JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Message from an Independent Director
Following this chain of events, in November 2022 the Company

Supporting JAFCO’s

to introduce a framework for further developing expertise and foroutlines its capital efficiency improvement plan and growth strategy.

encouraging the growth of talented human resources with diverse

In particular, the policy emphasizes the need for improving capitalpotential and backgrounds.

efficiency and ROE as well as for contributing to the sustainability-transformation withdedication anddiverse skills
Shigeru Tamura

can thrive, fully supported within the Company. Moreover, it is essential

announced the Basic Policy for Enhancing Corporate Value, which

Improving external-facing communication is also extremelyoriented corporate management of portfolio companies. Furthermore,

important. Although JAFCO has in the past emphasized a corporate

I believe that it is critical that JAFCO strengthen its investment andculture of discipline in which action is valued over words, I believe

fundraising capabilities. Currently most of the partners have been withthat it must now “say and act.” By this, I mean that JAFCO must

the Company since they were hired straight out of college. However,actively communicate what it has achieved and what it is going to do

JAFCO needs to recruit new talent from outside the Company. Suchin the future. I myself and the other independent directors will alsotalent should include partner-level investment officers and fundraisingproactively seek opportunities for listening to shareholders andprofessionals capable of attracting risk money from global investors.

investors, and in our capacity as directors we hope to help the

JAFCO must change its mindset so that such mid-career newcomers

Company strengthen its communication.

Independent Director

What do you consider to be the skillset and strengths of JAFCO Group’s Board of Directors?

What has impressed you about JAFCO’s management team?

in Board discussions of matters that I am less familiar with. I also

outside perspective and to provide useful advice to the management

regularly attend important internal meetings as a full-time but

team. While JAFCO’s independent directors include an attorney-at-law,

independent member of the Board, and from time to time serve as aa certified public accountant, and experienced corporate executives,

coordinator among the independent directors.

all of us possess a wide range of abilities beyond our own fields. Koji

I would also like to mention that we independent directors are

Tanami, who is an attorney-at-law, provides not only legal advice but

strongly committed to improving JAFCO’s management. In comparison

was already recognized for its role in building the venture capital

points. The first is that the Company is not haphazard in exploring new

also expresses opinions from a broader perspective based on his

to other companies where I have served as an independent director,

industry in Japan, and as an established leader in the industry. Afterbusiness opportunities; it is committed to and focused on the investment

experience, including as a top government official. It seems to me that

I feel that we have many more opportunities for sharing and discussing

joining the Board, however, I learned for the first time that thebusiness where there is the potential to help create new industries

Kenichi Akiba, a full-time professor who teaches the latest

management matters together with and separate from full-time

Company had overcome numerous difficulties in the preceding years,

through the provision of risk money and business expertise todevelopments in accounting at one of Japan’s top professional

executives, beyond the scope of regular Board meetings, andsuch as the collapse of the dot-com bubble, the 2008 financial crisis,

entrepreneurs and challengers. The second is that the team maintains aaccounting schools, will on occasion see how academic theories

discussions often go beyond our individual professional fields.

and its separation from the Nomura Group. JAFCO has since shifted

high level of professionalism, ensuring that conflicts of interest among

apply to JAFCO’s actual business. Yoshie Kajihara offers specific andFurthermore, the Basic Policy for Enhancing Corporate Value wastoward a policy of “highly selective, intensive investment,” and has

stakeholders, to which the investment sector can be prone, never arise.

realistic advice based on her experience as an executive in charge offormulated on the basis of comprehensive and timely discussions with

reduced the number of companies in its portfolio so that it can work

In addition, they trust the independent directors and do not hesitate to

management planning and human resources at several startups andthe full cooperation of each independent director.

more closely with each one. In doing so, JAFCO has established aseek advice of any kind from us. Since we do not always know

listed public companies. I myself make a point of actively participating

solid structure for more stable investment performance. The current

everything that occurs on the business front lines, there are occasions

management team, including partners, who are responsible for making

when we participate in discussions without being fully aware of thefund investment decisions, are the very people who helped tide therelevant details. Nevertheless, in such cases, the team is careful toCompany over past adversities. Competent and sincere, its members

explain the reasoning and background of matters to the point where

are capable of leveraging their experience to achieve future growth.

we have gained a full understanding.

When I was appointed as an independent director in 2017, JAFCO

I evaluate JAFCO’s management team highly on the following two

What are JAFCO’s current issues, and what should be prioritized going forward?

43

One of the key roles of independent directors is to always maintain an

In April 2022, Keisuke Miyoshi was elected as the new President & CEO.
Can you outline the discussion and decision process?
We had been requesting a concrete CEO succession plan for several

outside, or a relatively young executive. It was definitely a top priority

years. While the previous president, Shinichi Fuki (currently theto choose someone who had a deep understanding of investment,

chairman), was only 60 years old in 2021 without any issues in terms

especially in the venture field, and who could carry out ongoingof mental and physical strength, he had reached his 12th year asreforms. Keisuke Miyoshi had consistently supported Shinichi Fuki in

In my opinion, JAFCO previously operated under the straightforward

of around 40% of the Company’s Nomura Research Institute, Ltd.

president. During his tenure he resolved many important issues such as

implementing reforms and had served for many years as the head ofbelief that the way to enhance corporate value was simply to improve(NRI) shareholdings, and decided to carry out share buybacks.

shifting toward highly selective, intensive investment, separating fromdomestic venture investment. He is a seasoned investment professional

fund performance. While this idea may be correct in theory,

JAFCO then launched internal projects to develop growth strategies

the Nomura Group, and introducing the quasi-partnership. As such, he

who holds the deep trust of employees, and understands theunfortunately, this did not lead to JAFCO receiving a necessarily fairand measures for enhancing corporate value. In August 2022, theprobably felt that it was the right time to pass the baton to a successor.

Company’s true value. We judged that he would lead the Company inevaluation in the stock market. Recognizing this as an issue to quickly

management team received a number of proposals from shareholders

In autumn 2021, the Nomination and Remuneration Committee, which

enhancing its corporate value, and the Nomination and Remuneration

address, we took part in intensive discussions of improvement

regarding the enhancement of corporate value, the content of whichis comprised of the president and the independent directors, began toCommittee was unanimous in recommending him as the newmeasures at Board meetings. In February 2021, the Board

substantially overlapped with the content covered in discussions at

discuss the timing and candidates for a successor. There were three

President & CEO.

established the new Policy on Shareholder Returns, initiated the sale

Board meetings.

potential choices of candidate: a current Board member, someone from

JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

44

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Board of Directors
Directors

Experience and Expertise of Directors
The policy and procedure for selection of director candidates are stipulated in the Corporate Governance Policy of the Company as shown below.

