacy of operations by such indirectly-owned subsidiaries inaccordance with this Basic Policy by way of, in principle, causing directly-owned subsidiaries toprovide managerial guidance to indirectly-owned subsidiaries.
3. With respect to important matters on the management of subsidiaries, ITOCHU is to, in principle,
agree and specify with each subsidiary what matters will require the prior approval of or reporting
to ITOCHU, as appropriate, taking into account, among others, each subsidiary's nature and size ofbusiness and whether it is listed or unlisted.

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Environment

Society

Governance(2) Rules and Other Systems to Manage the Risk of Loss at Subsidiaries
ITOCHU is to identify the subsidiaries which shall be subject to ITOCHU's Group-wide risk
management in respect of each risk category, taking into account, among others, each subsidiary's
nature and size of business and whether it is listed or unlisted. In addition, ITOCHU is to periodicallyreview the effectiveness of such Group-wide management system.

(3) System to Ensure the Efficient Performance of Duties by Directors, etc. of Subsidiaries
ITOCHU is to formulate a management plan on a consolidated basis and undertake managerial
guidance of subsidiaries in order to attain the said management plan as well as to provide support tosubsidiaries such as provision of group financing from ITOCHU.

(4) System to Ensure Compliance by Directors, etc. and Employees of Subsidiaries to Laws,
Regulations and the Articles of Incorporation
1. In principle, ITOCHU is to send directors and corporate auditors to each subsidiary and strive toensure that the performance of duties of directors, etc. and employees of a subsidiary complies
with laws and regulations and the Articles of Incorporation of such subsidiary through supervision
and audit of the performance of duties at the subsidiary by the said directors and auditors sentfrom ITOCHU.
2. ITOCHU is to provide guidance to its subsidiaries for the purpose of implementing a compliancesystem under the "ITOCHU Group Compliance Program" and to perform periodic monitoring andreview of the implementation status of the relevant matters as well as providing education andtraining at subsidiaries whenever necessary for the purpose of securing compliance by the entire
ITOCHU Group.
3. All of the operations and activities of the subsidiaries are to be subject to internal audits by the
Audit Division.

6. Matters Concerning Supporting Personnel to Corporate Auditors, Independence ofSuch Personnel from the Directors and Ensuring the Effectiveness of Instructions to
Such Personnel
ITOCHU is to establish the Corporate Auditors’ Office under the direct jurisdiction of the Board of
Corporate Auditors and is to put in place full-time employees with the sole responsibility of supporting thework of the corporate auditors. The supervisory authority over such employees is to belong exclusively tothe corporate auditors, and evaluation of such employees is to be carried out by the corporate auditor
designated by the Board of Corporate Auditors. Any transfer orders or disciplinary actions relating to such
employees are to require prior approval by such corporate auditor.

7. System for Reporting by Directors and Employees to Corporate Auditors(1) Attendance at Important Meetings
The corporate auditors are to attend meetings of the Board of Directors, the HMC meetings, and otherimportant meetings, and interview the directors and other relevant persons regarding theperformance of their duties. In addition, the corporate auditors are to have the right to inspect all
relevant materials.

(2) Reporting System
1. The directors and corporate officers are to regularly report to the corporate auditors about theirperformance. Furthermore, in addition to the matters required by laws and regulations, thedirectors and corporate officers are to report all the decisions that could have a major impact on
the finance or business of ITOCHU to the corporate auditors immediately after such decisions are
made.
2. Employees are to have the right to report directly to the corporate auditors any matters that could
cause serious damage to ITOCHU.
3. In the "ITOCHU Group Compliance Program," ITOCHU is to explicitly prohibit disadvantageous
treatment of directors and employees who have reported to the corporate auditors and to ensure
thorough familiarization with this prohibition.

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Environment

Society

Governance

8. System for Reporting by Directors, Corporate Auditors and Employees of
Subsidiaries or by a Person who Received a Report from Them to Corporate Auditors(1) Reporting System
1. The directors and corporate auditors of subsidiaries may report directly to the corporate auditors of
ITOCHU any matters that could cause serious damage to the said subsidiary.
2. A department that oversees compliance is to periodically report to the corporate auditors of
ITOCHU a summary of matters that could cause serious damage to a subsidiary that were reportedby the officers and employees of the said subsidiary.
3. In the "ITOCHU Group Compliance Program," ITOCHU is to explicitly prohibit disadvantageous
treatment of persons who have reported to the corporate auditors under the provisions listed
above and to ensure full familiarization with this prohibition.

9. Matters Concerning Policy on Procedures for Prepayment or Refund of Expenses
Arising in Relation to Performance of Duties of Corporate Auditors and Processing of
Expenses or Obligations Arising in Relation to the Performance of Other Duties
When a corporate auditor claims prepayment, etc. from ITOCHU in relation to the performance of duties
under Article 388 of the Companies Act, ITOCHU is to process the relevant expense or claim promptly
upon confirmation by the responsible department.

10. Other Relevant Systems to Ensure the Proper Functioning of Audits(1) Coordination with the Corporate Auditors by the Audit Division
The Audit Division is to maintain close communication and coordination with the corporate auditorswith respect to matters such as formulation of the internal audit plan for each business year, andinternal audit results.

(2) Retaining External Experts
When deemed necessary, the corporate auditors are to independently retain outside experts for the
implementation of an audit.

