Furukawa Electric Group Integrated Report 2021

https://www.furukawa.co.jp/en/

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Drawing on more than a century of expertise in the development andfabrication of advanced materials, we will contribute to the realization ofa sustainable society through continuous technological innovation.

At a GlanceContents

Founded inGreenhouse gas emissions (Scope 1+2)

About Furukawa Electric Group

1884

64.8

01

Consolidated net sales

811.6

billion yen(Fiscal year ended March 31, 2021)

48,449(As of March 31, 2021)(FY2020)* Combined total amount for Furukawa Electric, 30 domestic and 58
overseas group companies

Renewable energy ratio (Japan and overseas)

10.3

%

(FY2020)* Combined total amount for Furukawa Electric, 30 domestic and 58
overseas group companies

Number of Group companies

123(As of March 31, 2021)* Combined total for Furukawa Electric, 109 consolidated subsidiaries
and 13 equity-method affiliates

Contents

44 Corporate Governance

02 Innovation History of Furukawa Electric Group

56 Group Governance/Risk Management

04 At a Glance, Furukawa Electric Group58 Supply Chain/Human Rights
60 Environment/Climate Change

Business Strategy

64 Strengthening Human Capital Management andOrganizational Execution Abilities/Occupational
Health and Safety

06 President’s Message
12

CFO Message

16

Furukawa Electric Group's Values

Changes in the external environments concerning
sustainability and the social issues surrounding Furukawa
Electric Group
20 Furukawa Electric Group’s Sustainability

18

23 Value Creation Process
24 Research & Development
26 Creating businesses that solve social issues
29 “Open, Agile, Innovative”, Partnerships
30 Intellectual Property
32 Digital Transformation (DX)33 Strengthen the foundation of ESG management
Communications Solutions
Energy Infrastructure
Automotive Products & Batteries
Electronics Component Materials
Functional Products

70 Management Analysis of Operating Results andFinancial Position

72 Mid- and Long-term Management Strategy
74 Main Financial and Non-Financial Data
76 Consolidated Financial Statements
78

Overview of Furukawa Electric Group80 Company Profile and Stock/Dividend Information
82 Participation in Initiatives/External Evaluation
84 About the Furukawa Electric Group Integrated
Report 2021

00

34 Business Overview

Corporate Information/Data

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Number of Group employees

104 t-CO2e

CO2Business Foundation

1974

2000

2012

2018

Established company in Brazil
manufacturing and selling
aluminum power cables

Contributed to the establishment ofhigh-capacity communications based on
wavelength multiplexing technology

Participated in the Floating
Offshore Wind Farm
Demonstration Project

Established the research centerin the Silicon Valley

About Furukawa
Electric Group

Innovation History of Furukawa Electric Group

Innovation History of
Furukawa Electric Group
Furukawa Electric Group / HISTORY

1897

1884

1937

1964

(Mass production of 1480 nm pump laser diode modules)

2011
World’s first successful fieldtrial of optical fiber cable

Contributed to the construction of a
global network by acquiring Lucent
Technologies’ optical fiber division (OFS)

1982(Billions of yen)

Opened Honjo Copper
Smeltery and Yamada
Cable Works

Started manufacturing
electric copper wires

Laid the world's first non-loaded
carrier submarine cable in the
Tsushima Strait

2003

Developed a fully
automatic high-precision
six-high rolling millFounded as manufacturers
of wrought copper
products and electric cable

1,000

Relocate
the head office to“TOKYO TORCH
Tokiwabashi
Tower”

Purchased SuperPower Inc., ahigh-temperature superconducting
materials manufacturer in the US.

Completed large-scale
power transmission line
installation in Iran

1915

1958

1971

Started Japan’s firstelectrodeposit copper
trial operations

Manufactured Japan’s
first submarine electric
cableInstalled an antenna andfeed line on Tokyo Tower

Installed acommunications
network in Bangkok,
Thailand500

Received the Golden Hadron Award from
CERN for superconducting wire materials

Corporate Information/
Data

1889

Business Foundation

1,500

2021

2001

Business Strategy

Drawing on more than a century of expertise in the development and fabrication of advanced
materials, Furukawa Electric Group has contributed to the realization of a sustainable society throughcontinuous technological innovation since its foundation in 1884.
Furukawa Electric Group has supported the establishment of Japan’s social infrastructure andcontributed to the global sustainable development for 137 years.

Trends in the net sales
Non-Consolidated

Consolidated

0

1890

1900
Meiji Period

1910

1920

1930

1940

1950

Taisho Period

1960

1970

1980

1990

Showa Period

2000

2010

2020

(FY)

Heisei Period
Reiwa Period

1960's-2000's-Foundation & Dawning of a New Era

Helping to Establish
Japan’s Social Infrastructure

Expanding Overseas

Speeding up Global Development

From this period, Furukawa Electric launched its full-scale
efforts to enter the global market with the hope of
spreading its technical strength around the world. Whilebuilding up a track record in the Middle East, Southeast
Asia, and elsewhere, it established manufacturing plantsfrom Southeast Asia all the way to Brazil, laying thefoundations for today's globalization.

The expansion of free trade areas after the end of the Cold
War accelerated the globalization of the world economy,
which greatly sped up Furukawa Electric's global
development too. In 2001, it bought out the optical fiber
solution business of Lucent Technologies in the US,
jumping straight into the group of global leaders in the
optical fiber market.
Global attention is on Furukawa Electric's capacity fortechnological development, such as its superconducting
wire materials used in the European LHC particle accelerator
project, the largest in the world.

The origins of our company can be traced back to 1884,
when Ichibei Furukawa first smelted copper in Honjo,
Tokyo and Yamada Cable Works began manufacturing
electrical cables in Takashima-cho, Yokohama.

Catering to demand for electricity and communicationsin the then undeveloped Japan, Furukawa Electric
expanded production to include various rubber andcotton-covered wires, and in 1915 manufactured thenation’s first submarine electric cable. The company
continued to support the establishment of Japan’s social
infrastructure with its global quality technical capacity,such as by installing an antenna on Tokyo Tower, thecountry's largest radio tower at the time.

03

02

1900's-INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

1884-

About Furukawa
Electric Group

Furukawa Electric Group / At a Glance
Overview of Performance in Fiscal 2020

Business Overview by Segment for Fiscal 2020

business. The overall Group sales decreased fromthe previous year partly due to the sale of thecopper tube business and the reorganization of apart of the wire business (both businesses fell out of
the scope of consolidation.) Profit also decreased
from the previous year due to a significant impact
from the stagnant global economic activities caused
by COVID-19, in spite of some positive impact from
efforts for cost reduction and cost control, whichwere mainly spearheaded by the Emergency
Management Measures Team.

Net sales / Operating income /Operating income margin

Sales by region(Billion yen)

Net sales (left)
Operating Income (right)
Operating income margin

1,200

800

967.3

843.3
4.6%

4.6%

38.6

400

44.8

991.6

914.4

4.1%
40.8

(Billion yen)

811.6

2.6%

2017

2018

2019

2020

Others (Europe, Russia, Brazil, etc.)¥78.2bn

Asia (excluding Japan¥435.2bn
FY20200¥158.3bn

Major business

Manufacture and sale of information andcommunication network configuration products
Design and construction of information andcommunication networks

G Plan 2020priority measures

Results(1)
Strengthen
and transformthe businesses

Revised the business portfolio
KPI management using return on operating
assetsEstablished the activities of the Transformation
Division (Target businesses: Global Fiber & Cable, Energy¥811.6bn

China

Strengthened the frameworks for co-creation
Strengthened the creation of new businesses

Established Future Infrastructure Technology Center,
Digital Innovation Center

Fostered new businesses through co-creation andsowed the seeds of new businesses
Industrial lasers, bipolar storage batteries and metal
encapsulated zeoliteTM-¥1.9bn

Manufacture, sale, and installation of power cables, etc.

Sales ratio

12%Electronics & Automotive Systems

Automotive Products & Batteries
Sales¥235.1bn

Major business

Operatingincome¥5.0bnManufacture and sale of various automotive productsElectronics Component Materials
Sales¥198.0bn

Major business

Operatingincome¥0.9bnManufacture and sale of copper products forelectronic equipment materials3) to accelerate the creation of new businesses.
We made some progress, such as improving thefinancial situation, but there remained issues withregard to assuring business earnings capability. In
addition, we have formulated Furukawa ElectricGroup Vision 2030 and started full-scale efforts for
ESG management.

Sales ratio

Sales ratio

28 %Functional Products
Sales¥114.7bn

Major business

23%

Services and Development, etc.
Operatingincome¥6.3bnManufacture and sale of various functional products
processed with plastics and non-ferrous metals

Sales¥38.7bn

Major business

Operatingincome-¥1.7bn

Logistics, real estate leasing, hydroelectric power
generation, research and development of new
products, etc.

Issues/ Future actions

IssuesInsufficient expansion of the key businesses(Communications Solutions)IssuesInsufficient net sales growth overseas(FY2020 target: JPY 550 billion)(FY2019: JPY 418.8 billion, FY2020: JPY 376.4 billion)

Future actions
Expand the optical fiber and cable business
Future actions
Clarify the key domains

Going forward, the Social Design & New Business
Development Department (newly established in April 2021)
will be responsible for execution, and efforts will bemade to accelerate the creation of products andbusinesses under this new organizational framework

Sales ratio

13%

Sales ratio

5%

FY2021 Management Policy
With respect to the next medium-term management plan
which was supposed to start from FY2021, since themanagement environment surrounding Furukawa ElectricGroup significantly changed due to the COVID-19
pandemic, we suspended the formulation of the plan, andpostponed the start of the plan until next year.
In FY2021, we will become a stronger company andmake definite preparations for the 2025 medium-term
management plan. In addition, we will implement mainly
the following initiatives.

Transform the businesses

Strengthen the key businesses and continue to revise thebusiness portfolio through responses to the low-margin andnon-core businesses

Establish and foster new businesses

Create environment-friendly businesses and businesses thatsolve social issues

Strengthen management focus on capital efficiency
Evolve the “return on operating assets” used as an indicator in
the 2020 medium-term management plan, and shift to target
management with a focus on capital efficiency and greaterawareness of “cost of capital”

05

00

(3)
Accelerate thecreation of new
businesses

Opened FunLab®, Established SVIL in the US

Major business

Operatingincome¥82.8bn

Future actions
Response to low-margin businesses & sites (Continued)
Expand the Transformation Division activities within
Infrastructure, Copper & High Performance Material Products)
the group
Expanded sales and enhanced the
manufacturing sites
Created a foothold for expanding the sales area
through the establishment of marketing regional
headquarters (in Southeast Asia, China)¥100.9bn

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP(2)
Expand sales
in the global
market

Sales

19 %

Overview of the Furukawa G Plan 2020
In the Medium-term Management Plan whichstarted in fiscal 2016, the priority measures were 1)
to strengthen and transform our businesses,
particularly in the infrastructure (information andcommunications, energy infrastructure) andautomotive sectors that were positioned as focus
areas; 2) to expand sales in the global market; and-¥0.2bn

Energy Infrastructure

Sales ratio

and China)¥141bn(FY)

Sales

OperatingincomeJapan¥74.4bn

North andCentral America

Communications Solutions

Corporate Information/
Data

2016

80

40

23.6 1.0%
8.4

0

120

Infrastructure

Business Foundation

In fiscal 2020, in response to the global outbreak ofnovel coronavirus infections (COVID-19) whichsignificantly affected various parts of the world, andthe rapidly deteriorating economic environment,
Furukawa Electric Group established the Emergency
Response Team to minimize the COVID-19 impact
and implemented various measures, in addition topromoting measures for the Medium-termManagement Plan, Furukawa G Plan 2020. However,overall sales were sluggish, including thecontribution by the Communications Solutions

Business Strategy

At a Glance, Furukawa Electric Group

Furukawa Electric Group at PresentAbout Furukawa
Electric Group

President’s Message

Business Strategy
Business Foundation

Positioning ESG as central to overallmanagement, we will transform
ourselves into a corporate groupthat is recognized by our
stakeholders not only as promising
but also as reliable.
Keiichi Kobayashi

In fiscal 2020, the COVID-19 pandemic depressed
economic activities, which affected the overall businessof Furukawa Electric Group and we could not achieve
management goals set forth in the Medium-termManagement Plan. Looking back at the status of ourGroup, we recognized that we did not have sufficientstrengths, including autonomous improvement
capabilities, break-through capabilities to solve
problems, and overall management capabilities.
We then thought that in fiscal 2021 it is mostimportant to build up these insufficient strengths, andresolutely secure a solid foundation that would enable us
to prevails in the current difficult business environment.
We have therefore decided to postpone the formulationof the next medium-term management plan, with thetarget year 2025, by one year, and to designate fiscal
2021 as “the zero year of the 2025 Medium-term Plan”
for overcoming the deficiencies mentioned, andbecoming a powerful company. Three specific measures
for fiscal 2021 are 1) to transform business, 2) toestablish and foster new businesses, and 3) tostrengthen management focus on capital efficiency.
Basic to these three measures is the strengthening andWe have identified the “creation of social issue-solving
businesses” as a part of materiality for exploiting revenue
opportunities toward achieving Vision 2030. In this
aspect, we are not trying to address any specific issues
that we can see. Rather, we will focus on smart use of ourGroup's products and technologies to support solvingsocial issues or to be directly used for solving social
issues, and we will select and concentrate on issues thatshould be addressed by our Group. This will be in line with
our important factor of “protecting the foundation andwellness of people and society, and supporting growth,”
which resonates with our Corporate Philosophy: “Drawing
on more than a century of expertise in the development
and fabrication of advanced materials, we will contributeto the realization of a sustainable society throughcontinuous technological innovation.”

revision of the business portfolio, which is based on thelong-term Furukawa Electric Group Vision 2030. In orderto build up the needed strengths toward the achievementof this Vision 2030, we have decided to continue planting
seeds toward the next harvest, namely, making R&D
investments and creating new businesses, even in thechallenging environment now faced.
I now recognize that some of seeds we had sowed
are beginning to sprout. I am also pleased to see thatmany of our employees are committed to completing
what they have been assigned to do, with a strong
determination.
FY2021 Management Policy
In FY2021, we will become a stronger company and make definite
preparations for the 2025 medium-term management plan. In
addition, we will implement mainly the following initiatives.
Transform the businesses

Strengthen the key businesses and continue to revise the business portfolio
through responses to the low-margin and non-core businesses

Establish and foster new businesses

Create environment-friendly businesses and businesses that solve social issues

Strengthen management focus on capital efficiency

Evolve the “return on operating assets” used as an indicator in the 2020
medium-term management plan, and shift to target management with a focus
on capital efficiency and greater awareness of “cost of capital”

Three Initiatives to Achieve Carbon Neutrality
While there are many social issues before us, one of thebiggest challenges for our Group is the realization of adecarbonized society, namely, the initiatives aimed atcarbon neutrality. As a concrete example of the “creationof social issue-solving businesses” identified asmateriality for revenue opportunities, we have listed the“creation of environment-friendly businesses” that
contribute to the realization of a decarbonized andrecycling-oriented society. This also resonates with the“development of business activities that consider climatechange,” which is included in materiality for risks.
Concerning this risk materiality, we are undertaking
three initiatives: 1) eliminate or reduce direct CO2
emissions; 2) eliminate or reduce CO2 emissions bycustomers and society in general, and 3) capture ortransform CO2 that is emitted.
With regard to the first initiative of our own internal
efforts, we believe that our conventional efforts, such asenergy conservation (i.e., improvement of yield rates),
fuel conversion, improvement of recycling rate, and theuse of renewable energy, are the main measures towardachieving carbon neutrality. We will continue tostrengthen use of renewable energy, although our usage
ratio of renewable energy is already at a high level
among Japanese companies. Concerning the second
initiative involving our customers and society, we willcontinue to contribute with our technologies andproducts, such as power cables that transmit renewable

07

06

Efforts Toward Achieving the Vision 2030

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Review of Fiscal 2020 and Positioning of Fiscal 2021

Corporate Information/
Data

President and Representative Director
Furukawa Electric Co., Ltd.

1

Eliminate or reduce direct CO2 emissions

2

Eliminate or reduce CO2 emissions bycustomers and society

3

Capture or transform the CO2 that is emitted

Environmental efforts are not limited todecarbonization and carbon neutrality. In MarchContribute toa carbon-free society

Contribute to society inharmony with nature

Contribute to realizing awater & resources
recycling-based society

Aim to reduce greenhouse gas
emissions throughout thevalue chain.

Greenhouse gas emissions frombusiness activities (Scope 1 & 2):
Challenge target of zero emissions in
2050

Minimize the impact on
ecosystems through value
chain management that
includes raw materials.

Minimize water usage, andpromote the use of recycledmaterials, including waste
plastic, throughout the value
chain.

Scope 1: Direct emissions from the Company’s plants and offices Scope 2: Indirect emissions from the electrical power and heat purchased by the Company

Investments to Support Business Transformation
In order for Furukawa Electric Group to contribute to
the sustainable society as I have discussed so far,
our Group's business need to be sustainable. During
the 2020 Medium-term Management Plan, the“return on operating assets” has been used as one of
the indicators and we have carried out various
measures including structural reform andreorganization, strengthening of core businesses,
and sale of low-margin businesses. Since 2019,
when we started to re-acquire strengths, we haveadopted a fairly tight investment discipline. These
actions have begun to bring out some outcome, andwe are now focusing on how to “harvest” the seeds
that had been sown.
In the meantime, the return on operating assets
alone is not sufficient to further develop the entire
Group’s management capabilities. We believe that weneed indicators that take into account the relationshipwith cost of capital and more strongly motivate
portfolio changes. We have therefore decided to use
ROIC (Return on Invested Capital) as a new indicatorand FVA (Furukawa Value Added = Value added toinvested capital) as an internal management indicator
for the forthcoming 2025 Medium-term Management
Plan, with the aim to shift to management with moreawareness of capital costs and corporate value
improvement than ever before.
As we are a company, we have to be evaluated byour shareholders. To do so, it is important that ourown sustainability is secured. We also believe that wemust be recognized by our stakeholders not only as
promising but also as reliable. For this purpose, we
believe that our ROIC must always exceed our WACC
(Weighted Average Cost of Capital). We will therefore
further promote management with greaterawareness of capital costs and corporate value.

Corporate Information/
Data

Formulated Environmental Vision 2050 andEfforts for Environment-Conscious Products

Contribute to the realization of asustainable society throughout
the value chain through theprovision of environmentallyfriendly products and services
and recycling-oriented
production activities

Business Foundation

Furukawa Electric Group’s Basic Policy
for Carbon Neutrality

2021, we have announced Furukawa ElectricGroup Environmental Vision 2050 with the aim ofcontributing to the realization of a sustainable
society throughout the value chain by theprovision of environmentally-friendly products
and services and recycling-oriented production
activities. In addition to the “Contribution to a
decarbonated society” that I mentioned earlier,this vision is concerned with environmental
response from the perspective of “Contribution toa recycling society of water and other resources”
and “Contribution to a natural symbiotic society."
A concrete example of environmentally-friendly
products and services is the efforts ofenvironment-conscious products. Environmentconscious products are defined as products andservices that are comprehensively evaluated fortheir entire product lifecycle from being made tobeing disposed, thereby contributing to a
reduction in environmental impact or having a
positive environmental impact. For example, inthe case of a conduit route for the installation ofcables, we use our technology to recycle wastematerials into products. We will continue to focus
on our efforts, which contribute not only todecarbonization but also to a recycling-basedsociety.