ChairmanPresident & CEO(Representative Director)

Shinichi Fuki

Keisuke Miyoshi

Apr. 1985
Jun. 2003
Feb. 2005
Mar. 2007
Jan. 2010
Apr. 2022

Joined JAFCO
Director in charge of Investment Group II,
Kansai Branch and Planning & Administration, JAFCOManaging Director in charge of Finance, Investment Group II,
Kansai Branch and VA Department III, JAFCO
Executive Managing Director in charge of Finance, Structured Investment,
Kansai Branch and VA Department III, JAFCO
President & CEO (Representative Director)
Chairman, JAFCO (present)

Apr. 1993
Aug. 2011
Apr. 2013
Jun. 2015
Mar. 2018
Apr. 2022

Joined JAFCOGroup Officer of Investment Group II, JAFCO
Corporate Officer in charge of Investment, JAFCO
Director in charge of Investment, JAFCO
Director in charge of Investment, Partner, JAFCO
President & CEO, in charge of Investment, Partner, JAFCO (present)• Directors and corporate officers are appointed by the Board of Directors based on deliberations by the Nomination andRemuneration Committee.
• All directors (excluding directors serving as Board-Audit Committee members) are subject to election/reelection every year at theGeneral Meeting of Shareholders. The Board-Audit Committee expresses its opinion on directors’ appointment/dismissal at theGeneral Meeting of Shareholders when it deems it necessary.
• The Company shall select director candidates who have business skills, insight, experience, and expertise to serve as a director toallow the Board of Directors to fully exercise its operational and supervisory functions. The Company proactively selects suitable
candidates from diverse backgrounds regardless of gender and nationality.
• The Company shall select independent director candidates who have abundant experience and deep insight into corporate
management or specialist fields, and can be expected to fulfill the roles and responsibilities of an independent director. The selection
is in accordance with the Company’s Standards for Independence of Independent Directors.

Independent Directors

The experience and expertise required of directors comprising the Company’s Board of Directors, and the experience and expertise of the directors
appointed at the Annual General Meeting of Shareholders held on June 21, 2022, are outlined below.
Director(Board-Audit Committee
member, full-time)

Director(Board-Audit
Committee member)

Shigeru Tamura

Koji Tanami

Apr. 1985
Jun. 2000
Aug. 2000
Sep. 2002
Jun. 2003
Aug. 2005
Aug. 2006
Jun. 2010
Oct. 2014
Jun. 2017
Jun. 2019

Joined The Bank of Yokohama, Ltd.
General Manager of Business Administration and Head of Office of IPO,
Members Co., Ltd.
Director & CFO, Members Co., Ltd.
General Manager of the Business Management Headquarters (CFO),
Aplix Corporation
Vice President of Principal Investments, Investment Banking Headquarters,
ORIX Corporation
Senior Corporate Officer, Medical Industries Corp.
(currently MEDISCIENCE PLANNING INC.)
Executive Vice President, MIC Medical Corporation(currently MEDISCIENCE PLANNING INC.)
President & CEO, MIC Medical Corporation
Chairman, MIC Medical Corporation (until May 2015)
Director (Board-Audit Committee member), JAFCO
Director (Board-Audit Committee member, fulltime), JAFCO (present)

Apr. 1964
Jul. 1994
Jul. 1996
Jan. 1998
Sep. 1999
Jun. 2001
Oct. 2007
Sep. 2008
Dec. 2010
Jun. 2015

Joined the Ministry of FinanceDirector-General of the Financial Bureau, Ministry of Finance
Chief Cabinet Councilor for Internal Affairs, Cabinet Secretariat
Administrative Vice Minister, Ministry of FinanceSpecial Advisor to the Minister of Finance
Deputy Governor and Managing Director, Japan Bank for International Cooperation
Governor, Japan Bank for International Cooperation
Resigned from the position of Governor of Japan Bank for International Cooperation
Registered as Attorney-at-Law (Dai-ichi Tokyo Bar Association)
Attorney-at-Law, Hashidate Law Office (present)
Director (Board-Audit Committee member), JAFCO (present)

Experience/
Expertise

Expertise
Investment

Fundraising/
Fund operation

Overseas
operation

l

l

l

l

Keisuke Miyoshi

l

l

l

Shigeru TamurallCorporate
management

Shinichi Fuki

Director(Independent Director)

Koji Tanami(Independent Director)llPersonnel/
Labor affairs

Treasury
accounting

Legal affairs/
compliance

Finance

l

l

l

l

l

l

l

l

l

l

l

l

(Independent Director)

Yoshie Kajihara(Independent Director)

l

l

l

Kenichi Akibal

Academic
research/
education

l

l

l

l

Notes: 1. Expertise
Directors Shinichi Fuki and Keisuke Miyoshi have experience of management team member recruitment, management figure analysis, investment legal affairs, fundraising arrangement, etc. atunlisted companies through their venture investment operations. Therefore, even if they have not worked in the relevant divisions, they are deemed to have expertise in personnel/labor affairs,
treasury/accounting, and legal affairs.

Director(Board-Audit
Committee member)

Director(Board-Audit
Committee member)

Kenichi Akiba

Yoshie Kajihara

Sep. 1986
Jul. 1989
Sep. 2001
Apr. 2007
Jul. 2007
Sep. 2009
Jun. 2015
Jun. 2018

Joined Eiwa Audit Corporation (currently KPMG AZSA LLC)
Registered as a certified public accountant
Accounting Standards Board of Japan, seconded as Technical Manager
Accounting Standards Board of Japan, seconded as Technical Director(until Aug. 2009)
Partner, KPMG AZSA Corporation (currently KPMG AZSA LLC)
Professor, Waseda University Graduate School of Accountancy (present)
Director (Board-Audit Committee member), JAFCO (present)
Auditor of the Board (outside), Mitsui Sumitomo Insurance Co., Ltd. (present)

Oct. 2001
Mar. 2005
May 2007
Feb. 2008
Oct. 2009
Nov. 2013
Oct. 2016
Jan. 2017
Aug. 2017
Jul. 2018
Jun. 201945