Overview of the Operational Status of Internal Control System
For the proper operation of internal control systems, ITOCHU has adopted a system by which it further segments
items stipulated by the Basic Policy into more detailed confirmatory items in respect of each fiscal year, and, after
setting the department in charge of each of these confirmatory items, conducts checks of the construction and theoperational status of internal control systems by each department (and by other related internal committees) at
the Internal Control Committee meetings held each half year. As of FYE 2021, the Internal Control Committee ischaired by Chief Administrative Officer with the Corporate Planning & Administration Division as secretariat, andconsists of Chief Financial Officer, General Manager of Internal Audit Division, and an external expert (attorney) as
members. Corporate Auditors also attend and voice opinions every time.
At its meetings, the Internal Control Committee verifies the content of checklists summarizing achievement status,
issues, etc. for each of the above confirmatory items, as submitted by the departments in charge of each. It also
confirms the construction and operational status of internal control systems by verifying the content of individual
reports from the departments in charge, with respect to important matters such as systems to ensure the reliabilityof financial reporting, compliance systems, systems to manage the risk of losses, and the construction andoperational status of internal control systems in the ITOCHU Group. The results of deliberations by the Internal
Control Committee are reported twice per year to the HMC and the Board of Directors, the latter of which conductsa full-year evaluation of the construction and operational status of internal control systems.
Regarding the meetings of main internal committees related to internal control in FYE 2020, the Internal Control
Committee met 2 times, the Compliance Committee 2 times, and the ALM Committee 10 times.
ITOCHU's internal control systems are constructed on the base of the ITOCHU Group, consisting of ITOCHU
Corporation and its subsidiaries, and the operational status of the Group base internal control systems, and theconstruction and operational status of internal control systems in subsidiaries, are reported regularly to theInternal Control Committee.
ITOCHU intends to revise and improve these internal control systems tirelessly in order to build systems that areeven more appropriate and efficient. Further, a meeting of the Board of Directors convened on May 8, 2020
evaluated the development and implementation status of each item enumerated in the Basic Policy regarding theInternal Control System for FYE 2020 and confirmed that there were no significant deficiencies or defects.
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Environment

Society

GovernanceInitiatives to Further Enhance the Reliability of Financial Reporting
We have established an internal system in order to further enhance the reliability of our consolidated financial
reporting. The designing and implementing of internal control are periodically assessed to keep making appropriate
improvements. Specifically, a Chief Responsible for Internal Control has been appointed in each organization to
design and implement internal control. The Internal Audit Division evaluates the effectiveness of internal control
and provides feedback to each organization to ensure the continuous improvement. Overall management of these
initiatives is conducted by the Internal Audit Division, and important matters are determined through deliberationsin the Disclosure Committee chaired by the CFO. In this way, we are working to reinforce the companywide internal
control system.

Strengthening Risk Management on a Group Basis, Including
Subsidiaries
ITOCHU has established internal committees and responsible departments in order to address the various risks
associated with the Group's business operations, such as market risk, credit risk, country risk, and investment risk.
At the same time, on a Group basis ITOCHU has developed the risk management systems and methods to manage
various risks individually and on a companywide basis.
Those include a range of management regulations, investment criteria, risk exposure limits, and transaction limits,
as well as reporting and monitoring systems. Moreover, ITOCHU regularly reviews the effectiveness of its risk
management systems. As part of such efforts, the ALM Committee protects the ITOCHU Group's assets throughdeliberations on Group balance sheet management as well as analysis and management of risk.

Process for Investments

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Sustainability at the ITOCHU Group

Environment

Society

GovernanceManaging Concentrated Risks
We also manage overall country risk exposure to non-industrialized countries and manage individual country risk
based on internal country rating standards. Country limits are deliberated by the Asset Liability Management (ALM)
Committee and approved by the HMC.

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Sustainability at the ITOCHU Group

Environment

GovernanceSociety

Risk Management
Action Plan
Risks

Opportunities
Improvement of transparency in decision-making, appropriate
response to changes and establishment of a stable basis of
growth enabled by the establishment of a firm governancesystem, and others.

Occurrence of business continuity risk or unexpected loss
resulting from the malfunction of corporate governance orinternal control, and others.

Materiality

SDGs

Issues to

Business

Targets

Address

Area

Commitment

Specific Approach

Performance

Degree of Progress

Indicators

We reviewed the progress situation for the action plans

Maintainrigorous
governancestructures

Maintaining andreinforcing agovernancesystem forachievingsustainablegrowthWe will build a system
for group risk
management andmaintain it to manage
Risk
the risk of loss andmanagement
ensure theappropriateness of ourcorporate group's
operations.

Conduct regular reviews ofrisk management systems
that have been established,including internal
committees and risk
management departments,
various rules andregulations, reporting andmonitoring systems, as wellas the effectiveness of such
systems.

Maintain a firm
governance system in themedium- and long-termby establishing a PDCA
cycle, including
development andimplementation of actionplans by the departments
responsible for risk
management, andmonitoring and reviews byinternal committees.

in the first half of 2019 with each department
responsible for risk management. The Global Risk
Management Division assembled and made a report to
the Internal Control Committee in October 2019 to theeffect that the risk management structure is functioning.
This includes the response to events that occurred during
the applicable period. It obtained approval for the reportfrom the committee.
We reviewed the progress of the second half of FYE 2020
and the action plans of FYE 2021 at the meeting ofInternal Control Committee in April 2020 and obtained
approval from the committee.