Business Strategy

energy, including energy generated offshore by wind
power, and lightweight aluminum wire harnesses
that improve the fuel efficiency of automobiles. We
will also focus on the development of bipolar storage
batteries as key devices for efficient use ofrenewable energy. In the third initiatives, for
capturing or transforming emitted CO2, we aredeveloping technologies such as the technology for
producing LP gas from livestock excreta by use of
metal encapsulated zeoliteTM. We consider theseareas as important revenue opportunities and willcontinue to respond firmly.

About Furukawa
Electric Group

President’s Message

Furukawa Electric Group Environmental Vision 2050

Major Actions to Revise the Business Portfolio

Reorganized the sales and distribution business of general-purpose power cables

FY2019 for the construction and wholesaler markets

Established a joint venture company with Showa Densen Holdings Co., Ltd.

Sold the copper tube business

Sold the business to a special purpose company of Japan Industrial Partners, Inc.

Reorganized part of the wire business

Established a joint venture with the Superior Essex Groupan agreement to sell a portion of the shares of Furukawa Logistics Co., Ltd.
FY2021 Concluded
Concluded a transfer agreement with SBS Holdings, Inc.

09

08

FY2020INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

0
8

all of holding shares of a subsidiary FCM Co., Ltd.*FY2018 Sold
*Listed on the JASDAQ market at that time.

Established Corporate Sustainability Office

May 2019

Formulated Furukawa Electric Group, Vision2030

February 2020

Signed United Nations Global Compact

August 2021

Established Furukawa Electric Group Basic
Policy on Sustainability and Furukawa ElectricGroup Sustainability Committee

Environment
March 2019

Environmental targets 2030 set

August 2019

Science Based Targets (SBT) certified

January 2020

Expressed support for the recommendationsof the Task Force on Climate-related Financial
Disclosures (TCFD)

December 2020 Selected as CDP Climate Change A-listedcompany for the first time

March 2021

Formulated Furukawa Electric Group
Environmental Vision 2050

SocialNovember 2018 Formulated Furukawa Electric Group Vision

for Our People

Formulated Furukawa Electric Group Human
Rights Policy

July 2021

Moved head office to Tokyo Torch Tokiwabashi
Tower

Governance

Strengthened independence of outside
directors, enhanced board diversity(All five outside directors are independentand one female outside director appointed)

June 2020

Diversity of outside audit & supervisory board
members (appointed one female audit &supervisory board member)

January 2021

Revised Furukawa Electric Group CSR
Procurement Guidelines (3rd edition)

June 2021

Reduced one internal director

Directors

Executive
Directors

5 members

11 people(As of June 24, 2021)

OutsideDirectors

5 members(All independent officers)

Management Aspirations to Achieve Vision 2030
We have formulated Group Vision 2030 withstrong determination. In order to contribute to theachievement of the SDGs at the same time as thisVision 2030, we know that group-wide concerted
efforts on materiality are critically important. The
next medium-term management plan, for 2025, isto be announced in 2022 and will be the core of
the initiatives.

Through the medium-term plan for 2025, we will
strive to transform ourselves to be recognized byour stakeholders not only as promising but also as
reliable. Positioning ESG in the center of ourmanagement, we will continue to transform
ourselves into a sustainable corporate group. We
appreciate your continued support for Furukawa
Electric Group.

11

11

June 2019

OutsideINTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

January 2020

In-house

Corporate Information/
Data

April 2019

Directors. Moreover, the Board of Directors has
become more independent as we reduced by one
our in-house directors in 2021 and the Board isrepresented equally by five in-house directors andfive outside directors, besides the Chairman.

Business Foundation

ESG in GeneralAmong our efforts that placed ESG management ina position of central importance, I have alreadyexplained about our E (Environment) efforts.
Concerning the response in June 2021, to climatechange in light of the revised Corporate Governance
Code we are working toward coping with theframework of the Task Force on Climate-related
Financial Disclosure (TCFD). Our Group was selected
as a TCFD subsidy project by the Ministry of theEnvironment in 2019 and carried out scenario
analysis for the optical fiber cable and power cablebusinesses. In 2020 we also conducted scenario
analysis for the automotive parts business. We willcontinue to expand the scope of such studies andconduct deeper analysis.
In fiscal 2020, we were selected as a CDP Climate
Change A-listed company for the first time, basedon the evaluation of our goal-setting and actions inefforts to address climate change, and transparency.
Regarding S (society), we have identified thestrengthening of human resources and organizational
execution as materiality, and started these efforts
before the COVID-19 breakdown. The COVID-19
pandemic has made these efforts even more
important and we are agile in making progress. In
particular, we have formulated “Furukawa Seven” –seven principles for mindset and actions of leaders in
the workplace, so that supervisors become trusted
by their subordinates. Another important theme thatderives from the current world situation in the field of
S (society) is the response to human rights risks in the
supply chain. We are committed to steadily
implementing human rights due diligence (DD) in
order to reduce human rights risks by checking theentire supply chain.
To achieve Vision 2030 and move on to the next
step, it is critically important that all employees
work vigorously and feel happy to work at ourGroup. In July 2021 we moved to a new head office.
We had entrusted our young employees for its
design and layout and they have created awonderful head office. I am looking forward to thevalue of various ideas that are created from
dialogues in the pleasant workplaces.
Finally, concerning G (Governance), we have strived
hard to improve the independence of the Board of
Directors and the Audit & Supervisory Board forsome years. Based on the idea to leave corporate
execution to executive officers, Furukawa Electric’s
Chairman is a non-executive director without the
representative rights, and is dedicated to oversight
and works as a neutral chairperson of the Board of

Chairman of the Board(Non-executive)

Business Strategy

While ESG is central to our management in thecontext of achieving Vision 2030 and continuing totransform ourselves into a sustainable corporategroup, we may experience a degree of unexpected
unsureness during the transformation process. In thehope of formulating principles comparable to those in
the Constitution, which will serve as the basis forjudgment at such times, we have adopted a basic
policy on sustainability this year. It describes thesustainable growth of the Group and its contribution
to the achievement of the SDGs. In addition, a
Sustainability Committee has been established tofurther enhance the quality and speed ofsustainability discussions and implementation.

About Furukawa
Electric Group

President’s Message

Efforts to Strengthen the Foundation of ESG management

About Furukawa
Electric Group

CFO Message

Business Strategy

We will increase our cash
generation capability andimprove corporate value by
generating a steady return on
growth investments andimproving asset efficiency.
Director and Corporate Vice President,
General Manager of the Finance & Global Management Division

investment by about 15% from the initial plan for
the fiscal year.
In addition, R&D projects and themes have beenreexamined and ranked in priority, while we have
improved efficiency and other operating parametersby smart adoption of remote work and use of theworldwide web, all the while keeping in mind what
we anticipate for the future.

Net sales / Operating income /Operating income margin
Net sales (left)
Operating Income (right)
Operating income margin(Billion yen)

1,200

967.3
800

843.3

4.6%

4.6%
38.6

44.8

120

914.4
811.6

4.1%

80

2.6%
40.8

40
23.6 1.0%
8.4

0
2016

2017

2018

2019

2020

0
(FY)

While our net D/E ratio as of March 31, 2021
improved to a level below 0.8, we recognize that thislevel is not yet sufficient to demonstrate financial
stability. In addition to raising our equity capitalratio, we will further strengthen our financial
position by keeping interest-bearing debt to cash
flow-generating capacity, or ratio of interest-bearing
debt to EBITDA, to a level less than the present
three times.

Net Interest-Bearing Debt and Net D/E Ratio(Billion yen)

200

(Times)Net Interest-Bearing Debt (left)
Net D/E ratio (right)

250

205.3

205.3

207.8

201.3

196.7

1.5

206.2

1.2

1.2
150

1.0

0.9
0.9

100

0.8

0.8

0.8

0.6
0.3

50

0

0
2015

2016

2017

2018

2019

2020

(FY)

11

11

400

991.6

(Billion yen)

Despite the severe business environment that was
partly due to COVID-19 pandemic, the Rating andInvestment Information, Inc. (R&I) upgraded
Furukawa Electric to “A-” in March 2021 for the firsttime in the 19 years since it was downgraded to“BBB+” in June 2002.
We believe that this upgrade has been a result of
the evaluation not only of the efforts of the past
year, but also for many years of our persistentefforts to improve the financial structure,
particularly by cash generation and theimprovement of interest-bearing debt and the net
D/E ratio, which had been a major challenge.
During the latter three years of the 2020 Mid-termManagement Plan (fiscal 2018 to fiscal 2020), we
generated free cash flows of 21.9 billion yen, which
far exceeded our target of 10-15 billion yen. This
resulted from the promotion of future investments(i.e., capital investment), and the measures taken in
the past few years from the viewpoint of improving
capital efficiency (i.e., sale of policy-holding sharesand of real estate assets which were not used forbusiness operation). I believe that our commitment
to cash flow was fully understood by the credit
rating agency.

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

In fiscal 2020, we were significantly affected by the
economic stagnation caused by the COVID-19
pandemic, and decreased sales and profit comparedwith the previous fiscal year.
As a part of our response to the severe economic
environment, we established the Emergency
Response Team, and that led us to achieve a little
less than 12 billion yen in annual cost reductions andcost containment. We recognize that the
combination of these efforts and our Grouptransformation efforts accumulated from the past
has enabled us to reduce the breakeven point by
about 5% from a level exceeding 800 billion yen to alevel below that amount.
In the process of reducing expenses, we assigned
an order of priority to capital investments and R&D
expenses, rather than simply restraining them, andtried to balance offensive measures and defensive
measures. This was quite difficult.
In order to achieve the long-term Furukawa
Electric Group Vision 2030, we must also steadily
implement investments for the future. Therefore,
from the viewpoint of investing what is needed at
the time it is needed, we have again thoroughly
scrutinized each project and have reduced capital

Establishing a Stable Financial BaseCorporate Information/
Data

Review of FY2020 Results

Business Foundation

Akihiro Fukunaga

While we have made some progress in improving
financial indicators, our priority task for fiscal 2021
is to achieve our targets in operating income, net
income, and the financial indicators. Although theexternal environment has been rapidly changing andevents that were out of control have been occurring,
we need to generate results by our own efforts evenunder these circumstances. We will certainly take
immediate measures and actions to mitigate theimpacts, rather than passively succumb to adverse
or unpredictable changes in the external
environment. I believe that we need to take externalchanges as our own issues and take action without
blaming the environment. I further think that it is mychallenge to share my strong determination withconsidering to shift the management target to focus
on capital efficiency with greater awareness of costof capital, and to introduce ROIC (Return on
invested Capital) and FVA (Furukawa Value Added =Value added to invested capital) as new
management indicators in order to speed up
business transformation.
With the introduction of the new indicators, wehope to further strengthen the mindset of ourpeople to pay attention to not only operating
income but also the final net income, that is, thegeneration of real cash.
This is anticipated to lead us to resolve the longstanding problem of canceling operating income andordinary income, that have been properly
accumulated, by extraordinary losses.
In addition, since some of our businesses generate
stable profits, while others are highly volatile, weneed to consider the appropriate cost of capital
separately for each business.
Addition of ESG elements is also being considered.
We will set up an appropriate cost of capital target
for each business, and will actively review ourbusiness portfolio based on the progress achieved.

make agile judgments as CFO, while keeping in mind
the importance of an adequate balance between
growth investment and investment discipline.
While we need to keep planting seeds for promisingbusinesses, we have to continuously generate returns
that justify investments. This is indispensable forbusiness growth. With our stronger awareness of thecost of capital, we are determined to achieve both“the improvement of our core businesses and thecreation of new business."

Investment Committee*
Committee chair:

General Manager, Finance &Global Management Division

Committee members: General managers, etc.
Organizers:

Finance & Accounting Dept. andCorporate Management Dept.

1111* An advisory body concerned with improving the probability ofachieving plans by enhancing pre-examination and post-assessmentof potential risks, important assumptions, priority measures,investment recovery calculations, etc., with respect to decisionmaking of investments.

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

With the aim of business transformation, we alsoemphasize the establishment and fostering of new
businesses, in addition to reviewing low-margin,
non-core businesses.
For this purpose, it is important to continue to
steadily proceed with the sale of those policyholding shares and real estate assets which we havedetermined as being underutilized or generating
insufficient returns, and to use the proceeds for
growth investments for new businesses.
There is also an operating issue in that theCommunications Solutions Business, which is one of
our core businesses, has not generated sufficientprofit for the past few years. There can be no step
forward unless our focused businesses generate
profit. We will therefore address the present issues
and then move to the next step of fully focusing on
new businesses.
Concerning growth through the creation ofbusinesses that solve social issues, as stated forachieving Vision 2030, some upfront investment will
be needed. We also need to be more aware of theinvestment needed for developing businessactivities that take into account climate change. I
think I will be required more than ever before to

Corporate Information/
Data

Strengthening Financial Management to Sustain Business Growthothers in the Company, change their mindset, andinspire them to take actions.
My persistence on cash creation derives from myexperience as CFO at OFS Fitel in the United States
when the country was still striving to emerge fromthe global financial crisis of 2008. I went to work
telling myself that “WE have to achieve results. WE
will make money, and then invest, repay debts, andproduce business growth. WE’ve got to do it.” I
continue to hold this persistence in mind even as
CFO of Furukawa Electric Group, and aim tocontinue to improve capital efficiency, increase cash
generation capability, and increase corporate value
for achieving Vision 2030.

Business Foundation

In the 2020 Mid-term Management Plan, we
strengthened the key businesses and revised thebusiness portfolio through changes related to thelow-margin and non-core businesses. During thisprocess, we used the “return on operating assets” as amanagement indicator for low-margin business. This
indicator is the ratio of operating income to operating
assets (inventories + tangible and intangible fixed
assets). Use of this approach has enabled us to
improve working capital by optimizing inventories.
One shortcoming of this “return on operating
assets,” especially from the viewpoint of the cash
conversion cycle, is that use of this indicator can leadto a focus only on operating income and businessassets and to not cover all items of the balance sheet,such as working capital or investments.
In addition, as we had uniformly set the target of
10% for return on operating assets for all
businesses, we could not make our people become
sufficiently aware of cost of capital and that made itdifficult to appropriately review the businessportfolio in retrospect.
Currently, we are developing the next mediumterm management plan, for which we are

Business Strategy

As CFO of Furukawa Electric Group

About Furukawa
Electric Group

CFO Message

Aiming to Strengthen Management with a Focus on Capital Efficiency

The Furukawa Electric Group CSR Code of Conduct (Revised April, 2019)1.

Furukawa Electric Group / PHILOSOPHY

Human rights

6.

Fair competition

1-1. Respect the human rights/ Prohibit discrimination
1-2. Prohibit harassment

The Founder’s Thoughts
2.

Apply the sum total of our expertise to satisfy our customers and grow with them.
Continuously strive to achieve world-class technological innovation, and transform
ourselves in every area of endeavor.
Nurture human resources at every level, so that we can become a more diverse andcreative organization.

Furukawa Electric Group, Vision 2030
In order to build a sustainable world and make people’s life
safe, peaceful and rewarding, Furukawa Electric Group will
create solutions for the new generation of global infrastructure
combining information, energy and mobility.

7-2. Prohibit excessive gifts and entertainment
7-3. Have fair relations with politics

2-2. Ensure safe, hygienic, and motivated working environments

7-4. Cut off all relations with antisocial forces

2-3. Creation of rewarding workplaces7-5. Request legal compliance to partners
7-6. Contribute to society

3.

Environment

8.

8-1. Prohibit the improper use of Company assets
8-2. Protect intellectual property
8-3. Manage confidential information
8-4. Protect personal data
8-5. Use information system appropriately

3-1. Comply with environmental laws and regulations
3-2. Ensure environmental preservation
3-3. Contribution to society coexisting with nature

Products and services
4-1. Ensure products safety and reliability
4-2. Provide high-quality products and services
4-3. Understanding and observance of rules concerning quality

5.

International businesses and transactions

5-1. Comply with laws and respect international norms of behavior
5-2. Observe laws and regulations governing imports and exports

Management and preservation of Company assets

9.

Disclosure of information
9-1. Disclose information in a timely manner
9-2. Achieve reliable financial reporting
9-3. Securing of the appropriateness of tax declarations
9-4. Prohibit insider trading

10. Duties and obligations of senior management and employees
10-1. Act in accordance with legal and ethical compliance10-2. Fulfill the responsibilities of senior management
10-3. Prohibit conflicting actions with the interests of the company
10-4. Report illegal and improper conducts
10-5. Cooperate with company investigations and prevent
recurrence
10-6. Crisis management and business continuity plans

Corporate Information/
Data

With an eye to the future, the Furukawa Electric Group management team pledges to:Live up to the expectations and trust invested in us by society, with fairness and integrity.

Relations with customers, partners, and society

Business Foundation

Drawing on more than a century of expertise in the development and fabrication ofadvanced materials, we will contribute to the realization of a sustainable society throughcontinuous technological innovation.

7.

2-1. Ensure appropriate working conditions and working hours

4.

Furukawa Electric Group Philosophy

Labor practices

7-1. Prohibit bribes

Since its foundation in 1884, Furukawa Electric has inherited these words in its DNA and has grown.
We are determined to receive and pass on these three valuable things and contribute to the realization of asustainable society as members of society who forge the future.

Core Value

6-2. Prohibit abuse of superior positions

Business Strategy

value employees,
value customers,
value new technology, andcontribute to society.”

Management
Philosophy

6-1. Prohibit impediment to free competition

1-4. Respect the basic rights of employees
1-5. Promotion of diversity and inclusion (securing and acceptanceof diversity)

Mr. Ichibei Furukawa, the founder of Furukawa Group, said, based on his wish to “brighten Japan,” that “we must

Corporate
Philosophy

1-3. Prohibit child labor and forced labor

About Furukawa
Electric Group

Furukawa Electric Group's Values

Furukawa Electric Group's Values

The Founder’s Thoughts are the wishes of the founder Mr. Ichibei Furukawa to contribute to society as
members of society who forge the future, based on the “three valuable things” that have been inherited inits DNA from the birth of the Group in 1884.
Furukawa Electric Group Philosophy is a clear statement of what wehave aimed to become from the time the firm was created to the present
and will continue to be the basic to the Group in the future, throughCorporate Philosophy and Management Philosophy.

Core Value

Vision 2030

CSR Code of Conduct

11

11

Furukawa Electric Group Vision 2030 is a visionary outlook of theGroup, with the time frame set to 2030, based on our conception ofbroad aspects of the future society and the Group’s Corporate
Philosophy.
In conducting corporate activities based on the Furukawa ElectricGroup Philosophy and Core Value, the Furukawa Electric GroupCSR Code of Conduct defines fundamental rules of behavior that
Furukawa Electric Group executives and employees should follow
from the perspective of corporate social responsibility.

Group Philosophy
INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

For the achievement of the sustainable growth of the Group based on theGroup Philosophy, the Core Value shows the five values that we wish toparticularly emphasize and enhance even more.