JAFCO INTEGRATED REPORT 2022

General Manager of Accounting, Aplix Corporation
Corporate Officer and Head of Corporate Planning Office, Aplix Corporation (until
Mar. 2007)
Corporate Auditor (full-time), MIC Medical Corporation (currently MEDISCIENCEPLANNING INC.)
Resigned from the position of Corporate Auditor (full-time) of MIC Medical Corporation
Joined CCS Inc.
Executive Officer in charge of Corporate Planning, CCS Inc.
Resigned from the position of Executive Officer of CCS Inc.
Joined Interactive Solutions Corporation
Director and General Manager of Human Resources & Administrations, Interactive
Solutions Corporation
Resigned from the position of Director of Interactive Solutions Corporation
Director (Board-Audit Committee member), JAFCO (present)

2. The table above does not represent all the knowledge or experience of the directors.

Corporate Officers

Hiroaki Matsuda

In charge of Administration

Naoki SatoIn charge of Business Development

Sueko Matsumoto

In charge of Fund Management; Administration

In charge of Venture Investment

Partners

Atsushi Fujii

In charge of Venture Investment

Shozo Isaka

Tomotake Kitazawa

In charge of Venture Investment

Mizuki Takahara

Yutaro Saka

In charge of Venture Investment

General Manager of the West Japan Branch andin charge of Venture Investment

JAFCO INTEGRATED REPORT 2022

46

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Corporate Governance(Fiscal year ended March 31, 2022)

Basic Views on Corporate Governance

Organization form

Company with a board-audit committee

Chairperson of the Board1

Keisuke Miyoshi, President & CEO

The Company’s basic views on corporate governance are as outlined below. With an eye to increasing corporate value over the medium to long term,
the Company makes continuous efforts to enhance corporate governance.
Directors1• Build respectful relationships with stakeholders• Establish an appropriate supervising structure• Maintain transparency and fairness in decision making• Establish a corporate structure that ensures effective and swift business execution

Board ofDirectors
meetings

Corporate Governance Policy
Based on the above basic views, the Company has established the Corporate Governance Policy, which outlines its concrete corporate
governance measures.

• Corporate Governance Policy• Corporate Governance ReportMore information

More information

Number of directors[of which, Board-Audit
Committee members]

6 [4]Ratio of female directors

16.7%

Ratio ofindependent directors

66.7%

Term

1 year2

Number of meetings held

13

Director attendance rate

100%

Board-Audit Committee
member attendance rate

100%

Board-Audit
Committee
meetings

Nomination
andRemuneration
Committee(Appointment, dismissal)

100%

Number of meetings held

14

Attendance rate

100%

Number of members

5

Ratio ofindependent directors

80%

Number of meetings held

5

Attendance rate

100%
Ernst & Young ShinNihon LLC

2. Excludes directors serving as Board-Audit Committee members.

Main deliberation items at meetings of the Board of Directors (fiscal year ended March 31, 2022)• Appointment of directors, corporate officers, and partners• Annual securities report• Remuneration for directors, corporate officers, and partners• Expense budget, financial plan
• Fund strategy• Directors and officers liability insurance, indemnity agreements with directors• Portfolio status report• Approval of potential conflict-of-interest transactions by directors• Approval of JAFCO Group’s investment in venture investment deals(from the perspective of prevention of conflicts of interest)• Surplus dividend

General Meeting of Shareholders

Ratio ofindependent directors

1. Since April 2022.

• Acquisition and cancellation of treasury shares, stock split

The Company is a company with a board-audit committee, whereby the Board of Directors and the Board-Audit Committee make importantmanagement decisions and audit/supervise business execution by directors.

4

Accounting auditor(basic, extraordinary, and stock-related compensation)

Corporate Governance Structure

Number of members• Matters related to corporate governance• Convening of the General Meeting of Shareholders(Corporate Governance Code compliance, Corporate Governance Report,• Organizational reform

evaluation of the effectiveness of the Board of Directors)• Important personnel changes, bonuses• Verification of cross-shareholdings• Establishment and revision/abolition of rules• Risk management• Approval of financial statements(Appointment, dismissal)(Appointment, dismissal)

Business execution
Board of Directors
Directors (excluding directors serving as Board-Audit Committee members)

Nomination andRemuneration
Committee

Board-Audit Committee(Supervision)(Supervision)(Supervision)(Reporting)

Representative Director(Auditing)Governance Initiatives
For the Company, which operates a high-risk business of venture and buyout investments, it is extremely important to enhance management
governance and carry out fair and prompt decision-making. We have been upgrading governance in stages each year, focusing on “management
independence,” “ensuring good balance between shareholder returns and strong shareholders’ equity,” and “transition to a partnership model.”Our efforts continue to enhance governance.

(Cooperation)

Partners
Investment Committee

Divisions,
Subsidiaries(Internal auditing)Internal Audit
DivisionMar. 2016(Reporting)(Auditing of accounts)

Accounting auditor
Transition to a company with

Board-Audit Committee

As of March 31, 2022, the Board of Directors was composed of seven directors, including three internal

The Board-Audit Committee is composed of four independent directors and currently the full-time member isdirectors and four independent directors. On April 1, 2022, the number of internal directors wasserving as head of the committee. The committee audits the execution of duties by directors and prepareschanged to two, with independent directors continuing to be the majority. The Board of Directors is

audit reports. The Company has set out the Standards for Independence of Independent Directors tochaired by the President & CEO.

ensure that their independence is maintained. We elect independent directors who meet these standards.

Nomination and Remuneration Committee

Investment Committee

The Nomination and Remuneration Committee is composed of four independent directors and the President

Investment decisions are made by the Investment Committee comprising the President & CEO, partners,& CEO. To ensure transparency and objectivity of nominations and remuneration, important decisions

and others to allow quick decision-making. Directors who are Board-Audit Committee members also

regarding the nomination and remuneration of directors, corporate officers, partners, and representatives ofparticipate in the committee on an as-needed basis.

major subsidiaries are deliberated by the committee in advance. The Board of Directors discusses andMar. 2018

Basic policy on dividends
announced

Eliminated cross-shareholdings
with Nomura Group by buying
back all shares held by
Nomura Group

Independent directors accountfor more than one-third of
the Boarda board-audit committee

Board of Directors

Mar. 2017

Mar. 2020
Majority of Board of
Directors members are
independent directors
Nomination and Remuneration
Committee establishedMar. 2019

One female director appointed

Partnership model introduced

Mar. 2021
Sold NRI shareholdings
Shareholder Return Policy
announced, after which sharebuybacks (2 times) totaling¥50 billion were conducted

Mar. 2022
Director Keisuke Miyoshi
became the new president
after deliberations by
the Nomination andRemuneration Committee

makes decisions on nomination and remuneration based on deliberation by the committee.