Policy and Basic Concept
The ITOCHU Group is exposed to various risks due to its wide range of business natures, such as market, credit,
and investment risks. These risks include unpredictable uncertainties and may have significant effects on the
ITOCHU Group's future financial position and business performance.
We acknowledge risk management as a key management issue. Therefore, we have established our basic risk
management policy and develop necessary risk management systems and techniques based on the concept of the
COSO-ERM framework. Specifically, we have defined the following 18 risks as major risks* and are responding tothem by building information management and monitoring systems at each department responsible for managing
these risks on a consolidated basis. In addition, we periodically review the effectiveness of management systems
through our internal committees. Moreover in accordance with the medium-term management plan, we conduct
risk assessments across the company to reevaluate the risks we are currently aware of and identify risks
comprehensively.
*Major Risks
1. Compliance Risks

2. Legal Risks (Excluding Compliance Risks)

3. Risks Associated with Trade Security Policy Management

4. Risks Associated with Customs

5. Country Risks

6. Commodity Price Risks (Specific, Important Product)

7. Credit Risks

8. Investment Risks

9. Stock Price Risks

10. Foreign Exchange Rate Risks

11. Interest Rate Risks

12. Financing Risks

13. Information System Risks

14. Information Security Risks

15. Labor Management Risks

16. Human Resources Risks

17. Risks Associated with the Appropriateness of Financial

18. Risks Associated with Internal Control

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Environment

Society

Governance

Structures and Systems
Risk Management Structure
Risks associated to business operations are managed under oversight from the board of directors, within the
responsibilities mandated to our division companies, Headquarters Management Committee (HMC) , and relevant
committees.
ITOCHU has established internal committees and responsible departments in order to address the various risks
associated with the Group's business operations, such as market risk, credit risk, country risk, and investment risk.
At the same time, on a Group basis ITOCHU has developed the risk management systems and methods to manage
various risks individually and on a companywide basis. Those include a range of management regulations,investment criteria, risk exposure limits, and transaction limits, as well as reporting and monitoring systems.
Moreover, ITOCHU regularly reviews the effectiveness of its risk management systems and reports on results andfindings to the board of directors.
At the Group level, ITOCHU's structural approach to risk management is overseen by the President and Chief
Operating Officer (COO) and the Board of Directors and aims to ensure timely and sound executive decision
making. The HMC, which is chaired by the President and COO and comprised of the Chairman and Chief Executive
Officer (CEO) and other executives appointed by the President and COO, is the committee that sits at the highest
level regarding our risk management system. Subsequent committees that report up to the HMC, also referred toas Principal Internal Committees, which include the Internal Control Committee, Disclosure Committee, ALM
Committee, Compliance Committee, Sustainability Committee, Investment Consultative Committee, areresponsible for identifying and addressing risks and incidents in their respective fields.
The Sustainability Committee, one of the Principal Internal Committees introduced above, is tasked to promotesustainability in the ITOCHU Group's company-wide risk management. The Committee manages operational ESG
risks such as human rights risks, health and safety risks, climate risks, and natural disaster risks, as well as ESG
risks related to investments. The Committee cooperates with other Committees as necessary and makes decisions
on policies and initiatives to address ESG risks and operational improvements to further mainstream sustainability
concerns in our risk management culture. Activities and findings are compiled by the Committee and reported to
the Board of Directors annually.
At the individual Company level, each Company's President reports to the Division Company Management
Committee (DMC), an advisory body to the Companies. The DMC deliberates on important issues such as thoseregarding investments, lending, assurance, and business management that have the potential to substantially
impact the management of each company. If the risks identified or escalated exceed beyond the responsibilities
mandated to the DMC, depending on the gravity of the risk and upon deliberation with other committees asnecessary, risk issues may be escalated to the HMC and/or the Board of Directors.
ITOCHU is a company with Audit & Supervisory Board Members and endeavors to strengthen themonitoring/supervising function and ensure the transparency of decision making by having the Audit & Supervisory
Board Members (including outside Audit & Supervisory Board Members) fully monitor corporate management.
Auditors are therefore independent from the Committees within our risk management structure, including the HMC,
but do attend Committees to perform their monitoring/supervising responsibilities. The executives chairing each
respective Committee is also required to report to the HMC and/or the President and COO as necessary. The Audit
Department directly under COO and other corporate staff departments oversee risks and our group-wide approachto managing risks as assigned within their mandated responsibility, and are also required to support the HMC andtheir subsequent Committees.
Organization chart regarding the ITOCHU Group's corporate governance structure and internal controls system(P171)
Overview of ITOCUH Group's main internal committees (P185)
With the business environment being filled with rapid changes and uncertainty, the ITOCHU Group recognizes theimportance of predicting and preparing for various eventualities. As such, we create and analyze various risk
scenarios regarding the various elements of the macroeconomic environment, such as political, legal, economic,
socioeconomic, and technological factors, and consider relevant future impacts in our management planning.
Please see Macroenvironmental PEST Analysis page (https://www.itochu.co.jp/en/ir/doc/annual_report/online2020/
pest.html) for our non-financial capital PEST analysis reported in the Integrated Report.

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Environment

Society

GovernanceInitiatives
Risk Management
Risk Capital Management* and Management of Concentration Risk
Strict Management of Risk Assets

Risk Assets and Risk Buffer

Our basic operational policy involves first calculating risk
assets based on the maximum amount of possible future
losses from all assets on the balance sheet including
investments and all off-balance-sheet transactions. Second,
we manage the amount of risk assets within the limits of ourrisk buffer (Total shareholders' equity + Non-controllinginterests). As we promote investments that will lead to evolve
existing business moving forward, we will work to maintainrisk assets within the limits of our risk buffer, conduct strictrisk management, and further strengthen our financial
position.