The Founder’s Thoughts

Sustainable Development Goals (SDGs)

Business Strategy

Changes in the external environments
concerning sustainability
and the social issues surrounding
Furukawa Electric Group

About Furukawa
Electric Group

Analysis of the External Environments in FY2020
heightened political tensions with various countries
including the United States and Europe.
In Japan, a state of emergency was declared due tothe spread of COVID-19, and the economic activities
were greatly affected. In the second half of the year,
the spread of infections tapered, but spiked in
January 2021, increasing uncertainty about theeconomic outlook.
Meanwhile, prompted by the COVID-19 pandemic,
digitalization accelerated across society, interest in
ESG and SDGs increased, and the global supply
chains were reviewed. These were among thechanges newly important for looking beyond thepost-COVID-19 world.

Changes to the environment following COVID-19

Era of VUCA (Volatility, Uncertainty, Complexity,
Ambiguity)
Advancements in low carbon/carbon free and renewableenergySpread of smart cities and 5G
Advancements in CASE and changes in the mobility
marketAppearance of new markets utilizing DX
Increased awareness of disaster prevention and mitigation
Market growth in Asia and other regions, and increased
trade friction between the US and China
Shrinking existing markets and difficulty securingpersonnel in Japan
Importance of risk management throughout the supply
chain

Increase in VUCA, and accelerating management speed
Further awareness of ESG/SDGs, and accelerated
selection within the markets
Japanese government’s declaration to reduce greenhousegas emissions to net zero by 2050
Increased communications traffic, and accelerated
preparation of telecommunications infrastructure and 5G/
B5G*
Acceleration of CASE (EV), and accelerated changes in themobility business
Further awareness of various disasters and risks
Realization of the risk of supply chain disruptions
Changes in the concept of mobility, and changed
awareness towards work styles and workplaces* B5G: Beyond 5G

The social issues surrounding Furukawa Electric Group andRealize a resource
recycling-based society

Advances in 5G/B5G, increased
communications traffic

Realize tougher
infrastructure

Preventive
medicine
Success ofelderly

Prevention of
global warming
Creation ofa diasaster-reRegional activation based
sistant society
on information networks

Electrification

Self-driving
cars

Energy saving,
Smart use of Electricity gridenergyUtilization ofdata and AI

Renewableenergy use

Furukawa Electric Group's employees, mainly in thegeneration that will lead management in around 2030
in Japan and overseas, carried out numerous
discussions, exhaustively projected the future, and put
together Furukawa Electric Group Vision 2030.

Becoming a corporate group that can provide
value

We are committed to becoming a corporate group thatcan provide value in society, which is being integrated
by advanced information associated with progress in ICT
technology. We intend to achieve this goal by expressing
our specific target timeframe and areas aimed at by theGroup, sharing the vision throughout the entire Group,and bringing together our strengths.

Becoming a corporate group that proactively
innovates itself
We are committed to becoming a corporate groupthat proactively innovates itself. We intend toachieve this goal by imagining how the world changes
and how our group can help solve social issues, while
inheriting our founders’ thoughts and valuing oureverlasting values stated in our group philosophy andCore Value.

Promotion of ESG management, directed at achieving Furukawa Electric Group Vision 2030
Directed at achieving Furukawa Electric Group Vision 2030, Furukawa Electric is openly, agilely andinnovatively promoting management aimed at medium to long-term improvement in corporate value basedon ESG (environment, social and governance).

SDGs highly relevant to the social issues to be solved in 2030

Acceleration ofvehicle CASE (EV)Realize tougher traffic
infrastructure

Town planning for
mitigating disasters

Regional revitalization &stimulate the rural economy

11

11

Realize a carbon-freesociety

The future society image of Vision 2030

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Current social issues (Awareness from pre-COVID-19)

The future image of society in 2030 drawn by Furukawa Electric and what we want to be

Corporate Information/
Data

In fiscal 2020, the global economy was significantly
affected by the COVID-19 pandemic and theeconomic environment deteriorated rapidly. In the
United States, the government's major measuresagainst the COVID-19 pandemic supported its
economy but the pace of economic recovery wasmoderate. In Europe, the stay-at-home measures
implemented in the UK and other countries
significantly restricted individual consumption andcorporate production activities, and economic
activities have been substantially reduced. In China,
the economy significantly contracted temporarily but
has then been recovering, despite the uncertain
economic environment, partly driven by theBusiness Foundation

Changes in the external environments concerning sustainability and the social issues surrounding Furukawa Electric GroupThe Future that Furukawa Electric is Envisioning
and Furukawa Electric Group Vision 2030

In order to achieve the “Furukawa Electric Group
Vision 2030,” we are promoting ESG management,
which aims sustainable growth of the Group andmedium- to long-term growth of corporate value.
We have defined “materiality” as importantmanagement issues that the Group should address inorder to achieve Vision 2030, and we definedmateriality in terms of both revenue opportunities
and risks, in accordance with the process ofidentifying important management issues. By
working on the materiality, we will achieve Vision
2030 and contribute to the achievement of the SDGs.
From the perspective of revenue opportunities, inorder to help solve various social issues through thebusiness activities of the Group, we found it
indispensable to devise a transformation from theconventional “Product-Out” approach to “OutsideIn” approach and identified the “creation ofbusinesses that solve social issues” as materiality.
Examples of these include the “creation ofbusinesses that support the next generation
infrastructure,” which will serve as the foundationof the society anticipated in Vision 2030, and thegrowth. In response to the recent rapid changes inthe business environment surrounding our Group,
we have established Furukawa Electric Group Basic
Policy on Sustainability, as a basic idea for our Groupto achieve sustainable growth.

Furukawa Electric Group Basic Policy on Sustainability (Established in August 2021)
Furukawa Electric Group will:in line with its mission of contributing to the realization of a truly affluent and sustainable society, tackle
important management issues (materiality) from the perspectives of both revenue opportunities and risks,
while focusing on the future of people and the planet.
in order to have sustainable growth and contribute to the achievement of SDGs (sustainable development
goals), strengthen and create businesses that solve social issues, while focusing on capital efficiency andcontinuing to transform its business through continuous technological innovation centered on material
technologies and collaboration with various stakeholders.
contribute to the sustainable development of society by maintaining and improving sound and positive
relationships with all stakeholders through appropriate information disclosure and active communication,
while complying with laws, regulations, social norms and ethics in Japan and overseas.

Sustainability Promotion Framework
top management. It meets to discuss sustainability
issues that concern Furukawa Electric Group andmakes proposals and reports to the Board of Directors.
The Corporate Sustainability Office serves as thesecretariat, and the committee will generally meet
twice a year.

Relationship between the materiality of both revenue opportunities
and risks, and the medium- to long-term corporate value

the Sustainability Policy
basic matters and current progress on materiality
related to revenue opportunities and risks
disclosure of basic information related to sustainability
SDG activities and community/social activities
other important sustainability issues

Board of Directors
Make proposals and reports

Sustainability Committee

Risk Management Committee
Committee chair: President

Vice chair: General Manager, Business
Basis Transformation Division
Committee members: Top management
Organizer: General Manager, Corporate
Sustainability OfficeVice chair: General Manager, Risk
Management Division
coordination

Committee members: Top management
Organizer: General Manager, Risk
Management Department(As of September 2021)

Create businesses that solve social issues

2- Creating businesses that support
next-generation infrastructure- Creating environment-friendly
businesses

2Open, Agile, Innovative

3

Build partnerships with various
stakeholders

E

Developing business activities
that consider climate change

S

Strengthening human capitalmanagement and organizational
execution abilities

G

Building a governance system
to strengthen risk management

Strengthen
management
focus oncapital efficiency
Improve capitalefficiency

Improve its medium
to long-term corporate value

Achieve Vision 2030
Reduce cost of capitalStrengthen
the foundationof ESG
management- Corporate governance- Group governance- Supply chain management* With regard to SDGs highly relevant to the materiality of revenue opportunities and risks, see “Participation in initiatives” on page 82 of this report.

22

20

Committee chair: President

Risks

Make proposals and reports

1

INTEGRATED REPORT 2021

Additionally, as risk materiality matters are closely
related to risk items concerning management of theGroup, they are therefore handled in coordination with
the Risk Management Committee.

Revenue opportunities

FURUKAWA ELECTRIC GROUP

Recently, the interest in corporate sustainability
increases as a material issue to achieve sustainablegrowth and increase corporate value over the mediumto-long term. Therefore, companies must be able torespond positively to sustainability-related issues, andthey are also increasingly required to disclose
information on sustainability issues andcountermeasures.
From this kind of circumstance, the “Furukawa
Electric Group Sustainability Committee” (hereinafter,“Sustainability Committee”) was established toconsolidate discussions on sustainability within
Furukawa Electric Group and further enhance thequality and speed of implementation thereof.
The committee is chaired by the President, vicechaired by the General Manager of the Business Basis
Transformation Division, and composed of members of“creation of environmentally friendly businesses,”
which contribute to the realization of adecarbonized society and a recycling-basedsociety. We also accelerate the “creation of social
issue-solving businesses” through the slogan“Open, Agile, Innovative,” which reflects the desire
to become a company that actively transforms
itself, and the “Building partnerships with various
stakeholders,” focusing on co-creation with others.
We will also work on improving capital efficiency,
including cost of capital.
On the other hand, from a risk perspective, in orderto achieve sustainable growth, it is essential thatcompanies develop business activities that take into
account climate change, and we see this as
materiality. In addition, in order to become acompany that actively transforms itself, we will
strengthen the foundation of ESG management andreduce the cost of capital by focusing on themateriality of “strengthening human capitalmanagement and organizational execution abilities”
and “building a governance system for strengthening
risk management” including corporate governance.

Corporate Information/
Data

The mission of Furukawa Electric Group is to“contribute to the realization of a sustainable
society,” as outlined in its Corporate Philosophy andwe aim to ensure that the environment, society, andeconomy continue to sustain over the medium- tolong-term, and that our Group will make sustainable

Business Foundation

Furukawa Electric Group’s ESG Management and Materiality

Business Strategy

The Group’s Basic Concept of Sustainability

About Furukawa
Electric Group

Furukawa Electric Group’s Sustainability

Furukawa Electric Group’s Sustainability

Step 2

Step 3

Understanding and organizing
social issues

Materiality map evaluation

Identification of materiality

In identifying materiality, we identified social

The two axes of “importance to shareholders

High-priority items are categorized byissues by referring to “external factors” andand investors” and “importance to achieving

revenue opportunity and risk aspects and“internal factors,” adjusted duplicate items,

Vision 2030” are evaluated for importanceidentified as materiality items.

and created a list of 29 items.

(high, medium, low) and prioritized.

The identified materiality items are
categorized and rearranged as important

External factors

Importance to shareholders and investors• 17 SDG goals and 169 targets• FTSE, MSCI and DJSI ESG evaluation
items, etc.

• Interviews with institutional investors• Impact on ESG rating assessment

issues for achieving Vision 2030, andexpressed as the materiality of threerevenue opportunities and the materialityof the E, S, and G risks.

Importance to achieving Vision 2030

Internal factors• Important measures of Furukawa G Plan
2020
• Values of Furukawa Electric Group• Important Companywide risks, etc.

• Management and executive officers
gather together regularly to discussmaterialization of Vision 2030
• Discussions of CSR and Risk
Management Committee reflected

Importance toshareholders andinvestors

Materiality of risks

Revenue opportunities
Risks

Climate change

E. Developing businessactivities that consider
climate change

Human resource
develop and employee
satisfaction
Diversity

S. Strengthening humancapital management andorganizational execution
abilities

Corporate governance
Subsidiary governanceSupply Chain(environment/social)

G. Building a governancesystem to strengthenrisk management

Materiality of revenue
opportunities
Building sustainable
cities and communities

Important issues for fulfilling “corporate social
responsibility” and strengthening the trust of stakeholders
Human rights and labor practices
Biodiversity

Occupational health and safety(Land area / marine & river)

QualityCompliance

Medium area

Anti-corruption

Sustainable economic
growth

1. Create businesses thatsolve social issues

Clean energy
Innovation
Utilization of
intangible assets

2. Open, Agile, Innovative

Partnerships

3. Build partnerships withvarious stakeholders

Sustainable resource management
Pollution prevention and chemical
substance management

Poverty
Low area

FURUKAWA ELECTRIC GROUP

Sustainable tourism

Health & welfare

Not directly important issues forachievement of Vision 2030

Deterrence of crimeand violence

Low area*No particular order in the area

Medium area

High area

Importance toachieving Vision
2030* With regard to materiality, we distinguish between important issues for achieving Vision 2030 and important issues for fulfilling corporate social responsibility andstrengthening the trust of stakeholders.

Focus

Energy Infrastructure

Focus

Automotive Products

Focus

Electronics Component
Materials

SupportFunctional Products

Support

Climate change

Growth through the creationof businesses that solve thesocial issues

Open, Aglie, Innovative
Build partnerships
with various stakeholders

Businesses that support nextgeneration infrastructure

New business models,
reinforce the strengths

Environment-friendly businesses

Strengthen and transformbusinesses with an awarenessof capital efficiency

Growth through thestrengthening of businesses
that solve the social issues
Stabilize earnings in information,energy and mobility andcontribute to an integrated society

Strengthen the foundation of ESG management
Strengthen human capital management andorganizational execution abilities

Build a governance system

23

22

Appropriate education

Communications Solutions

Strengthen management focus on
capital efficiency

INTEGRATED REPORT 2021

4 core technologies
Development and proposal
capabilities not limited toparticular markets
Trust from customers

Safe water and sanitaryenvironment

Food problems andfood security

Furukawa Electric Group Corporate Philosophy

Furukawa ElectricGroup’s business modeland strengths

Information security

Corporate Information/
Data

High area

Risk management

issues, we will enhance our strengths and build a new
business model through open innovation and cocreation with our partners. Examples of what we foresee
to be done include the “creation of businesses that
support the next generation infrastructure,” which would
serve as the foundation of the integrated society of
Vision 2030, and the “creation of environmentally friendly
businesses,” which contributes to the realization of adecarbonized society and a recycling-based society.
To mention an example of a business that supports
next-generation infrastructure, we have developed anext-generation bipolar storage battery that cancontribute to the stable supply of electricity generated byrenewable energy by integrating our metal and polymer
technologies with the battery technology of Furukawa
Battery Co. We expect to start shipping them soon.
Through joint development with our partners, we aim tocreate businesses that support the next-generation
infrastructure that combines favorable effects regarding
energy and mobility, contributing to the realization of adecarbonized society and a recycling-oriented society.
As an example of an environmentally friendly businessthere is the Blue-IR hybrid laser BRACE®, that wedeveloped. This combines the fiber laser manufactured
by Furukawa with a high-brightness blue laser oscillator,
which integrates Nichia's world-leading GaN laser diodewith Furukawa’s laser module assembly technology.
Going forward, in collaboration with Nichia Corporation,
we will provide new copper processing solutions using
this hybrid laser for key parts of electric mobility,
contributing to demand growth for that throughaccelerated decarbonization.

Business Foundation

Important management
issues for achievement of
Vision 2030

Furukawa Electric Group has developed capabilities
for development and making proposals, without
being limited to specific markets and with its four
core technologies—metals, polymers, photonics,
and high frequency—centered on capabilities tohandle materials. Through these capabilities, wehave gained the trust of customers.
Our Group at present is engaged in a wide range of
products and services of focused businesses ofcommunications solutions, energy infrastructure,
and automotive parts, as well as of electronics
component materials and functional products that
support these focused businesses. In many businessareas of the electronics market, including IT, energy,
automobiles, and semiconductors that support
them, we contribute to solving social problems.
Going forward, for achieving sustainable growth of
the Group and medium- to long-term growth ofcorporate value, we will strengthen and create social
issue-solving businesses.
First, in order to strengthen social issue-solving
businesses, we will strengthen and transform businesses
with an awareness of capital efficiency, including cost ofcapital, and do what is necessary to stabilize earnings in
information, energy, and mobility sectors. As a result, we
will contribute to a changed information-, energy,- andmobility-based society through high-speed, high-capacity
information transmission infrastructure businesses,
renewable energy-related businesses, and automotiverelated businesses that support the progress of Connected,
Autonomous, Shared, and Electric (CASE) mobility.
Next, in order to create businesses that solve social

Business Strategy

Step 1

About Furukawa
Electric Group

Furukawa Electric Group’s Sustainability / Value Creation Process

Value Creation Process

Process of Identifying Materiality

R&D Investment

The Furukawa Electric Group will mobilize its abilities and contribute to society with its material technology
based around the theme of “using technology acquired through our material capabilities to help realize a
comfortable, pleasant society for people.”In fiscal 2020, R&D expenses decreased by 6.6% fromthe previous year to 20,217 million yen for developing
new products and new businesses in each segment,with the aim of enhancing focused areas and creating
new businesses.

Four Core Technologies

For details on R&D activities by segment, please see “R&D
activities” on pages 24-26 of the 199th Securities Report.

R&D Organization

Polymers

Highfrequency

In order to build a sustainable world and makepeople’s lives safe, peaceful and rewarding,
Furukawa Electric Group is engaged in R&D
activities aimed at the creation of social
infrastructure that combines the areas of
information, energy and mobility. We established

Photonics

Yokohama

Hiratsuka

Hiratsuka

Chiba

Nikko

ImaichiAs the core of Furukawa Electric Group, we will
strengthen digital technologies and promote DX (digitaltransformation). Then, we aim for the achievement of
the SDGs and the resolution of social issues.
Concerning the Digital Innovation Center’s efforts for
DX, see “Digital Transformation (DX)” on page 32 of
this report.

(USA: superconductivity)(Hungary: analysis)

Electronics &Automotive Systems

21.5%

Fun Lab® as a base for open innovation in Yokohama
Works in 2016. Then, for the achievement of Vision
2030, we opened the Digital Innovation Center in
2020, and the Sustainable Technology Laboratory
and the Incubator Department in 2021.

MONOZUKURI strengthening and innovation:
Improvement of the productivity of Production Department and thepassing on of technology based on digital technology
New business creation in integrated areas:
The creation of KOTOZUKURI business using AI
The development of AI / IoT human resources:
The standardization of digital environments, and the securing,development and education of human resources

https://www.furukawa.co.jp/en/rd/profile/digital.html

Sustainable Technology Laboratory (April 2021)(Head Office, Yokohama)

Sustainable Technology Laboratory(USA: optical fibers)

20.2

billion yen

For details, please see the “Digital Innovation Center” on Furukawa Electric’s website.

Shiga

FETI

10.1%

FY2020Digital Innovation Center (April 2020)

Locations in Japan

Planning Dept.

SuperPower Inc.

Functional Products

R&D Activities Aimed at Achieving Vision 2030

Four CoreTechnologies

Locations in Overseas

OFS Laboratories

16.9%

Infrastructure

51.4%(Yokohama, Nikko and Hiratsuka)
Automotive Products & Electronics Laboratories(Hiratsuka, Nikko, Shiga and Imaichi)
Telecommunications & Energy Laboratories

The laboratory integrates the search for themes
directed at resolving environmental and social issues
and the further advancement of the coretechnologies, as well as creates and fosters theseeds of new businesses aimed at realizing
sustainable social infrastructure.