47

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48

JAFCO Group’s
ValuesAppointment and Dismissal of Directors and Officers

JAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Evaluation of the Effectiveness of the Board of Directors

l Directors and corporate officers are appointed by the Board of Directors based on deliberations by the Nomination and Remuneration Committee.
l All directors (excluding directors serving as Board-Audit Committee members) are subject to election/reelection every year at the General Meetingof Shareholders. The Board-Audit Committee expresses its opinion on directors’ appointment/dismissal at the General Meeting of Shareholders
when it deems it necessary.
l The Company shall select director candidates who have business skills, insight, experience, and expertise to serve as a director to allow the Boardof Directors to fully exercise its operational and supervisory functions. The Company proactively selects suitable candidates from diverse
backgrounds regardless of gender and nationality.
l The Company shall select independent director candidates who have abundant experience and deep insight into corporate management or
specialist fields, and can be expected to fulfill the roles and responsibilities of an independent director. The selection is in accordance with theCompany’s Standards for Independence of Independent Directors.
l In the case where a director has caused the Company to incur a tremendous loss or operational problems by committing a wrongful act, or
violating laws, regulations, the Articles of Incorporation or the Company’s internal rules, or is no longer able to effectively execute duties due toother reasons, such director shall be subject to a dismissal proposal.
l A partner is nominated with consensus of all partners and appointed upon the approval of the Board of Directors after deliberations by the
Nomination and Remuneration Committee.
l In principle, a majority of the Board of Directors are independent directors, and the Board size shall be determined to allow high effectiveness interms of the Company’s scale and business. The Company strives to ensure diversity in terms of gender, nationality, career history, and age.

The Board of Directors analyzes and evaluates its effectiveness every
year and discloses a summary of the evaluation results.
The summary of the results of the evaluation of the effectiveness of
the Board of Directors for the fiscal year ended March 31, 2022 is
as follows:
The Board of Directors (“BOD”) evaluates the effectiveness of the
BOD on an annual basis. In the fiscal year ended March 31,
2022, BOD deliberations over items such as composition, operation,role, duties, etc. of the BOD were held as in previous years based onquestionnaires and interviews administered to all directors.
As the majority of the BOD consisted of independent directors, it
was confirmed that the BOD composition was appropriate in terms ofinternal-external balance and size to fulfill its function to supervise
business executions.
In the fiscal year ended March 31, 2022, the BOD deepened
mutual discussions further from a medium-to-long-term perspective,
which was an issue raised in the evaluation results for the fiscal year

ended March 31, 2021. In addition to the BOD meetings,
opportunities were provided for BOD members to allow active opinion
exchange and mutual discussions in a timely and appropriate manner.
Through such discussions, the BOD decided to introduce the stockcompensation plan, carried out share buybacks and cancellation oftreasury shares continuing from the previous year, and decided tochange the BOD structure from April 2022 onward (appointment of
new CEO and change of BOD composition). The evaluation
determined that further progress has been made in terms of theeffectiveness of the BOD.
As upcoming issues to be addressed, the need was confirmed tofurther enhance the effectiveness of the BOD under the new structure
after the aforementioned changes and continue to deepen discussions
with a medium-to-long-term perspective.
Based on the above results, it is evaluated that the effectiveness of
the BOD increased in general compared to the previous year.
We will continue to conduct effectiveness evaluations regularly andfurther increase the effectiveness of the BOD.

l The Company discloses major concurrent positions of directors in the Notice of Convocation of the Annual General Meeting of Shareholders every year.

Remuneration of Directors and Officers
Reasons for Appointment of Independent Directors

Name

Reasons for Appointment

Attendance in the fiscal year ended
March 31, 2022
Board ofBoard-Audit
Directors’ meetings Committee meetings

Mr. Tamura had been involved in the management of listed and unlisted companies as CEO, CFO, etc., and hasabundant experience and deep insight. He also has experience in financial and investment businesses as well asinternational operations. He has leveraged his achievements, insight, and knowledge to contribute to the Company’s

Shigeru Tamura important management decision-making while supervising the execution of its operations from an independent perspective
as the full-time Board-Audit Committee member. Also, he chairs the Nomination and Remuneration Committee and actively

13 out of 13(100%)

14 out of 14(100%)

13 out of 13(100%)

14 out of 14(100%)

contributes opinions at the committee meetings. Based on the above, the Company believes that he is capable ofappropriately performing his duties as an independent director serving as a Board-Audit Committee member.
Mr. Tanami has held various important positions at government agencies and international organizations, and has
extensive experience and insight in monetary, financial, tax, and international matters, as well as expertise in legal affairs
as an attorney-at-law. He has leveraged the above experience and insight to contribute to the Company’s important

Koji Tanami

management decision-making while supervising the execution of its operations from an independent perspective. He also
serves as a member of the Nomination and Remuneration Committee and actively contributes opinions at the committee
meetings. Based on the above, the Company believes that he is capable of appropriately performing his duties as anindependent director serving as a Board-Audit Committee member.
Mr. Akiba is a certified public accountant with extensive knowledge of international accounting systems and has
contributed to the development of accounting standards in Japan. He is also committed to research activities and humanresources development as a graduate school professor. He has leveraged his high level of expertise in financial accounting,

Kenichi Akiba

etc. to contribute to the Company’s important management decision-making while supervising the execution of its
operations from an independent perspective. He also serves as a member of the Nomination and Remuneration Committee

13 out of 13(100%)

14 out of 14(100%)

13 out of 13(100%)

14 out of 14(100%)

and actively contributes opinions at the committee meetings. Based on the above, the Company believes that he iscapable of appropriately performing his duties as an independent director serving as a Board-Audit Committee member.
Ms. Kajihara has served as an executive, mainly in charge of accounting and management planning, at listed andunlisted companies and has abundant experience and deep insight in these fields. She has leveraged her achievements,
insight, and knowledge to contribute to the Company’s important management decision-making while supervising the

Yoshie Kajihara execution of its operations from an independent perspective. She also serves as a member of the Nomination andRemuneration Committee and actively contributes opinions at the committee meetings. Based on the above, the Company