Business Investment Management
Fundamental Approach
Along with strategic business alliances, business investment is an important means of creating new businesses. To
actively promote strategic investments in areas of strength in a timely manner, we choose the optimal structurefrom a wide range of methods, such as establishing a wholly owned subsidiary, implementing joint investment withpartners, and participating in management through M&As or converting to a consolidated subsidiary.
In principle, we hold investments continuously. After making each investment, we work to maximize the investee's
corporate value and to expand trading profit and dividends received by fully utilizing our Groupwide capabilities.
Given such considerations as larger-scale investments in recent years, we are rigorously screening theappropriateness of the business plan and acquisition price. For existing investments, to increase investment
earnings and to exit quickly from low-efficiency assets, we are further strengthening monitoring procedures,
centered on instituting more rigorous exit criteria and thoroughly implementing periodic investment review.
Decision-Making Process for New Investments
A multilayered decision-making process that achieves quick decision-making by giving a certain level of discretionto the Division Companies while striving to pursue investment return and curb investment risk.

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Environment

Society

GovernanceBusiness Investment Process
Under "Brand-new Deal 2020," in addition to the conventional investment process, we have further strengthened
the earnings base to make it more resilient to economic fluctuation by thoroughly verifying the appropriateness ofbusiness plans and focusing on the monitoring of sub-subsidiaries. Despite the challenging operating environment,
in FYE 2020 profits/losses of Group companies reached a record high for the fourth consecutive year. Besides, amid
the COVID-19 pandemic, the ratio of Group companies reporting profits remained high, at 88.6%.
Given the rapidly changing operating environment, we recognize that "prevent" efforts will be an even higher
priority in FYE 2021 than in the past. By conducting careful and close monitoring, which is our forte as a company
having strengths in the non-resource sector, we will strive to accurately ascertain risks unique to individual
businesses. If we anticipate impairment concerns that could result from lower share prices or decreased earnings,
we will act preemptively.

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Environment

Society

Governance

Number of Consolidated Subsidiaries and Share of Group Companies Reporting Profits

Security Risk Management
Policy and Basic Concept
The ITOCHU Group aims to reduce and avoid information and data security risks by taking a structured approach toensure a high level of information security. The Information Security Policy(https://www.itochu.co.jp/en/security/index.html) is communicated to all of our executives and employees andserves as the overarching policy that guides our information management initiatives. We have also established theInformation Management Code, which includes a code of conduct specific to information and data security to which
our executives and employees must comply to. More specifically, rules and standards are strictly set regarding themanagement of personal information, documents, and IT security to prevent information leakage and breaches.

Structures and Systems

Name

Chairman

IT Strategy Council

CDO・CIO

Objectives
Deliberates regarding IT Strategy (Annual IT Strategic Plan, etc.)

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Environment

Society

GovernanceInitiatives
At the ITOCHU Group, we have experienced a data breach incident in the past, where a malware caused
confidential client information to be leaked externally. This incident became pivotal in our renewal andimprovement of our efforts to prevent similar data breaches from happening ever again. Some of our cornerstone
initiatives have been to expand and enhance our basic security infrastructure, renew the structure of our Cyber
Security team (ITCCERT: ITOCHU Computer Emergency Readiness, Response & Recovery Team), and hiring expert
advanced cybersecurity analysts.
We routinely collect the latest information regarding potential cyber threats by analyzing system logs and malware
and based on findings, implement preventative measures. Additionally, when incidents do occur, we respondinstantly by investigating their causes, discussing possible countermeasures, and restoring services. In FYE 2018,
we integrated the ITCCERT into our IT Planning Division to further enhance security countermeasures across theentire Group and build internal capacity around information security. We also provide training programs to develop
technicians proficient in cyber security. There are few examples of user companies in Japan that are working as
actively as we are to develop systems and respond to information security risk. Moving forward, we plan tomaintain these initiatives and make enhancements where necessary to ensure sustainable growth that is free fromcyber threats.
We periodically engage in the training programs listed below to maintain and improve our information security
program.
We give training to all employees on how to identify and respond to targeted e-mail attacks twice a year.
All global employees including those in group companies are subject to a mandatory, simultaneous e-learning
course on information security, which is held every three years.
Several times a year, the ITCCERT leads an internal cyber security workshop for the ITOCHU Group companies.
Policies regarding information security and the management of personal information are required to becommunicated to employees upon hiring. If amendments or updates are made to these policies, all executives
and employees receive a notification of the changes made. Employees are also updated on such amendments intheir periodic e-learning trainings.
Cyber security is especially important to us given that our BCP is supplemented by IT solutions which have enabled
us to maintain business operations during the COVID-19 pandemic. Such IT solutions include our adoption of thinclients in all of our internal computers, WEB-based teleconferencing systems, and cloud systems. We ensure thatcyber security is monitored in these systems by requiring that all company-wide services and tools are subject toprior assessments.

Business Continuity Plan
In order to ensure business continuity under extreme circumstances, including natural disasters (such as major
earthquakes), pandemics, terrorist attacks, cyber-attacks and security incidents, the ITOCHU Group establishes a
Business Continuity Plan (BCP). The BCP aims to prepare us for unpredictable incidents and minimize disruptions toour business. It is subject to regular reviews and revised as necessary.
The BCP outlines four stages between the occurrences of a major incident to the full recovery of our business: 1.
Emergency response and immediate recovery 2. BCP implementation 3. Operational recovery 4. Full recovery. Eachstage in the BCP clearly appoints responsibilities to certain personnel and outlines response protocols. The ITOCHU
Group's BCP is subject to all group-wide operations and is supplemented by business segment and departmentspecific provisions.
Regarding the COVID-19 Pandemic that began in late 2019, the ITOCHU Group responded by establishing an
emergency response task force. In addition to ensuring the health and safety of our immediate employees andtheir families, as a trading company that prides itself in consumer goods, it is also important to us that we fulfill
our duty to consumers and their livelihoods by maintaining stable operations in our various supply chains. By
taking a risk-based approach to handling the COVID-19 Pandemic but also prioritizing business continuity, we
continued to do our best in fulfilling our social responsibility.