Advanced technology

Polymer technology

Analysis and reliability technology

High frequency electronics
technology

Metals technology

For details, please see the “Sustainable Technology Laboratory” on Furukawa Electric’s website.
https://www.furukawa.co.jp/rd/profile/sustainable-technology.html (Only Available in Japanese)

Future Infrastructure Technology Center(Hiratsuka)
Superconducting Products Department(Nikko)Advanced Laser Development Project Team

Digital Innovation Center(Yokohama)

SVIL(USA: open innovation)

https://www.furukawa.co.jp/en/rd/profile/

Intellectual Property Dept.
(Yokohama, Chiba, Hiratsuka and Shiga)

The department oversees the commercialization projects (future infrastructure, superconductors, advanced
lasers) of the Research & Development Division, as well as creates new value and incubates new businesses
together with customers and business partners.
For details, please see the “Incubator Department” on Furukawa Electric’s website.
https://www.furukawa.co.jp/rd/profile/incubator/index.html (Only Available in Japanese)25

22(Chiba)Incubator Department (April 2021)

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FURUKAWA ELECTRIC GROUP(Chiba and Hiratsuka)
Incubator Dept.

For details, please see the “R&D Laboratories”
on Furukawa Electric’s website.

Corporate Information/
Data

With the aim of creating and developing new
businesses via new products and new technologies,
Furukawa Electric Group is actively engaged in R&D
activities through its R&D organization that is centeredon Furukawa Electric’s laboratories in Japan as well as
OFS Laboratories, LLC, Furukawa Electric Institute ofTechnology Ltd. (FETI), SuperPower Inc., Silicon Valley
Innovation Laboratories, Furukawa Electric (SVIL)
outside Japan.

Metalshttps://www.furukawa.co.jp/ir/library/sr/pdf/199_04.pdf(Only Available in Japanese)

Services andDevelopment, etc.

Business Foundation

Since its foundation in 1884, Furukawa Electric Group has
accumulated material technologies by expanding fromcopper smelting and electrical cables to a wider range ofareas. By adding high-frequency electronics technology tomaterials technology, we currently have four coretechnologies—metals, polymers, photonics, and highfrequency. Along with the development of products andservices in the three Segments of Infrastructure, Electronics& Automotive Systems and Functional Products, we arecommitted to contributing to a sustainable society throughnew businesses and new products.

Furukawa Electric Group’s
R&D investment by segment

Business Strategy

R&D Vision

About Furukawa
Electric Group

Research & Development

Research & Development

As part of our efforts to become carbon neutral inorder to realize a decarbonized society, which is oneof the social issues, we will explain the developmentof bipolar storage batteries, the development of theBlue-IR Hybrid Laser “BRACE®”, and thedevelopment of LP gas generation technology using
the Ramune CatalystTM.

Value Creation Process Aimed at Creation of Social-Issue Solving Businesses
Furukawa Electric Group Corporate Philosophy
Strengthen management focus on capital efficiency

Furukawa ElectricGroup business modeland strengths

Focus

Energy Infrastructure

Focus

Automotive Products

Focus

Growth through the Strengthening ofbusinesses that solve the social issues

Strengthen and transformbusinesses with an awarenessof capital efficiency

Stabilize earnings in information,energy and mobility andcontribute to an integrated society

SupportFactors in the social issues
that should be resolved

Semiconductor
laser diodes(LD)

Build a governance system

Furukawa
Battery

Lead storage battery andpower supply technology
UltraBatteryTM technology

4 core technologies
MetalsThin lead foil
Long-life

Plastic molding
technology
Photonics
Adhesiontechnology

Technology forjoining dissimilarmaterials
Ability to develop
the optimum
materials for therequiredcharacteristics

Social issues

Main products
and services
Bipolar storage
batteries

Open, Agile,
Innovative
Partnerships

Co-creation
partners

Storage battery market is expected
to be nearly ¥1.5 trillion in 2030
FY2021 - Start shipping samples (plan)
F Y2022 - Start shipping actual products(plan)Creation of social-issue
solving businesses

Stable supply of
renewable energy

Realize a carbonfree society(safe, not temperaturecontrolled, high capacity
storage batteries)

Realize a resource
recycling-basedsociety

Expanded use of leadstorage batteries, whichhave an establishedrecycling system

NichiaCorporation

Fiber laser welding
technology

Highestperformance GaN
laser diodes
in the world

NITTOKU

MetalsOptimummaterial welding
parameters

Aim toachieve salesof at least¥10 billion in
2025
Winding
welding

Winding machine
FA*2 solutions
Copper, aluminum,
galvanized steel,dissimilar metal
welding

Welding aluminum materials for automotive applications
Aluminum wire harness & α terminal welding

Realize acarbon-freesociety
Increasedstorage capacityof lithium-ion
batteries

Smaller motors
for xEVLighter weight,
improved fuel efficiency
of vehicle

1. B lue-IR Hybrid Laser: A hybrid laser combining a high-power blue oscillator featuring the world's highest-performance GaN laser diode (LD) from Nichia
Corporation with a high-brightness blue laser diode module that combines Furukawa Electric’s laser module assembly technology with a near-infrared(IR) single-mode fiber laser
2. FA: Factory automation

Please see details on our website page “Industrial Lasers”.
https://www.furukawa.co.jp/fiber-laser/en/

TopicsPublication of Furukawa Electric Review No. 140"Special Feature: Laser Processing of Copper” (July 2021)

Furukawa Electric has published Issue No. 140 (Special Feature: Laser Processing of
Copper) of the Furukawa Electric Review, a technical and research journal that introduces
the results of the Group's research and development, as well as its technologies and new
products. As one of the materiality of revenue opportunities to achieve Vision 2030, theGroup has set forth “Building partnerships with various stakeholders.” In this issue, we
received two contributions from outside the Group, the first such case for the Furukawa
Electric Review. Each of them is a strong partner who has mastered the art of “laser
processing of copper” and shares in the success of the business.
For more information on each of the papers in the “Laser Processing of Copper” section,
including these contributions, please visit our website page “Furukawa Review”.
https://www.furukawa.co.jp/en/rd/review/

27

26

Polymers

Development
and proposal
capabilities not
limited to specificmarkets

batteries for power storage. This product cancontribute to the stable supply of power generated
by renewable energy.
Through the launch of this product andcollaboration with our partners, we aim to createbusinesses that support next-generation
infrastructure that integrates energy and mobility,
and we will contribute to the realization of adecarbonized society and a sound material-cycle
society with the Group’s technological capabilities.

Customer trust

Copper foil
welding

Creation of social-issue
solving businesses

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Compact, lightweight, normal
temperature, safety

Open, Agile,
Innovative
Partnerships

Opticalcomponents

Development of bipolar storage batteries that contribute to utilizationof renewable energy
By combining our metal and polymer technologies
with the battery technology of The Furukawa BatteryCo., we have jointly developed a next-generation
bipolar storage battery, which has long been
considered difficult to commercialize.
Bipolar storage batteries have a simple structurethat enables high battery capacity, and they also do
not require temperature control when operating,making them highly economical and reducing thetotal cost to less than half that of lithium-ion storage

Development
and proposal
capabilities not
limited to specificmarkets

Blue-IR Hybrid
laser BRACE®

Corporate Information/
Data

Strengthen human capital management andorganizational execution abilities

Photonics
Optical fiberStrengthen the foundation of ESG management
Climate change

4 core technologies

SocialissuesMain products
and services

Growth of the xEV market

Electronics Component Materials Support

Environment-friendly businesses

Customer trust

Copper processing, high output
lasers, high quality welds

Solve customers’ issues by providing solutions

Communications Solutions

components for electric mobility, as well as laborsaving in the manufacturing process. In the past, purecopper, with its extremely high optical reflectance,
was considered a difficult material to process, but thisproduct achieves a high level of quality, depth, andprocessing speed in copper processing. By providing
new copper processing solutions with this product, we
will be able to solve the problems of our customers
and contribute to the expansion of demand for electric
mobility due to the acceleration of decarbonization.

Factors in the social issues
that should be resolved

Businesses that support nextgeneration infrastructure

New business models,
reinforce the strengths

As the global trend toward decarbonization isaccelerating, demand for the electrification of mobility
is expected to grow further. Furukawa Electric hasdeveloped the Blue-IR Hybrid laser1 BRACE®
equipped with a high-brightness blue laser diodemodule with Nichia Corporation. This product cancontribute to the improvement of productivity (quality
and processing speed) in the process of welding
copper, which is a conductor in lithium-ion batteries,
motors, inverters, and other components that are key

Business Foundation

Build partnerships
with various stakeholders

4 core technologies
Development and proposal
capabilities not limited toparticular markets
Trust from customers

Functional Products

Growth through the creation ofbusinesses that solve the social issues

Open, Aglie, Innovative

Development of Blue-IR hybrid laser “BRACE®” that contributes to theelectrification of mobility

Business Strategy

Furukawa Electric Group aims to achieve sustainablegrowth and contribute to the achievement of theSDGs by utilizing its core technologies in metals,
polymers, photonics, and high frequency, which havebeen cultivated over many years with material
capabilities at the core, and by creating social-issue
solving businesses through open innovation andcollaboration with partners.

About Furukawa
Electric Group

Creating businesses that solve social issues

Creating businesses that solve social issues

stored and transported, the LP gas can be used asenergy in homes, dairy farms, and other industrialsites, as well as energy for disaster relief. In addition
to contributing to the realization of a decarbonizedsociety, this technology will enable the local
production and local consumption of energy andcontribute to the formation of a regional recycling
symbiosis zone as part of a new social infrastructure
for local communities. Rather than acting
independently, it is essential for us to build a new
ecosystem with many partners. In the future, we aim
to conduct research and development and thencommercialization through collaboration with a wide
range of stakeholders, including Hokkaido University
and local municipalities.

Open, Agile, Innovative Partnerships
Fun Lab®, a space to create new open innovation
The Fun Lab, which Furukawa Electric establishedwithin the Yokohama Laboratory in 2016, is a place
to promote open innovation and to create new value
via COMPREHENSION, COOPERATION and
COLLABORATION with visitors. Through creative,
stimulative communication with visitors fromindustries, government agencies, schools, etc., wewant to create innovation and help realize asustainable society. Since the renewal in June 2019,
the Fun Lab has been continuing efforts to promote
open innovation.
Fun Lab visitor groups in the first five years by typeRealize acarbon-freesociety

Development and proposal capabilities
not limited to specific markets

Creation of social-issue solving businesses

MetalsSeveral nm

Porousmaterial

BiofuelLocal
community

Greenhouse gases (CO + methane)

Localcommunity2

Cleanenergy(LP gas)Normal householdenergyTown planningfor mitigating
disasters

Polymers
Livestock manure

Material
processing
technology

Localcommunity

EnergyEmergency
energyLocal
community

Regional
revitalization &stimulation ofregional
economies

Livestock manure

Dairy & livestock industries

Hokkaido
University

Co-creation
partners

Joint research anddevelopment ofmetal catalyst
fixation technology

Formation of aregional recycling
symbiosis zone

(Localmunicipalities, etc.)

Open, Agile, Innovative Partnerships*R amune catalyst™: Furukawa Electric has succeeded in fixing a metal catalyst inside a porous material. This catalyst has flocculation and coking
resistance, which has been an issue with conventional catalysts, and is highly active and long-lived in dry reforming reactions where synthesis gas is
obtained from biogas. We named the catalyst Ramune Catalyst™ because the way the catalyst is fixed inside the porous material resembles a bottle oframune (a Japanese carbonated soft drink).

Bipolar storage
batteries

Product
shipments
startedBlue-IR hybrid laser
BRACER®

BRACE™-1
commercialized

Higher power
outputTechnology for
producing LPG with
Ramune Catalyst™

FY2023

FY2024FY2025Furtheradvancement

Sales target:
At least ¥10bn

Demonstration
by small test
machineFielddemonstration
tests

57

···

Started a Fun Lab® virtual tour using VR technology (April 2021)

Encouraging the creation of open innovation opportunities through online experiences

Fun Lab® has welcomed many visitors from industries, government, academia, and group companies topromote discussions on co-creation of new products and businesses. However, due to the spread of
COVID-19, it has become difficult to welcome a large number of visitors. In order to create opportunities foropen innovation and co-creation in the Fun Lab® even in such an environment, we have opened a dedicatedvirtual tour website using virtual reality (VR) content production
software developed by Spacely, Inc. Spacely's VR content creation
software does not require extensive filming or programming, andusers can update the virtual tour content as new exhibits are built or
replaced. In addition, it does not require any special equipment andcan be viewed not only on PCs and tablets but also on smartphones,
so it can be used at any time and place.
For further details please see our website “Fun Lab® Virtual Tour dedicated website. You can experience Fun Lab® in VR.
https://www.furukawa.co.jp/funlab/virtual/ (Only available in Japanese)

FY2030Practical use

Furukawa Electric was registered as a “Kanagawa SDGs Partner” in May 2021.
The “Kanagawa SDGs Partners” program is a program in which the prefecture solicits,
registers, and disseminates examples of initiatives by companies, organizations, and otherentities that are developing projects that contribute to the promotion of the SDGs in
Kanagawa Prefecture, and in which the prefecture and companies, organizations, andother entities work together to promote the SDGs.
As a member partner of this program, we have registered as one of the initiatives thepromotion of open innovation and partnerships based in Fun Lab® (in our Yokohama
Laboratory), which was established in Kanagawa Prefecture, one of the places where Furukawa
Electric was founded. We will continue to actively contribute to the achievement of the SDGs.

29

28

FY2022

Sampleshipments
started362

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

FY2021

Industries

Universities

Registered as a “Kanagawa SDGs Partner” for the 5th term (May 2021)

Commercialization and Practical Application Roadmap Aimed atCreation of Businesses that Solve Social Issues
Products and services

For details, please see our corporate website “FunLab, a new space for generating open innovation.”52(As of
September 2021)

TopicsHelp local communities
become independent

Catalyst
characteristics

Catalyst

Inside the renovated Fun Lab

650

Corporate Information/
Data

Metal catalyst
supporttechnology

Group companies

https://www.furukawa.co.jp/funlab/en/

Build a new business model for biofuel that enables local consumptionof local production, storage and transportation

Ramune catalyst™

26

Business Foundation

Expectations for biofuels, long-life
catalysts, manure disposal

4 core technologies

SocialissuesCustomer trust

81

72

Government
agencies

Factors in the social issues
that should be resolved

Other

Internal

Business Strategy

With the aim of realizing a decarbonized society, we
have succeeded in developing a technology toconvert biogas into LP gas by applying metal
catalyst fixation technology developed through joint
research with Hokkaido University. In thisdevelopment, we focused on the biogas obtained
from livestock manure in the livestock industry andused the Ramune Catalyst™* that we developed asa technology that can be recycled with highefficiency. As a result, the reaction, which previously
had low activity and lasted only a short time, hasbeen greatly improved.
In addition, by using this technology to create LP gas
from carbon dioxide (CO2) and methane (CH4)obtained from livestock manure, which can be easily

About Furukawa
Electric Group

Creating businesses that solve social issues / “Open, Agile, Innovative”, Partnerships

Technology for Producing LPG with Ramune Catalyst™

(2)Intellectual property portfolio

The Furukawa Electric Group's basic policy is toconsider intellectual property an importantmanagement resource and to make use of it. It
promotes group and global intellectual property

In order to strengthen its business competitivenessthrough intellectual property, the number of rights held by
Furukawa Electric has exceeded 5,000 in Japan in the past

activities by integrating business, R&D, andintellectual property.
The basic policy consists of the following threepillars:
Run a cycle that starts from utilization of intellectual
property (utilization, creation, and then protection)*, andformulate and implement Open and Closed strategies toenhance business strategies.

Utilizing intellectual property with
Open & Closed strategies
Strengthening management andbusiness strategy planning capabilities by
IP Landscaping

Strengthen management and business strategy planningcapabilities by IP Landscaping that analyzes and utilizes
intellectual property information by incorporating it into
strategy planning processes.

Stabilizing business by
reducing intellectual property risks

Identify four categories of risks, which are infringement
risk, technology outflow risk, contract risk, andcounterfeit risk, as frequent risks with a significant
impact, and continuously reduce such risks to stabilize
business.

*The basic concept of promoting intellectual property management: In order to enhance our business, we implement intellectual property strategies for our uniquedifferentiating technologies and run a cycle starting from the utilization of intellectual property.

(1) R isk minimization
Minimize business risks by protecting our unique
technologies that differentiate our products
from others with intellectual property rights andtechnical know-how.
Specifically, in the fields of information, energy,
and mobility, which we focus on, we ensure todevelop and use intellectual property portfolios
on the basis of detailed competitor analysis inorder to support stable revenue.

(2) Chance Maximization
Seek new business fields and business models
by IP Landscaping, which analyzes competitiveenvironment and market environment including
intellectual property information of our own andother companies.
Specifically, we support creating businesses
that solve social issues by focusing on businesses
that support next-generation infrastructures andenvironmentally friendly businesses.

Rights held by Furukawa Electric over the years and breakdown of rights by division in fiscal 2020
Number of domestic rights held by Furukawa Electric(Items)6,000

Utility patents

Design patents

Trademarks

Breakdown of rights by division

Utility models

5,000

FY2020
Number ofdomestic rights
held

4,000

5,107

3,000
2,000

Communications Solutions
Division
Energy Infrastructure Division
Automotive Products Division
Electronics Component Material
Division
Functional Products Division
Headquarters
Others1,000
02008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

Number of overseas rights held by Furukawa Electric(Items)4,000

Utility patents

Design patents

Trademarks

Breakdown of rights by division

Utility models

FY2020
Number ofoverseas rights
held

3,000

3,725

2,000

Communications Solutions
Division
Energy Infrastructure Division
Automotive Products Division
Electronics Component Material
Division
Functional Products Division
Headquarters
Others1,000

Corporate Information/
Data

Based on (1) to (3) above, we are working from the following two major perspectives to realize Furukawa
Electric Group Vision 2030 and achieve the SDGs.

seven to eight years, including fiscal 2021. With the
expansion of sales in global markets, the number ofoverseas rights in the US, Europe and China has increased.

Business Foundation(3)Intellectual Property Strategy of Furukawa Electric Group

Business Strategy(1)

About Furukawa
Electric GroupIntellectual Property

Intellectual Property02008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

Intellectual property data
Utilization
Gain competitive
advantage

Furukawa
Electric

Unit

FY2016FY2017FY2018FY2019FY2020

Number of domestic patents held

patents

4,619

4,644

4,605

4,523

4,388

Number of overseas patents held

patents

2,289

2,507

2,712

2,910

2,976

https://www.furukawa.co.jp/en/rd/ip-report/

Open & Closed strategy

Code of Conduct

Topics

We do not infringe
third party's IP rights.

Received the “Derwent Top 100 Global Innovators 2021 Award”

We do not use or disclose
confidential information
without a consent.

Protection(February 2020)

Visualize
knowledge

Invention,
Know-how,
Data

Creation/
Accumulation

We were chosen among the “Top 100 Global Innovators 2021” by Clarivate Analytics, a global
information service company. This is the sixth award and the fourth-consecutive award from2018 for Furukawa Electric.
For further details, please see our corporate website.

https://www.furukawa.co.jp/release/2021/kei_20210224.html (Only available in Japanese)

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30

IP rights,
Trade secrets,
IP Prosecution
Prior use rights,
Contracts Protect know-how

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

For details, please see the “Intellectual Property Report” on Furukawa Electric's website.