Basic approach to the remuneration of directors, etc.
• The levels and structure of remuneration shall be sufficient to attract,
retain, and motivate competent personnel for the realization of theCompany’s Purpose of “Fueling perpetual growth; investing in boldvisions” and its Mission to “Commit to new business creation andjointly shape the future.”• Remuneration shall motivate our directors, etc. to commit to anincrease in corporate value and the improvement of not only shortterm financial results, but also medium-to-long-term results.
• Given the Company’s business nature of being an investmentcompany managing funds investing in unlisted companies, theremuneration of directors, etc. executing Company business shallreflect fund management performance.
• With the aim of gaining stakeholders’ trust, the remuneration plan
shall be transparent, fair, and rationalized, determined through anappropriate and transparent process.
• The plan shall also be designed to prevent fraud and over-emphasis
on short-term performance.
Remuneration of directors(excluding Board-Audit Committee members)
The remuneration of directors (excluding Board-Audit Committee
members) is determined by the Board of Directors based on
deliberations by the Nomination and Remuneration Committee.
The monetary compensation of directors (excluding Board-Audit
Committee members) shall consist of basic compensation andextraordinary compensation. Part of basic compensation is linked to
the Company’s ordinary income and other business performance, andextraordinary compensation additionally takes into account fundperformance. In addition, from the perspective of improving theCompany’s corporate value in the medium to long term, stock-based
remuneration shall be paid to directors (excluding directors serving as
Board-Audit Committee members and independent directors).
As an investment company managing highly volatile venture andbuyout investment funds, the level of compensation shall reflect theamount of assets under management, the Company’s businessperformance as a result of asset management, and shareholder value,and be appropriate for securing highly capable human resources.
The maximum total amount of monetary compensation of directors(excluding directors serving as Board-Audit Committee members) shallbe within ¥600 million per annum (based on a resolution of the 43rd
Annual General Meeting of Shareholders held on June 16, 2015). The
number of directors (excluding directors serving as Board-Audit
Committee members) as of the end of the 43rd Annual General
Meeting of Shareholders was six.
As stock-based remuneration to be paid to directors (excluding
Board-Audit Committee members and independent directors), the total
amount of monetary claims for granting transfer-restricted shares(hereinafter referred to as “Restricted Stocks”) shall be no more than¥300 million per annum, and the total number of the Company’scommon shares to be issued or disposed of as transfer-restricted sharesshall be within 300,000 shares per year (based on a resolution of the50th Annual General Meeting of Shareholders held on June 21,2022). The number of directors (excluding directors serving as BoardAudit Committee members and independent directors) as of the end of
the 50th Annual General Meeting of Shareholders was two.

believes that she is capable of appropriately performing her duties as an independent director serving as a Board-Audit
Committee member.

49

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50

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Compliance
Outline of directors’ monetary compensation
Basic compensation (fixed)

Fixed monetary remuneration paid monthly, determined by importance of roles and responsible areas of each job position, years in service, etc.

Compliance Promotion System

Monetary remuneration paid monthly, determined once a year, in principle, by the Board of Directors on a scale of 1 to 5 by reflecting short-term

Basic compensation (performance-linked)

results based on the comparison of the Company’s profit levels (capital gains, net additions to investment loss reserves, ordinary income, etc.) and
its details for the preceding fiscal year with the past results. A standard percentage of performance-linked basic compensation to total basic
compensation is about 20%, and the relevant portion increases/decreases within a range of 30% based on the above 5-point scale.
The Board of Directors determines the year-on-year percentage change in the level of remuneration for each position based on the year-on-yearcomparison of ordinary income, core income (amount of management fees after subtracting SG&A expenses), unrealized gains, fundperformance, which is a major management index over the medium to long term, and total fund size. The amount is then determined by the Board

Extraordinary compensation(performance-linked)

of Directors by taking into account respective job responsibilities and the degree of contribution, and paid to each director once a year.
Extraordinary compensation may not be paid when the Company’s performance deteriorates sharply.

Stock-based remuneration
In order to provide incentives to continuously improve the corporate value of the Company and to further promote value sharing with shareholders,the Company shall pay remuneration in the form of granting transfer-restricted shares to directors (excluding directors serving as Board-Audit Committee
members and independent directors; hereinafter referred to as the “Eligible Directors”). The outline of the restricted-stock remuneration plan is as shown below.
Granting of transferrestricted shares

The Company shall grant transfer-restricted shares (hereinafter the “Allotted Shares”) in an amount determined by the Board of Directors of the Company based on a baseamount corresponding to the positions of the Eligible Directors and a comparison of the Company’s stock price growth rate and the TOPIX (Tokyo Stock Price Index) growthrate for a certain period of time prior to the grant.
Payment ratio against base amountAmount of stock-based remuneration

125%
Payment ratio

Against TOPIX growth rate =		==Base amountBase amount×
×

Payment ratio
Against TOPIX growth rate

(A + B) ÷ CD÷EA Average closing price of the Company’s common shares for the three months immediately preceding the month within which the allotment resolution date falls

75%

B Dividend per share for the previous fiscal year
C Average closing price of the Company’s common shares for the three months immediately preceding the month within which the date one year prior to
the allotment resolution date falls

75%
125%
Against TOPIX growth rate

D Average closing price of TOPIX for the three months immediately preceding the month within which the allotment resolution date falls
E Average closing price of TOPIX for the three months immediately preceding the month within which the date one year prior to the allotment resolution date falls

The number of the Allotted Shares granted to the Eligible Directors shall be no more than the maximum of 300,000 shares per year as approved at the 50th Annual
General Meeting of Shareholders held on June 21, 2022.

Transfer restriction
periodFrom the allotment date to the time of retirement or resignation from director or other position of the Company or its subsidiary, as determined in advance by theCompany’s Board of Directors. Provided, however, if the time immediately after such retirement or resignation is prior to the date after a lapse of three (3) months fromthe end of the fiscal year within which the date of the allotment of the Allotted Shares falls, the end of the Transfer Restriction Period may be adjusted to a reasonable extent.

Removal oftransfer restriction(1) On the condition that the Eligible Directors continue to hold their position as director or other position of the Company or its subsidiary, as determined in advance by
the Company’s Board of Directors, during a period of time determined in advance by the Company’s Board of Directors (the “Service Period”), the Company shallremove the Transfer Restriction as of the expiration of the Transfer Restriction Period. Provided, however, that: (a) if an Eligible Director retires or resigns from his or her
position as director or other position of the Company or its subsidiary, as determined in advance by the Company’s Board of Directors, before the expiration of theService Period for justifiable reasons; or (b) if an Eligible Director resigns or retires from his or her position as director or other position of the Company or its subsidiary,as determined in advance by the Company’s Board of Directors, for any reason other than justifiable reasons before the expiration of the Transfer Restriction Period,
the number of the Allotted Shares to be removed from Transfer Restriction and the timing of the removal of Transfer Restriction shall be reasonably adjusted as necessary
even after the expiration of the Service Period.
(2) If any matter relating to a merger agreement under which the Company becomes the disappearing company, or a contract of share exchange, a share transfer plan,or any other reorganization in which the Company becomes a wholly-owned subsidiary, is approved at a General Meeting of Shareholders of the Company(provided, however, that if the approval of such reorganization is not required by the General Meeting of Shareholders of the Company, the Board of Directors of theCompany) during the Transfer Restriction Period, the Company shall, by resolution of the Board of Directors of the Company, remove the Transfer Restriction withrespect to the number of Allotted Shares reasonably determined based on the period between the commencement date of the Transfer Restriction Period and theapproval date of such reorganization, etc., prior to the effective date of such reorganization, etc.