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Environment

GovernanceSocietyCompliance
Action Plan
Risks

Opportunities
Improvement of transparency in decision-making, appropriate
response to changes and establishment of a stable basis of
growth enabled by the establishment of a firm governancesystem, and others.

Occurrence of business continuity risk or unexpected loss
resulting from the malfunction of corporate governance orinternal control, and others.

Materiality

SDGs
Targets

Issues toAddress

Business
Area

Commitment

Specific Approach

Performance
Indicators

Degree of Progress
Registered with the Whistleblowing Compliance Management System (selfdeclaration of conformity) on April 10, 2019.
We monitored all ITOCHU Corporation for bribery and corruption in July and

Maintainrigorous
governancestructures

Ensuring
compliance

We will makeemployees moreaware that
ensuring
Compliance compliance at any
time is ourcontribution to thecompany andsociety.

Recognizing attitude
of employees
identifying issues
and ensuring actionplans to tackle theissues throughperiodic complianceattitude survey anddirectcommunications.

Continuous directcommunication with
employees throughface-to-face training
programs whose
contents shall be
updated along with
monitoring themeasures according torisks, expectations
from society andissues on site which
will change with thetime.

August 2019. We confirmed the application status under the Public Officer andForeign Public Officer Guidelines, Business Partner Guidelines and Investment
Guidelines based on certificates. We found no major problems as a result of that.
We conducted compliance attitude survey on 57,781 employees in ITOCHU
Corporation and group companies in August and September 2019. The numberof employees subject to this survey increased by approximately 14,000
compared to the previous survey (FYE 2018). The response rate was 94.9%. This
exceeded the response rate for the previous survey (93.4%).
We provided e-learning on dealing with bribery and corruption and organizedcrime for ITOCHU Corporation employees (January 31 to February 29, 2020).
The situation concerning the implementation of training tours in FYE 2020 is asfollows.
For ITOCHU Corporation : Implemented 53 times with 2,198 attendees
For ITOCHU group companies (implemented in 84 companies): Implemented 195
times with 10,715 attendees

Policy and Basic Concept
All officers and employees are to conduct themselves in accordance with the ITOCHU Group Corporate Mission
and the ITOCHU Group Guideline of Conduct based on high ethical values.
ITOCHU is to designate a representative director as the Chief Officer for Compliance (Senior Managing Executive
Officer・CAO) responsible for supervising compliance and also establish the Compliance Committee and adepartment that oversees all compliance matters. In addition, the "ITOCHU Group Compliance Program" Is to becreated to further enhance our compliance system.

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Environment

Society

Governance

Structures and Systems
ITOCHU Group's Compliance System
The ITOCHU Group is developing a system for compliance by having the Compliance Department of the Legal
Division plan and suggest policies and measures to encourage compliance throughout the entire Group andappointing compliance officers in each organization within ITOCHU Corporation, overseas offices and major Group
companies worldwide (including consolidated subsidiaries and some equity method associated companies;
hereafter, the "companies subject to compliance management"). The Compliance Department performs these roles
under the direction of the Chief Administrative Officer (CAO) who serves as the Chief Officer for Compliance. In
addition, the ITOCHU Group Compliance Program provides guidelines to maintain the compliance system. We thenperiodically monitor and review the implementation situation of these matters. At the same time, we strive toensure thorough compliance throughout the Group by giving education and training in our subsidiaries asnecessary.
Incidents of compliance violations revealed in each organization within the Headquarters, overseas offices orcompanies subject to compliance management are reported to the Chief Officer for Compliance (CAO) and the
Corporate Auditors, while incidences of serious compliance violations are reported to the Board of Directors as
appropriate. The Compliance Committee is chaired by the CAO and consists of three external members and headsof relevant administrative divisions and sales division as internal members. It deliberates on matters related tocompliance as a permanent organization on business operations. The most recent Compliance Committee meeting
was held on February 26, 2020. (The meeting is held two times a year, in principle.)
The ITOCHU Group Compliance Program details the compliance system of the ITOCHU Group so that eachorganization within ITOCHU Corporation, its overseas offices, and companies subject to compliance management
can ensure compliance by taking into account business characteristics, operational formats and local laws. The
Compliance Committee (Chair: CAO) reviews the effectiveness and validity of the program based onlaws/ordinances and social trends. The committee then revises and approves this program as appropriate every
year.
Across the Group, we conduct Monitor & Review surveys once a year to check the status of compliance systems
and operations of each organization. In addition, as for key organizations such as overseas offices and companies
subject to compliance management, we are implementing activities with a focus on system operation, including onsite guidance with the objective of ascertaining actual front-line compliance conditions and identifying risks.
Furthermore, based on trends in former incidences of compliance violations and the findings of the Monitor &Review surveys, we are formulating individual compliance reinforcement measures tailored to each Division
Company, and these measures are steadily being implemented.
The ITOCHU Chief Officer for Compliance (CAO) and the compliance officers of each organization, overseas offices
and companies subject to compliance management report the situation of compliance system operation and theresults of the monitoring and reviews in accordance with the ITOCHU Group Compliance Program to the respective
board of directors and top management (e.g., DMCs, responsible directors, presidents and board of directors) oncea year in principle. Moreover, the directors of ITOCHU and our group companies are obliged to report any serious
violations of compliance with laws/ordinances or our Articles of Incorporation to the Audit & Supervisory Board
members of the respective companies. The Internal Audit Division of ITOCHU conducts two types of internal audit:
compliance audits to verify that the compliance system in the ITOCHU Group is functioning sufficiently and regular
audits to check the compliance implementation situation of the relevant organizations as appropriate in the regular
audits on each division (including supervising group companies) and overseas bloc.
In addition, to ensure compliance throughout the Group, at personal performance evaluations at the end of eachfiscal year we ask all employees to confirm in writing that they have complied with laws, regulations, and otherrules.