The Basic Concept of the Digital Transformation (DX) Strategy

Concerning initiatives to build stronger operating
foundations in the “Furukawa G Plan 2020,” wehave set the dissemination of the Group
Philosophy, corporate governance enhancement,
and workstyle reform and diversity & inclusion
promotion as themes. In line with these themes,
we recognize climate change as a critical

Furukawa Electric Group will plan and formulate a
DX strategy based on the following ideas, referringto the Ministry of Economy, Trade and Industry's“Guidelines for Promotion of Digital
Transformations (DX Promotion Guidelines)” Ver.
1.0 and other guidelines.

(1)

Position DX as a top-down management strategy in the medium-term plan, and create and share the vision and policy
across the entire company.

(2)

Provide an overall picture of the target areas, and for each area, organize and present targets for achieving a competitive
advantage by 2030.

(3)

Formulate a plan for human resource development and recruitment by clarifying the image and goals of the required
human resources.

(4)

In order to optimize the entire process using digital technology, develop data infrastructure that spans the entire process,as well as data infrastructure that spans manufacturing, sales, and logistics by product unit.

-2015

2020

2021

ValuesFormulated the Core Value (2015)
Formulated the FEG Vision 2030
Revised the FEG CSR Code of Conduct (March, 2011)*1

Partially revised the FEG CSR Code of Conduct

Formulated the FEG Basic Policy on Sustainability
Established the Corporate Sustainability Office

As a specialized department, we must continue to develop
and strengthen our sharp skills.
As an internal organization, the Center should be closely
and safely used by business units.

Basic policy
Separation ofsupervision andexecution

Established the Guideline on Corporate Governance (2015)
Established the Independence Standards for the Outside Officers (2015)
Introduced the executive officers system (2003)
The Chairman became the Director without the representative right of the Board of Directors*2
I ncreased the number of the Outside
Directors (2008-)

Increased the number of the Outside Directors to five as at present
Strengthened the independency of Outside Directors

Board of Directors,
Audit & Supervisory
Board

A female Outside Director was appointed.
A female outside Audit & Supervisory Board member was appointed.
Reduced the number of the In-house Directors by 1

Evaluation of theeffectiveness of theBoard of Directors
Nominating/Compensation
Committee
Group Governance,risk management
Supply Chain,human rights

Started the evaluation of the effectiveness of the Board of Directors from 2015, and the summary of the result was published every year.
 stablished the Nominating/Compensation
E
Committee(2015) s a process to evaluate the effectiveness of the Board of Directors,
A
the Chairman conducted the interviews every year.

An outside director became chairman of the Nominating/Compensation Committee
 evised the directors’Rcompensation scheme*3

Partially revised the directors’compensation scheme*4
 stablished the Risk Management Division and the Risk
E
Management Depertment

Established the CSR Depertment (2007) and the Administration & CSR Division (2013)
Established the CSR and Risk Management Committee (2007)

Corporate Information/Datainnovation based on digital technology. As a coreorganization for digital technology that cuts
across corporate divisions and marketing, we will
promote the development of digital software
infrastructure through activities that integrate
R&D, manufacturing, ICT, and marketing.
In 2030, we envision that digital technology will
differentiate our core technologies and become asource of competitiveness for our products. To
that end, we are conducting research anddevelopment with the following matters in mind:

Business Foundation

Signed the United Nations Global Compact
Revised the FEG CSR Basic Policy (March, 2011)

Corporate governance, group governance and supply chain management

Renamed the Risk Management Committee

Formulated the Furukawa Electric CSR Deployment Guidelines for Business Partners (2010)

Revised the FEG CSR Procurement Guideline 3rd edition

Formulated the FEG Human Rights Policy

Human capital management and organizational execution abilities
Formulated the FEG Vision for Our People

Strengthening human capital management and organizational execution abilities

Basic policy

The Digital Innovation Center and other internal personnel
in R&D, manufacturing, ICT, and marketing are being trained
and strengthened as DX personnel.

Diversity & inclusion
promotion
Occupational Healthand Safety

Started the global human resources training (2006-)
Started the activities to transform leaderships “Furukawa Seven”
 ppointed two non-Japanese corporate viceA
presidents (2013)

Increased the number of the nonJapanese corporate vice presidents to fourI ncreased the number of the female-Japanese
corporate vice president to two as at present

Set FY2025 targets to support the success of women in the workplace
Established the FEG Occupational Health and Safety Committee (2013)
Announced the FEG Health Management Declaration

Environment and climate change
Formulated the FEG Basic Environmental Policy (2008)
Established the FEG Environment Committee (2013)
Set the environmental targets 2030

Basic policy

Formulated the FEG Environmental Vision 2050

Started to answer to CDP climate change inquiries (2008-)
Climate change,
information
disclosure

Started to answer to CDP water security inquiries (2013-)
Acquired an SBT(Science Based Targets) initiative certification
 xpressed support for the recommendations of the Task Force on Climate- relatedE
Financial Disclosures (TCFD)*1. Combined the FEG Action Guidelines (fomulated in 2004) with the CSR Code of Conduct*2. Aimed for supervising execution by the management, including the President, from a non-executive position*3. Consisted of the basic remuneration, short-term performance-linked remuneration, and mid- to long-term performance-linked remuneration*4. Aimed at strengthening incentives

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32

Established the Environment Depertment

Joint realization spanning DX human resource development to new business development (June 2021)

https://www.furukawa.co.jp/release/2021/kei_20210622.html (Only available in Japanese)

Structured the non-Japanese corporate vice presidents to 3 people at present

Appointed a female-Japanese corporate vice president (2015)

Furukawa Electric and Aidemy Conclude Capital and Business Alliance

In June 2021, Furukawa Electric entered into a capital and business alliance with Aidemy, Inc., in order to jointly realize
activities ranging from DX human resource development to new business development. In the future, while promoting
DX human resource development within the company, we will aim for further business development of both companies,
including new business exploration, through joint development of AI/machine learning systems and co-creation with
Aidemy based on the concept of open innovation.

Established the HR & Organizational Development
Depertment

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Human resource
development,
organizational execution
abilities

In particular, with regard to the "AI Planner" part, which
identifies AI issues, business issues and domain knowledge
are important, and we are strengthening our internal DX
training.

Reorganized theOrganization & Work
Style Reform Team

Established the Work Style Reform Project Team(2015)

Established the Diversity Promotion Section (2014)

We are actively engaged in career hiring and new employee
hiring to strengthen our workforce of AI engineers andsoftware engineers with immediate capabilities.

TopicsFor further details, please see our corporate website.

2019

Established the FEG Sustainability Committee

DX Human Resource Development

Many companies are promoting the use of DX andAI, and as part of these efforts, the development ofDX human resources is attracting attention in a wide
range of fields, regardless of job classifications or
occupations, such as executives, managers, andtechnicians. As shown on the right, we are working
to strengthen our DX human resources.

2018

Formulated Furukawa Electric Group (FEG) Philosophy (2007)

Basic policy

Open, Agile, Innovative
As part of our commitment to quality andreliability, we have been working on statisticalanalysis technology for a long time, and in the2010s, we also introduced technologies such as
big data analysis and deep learning. With thesetechnologies as elemental technologies, we set up
the Digital Innovation Center in April 2020 in orderto establish digital technologies, represented by
AI/IoT, as fundamental technologies that support
the entire company.
The Digital Innovation Center will serve as thecore of our group, with the aim of strengthening
digital technology to achieve the SDGs and solve
social issues. We are working to create high added
value by leveraging AI and manufacturing

2017

ESG management in general

Major Initiatives in Response to Materiality
Digital Innovation Center established2016

managerial issue for the sustainable growth of theGroup and have been strengthening our responseto this issue. Continuously, we recognize these
themes as materialities that are importantmanagement issues for achievement of Vision
2030, and we have been strengthening thefoundation of ESG management.

Business Strategy

Strengthen the Foundationof ESG Management

About Furukawa
Electric Group

Digital Transformation (DX) / Strengthen the foundation of ESG management

Digital Transformation (DX)of Furukawa Electric GroupNet sales / Operating income / Operating income margin
Net sales (left)

191.3

168.5
150

Infrastructure

100

8.4%

FITEL Products

Telecommunications providers
OTT

10

5

0.2%

0

2016

2017

2018

2019

2020

2

0

(FY)

Broadband Solutions Business

Strengths and Challenges

Strengthsof theDivision

Challenges
andEfforts

Industrial lasers

FTTH system devices(including highdefinition images andlow-latency transmission
systems)

Network routers

Signal sources (including
digital coherent
communication)
Signal optical amplification

Cutting, welding, etc.

Telecommunication andbroadcast services
Design and constructionof transmission systems
and networks

High speed, highcapacity telecommunications service
VPN construction

System vendors
Transmission device
manufacturers

Industrial processing
manufacturers

Telecommunications
providers (CATV
providers)
Municipalities

Telecommunication
providers
General companies

Global production bases that extend into the growing
markets
Differentiation by utilizing high-performance products
and technologies (optical fiber, cable, digital coherent
related, network technologies, etc.)

Cost reduction through increased productivity
Development of next-generation products that meetcustomer needs and leverage the strengths of theGroup

Multi-channel Micro-ITLA

Increase in global communications traffic
Advancement of 5G and IoT

Key
Opportunities

Changes in the social environment, driven by the
COVID-19 pandemic

External
Environment

Trade friction between the United States and China

Major Risks

As laser light source products used for thebroadband development of optical communications,
we have developed a Micro Integrable Tunable Laser
Assembly (Micro-ITLA; wavelength variable lightsource) for the Super C and Super L bands and thecorresponding laser diode module for Raman
amplifier excitation that extends the specified
wavelength range.
In addition to contributing to the construction of
medium- and long-range optical communication
networks that support the widespread use of 5G, itis also expected to become the foundation
technology that will support the all-photonics
network, as included in the IOWN concept*.

Difficulty in procurement of raw materials(semiconductor shortage, price rise, and transportation
volume increase)

Laser diode module for Raman amplifier excitation
https://www.furukawa.co.jp/release/2021/comm_20210607.html* The Innovative Optical and Wireless Network (IWON) concept is ahypothetical network and information processing infrastructure
anticipated for future establishment. It would include terminals capableof providing high-speed, high-capacity communications and massive
computational resources that exceed the limitations of the infrastructure
to date, by utilizing innovative technologies centered on light.

* ITLA: Integrable Tunable Laser Assembly

Overview of FY2020
Future Prospects
5G society requires high-speed, high-capacity, low latency, and simultaneous connection of multiple devices.
We will develop and expand sales of products and services that meet these social needs.

35

33

While demand for fiber in North America was strong, the prices of optical fiber remained at low levels
worldwide and the optical cable business environment continued to be competitive. Due to the
COVID-19 pandemic, the reduction in construction starts and customer investment resulted in adecrease in product sales, while vacancies in staffing at some of the Group's manufacturing bases
deteriorated productivity, and the currency exchange rates affected our business in South America. As
a result, the Communications Solutions Division decreased sales and profits compared to FY2019.

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Main
customers

Telecommunications
Video broadcasts
Data centers

9.8

1.0%
1.6

External
Environment

Telecommunications
Video broadcasts
Data centers

7.3%

Contributing to the construction of medium- and longrange optical communication networks supportingwidespread use of 5G

Corporate Information/
Data

The Communications Solutions Division is made up of the Optical Fiber and Cable products Division,
FITEL products Division and Broadband Solutions Business Division, and it is involved in the
manufacture and sale of products for telecommunications infrastructure and the design, installationand service of telecommunications networks.

Mainapplications

15

Business Foundation

Business Overview / Introduction of Products

Variable wavelength
laser modules (ITLA*)
Light sources for signal
optical amplification

158.3

14.0

Development of laser lightsource products for broadband
optical communications

Business Strategy

Hideya Morihira

The Communications Solutions Division will further evolve the long-cultivated communication element
technology and create solutions with it. That is how the Division will contribute to make people’s life
safe, peaceful, and rewarding in a society that combines information, energy, and mobility.

Optical cables in general(including rollable
ribbon cables)
Optical connection
products

166.4

Corporate Executive Vice President
and General Manager ofCommunication Solutions Division(with Vision 2030 in mind)

Low loss fibers
Low bending loss fibers
for building/ residential
applications
Special fibers

179.9

50

Basic Policy for FY2021 (Zero year of FY2025 medium-term plan)

Main
products(Billions of yen)
20

5.5%

Communications
Solutions

Optical Fiber and Cable Products

1.2

Main Topic

Operating income margin

About Furukawa
Electric Group

Business Overview(Billions of yen)
200

Operating income (right)

Net sales / Operating income / Operating income margin
Net sales (left)

Operating income (right)

Infrastructure(Billions of yen)
15

114.5

108.1

102.1

95.3

100.9

10

50

1

0

1.6

2.4

0.2%

Takamitsu Kozuka

2016

1.9

0

0.1%
1.6%

-50

1

2017

2.2%
2018
2019

1.9%
2020

-5

(FY)

Corporate Executive Vice President andGeneral Manager of Energy Infrastructure Division(with Vision 2030 in mind)

As one of the core businesses of Furukawa Electric Group, the Infrastructure / Energy Infrastructure
Division will strengthen SDGs-aware business development, particularly in renewable energy-related
businesses, in order to secure profits for continued growth and realize businesses that contribute tosociety.

The Energy Infrastructure Division is made up of the Power Cable Division and Industrial Cable &Power Cable Accessories Division, and it is involved in the manufacture, sale and installation ofultra-high voltage, high voltage and medium to low voltage power cable and equipment. The Power
Cable Division was newly established following the reorganization in October 2016 and has steadily
been developing its business base.
Electric PowerStrengthsof theDivision

Challenges
andEfforts

An abundant track record of ultra-high-voltage submarine
cables in Japan and overseas
Technology development centered on the submarine cables
High-value-added power cables utilizing polymer
development technology
High-value-added components based on polymer and metalmaterial technology
Short term
Steady order receipt for renewable energy (offshore wind
power) projects
Profit improvement in the low- to medium-voltage power
cable businessMedium to long term
Strengthening of sale of product with services for thedevelopment of DC (wide-area interconnection) businessNote: P resentation on Furukawa’s efforts at the Study Group forthe Development of Long-Haul Submarine Direct Current
Transmission sponsored by the Agency for Natural
Resources and Energy (in Japanese only).
https://www.furukawa.co.jp/release/2021/ene_20210430_2.html

Industrial Wires and Equipment
External
Environment

Key
Opportunities
Ultra high voltage (220kV and higher) andhigh voltage (66kV and higher) underground transmission cables, accessories
and installation

Submarine transmission cables
and installation

Low to medium voltage power cables

Electric power distribution accessories
and overhead transmission line
accessories

Main
applications

Underground power lines between power
plants substations - large factories
Renewable energy power station related(interconnections)

Submarine power cable fromrenewable energy power stations
such as offshore wind power
stations (new business domain)
Interconnections between
regions and to islands

Indoor wiring in factories, buildings.
Wiring of the distribution board /control panel for factory facilities /
equipment
Wiring of mobile equipment
Solar power systems
Wiring of ship’s onboard electricalequipment.

Electrical materials for distribution lines
Direct and branch cable connections
Insulation and protection forconnectors
Electric power supply to railroad carsMaincustomers

Electric power (distribution) companies,
large factories
Renewable energy source electric powercompanies (SPC)

Renewable energy source electric
power companies (SPC)
Electric power (distribution)companies

Construction contractors
Electronic appliance manufacturers
Railroad companies
Shipbuilding companies

Electric power companies
Construction contractors
Railroad companies

Overview of FY2020

Major Risks

Delay in securing personnel necessary for business expansion
Change in customers’ timing of implementation of largescale projects
Supply disruption of major materials

Future Prospects
The expanded use of renewable energy is essential for decarbonization. We will actively participate inbuilding a more robust energy infrastructure, such as by strengthening the main lines for diversified powersources in Japan, so as to contribute to converting the future energy mix.

37

36

Sales and profits of domestic renewable energy-related projects and domestic and overseas
underground line projects were strong. However, due to the COVID-19 pandemic, the domestic
market environment of general-purpose lines in the construction and electronic sales market was
severe, and the Chinese subsidiary experienced delays in construction work commencement, due
to travel regulations and disruption in distribution systems. As a result, the Division recorded
decrease in sales and profit compared to FY2019.

External
Environment

Rapid expansion in demand, particularly for renewableenergy projects
Increase in demand for products that are easy to install due
to labor shortage

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Main
products

Corporate Information/
Data

Business Overview / Introduction of Products

Strengths and Challenges

Business Foundation

Basic Policy for FY2021 (Zero year of FY2025 medium-term plan)

Partly boosted by the Japanese Government’s
Green Growth Strategy Through Achieving
Carbon Neutrality in 2050, renewable energy,
mainly offshore and land wind power
generation, is expected to be increasingly
adopted in the future. These power supply
locations tend to be far away from demandareas, and the need for long-distance, highcapacity power cables to be laid on the seaflooror land for the transportation of power
generation is expected to increase.
We are steadily promoting the development of
DC cable systems suitable for long-distance,large-capacity transmission, including
participation in the two projects of the New
Energy and Industrial Technology Development
Organization (NEDO): Development ofFundamental Technologies for Multi-Use MultiTerminal DC Transmission Systems andResearch and Development of Technologies for
Low-Cost Floating-Type Offshore Wind Power
Generation, thereby contributing to futureenergy mix conversion.

Business Strategy

EnergyInfrastructure5

Accelerating efforts in the
renewable energy field,
contributing to achieve carbon
neutrality in 2050

About Furukawa
Electric Group

Business Overview(Billions of yen)
150

100

Main Topic

Operating income margin

Net sales / Operating income / Operating income margin
Net sales (left)

Operating income (right)(Billions of yen)
20

300

Electronics & Automotive Systems

200

13.2
267.3 13.5 257.6

10.1 5.3%

5.0%

10.9

235.1
10

4.2%

4.5%
100

Shigenobu Abe

15

5.0
2.1%

5

2020

(FY)

0

0

2016

2017

2018

2019

Corporate Senior Vice President andGeneral Manager of Automotive Products Division* The batteries business is conducted by a listed subsidiary The Furukawa Battery Co., Ltd.

(with Vision 2030 in mind)

Business Overview / Introduction of Products
The Automotive Products & Batteries Division is comprised of the wire harness business, theautomotive products business (e.g., steering roll connectors, lead battery state detection sensors),
and the battery business conducted by the listed subsidiary Furukawa Battery Co.

Strengths and Challenges

Strengthsof theDivision

Challenges
andEfforts

A well-balanced portfolio of products that corresponds toadvanced technologies
Product development capabilities through the use of
proprietary technologies accumulated over many years by
the Group
Advantages of aluminum harnesses and α terminals
Supply chain multiplexing

Strengthening of production systems in Asia
Early launch of new products
Promotion of automation worldwide and improvement of
manufacturing capabilities

Energy Infrastructure
External
Environment

Key
Opportunities

New opportunities through mobility transformation
Expansion of product needs for environmentally friendly
vehicles

Vehicle-mounted Radar andInfrastructure Application(Illustration)

Corporate Information/
Data

There is an increase in the number of parts used for autonomous driving and vehicle electrification in response to
the technological revolution known as “CASE” (Connected, Autonomous, Shared, and Electric). In such anenvironment, Furukawa’s Automotive Products & Batteries Division will augment customers' efforts at contributing
to achievement of SDGs by building technological advantage through development of next-generation products
and services, and contribute to the safety of vehicles and to the advancement of autonomous driving. In addition,from fiscal 2021 onwards, we intend to steadily generate returns on our investment in increased production, and toaccumulate profit.