Acquisition of
the Allotted Shares
without consideration(1) The Company shall acquire, without consideration, the Allotted Shares, for which the Transfer Restriction has not been removed as of the time immediately after
the removal of the Transfer Restriction pursuant to the “Removal of transfer restriction” above, as a matter of course.
(2) If an Eligible Director resigns or retires from his or her position as director or other position of the Company or its subsidiary, as determined in advance by theCompany’s Board of Directors, before the expiration of the Service Period, the Company shall acquire the Allotted Shares without consideration as a matter of course,
unless there are reasonable grounds for the retirement or resignation such as the expiration of the term of office or the death of the Eligible Director.
(3) If the Board of Directors of the Company recognizes that an Eligible Director has violated laws, regulations, internal rules or the Allotment Agreement in any material
respect during the Transfer Restriction Period, or in the case of certain grounds set forth in the Allotment Agreement, the Company shall acquire, without consideration,
all of the Allotted Shares held by the Eligible Director at the relevant time as a matter of course.

Information related to JAFCO Group’s compliance is reported to theCompliance Officer, who supervises overall compliance initiatives. The
heads of each division are responsible for compliance in theirrespective divisions and promote daily compliance, the Administration
Division supports and manages compliance-related initiatives as thesupervising division, and the Internal Audit Division audits these
activities. In addition, the Administration Division disseminates
information concerning the enactment, revision, and abolition of laws
and regulations to directors, officers, and employees and holds

Initiatives to Prevent Improper Use of Public Funds
Clarification of the responsibility system
We have established the necessary matters with regard to the handlingof public research funds, etc., in accordance with the Guidelines forSupervision and Auditing of Public Research Funds at ResearchInstitutions (implementation standards) to ensure their proper
management and promote appropriate and smooth operation. Under
the President & CEO as the chief administrative officer, the director in
charge has been appointed as the supervising officer and the managerof the department handling competitive funds, etc., as the officer
responsible for compliance promotion.

In response to the global trend in the establishment and strengthening of bribery prevention systems, we have established the Basic Policy on Bribery
Prevention to address prevention of improper transactions.

Basic Policy on Bribery Prevention
1. Prohibition of bribery
The directors, officers, and employees of JAFCO Group Co., Ltd. and its

The Company Group shall accurately record payments made to public

any act of offering or accepting bribes prohibited by laws and regulations

officials, etc., and retain the records properly under the appropriateof each country, either directly or indirectly, with public officials, theirinternal control systems.

equivalents and persons of interest (hereinafter “public officials, etc.”) toacquire illicit gains in business or offer benefits to third parties.

Fixed compensation

5. Internal audit
The Company Group shall conduct periodic internal audits on theprevention in light of laws and regulations of each country, while building
Basic compensation(1/3)

4. Retention of payment records

group companies (hereinafter “the Company Group”) shall not engage inoperational status of the bribery prevention framework.

The Company Group shall establish internal rules related to bribery

Monetary compensation(Performancelinked portion)

Consultation and contact desks
We have established the following consultation and contact desks forappropriate use of public research funds, etc.
• Consultation desk regarding appropriate use and administrative
processing of public research funds, etc.
• Contact desk for reporting improper use, etc.

Initiatives to Prevent Bribery

2. Establishment and operation of a bribery prevention framework(Fixed portion)compliance training and seminars. In case of violation of laws,
regulations, internal rules, etc. or administrative incidents, information isreported to the Compliance Officer and the supervising division, andimmediate remedial measures are then examined and implemented totake steps to thoroughly prevent recurrence. Furthermore, we haveestablished the JAFCO Hotline as a whistleblowing system for reporting
compliance-related matters, which is connected to the Compliance
Officer, the Administration Division, and an independent director.

Extraordinary compensation

Stock-based remuneration

6. Disciplinary action

a framework to prevent bribery through establishment of a continuous

The Company Group shall take strict disciplinary actions based on themonitoring system and an internal whistleblowing system.

Rules of Employment in the event that a director, officer, or employee
violates this policy or internal rules related to bribery prevention.

3. Education and training
(1/3)

(1/3)
Performance-linked compensation

The Company Group shall provide periodic training to prevent its
directors, officers and employees from offering or accepting bribes andensure the effectiveness of the bribery prevention system.

Note: Fractions in parentheses are approximate.

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JAFCO INTEGRATED REPORT 2022

JAFCO INTEGRATED REPORT 2022

52

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Sustainable
Growth Strategy

Business Foundationfor Sustainable Growth

Corporate
Data

Risk Management
Risk Management System

Business Risks, Etc.

JAFCO Group considers risk management to be an importantmanagement issue and has established a system to ensure that
operations are conducted appropriately.
Our risk management rules define the management system inaccordance with the characteristics and importance of each risk.
The risks that we manage are classified into categories including
investment management risks, market risks, liquidity risks, compliancerisks, information management risks, systems risks, back-office risks, andother risks. After deciding the degree of impact of risk materialization,
each risk is assigned to departments in charge and managed.
The risk management system adopts the Three Lines of Defense
model: risk management by each department in charge (first line),monitoring by the compliance officer and Administration Division(second line), and monitoring by the Internal Audit Division (third line).
As a preventive measure, the Board of Directors and Board-Audit
Committee evaluate the effectiveness of risk management based on
management status reports. Investment Committee meetings andportfolio meetings are also held regularly to appropriately manage

investment management risks, market risks, liquidity risks, and humanresource risks, ensuring the enhancement of the risk management system.
Investment decisions are made after deliberation by the Investment
Committee, which is comprised of members including the President &CEO and partners. For making decisions, opinions of staff in charge ofinvestment evaluation are asked separately from the relevant investment
division. The status of unlisted portfolio companies is reported on aregular basis at Investment Committee meetings, portfolio meetings,
and fund evaluation meetings, which is then reflected in the evaluationof portfolio companies, while discussing appropriate responses toaddress issues.
To create a culture that ensures proper recognition and managementof risks as an organization, we have put in place a system for prompt
reporting and consultation by the relevant divisions in case risk
management concerns or issues arise. In addition, we have establishedthe JAFCO Hotline as a means to enable directors, officers, andemployees to directly report information on actions that violate or may
violate laws and regulations.