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Governance

Response to Violations
The compliance officers in the relevant organizations make reports as appropriate to the Chief Officer for
Compliance (CAO) on compliance-related concerns for which violations of the aforementioned policies andregulations, including those concerning the prevention of corruption, have been discovered or for which it has been
determined there is a risk of such occurring in each organization in the headquarters, overseas offices andcompanies subject to compliance management. At the same time, the compliance officers in the relevantorganizations play a central role in taking a proactive response that includes investigating the causes of issues andformulating measures to prevent their recurrence and to then report developments in the situation, the results andrecurrence prevention measures to the Chief Officer for Compliance (CAO).
We set up an investigation committee as necessary under the direction of the Chief Officer for Compliance (CAO)
for serious compliance-related concerns requiring consideration from a company-wide perspective. That committee
reports the results of the investigation and the recurrence prevention measures to the Board of Directors.
Furthermore, ITOCHU then takes action as necessary upon considering whether it is necessary to respond, reportand make announcements to external organizations. We verify whether it is necessary to impose internalpunishments on officers and employees involved in violations of laws/ordinances including those concerning briberyin accordance with the internal regulations (e.g., work regulations) of each company. If necessary, we impose
appropriate punishments according to the procedures stipulated in the internal regulations upon consulting with therelevant departments including the supervising organization.

Overview
The ITOCHU Group Compliance System

Internal Information Reporting System (Hotlines)
ITOCHU Corporation has formulated regulations on the Internal Information Reporting System (Hotlines) andinstructed the installment of hotlines at companies subject to compliance management as well. In addition toprotecting whistleblowers through these arrangements, we have defined mechanisms for proper disposal of cases.
This initiative is reinforcing compliance management by supporting the prompt discovery and rectification of any
incidents of corruption, including bribery. The Internal Information Reporting System operation situation is reported
to the Compliance Committee periodically.
ITOCHU Corporation has established multiple whistleblowing contacts both in Japan and overseas (including
external whistleblowing contacts that utilize specialized company and external lawyers). We accept reports from
employees who have an employment relationship with ITOCHU, those who have been dispatched to ITOCHU undera worker dispatch contract from a company that has entered into that contract with ITOCHU, and group companies.
It prohibits the unfavorable treatment of whistleblowers, such as retaliation, and allows whistleblowers to provide
information anonymously.
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Environment

Society

Governance

Flow of Report

ITOCHU Corporation applied for recognition under the Whistleblowing Compliance Management System (Phase 1:
self-declaration of conformity), which was newly introduced by the Consumer Affairs Agency of Japan. Ourconformity with certification standards was confirmed and our registration was accepted as of April 10, 2019,ahead of the competition (first on the registrant list).

Consultation Desk for the General Public (including Stakeholders)
ITOCHU Corporation has established a system to accept opinions, proposals, and grievances and to accept inquiries
from the general public and all our stakeholders, as described below.

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Environment

Society

GovernanceInitiatives
Implementation of Compliance Training
ITOCHU provides ongoing education and awareness on compliance. The aim is for each one of our officers andemployees to understand the purpose of laws/ordinances and social norms and to then comply with these based onhigh ethical values.

On-Site Compliance Training
We conduct On-Site Compliance Training for all officers and employees of ITOCHU Corporation every year. This
training, which is intended to raise compliance awareness and prevent the occurrence of any cases, uses actual
incidents of compliance violations as teaching materials while also focusing on the following points.
Raising awareness of compliance with laws that need to be observed in the course of business
Raising awareness of prevention of any incidents of corruption, including bribery, insider trading, and money
laundering
Raising awareness of prevention of human rights violations such as power harassment and sexual harassment
In addition, Group companies implemented their own compliance training programs for officers and employees asappropriate for their operational formats. In FYE 2020, on-site training was also provided by the Headquarters forofficers and employees of major Group companies for a total of about 10,800 people from 85 companies in Japan.
Training was also provided to about 1,450 people from 51 group companies at major overseas blocs in FYE 2020.
We also distribute the Compliance Handbook to all employees. This handbook provides advice on compliance foreach potential work setting (in Q&A format) and advises what actions to take in order to prevent corruption. We
also conduct separate programs of finely-tuned education and training for each employee layer that are based on
actual cases, including training for new recruits, manager training, training for Group company officers and training
prior to overseas assignments.

Compliance Awareness Survey
The ITOCHU Group implements a Compliance Awareness Survey every two years with all Group employees,
including the level of understanding of the ITOCHU Mission, and assists the implementation of specific initiatives. In
FYE 2020, we conducted the survey of 57,781 Group employees, and received response from 54,848 of them(retrieval rate of 94.9%). The results of the analysis of the findings are presented as feedback to each organization
and reflected in efforts to improve the compliance system.

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Environment

GovernanceSociety

Bolstering Measures to Fight Corruption
The ITOCHU Group has established the ITOCHU Group Anti-Corruption Policy based on the Corporate Ethics Codeof Conduct. It prohibits the provision of money and goods, entertainment, convenience and other profits to public
officials and officers and employees of private entities, in Japan or overseas, for the purpose of gaining an illegal
advantage.