The world is waiting for the arrival of a totallysafe motorized society free from traffic
accidents. This is expected to become a reality
in the near future through use of suchtechnologies as self-driving automobiles, CASE,
and MaaS (Mobility as a Service). Vehicle safety
has always been a concern since the first
automobiles were introduced, but society now
faces the increasingly possibility of dangerous
driving and accidents, such as drivers driving in
the wrong direction on highways. The Ministry ofLand, Infrastructure, Transport and Tourism has
also considered infrastructures to prevent
accidents in accident-prone areas on publicroads in its Traffic Accident Elimination Plan
(Strategic Elimination of Risky Accident Areas).
Furukawa Automotive Systems has investigatedusing its vehicle-mounted radar technology,
which leverages the strengths of the Furukawa
pulse system to detect objects at a wide angle
and wide range in various environment, for use
in preventing traffic accidents in addition for use
in systems to detect vehicles traveling in thewrong direction.

Business Foundation

Basic Policy for FY2021 (Zero year of FY2025 medium-term plan)

A new technology allows the use of vehicle-mounted
radars in infrastructure systems, in order to help prevent
traffic accidents

Business Strategy

Automotive Products& Batteries

248.1

Expanded use of submillimeterwave radars from vehicles toinfrastructures

About Furukawa
Electric Group

Business Overview(Billions of yen)
400

223.4

Main Topic

Operating income margin

SafetyLightweightExternal
Environment

Electrification

Major Risks

CN*
Quasi-millimeter wave
radar

Steering roll connector(SRC)

Lead battery state
detection sensor (BSS)

Products using flat cable

Aluminum harnesses
Corrosion-proof
terminal (α terminal)

High voltage productsMainapplications

Advanced driverassistance systems(ADAS)

Connector for airbags

Vehicle power source
management

Electricity supply andsignal transmission forsliding doors and longslide seats

Reduce the weight ofvehicle wiring (W/H)

Wiring for electricvehiclesMaincustomers

Japanese automobile
manufacturers

Tier1

Japanese automobile
manufacturers

Automobile manufacturers

Japanese automobile
manufacturers

Japanese automobile
manufacturers*CN: Carbon neutral

Overview of FY2020

Future Prospects
By promoting efforts toward SDGs centered on carbon neutrality, we aim to expand business and achieve
profit. Specific activities include 1) expansion of sales of products related to vehicle weight reduction, powersource management, and electrification (aluminum wiring harnesses, BSS®, high-pressure parts, etc.); 2)
creation of new environmentally-friendly products (next-generation wiring systems, future electric wires,etc.); 3) high productivity and energy management through the use of the IoT; and 4) promotion of the use ofrenewable energy, including solar power generation.

39

38

In the first half of fiscal 2020, we were significantly affected by the COVID-19 pandemic, throughsuch conditions as overseas subsidiaries’ temporary suspension of operations and sluggish
operating rates after the resumption, and we recorded a decline in sales and profit. However, since
the second half of the year, the recovery in the automotive market resulted in a recovery of profits
to a level higher than expected for the entire business, including wiring harnesses.

https://www.furukawa.co.jp/release/2020/mob_20201116.html

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Key
products

Supply chain disruption, caused by country risks and climatechange risks
Decline in prices, driven by the intensifying global
competition

Net sales / Operating income / Operating income margin
Net sales (left)

Operating income (right)(Billions of yen)
20

300

285.6
232.1

200

1.2%
100

5.1

251.7
2.0%
1.6%
3.9

2016

5

0.5%
0.9

0

2017

2018

2019

10

various electronic devices that enrich our lives. A
high-precision current detection technology forresistors is essential to control the heat generation

6.0

2.7

Masao Terauchi

198.0

Resistors are used as current control components in

2020

0

(FY)

Corporate Vice President andGeneral Manager ofElectronics Component Materials Divisionof circuits.
We have developed materials that correspond tovarious types of electrical resistance ratios used for
current detection, and provide them in various
forms, including strips, plates, round and flat anglelines. We product these high-precision resistanceBusiness Strategy

Electronics
Component Materials

1.8%

15

294.4

High-precision current control
contributes to energy savings

About Furukawa
Electric Group

Business Overview(Billions of yen)
400

Electronics & Automotive Systems

Main Topic

Operating income margin

materials in integrated manufacturing.
In order to realize a low-carbon society, resistors(with Vision 2030 in mind)

The Electronics Component Materials Division will develop materials and supply products withperformance characteristics that match customer needs in the automotive and electronics
markets, and conduct clean manufacturing. We will thus contribute to solving social issues.

The Electronics Component Materials Division handles electric conductors, magnet wires, andcopper & high performance material products and is mainly engaged in the manufacture and saleof wires, automotive parts, and copper products for electronics device materials.
Electric Conductors (Magnet Wires)

Main
products

Copper wires, aluminum
wires

Oxygen-free copper
wires

Various cables
Wire harness

Magnet wires foralternators
Magnet wires for EV
motorsMainapplications

Mobile phone inductors
Relays (general use, forautomobiles)

TEX (Triple insulated
winding wire)

Copper products
Thin sheets (strips)

Oxygen-free copper
GOFC

Battery charge formobile phones
Transformers for various
power supply

Mobile phone terminals
Anti-corrosion terminals
for automobiles
Semiconductor leadframesShielding strips
Substrates for heatdissipation

Material development and proposal capabilities tailored tocustomer needs
Provision of high-performance, high-quality, oxygen-freecopper and copper alloy products
Production system for copper strip products using renewableenergy from hydroelectric power generation

Challenges
andEfforts

Being mindful of cash flow in manufacturing
Expansion of sales of differentiated products for automobiles
and communications infrastructure
Expansion of sales of alloys for medical devices
Facility maintenance and renewal start-up

External
Environment

Increase in demand that stems from vehicle electrification
and automatic driving
Increased requirement for non-magnetic and heatdissipation characteristics to satisfy increased data traffic
Increased needs in minimally invasive medical treatment

Key
Opportunities

External
Environment

Major Risks

Shunt tip resistance

Shunt resistance

Needs for alternative materials due to rising prices of raw
materials and precious metals
Impact on supply chain due to natural disasters and politicalfactors

Application example: BSS® (Lead Battery State Sensor)

Electrical cable makers(internal-use)

Electrical wire makers
Motor makers

Electronics component
makersPower source makers
Transformer makers

Terminal makers
Semiconductor
component makers(internal-use)

Electrical cable makers
Heat pipe makers(internal-use)

Overview of FY2020

Vehicle electrification and automatic driving in the automotive market and an increase in data traffic resulting
from 5G/B5G (Beyond 5G), IoT, and AI in the communications and electronics market, will expand demand
for semiconductors and electronic components, and a wide range of properties will be required in essential
materials. To meet the needs of our customers, we will make value-added proposals that take advantage ofour development capabilities.

44

44

In the first half, sales of automotive, construction, and electric appliances-related products fell, affected by
the COVID-19 pandemic. Since the second half, demand has recovered, particularly for automotive andelectronics-related products. However, the Division recorded a decrease in sales and profit for the full year
due to the significant impact of the decline in sales up to the first half, and the impact of the businessreorganization (transfer of the copper tube business and the reorganization of a part of the wire business).
Both businesses fell out of the scope of consolidation.

Future Prospects

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Main
customers

Fine wires

Copper Strips

Strengthsof theDivisiondemand for resistance materials in the future.

Corporate Information/
Data

Business Overview / Introduction of Products

Strengths and Challenges

and we are committed to meeting the growing

Business Foundation

Basic Policy for FY2021 (Zero year of FY2025 medium-term plan)that can help conserve more energy are required,Net sales / Operating income / Operating income margin
Net sales (left)

Operating income (right)

8.9%
131.5

9.1%
9.1%
153.1
149.3
14.0
13.5

15

115.9
114.7
6.4%
5.5%
7.5
6.3

11.7

100

50

10

5

Full-scale mass production
began in the Philippines in fiscal
2021, as a new flagship plant forheat-dissipating and cooling
products for U.S. data centers
Contributing to the growth markets through stableproduction plans that respond to the growing andchanging international procurement demand

As a new flagship plant for heat-dissipating and

Ryoji Ono

0

0

2016

2017

2018

2019

2020

(FY)

Corporate Senior Vice President andGeneral Manager of Functional Products Divisioncooling products for U.S. data centers, the Philippine
Plant was constructed in 2019, and it was decided
to make additional investment in 2020, after which
it began full-scale mass production in the summer* This segment includes businesses of a listed subsidiary TOTOKU Electric Co., Ltd., etc.

Business Strategy

Functional
Products(Billions of yen)
20

About Furukawa
Electric Group

Business Overview(Billions of yen)
200

150

Main Topic

Operating income marginof 2021. In the growing data center market, we will
help realize a production system that responds toestablish a stable product supply network, and(with Vision 2030 in mind)

In the era that we have to cope with the COVID-19 pandemic, the Functional Products Division willoffer differentiated products to the expanding market through development and manufacturing thatenable us to respond quickly and flexibly to market condition.

Business Overview / Introduction of Products

AT & Functional Plastics

Thermal Management
Solution & Products

Memory Disk

Copper Foil

Strengthsof theDivision

Advanced technology development capability for highperformance products
Fast, detailed, integrated services of technology and sales

Challenges
andEfforts

To sustain and improve design and development capabilities
that continue to create technological differentiation
Optimization of bases, taking into account BCP
Recovery of the copper foil plant from the fire in Taiwan

contribute to the growth of the global informationand communications society.

Heat pipe type heat sinkRenewableenergyExternal
Environment

Communication
infrastructure
Disasterprevention andreduction

Key
Opportunities

Tape for semiconductor
process

Cable protective pipes
Troughs made fromrecycled materials
Insulation materials

Copper, etc. including heatsinks and heat pipes

Aluminum blanks for HDD

Electrolytic
copper foil for
printed wiringboardsElectrolytic copper
foil for batteriesMainapplications

Surface protection,
immobilizing, etc. during
semiconductor wafer
processing

Protective pipes forunderground cable
Troughs for holding cables
Insulation for air conditioning ducts

Heat dissipation andcooling of CPUs and power
semiconductors, electronics components, highoutput LED lighting, etc.

HDD for use in data centers,
desktop PCs and monitoring
camerasCircuit boards
for communication devices
and electronic

Negative electrodematerials for lithium
ion batteries used
for EVs, mobile
phones, power
tools, etc.

Semiconductor manufacturers
Foundry manufacturers

General construction
companies and subcontractors
Railroads
Highway public corporations
and road subcontractors
Air conditioning duct
manufacturers

Data center operators
telecommunications basestation operators
Smartphone, PC manufacturers
Manufacturers of power
conditioners for railroads
and solar power
Lighting equipment
manufacturers, etc.

HDD substrate
manufacturers

Circuit board material makers
Lithium ion battery makers

Maincustomers

Overview of FY2020

Major Risks

Change in supply chain due to political factors (including
geopolitical risks)
Global economic recession, driven by natural disasters, newpathogens and viruses, etc.

https://www.furukawa.co.jp/release/2021/fun_20210427.html

Future Prospects
The growth of data traffic and the proliferation of 5G will continue to drive demand for the communications
infrastructure market. We will respond rapidly to changes in customer demand, continue to develop andprovide high-performance (differentiated) products, contribute to the realization of a sustainable society by
developing products for Society 5.0 for SDGs, and expand the new product area, which will serve as the nextgeneration revenue source.

44

44

The Thermal Management Solution & Products Division experienced strong demand for data center-related
products, while the AT & Functional Plastics Division had a decline in demand for functional plastic products
due to a curbing of the start of construction work in Japan, caused by the COVID-19 spread. The Copper Foil
Division was still in the process of recovery from the fire that occurred at the Taiwan subsidiary in 2019 andfaced sluggish demand for copper foils for automotive batteries in the first half. As a result, the overall
segment recorded a decline in sales and profit.

External
Environment

FURUKAWA ELECTRIC
THERMAL MANAGEMENTSOLUTIONS AND PRODUCTS LAGUNA, INC.

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Main
products

Increase in demand for communications infrastructure,
driven by growth in data traffic from the proliferation of 5G
Contributing to the realization of a sustainable society

Corporate Information/
Data

The Functional Products Division is made up of the AT (Advanced Technology Tape) & Functional Plastics
Division, Thermal Management Solution & Products Division, Memory Disk Division and Copper Foil Division,and it is involved in the manufacture and sale of functional products made from plastics and nonferrous metals.

Strengths and Challenges

Business Foundation

the diversified international procurement needs,

Basic Policy for FY2021 (Zero year of FY2025 medium-term plan)Directors

About Furukawa
Electric Group

Corporate GovernanceDirectors and
Audit& Supervisory
Board Members(as of June 24, 2021)

Osamu Tsukamoto

Takashi Tsukamoto

Hiroyuki Ogiwara

Osamu Kuroda

Satoshi Miyamoto

Akihiro Fukunaga

Director
Corporate Senior Vice President,
General Manager,
Global Marketing Sales Division

Director (Outside, part-time)

Director
Corporate Senior Vice President,
General Manager, Business Basis
Transformation Division

Audit & Supervisory Board Members

Director (Outside, part-time)

Takahiro Kashiwagi

Audit & Supervisory Board Member(Full-time)

Yoshiaki Mizota

Audit & Supervisory Board Member(Full-time)

Sayaka Sumida

Audit & Supervisory Board Member(Outside, part-time)

Tamotsu Saito

Director (Outside, part-time)

Takao Shiomi

Audit & Supervisory Board Member(Outside, part-time)

Takamitsu Kozuka

General Manager, Energy Infrastructure Division

Foad Shaikhzadeh

President, Furukawa Electric LatAm S.A (Brazil)

Tetsuro Ijichi

General Manager, Research & Development Division

Ryoji Ono

General Manager, Functional Products Division

Shigenobu Abe

General Manager, Automotive Products Division

Masako Tanaka

Deputy General Manager, Business Basis Transformation Division

Jun Goto

Managing Director, Furukawa (Thailand) Co., Ltd. (Thailand)

Jozsef Takacs

CEO, Trocellen GmbH (Germany)

Gyula Besztercey

President, Furukawa Electric Institute of Technology Ltd. (Hungary)

Masao Terauchi

General Manager, Electronics Component Material Division

Takashi Fukuda

General Manager, ICT Strategy Planning Department, Business Basis Transformation Division

Toru Fukushima

CEO, SuperPower Inc. (US)Kiyotoshi Nagai

Executive Vice President, OFS Fitel, LLC (US)Keiichiro Urakami

General Manager, Chubu Branch, Global Marketing Sales Division

Teruyoshi Uchida

General Manager, MONOZUKURI Innovation Division

Michihiro Shimada

General Manager, Incubator Department, Research & Development Division

Toshio Yanagi

General Manager, Risk Management Division

Hideya Moridaira

General Manager, Communications Solutions Division

Yoshio Masutani

Deputy General Manager, Corporate Strategy & Direction Division

Eiichi Nishimura

General Manager, Power Cable Division, Energy Infrastructure Division

Toshihiko Ota

General Manager, FITEL Products Division, Communications Solutions Division

Takashi Yamamoto

General Manager, Copper & High Performance Material Products Division, Electronics Component
Material Division

Mami Masuda

General Manager, Investor Relations Department, Finance & Global Management Division andGeneral Manager, Public Relations Department, Business Basis Transformation Division

Senior Fellow
Senior Fellow

Akihiko Kasukawa Senior Fellow, Telecommunications & Energy Laboratories, Research & Development Division

44

44

Audit & Supervisory Board Member(Outside, part-time)

Director (Outside, part-time)

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Corporate
Vice Presidents

Kunihiko Sakai

Yukiko Yabu

Corporate Vice Presidents

Corporate
Senior Vice
Presidents

Audit & Supervisory Board Member(Full-time)

Director (Outside, part-time)

Director
Corporate Senior Vice President,
General Manager, Finance & Global
Management DivisionCorporate Executive
Vice President

Nozomu Amano

Yoshiro Miyokawa

Corporate Information/
Data

Representative Director
Corporate Senior Executive Vice
President,
General Manager, Corporate
Strategy & Direction Division

President
Representative Director

Business Foundation

Keiichi Kobayashi

Chairman of the Board
Director

Business Strategy

Mitsuyoshi Shibata

Outside Director

The inclusion of opinions of diverse stakeholders
naturally leads to the promotion of environmental (E)and social (S) challenges. Since Furukawa ElectricGroup was originally engaged in the copper business, it

While making the best of of the tradition of Furukawa
Electric’s Board of Directors—to conduct very active
discussions—I think that the Board of Directors should
shift a little bit from "balancing the brake and theaccelerator" to “using the accelerator." In particular, I
would like the Group to use its numerous excellent
technologies, commercialize them to create new
business models, and continue this virtuous cycle. This isbecause I firmly believe that this would lead the Group tosolve materiality issues, contribute to the SDGs, and behighly respected in society as it deserves to be. As one ofthe outside directors, I will make my best efforts to help
Furukawa Electric further advance its corporate culture,
strategy, and organization to create innovation andgrowth strategies by astutely taking risks.

44

44

Active Discussions at the Board of Directors,
the Nominating/Compensation Committee,
and the Outside Officers Meeting

Aiming for Furukawa Electric to be highly
evaluated in society

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Furukawa Electric has been working at building asystem of effective corporate governance from earlyon. With regard to the composition of the Board of
Directors, we have five outside directors, which is only
one less than the number of internal directors. We also
have one female outside director and one outside Audit& Supervisory Board member. The skill matrix of the
management team shows diverse backgrounds,
including legal, accounting, and international
management. I believe that we are steadily moving
toward the right direction we have aimed at.
The Board of Directors, consisting of such diverse
members, has very active, constructive discussions.
Outside directors give straight, wide-ranged opinions
and questions, as well as harsh comments occasionally,
and I feel that deep discussion is being conducted
through a frank exchange of opinions with theexecutives. Those who have been newly appointed as
outside directors were amazed by our vigorous
debates, not seen in other companies.
In order to encourage vigorous discussion at theBoard, the chairperson plays a critical role of managing
discussions. While cases of appointing an outside
director as chairperson appear to be seen not only in
the U.S. and European companies but also in Japan
recently, the chairperson of the Board of Directors is
expected to develop an agenda and lead discussions
based on deep knowledge of the business, knowledge
such as concerning business strategy, growthstrategies, and risks associated with the business. In
case of Furukawa Electric, Mr. Shibata, who has
experience as its top executive officer, serves as theBoard’s chair, and is the point of contact between
execution and governance. Because he is in a neutral
position while being the chair and a non-executive
director without the right of representation right, heruns the Board from a viewpoint that is not biased
toward the execution side or the outside officers’ side. I
understand that some people may suspect that only
the agenda items that are convenient to the company
would be raised if the chairperson with the experienceof its executive officer presides over the proceedings ofthe Board. I believe that this is not the case at Furukawa
Electric. We respond appropriately to requests fromstakeholders of the capital market, as outside directors,
including myself, and we exchange opinions regarding
the selection of agenda items and even propose issues
to be discussed if needed. We may also draw up a
meeting agenda that reflects issues raised byinstitutional investors and analysts concerning
Furukawa Electric. We intend to also listen more than
before to the opinions of important stakeholders otherthan shareholders, such as employees, suppliers, andlocal communities in the future.