Economic situation

opportunities for exits (sale) through M&A and other means.
However, there is a possibility that capital gains may fluctuate significantly if the economy or the stock market becomesluggish, and regional risk diversification may not be so effective due to factors such as geopolitical risks or global pandemics.

Investment inunlisted securities

A growing percentage of investments by the Company Group and its funds are at the seed stage of business foundation andthe early stage of business startup.
The Company Group rigorously selects promising companies, boosts its shareholdings in each company by making large
investments, and increases management involvement in portfolio companies.
Because it is difficult to fully ascertain the potential of companies in the seed and early stages, it is possible that we missinvestment opportunities in companies with high potential and cannot generate signiﬁcant returns on investment.
In the case that the business of a portfolio company does not progress as initially planned, or its financial situation
deteriorates, there is the risk that all invested capital will be lost. Also, investment exits through IPO, trade sales to third parties,
M&A, etc. are not guaranteed. Furthermore, as unlisted securities by nature have considerably poor liquidity, their value may
be signiﬁcantly lower than expected if sold at the unlisted stage.

Specialized business

The Company Group conducts its business operations by concentrating management resources on the operation andmanagement of funds and investment in unlisted securities.
Since investment in unlisted securities is significantly affected by changes in the economy and the stock and IPO markets, thebusiness performance and financial situation of the Company Group may be negatively impacted should such changes arise.

Competition

In our main business of private equity investment, competition for investment deals in promising unlisted companies isintensifying among competing companies, including specialist venture capital and corporate venture capital programs ofbusiness firms. Due to this competitive environment, we may miss opportunities to invest in promising companies or fail togenerate sufficient capital gains depending on the terms of investment. As a result, fund performance as well as the Company
Group’s business performance and financial situation may be negatively impacted.

Fall in stock prices

Following the IPO of a portfolio company, we sell our shareholdings after considering factors such as trends in the stock
market, acquisition cost, shareholding balance, stock price, trading volume, and the fund’s term of contract.
Decline in the prices of listed shareholdings may negatively impact fund performance and the business performance andfinancial situation of the Company Group. In particular, the negative impact from a fall in stock prices may increase
substantially if the shareholding ratio of the Company Group or its funds is high.

Exchange rate
fluctuations

We invest in U.S. dollar-denominated investments in Asian and U.S. funds. Since there is a five- to 10-year time lag between
making capital contributions to a fund and receiving distributions, exchange rate fluctuations affect our business performance.
The funds managed by the Company Group make new investments over a period of around three years, and distributions fromOperations risks

Private equity
investment
Economic situation
Specializedbusiness
Competition /Loss of investment
opportunities

Market risks

Fall in stock prices
Exchange rate
fluctuation
Economic situation

Liquidity risks

Fundraising/fund operation
Sale of unlisted
securities

Human resource
risks

Compliance risks

Information
management risks

Systems risks

Back-office risks

New risks

Securing, training,
and retaining
talented humanresources

Violations of laws
and regulations
and the Articles ofIncorporation
Businessregulations,litigation
Dispatch of
directors andofficers to portfolio
companies(Damages andemployer’s liability)

Leakage ofbusiness partners’
important
information andpersonal
information

System outages,
malfunctions,virus/malware
infection,
unauthorizedaccess, etc.

Disclosure andnotification of
documents
Settling accounts
Portfolio
companies andfund investors
Related duties, etc.

Infectious diseases
Pandemics
Natural disasters
Reputation
Other(First line) Departments in charge

Checking/Monitoring

Investment / Structured Investment

Fund Management Division

Overseas subsidiaries (Asia and United States)(Second line) Administration Division

J-SOX

J-SOX
HR Planning /HR Operations

Management

Management

Asia

Management(system)Fund administration/
management

Relevant departmentsAsia

the sale of shares and sale proceeds are paid over the fund term (usually 10 years). As a result, the exchange rate risks for theacquisition and liquidation of foreign currency denominated assets are diversified over a given period. However, as it requires
several years for an investment in an unlisted company to achieve an exit, it is difficult to completely eliminate the effect of
exchange rate fluctuations.

Monitoring
Compliance Officer (Officer in charge of administration)
Administration Division(Third line) Internal Audit Division

Fundraising

Monitoring
Internal Audit Division

Investment Committee

Preventive measures

The investors in our funds are mainly institutional investors, such as financial institutions, for fund management purposes orbusiness firms that wish to approach startups.
We work to build trust with our fund investors and ensure transparency in our fund management by issuing regular reportson the status of fund management and arranging meetings and other types of communication as needed.
However, in the event that we are unable to raise sufficient funds from investors due to sluggish business performance ora deterioration in the fundraising environment resulting from the economic climate and other factors, our investment activity may
be impeded and our fund management fees may decrease, thereby negatively impacting the Company Group’s businessperformance and financial situation.

Meetings/Committees, etc.

Portfolio meetings / Fund evaluation meetings
Board-Audit Committee
Board of Directors
JAFCO Hotline System

Employees
Compliance Officer / Administration Division / Independent Director

53

receiving fund management fees and success fees, we invest our own capital in the funds to receive capital gains.
The Company Group diversifies regional risks by making investments in Japan, Asia and the United States. In addition, afund makes new investments over a period of around three years to diversify risk over a certain period of time. We also seek

Risk management system

Investment
management risks

The Company Group uses capital from the funds it manages and operates to invest in unlisted securities. In addition to

JAFCO INTEGRATED REPORT 2022

Management of
information

In order to manage the important information of business partners and personal information held by the Company Group,
we have improved our information management system by establishing various company rules, thoroughly disseminating
information to directors, officers, and employees, and strengthening the security of information systems.
However, in the event of an information leak due to unauthorized external access, or malicious actions or carelessness of
directors, officers, employees, or other relevant persons, the Company Group’s business performance and financial situation
may be negatively impacted by claims for damages, a loss of social credibility, or other factors.

JAFCO INTEGRATED REPORT 2022

54

JAFCO Group’s
ValuesJAFCO Group’s
Value Creation

Business Foundationfor Sustainable Growth

Sustainable
Growth Strategy

Corporate
Data

Environmental Initiatives
Legal regulations

The Company Group operates and manages funds and invests in unlisted stocks mainly in Japan, Asia, and the United States.
These activities are subject to the legal regulations of the respective country where they take place.
At the Company Group, the relevant divisions gather information and respond to legal regulations related to theiroperations. However, in some cases, the Company Group’s activities may be restricted by legal regulations and costs may risedue to the need to address these regulations.