ITOCHU Group Anti-Corruption Policy
1. ITOCHU Group Anti-Corruption Policy
The ITOCHU Group ensures the implementation the compliance principles, that is, legal compliance, andrecognizes that it must continue to be an organization that is permitted by society. We do not even need
one yen if it is gained through illegal means.
To address the risk of bribery and corruption, the ITOCHU Group has established rules relating applications
and approval procedures, and recording method, etc. according to categories of behaviors which are easy to
be used for bribery or corruption, and strictly observes those rules. The rules were established based on"Regulations Concerning the Prohibition of Giving Illicit Benefit," as well as four related guidelines relating to
public officers, foreign public officers, business partners, and investment generally.

[ITOCHU Group Anti-Corruption Policy]
No money, entertainment, gifts, or anything of value in order to obtain illicit gains shall be given to any
public or quasi-public official inside or outside of Japan.
No money, entertainment, gifts, or anything of value in order to obtain illicit gains shall be given to any
director, officer or employee of any private entity.

2. Requests for All Partners
In order for the ITOCHU Group to implement the above anti-corruption policies, the ITOCHU Group requires
the cooperation of all of its business partners and investment partners.
In connection with the business partners and the investment targets and investment partners (collectively"Partners"), the ITOCHU Group will request itself conducting due diligence on Partners and entering into
contracts containing anti-bribery provisions with Partners.
The ITOCHU Group thanks you for your understanding and cooperation.
April 1, 2020
Masahiro Okafuji
ITOCHU Corporation
Chairman & Chief Executive Officer

The U.S. Foreign Corrupt Practices Act (U.S. FCPA) and the U.K. Bribery Act 2010 evidence the global trend toward
the tightening of legislation against bribery. In keeping with this trend, ITOCHU Corporation has thus far
determined and strictly operates the Regulation Concerning the Prohibition of Giving Illicit Profit and three related
guidelines (regarding public officers, agents and consultants, and foreign public officers) to prohibit all employees
from giving any improper advantage to Japanese or foreign civil servants or people in an equivalent position. In
December 2015, we revised the guideline regarding agents and consultants to guideline regarding business
partners, thereby expanding the scope of application of the guideline, and bolstered measures to fight corruption
by establishing investment guideline, which is designed to carefully check investment projects for the risk ofbribery. The Regulation Concerning the Prohibition of Giving Illicit Profit includes facility payments, or payments ofsmall amounts of money that are aimed solely at facilitating ordinary administrative services, among the improper
advantages it prohibits. It also prohibits commercial bribery, which falls under an improper advantage given tobusiness partners in the private sector. In addition to banning bribery, our internal rules prohibit officers andemployees from receiving improper advantages from business partners in the private sector, deeming such acts tobe a mix of business with personal affairs (conflicts of interest, etc.).

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Governance

The guidelines regarding public officers and foreign public officers include guides for decisions and judgments on
business entertainment and gift-giving to public officers and foreign public officers, under which we review caseson an individual basis. The guideline regarding business partners clarifies the process for comprehensive checks
and stipulates the process of concluding contracts on new appointments and renewals of contracts with business
partners who will provide services to ITOCHU Corporation (including agents and consultants). Concerning overseas
business partners, we use the Corruption Perceptions Index (CPI) published by Transparency International as oneof our risk identification criteria.
In contracts where there is a possibility to contain a risk of bribery, including ones with business partners, we
include an article prohibiting bribery, thereby prohibiting improper payments (bribery or the provision of improper
advantages) and clearly state that the contracts may be cancelled immediately if the provisions of the article are
violated. The investment guideline includes specific provisions on the implementation of due diligence andprocedures for obtaining the confirmation letter from the viewpoint of preventing corruption, which are to be used
for deliberations on investment projects.
In the training provided to officers, employees and others, we strive to raise awareness and instill ITOCHU Group
Anti-Corruption Policy, the Regulation Concerning the Prohibition of Giving Illicit Profit and four related guidelines.
We make certain that the regulation and guidelines are reflected in their daily management work to prevent
corruption, including the provision of improper advantages. We also provide training specializing in bribery fororganizations where the risk of bribery is particularly high. We also manage our political contributions, charities,
and sponsorship activities by referring to internal rules to ensure that they do not constitute corruption, and byfollowing our internally specified routes of application for the approval of donations and sponsorship to ensure thatsuch activities are socially just and meet ethical standards.
The annual Monitor & Review surveys, which are mentioned in the ITOCHU Group's Compliance System above,
include a check on business entertainment and gift-giving to public officers and foreign public officers and on theappointments and renewals of contracts with agents and consultants by organizations within ITOCHU Corporation,
overseas offices, and companies subject to compliance management. Where necessary, we hold a dialogue on thestatus with the compliance officer of each organization.

Measures to Fight Collusive Bidding and Cartels
In recent years, there have been many reports of suspected cartel activities in markets around the world. In
response, to prevent involvement in any illicit transactions, ITOCHU Corporation established the Basic Regulations
on the Compliance with the Antimonopoly Act, etc. and the Standard on Prevention of Cartels and Collusive Biddingon November 1, 2017. In addition, we regularly revise our Anti-Monopoly Law Manual and the document "A MustRead! 51 Q&A about the Antimonopoly Act" which facilitates referral. (The last revision was made in August 2017.)
Through various Monitor & Review surveys and education and training programs as well, we are making sure all
employees are aware of requirements. Further, in July 2017, we set up the Antimonopoly Act Desk in the Legal
Division as the consultation desk and created "The 29 Frequent Misunderstandings about the Antimonopoly Act" asa new educational material. We passed instructions at a meeting of the Board of Directors according to four
exclusion measure orders we received from the Fair Trade Commission from FYE 2018 to FYE 2019. We havenotified and thoroughly informed all our employees of the content of these resolutions.