Corporate Information/
Data

Having a chairperson who is in a neutral
position is a unique feature of the Furukawa
Board

Business Foundation

Takashi Tsukamotoplanned manner. This is also an extremely important
theme in the sense of nurturing the next generation ofmanagers. The Nominating/Compensation Committee
aims to steadily help develop various levels of theworkforce as a portfolio of human resources who will
be responsible for the next generation of management,
taking into account not only their business field but also
their diversity in gender, nationality, and other criteria.
We also discuss promoting young people for the
rejuvenation of the management team. In addition, inthe current era of VUCA (Volatility, Uncertainty,
Complexity and Ambiguity), I find it important todiscover and develop sharp, unconventional, out-ofbox personnel who can develop various promising
breakthrough technologies.
Concerning the ESG element in executive
compensation, I would like to put it on the agenda in
the future. I believe we need to discuss how toincorporate long-term incentives that are important to
ESG management, beside raising the performancerelated compensation ratio.
Furukawa Electric’s outside officers routinely holdtheir meetings with the intent of helping deepen thediscussion of the Board of Directors. Being the chair of
this Outside Officers Meeting, I listen to opinions ofother outside directors and outside audio &supervisory board members regarding the review ofmanagement issues to be discussed at the Board
meetings, evaluation of the quality of discussions, andthe speed of management, etc. I then regularly provide
these opinions and requests to the executive officers at
the Board meeting. For example, at the Outside
Officers Meeting, an opinion that our Group should be
be managed with more awareness of being a global
company was raised. Based on this opinion, the Boardof Directors is currently discussing how to build asystem to strengthen global governance and achieve
further growth.

Business Strategy

I would like Furukawa Electric
to further advanceits corporate culture, strategy,
and organization to create
innovation and growth strategies
by smartly taking risks.

has been keenly aware of ESG issues, and the Board of
Directors always incorporates the perspectives of ESG
and materiality in its discussions.
Concerning environmental (E) initiatives, weannounced Furukawa Electric Group Environmental
Vision 2050 in March 2021. We find it important toestablish a framework that allows young generations
who will be Furukawa’s future leaders to beenthusiastic about this and make a commitment
beyond the current management and managers, inorder to firmly realize the vision in the future. We are
currently discussing ways to further embody the path
toward 2050 and to disseminate our philosophy within
the company.
In addition to solving environmental (E) and social (S)problems that stem from our operations, we have tohelp solve the challenges that the world is facing todaywith regard to climate change and society. For thispurpose, it is critical that we leverage our Group's
advanced technology to draw a reliable, shared
scenario for the future and design our value-creatingstory. In my view, the role of the outside directors is topromote the commercialization process that matches
the technology born in the working field with the needsof society, and to continuously monitor it, thereby
enabling the organization to establish a framework forvalue-creating scenarios and new business models. I
would like to support Furukawa Electric’s sustainablebusiness to solve environmental (E) and social (S)issues while taking into proper account importantelements, such as the management environment andthe nature of organizational culture that encourages
smart risk-taking, and the incentive plan(compensation).
Over the past few years, we have made efforts tostrengthen management with an emphasis on business
transformation and capital efficiency and have beenreviewing low-margin businesses, for example, in thecontext of business portfolio strategy. We used toreview the portfolio based on return on operating
assets, but we have decided to use ROIC and FVA(Furukawa Value Added) as new management
indicators so as to raise our group-wide awareness ofcapital costs. While the promotion of ROIC and FVA issaid to increase the risk of shrinking equilibrium, we
intend to incorporate measures to offset such negative
aspects in a well-balanced manner, increase theprofitability of each business, and review our portfoliowith a sense of agility and speed.
I am the chairperson of the Nominating/Compensation Committee, where we actively discuss
the development of future management personnel in
addition to the succession plan. As digital savvy
personnel and global experienced personnel will be key
to our innovation in a variety of fields, we need toincreasingly develop and strengthen our people in a

About Furukawa
Electric Group

Corporate Governance

Message from an Outside Director

Corporate Governance
Basic Views on Corporate Governancefollowing views, we seek to strengthen and enhance
our corporate governance.
i.

We secure the rights and equal treatment of shareholders.

ii.

We consider interests of stakeholders including
shareholders, and cooperate appropriately with them.

iii.

We ensure appropriate information disclosure andtransparency.

iv.

Given its fiduciary responsibility and accountability toshareholders, the board of directors carries out
effective oversight of management from objective
standpoint, respecting the independent directors' role
for the oversight.

v.

We engage in constructive dialogue with shareholders
who have investment policies in accordance withinterests of mid- to long-term shareholders.

as a policy to enhance corporate governance.

Based on the “Basic Views on Corporate Governance,”
we adopted the “Guidelines on Corporate Governance”

Shareholders’ Meeting

CSR and Risk
Management Committee

Board of Directors
Consults andCommits

Nominating /Compensation
Committee

Monitors

Business operation

Audits account
Submits
reports,
attends
meetings
and audits

11 Directors (5 members areoutside and independent)

Appoints

Appoints

Audit &
Supervisory Board

6 Audit & Supervisory Board
Members (3 members areoutside and independent)-Decision of critical matter
relating to business
operation-Supervises business
operation-Appointment of corporate
vice president

Submits
reports

Accounting
Auditors-S creens
Collaboration
reports
between audits
relating tobusiness-E xamines status ofoperations and assets-S creens reports
relating toaccounting-Examines statusof operations andassetsAppoints

President

Submits reports

Internal Audits(Auditing Department)

Operations
Communications Solutions Div.
-Optical Fiber and Cable Products Div.
-FITEL Products Div.

Corporate Strategy &Direction Div.
Business Basis
Transformation Div.
Risk Management Div.

Finance & Global
Management Div.
Research & Development Div.
MONOZUKURI Innovation Div.

Global Marketing
Sales Div.

Provides support and guidance

Energy Infrastructure Div.
-Power Cable Div.
-Industrial Cable & Power Cable
Accessories Div.

Electronics Component Material Div.

Functional Products Div.

-Electric Conductor Div.
-Copper & High Performance Material Products Div.

-AT & Functional Plastics Div.
-Thermal Management Solution & Products Div.
-Memory Disk Div.
-Copper Foil Div.

Automotive Products Div.

Outside Directors

President and other generalmanagers of the major business andcorporate divisions are concurrently
appointed as directors.

All 5 members are
independent.

5 members

5 members

3. Setting capital allocation policy
4.

Appointment and dismissal of executives including
representative director and corporate vice president, anddetermination of the compensation of them (including
delegating these to Nominating/Compensation Committee)

Draw attention Make opinions

Establishment of an internal control system relating to
5. compliance and financial reporting and risk management
systems, and oversight of them

Audit & Supervisory Board Members
6 members

6. Decision on important business matters

At present, Furukawa Electric’s Board of Directors
consists of 11 Directors, five of whom are Outside
Directors (all independent officers). The Board ischaired by the Chairman, who is a non-executive
director without the representative right of theBoard of Directors.
In fiscal 2020, 17 Board of Directors meetings were
held and the Directors made important decisions on

All 3 members are independent.

(As of June 24, 2021)

the execution of operations, checked the progress ofthe mid-term management plan and the
management goals, such as the annual budget, anddeliberated corporate governance and other basic
management matters.

Subsidiaries and affiliated companies* CSR and Risk Management Committee changed its committee name to Risk Management Committee. The Sustainability
Committee was also established to consolidate discussions on sustainability within Furukawa Electric Group and further
enhance the quality and speed of implementation thereof.

(As of June 24, 2021)

Audit & Supervisory Board and each its member
auditor collect information about management
under statutory investigation authority and reportand express their views to the board meetings
and the management from an independent andobjective standpoint as a fiduciary toshareholders. Auditors ensure coordination withinternal audit department through regularmeetings, and report the policy, plan and result ofauditing to the board regularly.
Full-time auditors attend the meetings such as

Management Committee which decides major
business matters, and they report information
obtained from these audit activities to the parttime and outside auditors. We strengthen our
audit function by appointing an assistant staff tothe auditors who is dependent of management.
At present, the Audit & Supervisory Board consists of
6 members (3 members are outside and independent).
In fiscal 2020, eight Audit & Supervisory Board
meetings were held.

Nominating/Compensation Committee
The Nominating/Compensation Committee
consists of five or more members selected fromamong the Directors by the Board of Directors,
with a majority of the members being Outside
Directors. The committee deliberates succession
plans for officers and the president/CEO, officer
compensation and other matters, aiming to ensure
objectivity and transparency regarding thesematters and to enhance corporate governance.
At present, the Nominating/Compensation
Committee consists of seven members, five of whom,
including the Committee Chair, are Outside Directors.
Committee meetings were held. Apart fromdeliberation concerning the next management
team and directors’ compensation, the committee
members checked an update of the succession
plan for the CEO and the development of the next
generation of managers, and deliberated suchmatters as the selection of candidates for the next
generation of managers and the effectiveness of
their development process.
Nomination/
Compensation

In-house Outside

Committee

7 directors

Chairman: Outside Director(As of June 24, 2021)

44

44-Broadband Solutions Business Div.

Direction

Executive Directors

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Corporate Divisions
Management
Committee

Establishment and amendment of business strategies
2. and oversight of execution of such strategies and plansby management

Audit & Supervisory Board

Corporate governance organization chart

Submits proposals
and reports

Discussion anddecision Supervising

1. Determination of corporate governance-related matters

Corporate Information/
Data

from the Board of Directors. We have therefore
adopted the current “Audit & Supervisory Board”
type of the corporate governance structure. In
addition, we have a “Nominating/Compensation
Committee,” majority members of which areoutside directors to complement oversight functionof the Board.

We consider that the effectiveness of the audit on
the execution of the duties by the Directors issecured, based on the coordination with theaccounting auditors and the internal auditing
department, while maintaining the institutional
independence of the Audit & Supervisory Board
Members and of the Audit & Supervisory Board

Appoints- A position of
non-executive
without the
representative right.
Chairman - Connect between theOutside Directors andthe Executive
Directors.

Outside7. Others prescribed by the applicable laws and regulations etc.

Corporate Governance System

Monitoring and appoints supervising

Chairman of the Board

Business Foundation

Guideline on Corporate Governance

11 members

In-house

Business Strategy

Based on the “Furukawa Electric Group Philosophy”,
Furukawa Electric Co., Ltd. and Furukawa ElectricGroup secure the transparency and fairness andstrive to enhance its performance by promptly
responding to changes in the business environment
and the market through efficient management basedon prompt decision making. At the same time, we
ensure sound management by establishing andstrengthening an internal control system andapplying it effectively. We uphold the basic policy of
seeking to expand and develop our operations on asustainable basis and to raise corporate value
through these efforts. In accordance with theGiven its fiduciary responsibility and accountability
to shareholders, the board is responsible forpromoting sustainable corporate growth and theincrease of corporate value over the mid- to longterm and enhancing earnings capability and capitalefficiency. The board oversights and determines
the matters listed below:

Board of Directors

About Furukawa
Electric Group

Corporate Governance

Board of Directors

Outside Directors’ Expertise and Principal Activities

Policy on Nominating Candidates for Directors

Outside Directors have extensive experience atfinancial institutions, trading companies, or operatingcompanies, and expert knowledge/experience
regarding laws, financials, accounting, industrial
policies, and other areas. The Board of Directors
makes decisions by respecting Outside Directors’
opinions and comments from diverse perspectives
based on their extensive experiences.
The Outside Officers’ meetings are regularly
conducted so that Outside Officers can exchange
opinions while establishing a shared understanding of
the Company from an objective viewpoint and submit
the resulting opinions to the Board of Directors if
necessary. The Outside Officers’ meeting consists of
Outside Directors and Outside Audit & Supervisory

With respect to board members (Directors andAudit & Supervisory Board Members), theCompany believes that their skills, knowledge andexperience, as well as multiple views from diverse
board members, in terms of gender andinternational experience, contribute to the Group’s
global business operations and appropriate
oversight/auditing. Based on this perception, theCompany selects candidates for board members
as follows: andidates for Director: In light of the consideration of the Furukawa Electric Group’s business ofChaving many affiliates around the globe and various business lines, the Group should select persons
who have a sufficient skill set, knowledge and experience so that they will contribute to improving the
Furukawa Electric Group’s corporate value

Outside Officers’ meeting
Outside Directors
5 members

Outside Audit & Supervisory
Board Members
3 members

Chairman: the chair of the Outside
Officers’ meeting(As of June 24, 2021)* Secretary of the Outside Officers serves as chairperson of the Outside
Officers Meeting, reports what was discussed at the Outside Officers
Meeting to the Board of Directors and management as needed, and acts
as a liaison of outside directors to cooperate with the management teamor the Audit & Supervisory Board (meeting).

Directors
Name

Independent
Officer

Position in
Furukawa Electric

Term of
OfficeFY2020 Attendance
Board of Directors(Attendance rate)

Nominating / Compensation
Committee (Attendance rate)

Mitsuyoshi Shibata

Chairman of the Board

11

17 out of 17 (100%)

7 out of 7 (100%)2

Keiichi Kobayashi

President and Representative Director

617 out of 17 (100%)

7 out of 7 (100%)3

Osamu Tsukamoto

Director (Outside, part-time)

8

17 out of 17 (100%)

7 out of 7 (100%)

4

Takashi Tsukamoto

Director (Outside, part-time)—*1

17 out of 17 (100%)*2—

5

Yoshiro Miyokawa

Director (Outside, part-time)2

17 out of 17 (100%)

7 out of 7 (100%)

6

Yukiko Yabu

Director (Outside, part-time)2

17 out of 17 (100%)

7 out of 7 (100%)

7

Tamotsu Saito

Director (Outside, part-time)

—

—

—

8

Hiroyuki Ogiwara

Representative Director and Corporate
Senior Executive Vice President

7

17 out of 17 (100%)—

9

Osamu Kuroda

Director andCorporate Senior Vice President

4

17 out of 17 (100%)—

10 Satoshi Miyamoto

Director andCorporate Senior Vice President

2

16 out of 17 (94.1%)—

11 Akihiro Fukunaga

Director andCorporate Senior Vice President

2

17 out of 17 (100%)—

Finance/Accounting

Legal Affairs/
Compliance

Environment/Energy

Technology/IT

Sales/Marketing

International
Experiences andKnowledge

Company
Management

Finance/Accounting

Legal Affairs/
Compliance

Environment/Energy

Technology/IT

Sales/Marketing

International
Experiences andKnowledge

Corporate Information/
Data

1

Company
Management

Business Foundation

Principal Activities and Skill Matrix of both Directors andAudit & Supervisory Board Members

Business Strategy

Candidates for Outside Director: The Group should select a well-balanced mix of people with various skills
and backgrounds, such as persons with experience in corporate management and public policy, engineers
with technological expertise, and experts in law, accounting, or other areas.

Board Members and the chair of the meeting* isselected from among Independent Outside Directors.
In fiscal 2020, two Outside Officers’ meetings were
held.

About Furukawa
Electric Group

Corporate Governance

View Concerning Candidates for Members of the Board of Directors*1. His term of office as the Audit & Supervisory Board member was four years.
*2. Attendance to Board of Directors Meeting as the Audit & Supervisory Board member

Audit & Supervisory Board Members
Independent
Officer

Position in
Furukawa Electric

Term of
OfficeFY2020 Attendance
Board of Directors(Attendance rate)

Audit & Supervisory Board
Meeting (Attendance rate)

Nozomu Amano

Audit & Supervisory Board Member(Full-time)3

17 out of 17 (100%)

8 out of 8 (100%)

2

Takahiro Kashiwagi

Audit & Supervisory Board Member(Full-time)3

17 out of 17 (100%)

8 out of 8 (100%)

3

Yoshiaki Mizota

Audit & Supervisory Board Member(Full-time)2

17 out of 17 (100%)

8 out of 8 (100%)

4

Kunihiko Sakai

Audit & Supervisory Board Member(Outside, part-time)3

17 out of 17 (100%)

8 out of 8 (100%)

5

Sayaka Sumida

Audit & Supervisory Board Member(Outside, part-time)1

12 out of 12 (100%)*3

7 out of 7 (100%)*3

6

Takao Shiomi

Audit & Supervisory Board Member(Outside, part-time)

—

—

—

*3. Ms. Sayaka Sumida was newly elected at the 198th Annual Shareholders Meeting, their meeting attendance numbers differ from those of other Outside
Audit & Supervisory Board Members.

55

50

1

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Name

Evaluation Items on the Effectiveness of
the Board of Directors
Effectiveness of the Board of Directors
Management of the Board of Directors
System related to support and cooperation with theOutside Officers
Roles and expectation for the Audit & Supervisory
Board Members
Relationship with the shareholders and otherstakeholders
Others(The Board of Directors in general, individual andpeer evaluation, responsibility of the Board of
Directors)

Questionnaire
Implementation of theanonymous questionnaire

Individualquestionnairesby the Chairman

Compilation of theopinions on the resultsof the questionnaire.

Multiple
Discussions by the
Board of Directors

Item

Completion of
the analysis
and evaluation

Confirmation of the status Publish the analysis andof ensuring the effective- evaluation results.
ness of the Board of
Directors

The remuneration of the Company’s directors andofficers is comprised of basic remuneration, shortterm performance-linked remuneration and mid-tolong term performance-linked remuneration. The
performance-linked remuneration is paid to
directors except an outside director and non-director officers and senior fellows. The
performance-linked remuneration will account for
approximately 30% to 50% of total remuneration,
while the percentage for each eligible person willvary depending on its position. A summary of eachtype of remuneration is shown below.

Policy Regarding the Determination of Individual Remuneration for Each Remuneration System
The businessexecution and the
management of
the Board of
Directors basedon the actions

discussion with due consideration to many proposals
and opinions from Directors and Audit & Supervisory
Board Members, we have decided to make further
improvements regarding the following items.

Future initiatives based on the results of analysis and evaluation for FY2020

Medium-term management plan,business portfolio review, group andglobal management

Enhance discussions on medium- to long-term growth strategies in light of changes in thebusiness environment, including the COVID-19 pandemic. Also enhance discussions of thenext medium-term management plan, including the desired business portfolio to realize Vision
2030 as well as medium- to long-term direction of each business area.

Provision of information to outside
officers

Enhance the amount and quality of information that is essential for discussion to be provided
to outside directors by sharing periodic monitoring materials on the Company's businessenvironment, etc. This is to enhance discussions on medium- to long-term growth strategies.
In an effort to obtain appropriate involvement and advice of outside officers on the Board of
Directors, hold pre-briefing sessions for outside directors, and provide opportunities for themto deepen understanding of each agenda item in advance.

ESG and SDGs related

Continue to strengthen the foundation of ESG management, and enhance discussions at theBoard of Directors toward realizing Vision 2030.

Dialogues with stakeholders

Continue dialogues with shareholders and investors and report to the Board of Directors. In
addition, report opinions of all non-shareholder stakeholders, including employees, to theBoard to further enhance discussions.

Details of the overview of the results of the Board of Directors' effectiveness assessment are available on the corporatewebsite section “Corporate Governance.”

Remuneration item

Summary

Directors,
excludingOutsideDirectors

OutsideDirectors

Executive
Officers who
are not
Directors
and Senior
Fellows

Audit &
Supervisory
Board
Members

Basic remuneration

Basic remuneration is paid in cash in a fixed amount every
month. The amount paid to each person differs depending on
their role, i.e., management supervision role or businessexecution role, and position.