Legal and otherviolations

At the Company Group, the heads of each division serve as a person responsible to promote daily compliance at theirrespective divisions. The Administration Division, as the controlling division, supports and manages compliance-related
initiatives. In the event of non-compliance with laws, regulations, internal rules, etc. or an administrative accident, information iscollected and reported to the Compliance Officer and the controlling division. Immediate remedial measures are thenexamined and implemented, and steps are taken to ensure recurrence prevention. In the event that the Company Group or its
directors, officers, or employees cause damage to portfolio companies, fund investors, or other third parties due to violationsof related laws and regulations or various contracts, breach of its duty of care as a fund manager, or operational errors or
misconduct, the Group may be held liable for compensating such damage. Furthermore, the loss of social credibility andadministrative sanctions by the supervising authorities in response to such legal violations, etc. could adversely impact theCompany Group’s performance and financial position.

Executive dispatch

Securing andtraining of talented
human resources

Impact of
the COVID-19
pandemic

ESG

The Company Group may dispatch its directors, officers, or employees to serve as executives at a portfolio company toimprove the value of the portfolio company. In the event that a claim for damages is filed against such individual director,
officer, or employee, the resulting economic loss, employer’s liability, or loss of social credibility could adversely impact theCompany Group’s performance and financial position. In addition, to the extent possible, the Group takes out directors’ andofficers’ liability insurance and signs liability limitation agreements with portfolio companies, but it may not be able tocompletely avoid an adverse impact on the Company Group’s performance and financial position.
Due to the nature of its business, the future growth and success of the Company Group is heavily dependent on talented
investment professionals and other human resources. We have continued to recruit new graduates, while actively hiring
mid-career professionals, in an effort to secure and develop diverse, high-potential human resources.
However, if we are unable to secure high-potential human resources, the Company Group’s future growth, performance,
and financial position could be adversely affected.
The Company Group has worked to prevent the spread of COVID-19, prioritizing the health and safety of our directors,
officers, employees, and customers.
In anticipation of a prolonged pandemic, we worked with portfolio companies to raise funds for their businesses, reduce
costs, and conduct fundamental reviews of their profit plans.
In addition, we ourselves seek to maintain our net cash and deposits and equity capital at levels that do not particularly
hinder our medium-to-long-term business operations or investment activities.
However, in the event that the impact of COVID-19 lingers due to the emergence and spread of new variants, there arerisks that investment loss reserves may increase and IPOs, M&As, and other exits of portfolio companies may slow down.
Furthermore, it may also cause delays in future fundraising and other negative impacts.
The environmental, social, and governance (ESG) perspective has become increasingly important in corporate management
and investment activities, and JAFCO Group is also required to continuously address these initiatives.
Established in May 2022, the Project Promotion Division mainly promotes the Company’s sustainability projects and works
to specifically incorporate sustainability concepts into the Company’s business strategy.
However, if these efforts are not fully effective and the Company Group’s ESG investments and efforts to achievesustainability were considered to be weak, we could lose the support of our stakeholders, which could, in turn, have anegative impact on our fundraising and investment activities and our ability to secure human capital.
We will also work to gather and analyze necessary data on the impact of risks and revenue opportunities related to climatechange, one of the key global issues, on our own business activities and earnings, and strive to ensure appropriate information
disclosure as a listed company. However, if such disclosures were deemed insufficient, it could damage the Company Group’s
corporate value and negatively impact the Company Group’s performance and financial position.

55

JAFCO INTEGRATED REPORT 2022

Recognizing that environmental problems are major social issues, JAFCO Group works to reduce its own environmental impact and, through its main
business of investment, contribute to reducing environmental impact by supporting the establishment and development of companies with technologies
and business models that contribute to the environment.

Reducing our own environmental impact
1. Initiatives to reduce energy consumption
JAFCO Group is working to reduce energy consumption throughefficient office operations and active promotion of remote working.
As a result, we reduced our overall electricity consumption by 53.8%
and the greenhouse gas emissions associated with office electricity
and air conditioning by 56.2%, compared to the fiscal year ended
March 31, 2018.

2. Reduction of office paper
In February 2018, we moved our headquarters to Toranomon Hills(Minato Ward, Tokyo) and introduced a free address system. We havemade thorough efforts to reduce paper usage by discontinuing the
distribution of paper-based materials for internal meetings and thestorage of paper documents, and other means. This has resulted in a
63.1% reduction in the number of sheets of copy paper ordered,compared to the fiscal year ended March 31, 2018.

Office electricity consumption / Greenhouse gas emissions associatedwith office electricity and air conditioning

Sheets of copy paper ordered(Thousand sheets)

142.7

223.5
171.0

167.6

78.4

144.5
72.3

88.2

64.7

91.4
2018/3

2019/3

Greenhouse gas emissions (t-CO2)

56.9

2020/32021/3

62.7
60.0

77.5

2022/3

2018/3

2019/32020/32021/382.5

2022/3

Electricity consumption (Thousand kWh)

Notes: 1. Figures are for the Tokyo Head Office and the West Japan Branch (formerly Kansai Branch until August 2021) only. The former Chubu and Kyushu branches are not included.
2. The Company will work to disclose the impact of risks and profit-earning opportunities stemming from climate change on its business activities and profits in accordance with the Task Force on
Climate-related Financial Disclosure (TCFD) framework or similar.

Reducing environmental impact through the businesses of portfolio companies
Our main business of investment creates new businesses, and our investment activities themselves contribute to sustainability. We are strengthening ourinvestment in businesses and companies with the potential to contribute to the realization of a sustainable society through technologies and services
that offer solutions to environmental problems, about which there is recent increasing concern.
Investment example 1

Investment example 2

Kyoto Fusioneering Ltd.

Power Spin Inc.

The company is a Kyoto University-originated startup focusing on thedevelopment of specialized plant equipment for nuclear fusion.
Nuclear fusion, which is the source of the sun’s energy, has the power
to supply energy for human beings for millions of years into the future if
it can be harnessed on earth. As nuclear fusion enables fuel to becreated from seawater and does not emit greenhouse gases, it isexpected to provide a fundamental solution for energy andenvironmental problems.

Power Spin is a Tohoku University-originated venture focusing on circuit
IP and design for IoT devices and AI systems using spintronics technology
to increase the ratio of computing performance to energy consumption
by a factor of 100 or more compared to conventional technologies.
Because spintronics can achieve sufficient computing power withdramatically lower energy consumption, it solves the electricity
consumption issues of semiconductors and contributes to the realizationof both a carbon-neutral, energy-saving society and a livable societythat harnesses AI, IoT, and DX (Society 5.0).

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