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ITOCHU Group Tax Policy
ITOCHU Group Tax Policy
7th December, 2017
ITOCHU Corporation
ITOCHU Corporation and the ITOCHU group companies (collectively, "the ITOCHU Group") have establisheda Basic Policy: To comply with all applicable tax laws, rules, regulations, and tax treaties (collectively, "TaxRules") of each country and region where the ITOCHU Group conducts business.
The ITOCHU Group is committed to respecting the interests of all stakeholders, including all of the countries
and regions where the ITOCHU Group conducts business, as well as the ITOCHU Group's shareholders,
creditors, business partners, and employees.

1. Basic Policy - Compliance with Tax Rules
The ITOCHU Group is committed to managing its business operations in full compliance with all applicable
Tax Rules and not engaging in transactions that are intended to evade or avoid taxes.

2. Tax Cost Management
In accordance with the Basic Policy, the ITOCHU Group strives to achieve effective tax cost management byeliminating double taxation and utilizing the favorable Tax Rules of each country or region.

3.Maintaining Relationships of Mutual Trust with Tax Authorities
The ITOCHU Group strives to maintain a relationship of mutual trust with all tax authorities by engaging inconstructive discussions and preparing documents in an accurate, timely and appropriate manner to ensure
overall transparency of the ITOCHU Group's tax matters.

Measures for Intellectual Property
To completely prevent infringements on intellectual property rights held by other parties in businesses related tosuch rights, as well as in the ordinary course of business, ITOCHU implements measures to call attention to theissue by holding seminars for employees and by establishing internal rules, regulations and manuals etc., that
conform to related laws and regulations. We also define and properly apply internal rules for employees’ inventions
and work and rules for application, renewal, etc. of rights to properly manage and handle intellectual property
rights that constitute property of the companies.

Basic Policy on Product Safety
ITOCHU Corporation has prepared a product safety manual for each internal company to assure safety. The
manuals are based on its policy of observing obligations stipulated by laws related to the safety of the products it
handles, and providing safe and secure products to its customers. We are going to continue with efforts to assure
provision of safe and secure products through in-house education, institution of ad-hoc units assigned to productsafety, establishment of information relay routes, and response in the event of product accidents, while revisingarrangements in these aspects as necessary.

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Measures for Comprehensive Import and Export Control
Japanese government maintains strict trade-security under the Foreign Exchange and Foreign Trade Act in order toprevent the proliferation of weapons of mass destruction and conventional weapons. We have implemented a strict
internal comprehensive trade-security control program so as to observe laws and regulations. Our internal program
covers not only Japanese laws and regulations but also global security risks such as U.S. sanctions to ensure that
we do not take part in business transactions that threaten international peace and security.
Accordingly ITOCHU recognizes that, as a responsible member of the global business community, we need to
manage carefully potential risks associated with business operations in certain locations. In response to thegrowing importance of the corporate governance associated with global security risk, we have implemented
corporate policies, procedures, and internal reporting structures to ensure that we perform rigorous, securityminded due diligence for global projects and transactions. The Compliance Program of ITOCHU is annuallysubmitted to the Ministry of Economy, Trade and Industry of Japan as a company that has developed export control
and an excellent management system. In addition, to properly conduct customs procedures for import and export,
including import (payment of customs duty) declaration, we conduct internal customs examination (monitoring),
provide training for clearing and customs valuation control, and take a host of other measures under the internal
control/management provisions and regulations, thereby ensuring full compliance with customs procedures, etc.
We have also been providing information needed for developing new businesses, by providing training on Economic
Partnership Agreements (EPAs), which will be used more widely by sales sections in the future. These measures
have led to the director-general of Yokohama Customs certifying ITOCHU as an Authorized Economic Operator(AEO) (both Authorized Exporter and Authorized Importer), a title given to operators with outstanding compliancesystems and security control.

Basic Policy and Efforts against Antisocial Forces
ITOCHU Corporation makes it a basic policy to block any relationship or transaction with anti-social forces thatthreatens public order and safety. ITOCHU has established and strengthened the internal systems necessary toachieve this by providing education and awareness-raising activities to employees on a regular basis and ensuring
prior confirmation that counterparties of transactions do not fall under anti-social forces.

Insider Trading Regulations
ITOCHU Corporation has an internal rule regarding the restriction of insider trading, and formulated the "guideline
regarding reporting and management of insider information" in April 2014 in conjunction with the revision of therule. The above guideline stipulates, for example, recommended handling in case of acknowledging the insider
information of entity which ITOCHU has capital or contractual relationship, and we are taking action to assure that
all employees know about them.

Perspectives on Information Management
ITOCHU Corporation has formulated "Information Security Policy" for all members of the board and employees tohandle information with high security level. Also, in order to manage information required for business
management activities properly, we also formulated "IT Security Management Policy" for all executives andemployees, which is a code of conduct on information handling. More specifically, we have determined rules andstandards on personal information management, document management, and IT security, and are striving toprevent the leakage of personal information and other confidential information. We have also established amanagement system for complying with the My Number Act.

Monitor & Review Surveys on Personal Information Management
The ITOCHU Group regularly conducts Monitor & Review surveys of ITOCHU Corporation and companies subject tocompliance management under the auspices of the Corporate Planning & Administration Division, the IT Planning
Division and the Legal Division. In the ten survey, which was conducted in FYE 2020, the personal information
management systems of ITOCHU Corporation and 136 companies subject to compliance management werechecked from September to November 2019. Based on the results of the checks, we have continued activities toencourage continued improvements at ITOCHU Corporation and Group companies. At the same time, we haveestablished a system and provide support for the operation with advice from external lawyers.
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