Short-term
performance-linked
remuneration(individual)This remuneration is paid to each officer. The remuneration
amount for each person is determined by the Nominating/Compensation Committee after evaluating their actual
performance versus the business plan*1 of the division in charge
and the progress of implementing measures during the previous
fiscal year. The determined amount is paid in cash every month.

--

Short-term
performance-linked
remuneration(entire Company)

The remuneration amount, which is paid in cash once a year, isdetermined by the Nominating/Compensation Committee, using
consolidated operating income as the base*2 for evaluation.

--

Mid- to long-term
performance-linked
remuneration

This remuneration is under the stock remuneration program(“the Program” in this column). Under the Program, theCompany’s stocks, funded by the Company and acquired
through the Trust, are granted3. In the Program, three fiscal
years constitute a performance period (the current period isfrom April 1, 2019 to March 31, 2022), and the Company
contributes funds up to a maximum amount of 450 million yen
per performance period to the Trust as remuneration for
Directors and Officers.
Directors and Officers are granted a pre-determined numberof points depending on their titles/positions every year as thebasis of their rights to receive the Company’s stocks*3. After theend of each performance period, the number of points qualifying
Directors and Officers to receive the Company’s stocks are
finalized after an adjustment for certain cases*4, according to thecriteria for comparing changes in the Company’s stock price withthat of the TOPIX during the period. If any Directors and Officers
retire from their positions during the period, an adjustment is to
be made in a similar manner.
In principle, upon their retirement, Directors and Officers
receive the Company’s stocks from the Trust, and the number ofsuch stocks corresponds to the number of points finalized during
their term of office*5.

-

-

53

52

Establish a more detailed plan for the annual agenda and ensure sufficient time fordeliberation of important agenda items, in addition to reviewing the proposal criteria of theBoard of Directors to enhance the monitoring functions of the Board and to increase theweight of the agenda on medium- to long-term growth strategies.

Recipients

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

The appropriateness of the allocationof business execution authority
between the Board of Directors andthe business execution side

https://www.furukawa.co.jp/company/governance.html (Only available in Japanese)

Outline of the Directors and Officers Remuneration

Next FY

Results of the Evaluation of the Effectiveness of the Board of
Directors and Future Initiatives
Given the results of the effectiveness evaluation of
the previous year, the Board of Directors continued to
implement measures to further improve its
effectiveness and worked on analyzing andevaluating it again in fiscal 2020. As a result of

The remuneration of directors and officers shall be
determined in a way that encourages each officer to exert
his/her abilities to the maximum level and proactively fulfill
his/her duties, so that the Company Group will increase its
corporate value and achieve sustainable growth while
contributing to society through its business activities.

Based on the policy, the committee confirms
validity, effectiveness and appropriateness of plan
design and level of remuneration every year, bymeans of outside survey that is comparing theCompany’s remuneration level with those of othersimilar size 30 manufacturing companies.

Corporate Information/
Data

Implemented from
FY2017, aiming at a
deeper understandingof the responses to thequestionnaire

Outside officers’
Meeting

The Company has the following policy for the directors
and officers remuneration, which is determined by the
Nomination/Compensation Committee.

Business Foundation

Flow of the Board of Directors Effectiveness Evaluation

FY2020

Policy for Directors’ and Officers’ Remuneration

Business Strategy

For the purpose of improving the function of the Boardof Directors, we have been working on analyzing andevaluating the effectiveness of the Board of Directors
every year since fiscal 2015. Through this continuous
process, necessary measures are taken in order toimprove issues or further reinforce strengths reported
through the verification of the suitability of the Board of
Directors’ functions.
Since fiscal 2017, in addition to having a questionnaire
filled in by all members of the Board of Directors andthe Audit & Supervisory Board Members, an individualinterview has been conducted by the Chair of the Board(an interview with the Chairman is conducted by an
Outside Officer other than the Chair), for the purpose ofproviding a deeper understanding of the responses tothe questionnaires. More substantive analysis andevaluation have thus been implemented.

Design of Programs for Directors’ and Officers’ Remuneration

About Furukawa
Electric Group

Corporate Governance

Implementation Procedure for the Evaluation of the Effectiveness of
the Board of Directors

(Unit: JPY thousand)Operating Profit
650~(JPY 100 million)

550~650(JPY 100 million)

450~550(JPY 100 million)

350~450(JPY 100 million)

250~350(JPY 100 million)

150~250(JPY 100 million)~150(JPY 100 million)

Chairman of the Board

19,50016,08812,675

9,750

7,800

4,875

―

President(Representative)

28,20023,265

18,33014,10011,2807,050―

Corporate Senior
Executive Vice
President

20,80017,16013,52010,400

8,320

5,200

―

Corporate Executive
Vice President

13,90011,468

9,035

6,950

5,560

3,475

―

Corporate Senior Vice
President

10,000

8,250

6,500

5,000

4,000

2,500

―

Corporate Vice
Presidents/ Senior Fellows

5,400

4,455

3,510

2,700

2,160

1,350

―

Maximum number of shares(per eligible period)

Chairman of the Board

5,530

21,567

President (Representative)

5,840

22,776

Corporate Senior Executive Vice President

3,480

13,572

Corporate Executive Vice President

2,530

9,867

Corporate Senior Vice President

1,580

6,162

Corporate Vice Presidents / Senior Fellows

950

3,705

Actual degree of divergence
0.70 (reference value calculated by using figures in the year ending March 2021)
Rate correspondence table for each degree of deviation
1.3>X≥1.2

1.2>X≥1.1

1.1>X≥0.95

Payout Rate (%)

130

120

110

100

0.95>X≥0.85 0.85>X≥0.75 0.75>X≥0.65 0.65>X≥0.55

90

80

70

60

0.55>X≥0.2

0.2>X

50

0

Formula for calculating each officer’s points during the evaluation period
Finalized points = (Cumulative total points granted to each officer during the evaluation period) x (Payout ratio for the evaluation period)*5. At the time of their retirement, Directors and Officers receive the Company’s stocks and money calculated by the following formula (1) and (2) as themedium- to long-term performance-linked remuneration.
The "number of points convertible into share units" of the calculation formula 1) and 2) shall be (Cumulative total points as of the vesting date x Payout
ratio - Number of points corresponding to a fraction of shares). The vesting date is defined as the first end date of June after the retirement of Director or
Officer, and after the closing of the last fiscal year, in which he/she is eligible for receiving points.
1) Number of the Company’s shares to be granted = (Number of points convertible into share units) x 0.7
If there is a fraction of shares of the Company upon calculation by the above formula, such shares will be disregarded.
2) Amount of money to be paid = (Number of points convertible into share units x 0.3 + Number of points corresponding to a fraction of shares) x
Market value of the Company’s stock as of the vesting date
If there are any points corresponding to a fraction of shares upon calculation by the formula “the number of points convertible into share units x 0.3,”
such a fraction will be rounded up to a share unit and added to the number of share units.

Chairman of the Board

55%

12%

President (Representative)

55%

14%

12%

21%

100%

14%

18%

100%

60%

13%

13%

15%

100%

62%

12%

12%

14%

100%

68%

11%

11%

11%

100%

60%

14%

14%

12%

100%

Corporate Senior Vice Presidents

67%

13%

13%

8%

100%

Corporate Vice Presidents / Senior
Fellows

71%

16%

8%

5%

100%

Representative Director andCorporate Senior Executive Vice
President
Director and Corporate Executive
Vice President
Director and Corporate Senior Vice
President
Corporate Executive Vice
President

Number of
subject officers(persons)*3

Total remuneration(JPY millions)

Directors (excluding Outside
directors)

358

267

37

―

53

7

Audit & Supervisory Board
Members (excluding outside Audit& Supervisory Board Members)

91

91

―

―

―

3

Base
salaryShort-term performance- Short-term performancelinked remuneration
linked remuneration (the(individual divisions)entire Company)*1

Mid-to-long-term
performance-linked
remuneration*2

Outside Officers

101

101

―

―

―

9

Outside Directors

74

74

―

―

―

5

Outside Audit & Supervisory Board
Members

36

36

―

―

―

4

*1. Short-term performance linked remuneration (the entire Company) refers to the remuneration to be paid to seven Directors (excluding Outside
Directors). For fiscal 2020, this remuneration was not paid because the performance did not meet the qualified level for payment.
*2. The amount of medium- to long-term performance linked remuneration is calculated by deeming the number of shares equivalent to the points granted
for the current fiscal year under the Stock Remuneration Plan as the remuneration for fiscal 2020.
*3. The number of individuals paid and the amount paid in the table above include one Audit & Supervisory Board Member who resigned in fiscal 2020.

Policy-holding Shares
Each year, the Board of Directors verifies the validityof all listed shares of the policy-holding shares, anddecides to continue holding some of the shares fromthe viewpoint of their relationship with the Company
and of the cooperative relationship. We intend to
reduce the shares deemed unsuitable for holding.
The Board of Directors most recently examined theappropriateness of the policy-holding shares at a
meeting held in December 2020. As a result of theverification, we reduced some policy-holding shares,
including four listed stocks (9,180 million yen). Ourpolicy-holding shares as of March 31, 2021 include
17 listed shares (24,387 million yen).

Policy on Policy-holding Shares
We will hold the shares if they are deemed to besignificant from the viewpoint of improving capitalefficiency or from need for the Company's businessactivities, and will reduce the shares if they are
deemed to be unsuitable for holding. Each year, theBoard of Directors shall conduct a verification of thevalidity of all listed shares of the policy-holding
shares. The verification shall be conducted from acomprehensive perspective, including the creationof business opportunities, the maintenance andstrengthening of business relationships andcooperative business relationships, as well as thecomparison of quantitative benefits derived fromthe holdings of shares with the cost of ownership* Policy-holding shares are defined as the shares subject to "investment shares
held for other than purely investment purposes" in the Securities Report.

calculated by the market value and capital cost of
the shares.
Policy-holding Shares Recorded on the Balance
Sheet and the Number of Companies
Acquisition value(Million yen)

40,055Market price impact

36,24834
29

29

30,222

2015

Number of companies

42,855

24

2016

2017

2018

22,82524,387

18

17

2019

2020

55

55

component of remuneration, it is designed that thehigher the officer’s rank, the larger the percentage ofperformance-linked remuneration. When theaggregate total of the standard percentage of eachcomponent is 100%, the percentage of eachcomponent is shown below:

Total remuneration by type(JPY millions)
Officer classification

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Policy Regarding the Determination of the Percentage of Individual Remuneration for Each
Remuneration System
The Company's executive remuneration consists ofbase salary, short-term performance-linked
remuneration (individual division), short-term
performance-linked remuneration (the entire
Company), and medium- to long-term performancelinked remuneration. As for the percentage of each

Total

Corporate Information/
Data

Formula for calculating the degree of divergence
Degree of divergence = Volatility of the Company’s stock price / Volatility of TOPIX
Volatility of the Company’s stock price = Average stock price of the Company in the final year of the evaluation period / Average stock price of theCompany in the year prior to the start of the evaluation period
Volatility of TOPIX = Average TOPIX in the final year of the evaluation period / Average TOPIX in the year prior to the start of the evaluation periodX≥1.3

Mid-to-long-term performancelinked remuneration

Remuneration for Directors and Audit & Supervisory Board Members*4. In order to appropriately reflect increase in corporate value to the remuneration amount, and to share the incentive for increasing corporate value withshareholders, we adopted the Company’s stock price as the performance indicator. The specific number of points to be granted (finalized points) is
calculated by multiplying the cumulative total points granted in the evaluation period by the payout ratio which is determined on the basis of the degreeof divergence between the volatility of the Company’s stock price and the volatility of TOPIX (Tokyo Stock Price Index). “Payout ratio” represents thepercentage of change in the actual remuneration amount as a result of performance evaluation, where the standard amount of the mid- to long-term
performance-linked remuneration is 100%.

Deviation (Scope)(the entire Company)

Business Foundation

Number of points granted(individual divisions)

Remuneration for Fiscal 2020

*3. The total points granted to Directors and Officers during each period is limited to 180,000 points, and 1 point corresponds to 1 share of the Company’scommon stock. Points granted to each position during the period from April 1, 2019 to March 31, 2022 are shown in the table below.
Officer classification

BasesalaryBusiness Strategy

Officer classification

Short-term performance-linked remuneration

Officer classification

About Furukawa
Electric Group

Corporate Governance*1. With the aim of comprehensively evaluating the achievement of individual divisions, the actual performance versus the plan for operating profit andinventory reduction, the achievement of the goals for safety and quality, and the readiness for risk are scored and evaluated as total points.
*2. In order to properly and clearly reflect the Company's performance in the fiscal year, consolidated operating income (8,429 million yen in fiscal 2020) is
adopted as an indicator. The correspondence table between consolidated operating income, which is an evaluation standard, and the amount paid by therank of each position, is regularly reviewed by the Nominating/Compensation Committee to ensure that the level is appropriate, taking into account theconsolidated operating income of the past few years. The table below shows the correspondence between the consolidated operating income and theamount paid by the rank of each position.

(FY)Group GovernanceRisk Management
Overview of Risk Management and System
continuity management—we are enhancing oursystem to manage risks related to our businessactivities. In addition to this system, important
decision making is conducted by the Board of
Directors and the Management Committee or
through the approval processing system, after the
expected risks based on each case have been clearlypresented and acknowledged.
Compliance
Importantcompanywiderisks

Quality control	L arge-scale disasters, such as
earthquakes
Information security
Affiliated company controls

Risks that the business structure cannot respond to changes in economic and market conditions, and may affect the performance of the Group
Risks that, after implementing an M&A or external alliance, the expected earnings and effects cannot be achieved due to adverse market conditions and otherfactors, and may affect the performance of the Group

Climate change

Increase in manufacturing costs and materials procurement costs due to a carbon tax based on greenhouse gas emission targets and policies in each country
Suspension of plant operations due to a natural disaster caused by the intensified abnormal weather
Removal from a supply chain or market due to insufficient measures to combat climate change

Human resourcesand organization

Insufficient improvement in corporate value as employees who are the driving force of sustainable growth do not raise their work engagement
Shortage of personnel due to the loss of personnel, inability to employ workers, or adequately develop personnel

Human rights

Exclusion from the market due to the failure to fulfill the responsibility in respecting human rights as a corporation and the potential or actual negative impact
on human rights

GovernanceInsufficient sustained growth and improvement of corporate value due to the deterioration of corporate governance and group governance
Risks of a conflict of interest between the Company and minority shareholders of its listed subsidiaries

Effects of disasters,
infectious diseases, etc.

Disruption in the sourcing or delivery points of the supply chain due to disasters such as a major earthquake, tsunami, fire, typhoon, flood, and outbreak ofinfectious disease, war, terrorism, etc.
Inability to sustain business operations due to natural disaster, accident, and infectious disease at overseas sites
Inability of business continuity due to the outbreak of large-scale cluster of infections of employees

Information security

System failure or unauthorized use of information due to information leakage caused by external or human factors such as cyberattack or unauthorized access
Increased security risks through the use of a legacy system

Safety and healthof employees

Death, inability to work, residual disability, long-term leave, or poor health of employees, due to industrial accident, traffic accidents diseases, etc.

Procurementof raw materials

Supply delay or shortage due to natural disaster, an accident, etc.
Supply shortage or outage due to supply dependence on certain suppliers

Defective products

Risks of unexpected loss compensation due to the occurrence of defects, etc. (in particular, risk of significant additional cost in products related to power
cables, communication cables, automotive products, etc., depending on the nature of the defect)

Worsening
profitability of
construction

Design changes during construction, soaring cost of construction materials and labor
Additional costs incurred due to weather conditions such as ocean conditions and typhoons in undersea cable installation work
Payment of repair costs and compensation for damages or extension of long-term defect repair guarantees in the event of a serious defect or accident, or the
associated delay in the construction period
Changes in legal regulations in the country concerned, changes in the situation of contractors, political instability, disasters, epidemics, and exchange rate
fluctuations in overseas construction projects
Worsening balance of foreign currency contracts when converted into yen

Environmental
pollution andenvironmental
regulations

Environmental conservation problems resulting from leakage of hazardous substances in manufacturing processes, and new capital investment or incurred
cost for measures to comply with changes in environmental laws and regulations
Restrictions on use, disposal, etc. of land
Additional cost of measures due to the enhanced related laws and regulations for soil pollution and the treatment of hazardous substances such as asbestos
and PCB associated with past productions, etc.
Risks of loss costs for product recall, suspension of production and sales, in the event of a violation of regulations related to chemical substances containing
products, such as the RoHS (Restriction of the Use of Certain Hazardous Substances in Electrical Equipment) Directive and the REACH (Registration,
Evaluation, Authorization and Restriction of Chemicals) regulations, in various countries

Asset impairment

Impairment of assets due to a decline in profitability caused by deteriorating market or business conditions

Intellectual property

Risk of direct damage to business or opportunity loss caused by negotiations or disputes, arising from infringement of third parties’ intellectual property rights,
or disputes concerning inadequate technical contracts with third parties
Risks of diminished corporate competitiveness caused by leakage of technical know-how or imitation of products

Violations of laws
and regulations, etc.

Establishment and maintenance of compliance systems
Business restrictions or increased costs due to the enhanced regulations or stricter interpretations of laws and regulations received from regulatory authorities
in conducting business both domestically and internationally
Disposition or sanction of regulatory authority, request for damages from parties concerned, such as business partners, and the deterioration of public esteem
in the event of a violation of laws or regulations,
Administrative disposition due to export to embargoed countries, violation of foreign exchange law, and the risk of extraterritorial application of export control
rules and laws in the United States and China, caused by the worsening U.S.-China relations
Violation of compliance with the laws and regulations of countries concerned
Improper accounting and window-dressing accounting at overseas bases

FURUKAWA ELECTRIC GROUP

Risk Management Committee

Fluctuation in prices ofmaterials and fuels

Rapid fluctuations in prices of non-ferrous metals such as copper and aluminum, synthetic resin such as polyethylene, and fuels such as heavy oil, LPG, and
LNG, caused by supply and demand, speculative trading, or changing global conditions

Fluctuation in
exchange rates,interest rates,and stock prices

Changes in yen-converted amounts of foreign trade, including imports and imports, and foreign currency-denominated claims and liabilities
Fluctuation in the yen-converted amounts of individual financial statements in local currency denominated by overseas consolidated subsidiaries, etc. (anannual depreciation of 3-4 yen against the U.S. dollar is expected)
Increase in funding costs due to rising interest rates (interest bearing debts: 290.6 billion yen as of March 31, 2021)
Additional funding from the company due to a decrease in the market value of pension assets or increase in retirement benefit costs

Financing

Difficulty in raising funds or worsening conditions for raising funds, caused by the deteriorating financial environment
Restrictions on funding or worsening conditions for raising funds, caused by the deteriorating credit ability of the company due to its deteriorating financial
situation

Credit management

Bad debts losses caused by the difficulty of collecting accounts receivable due to the failure of business partners

Tax compliance

Tax costs incurred due to changes in the tax system and transfer price tax system for domestic and international transactions in each country
Additional tax costs incurred due to differences in views the tax authorities

Committee chair: President
Vice chair: General Manager, Risk Management Division
Committee members: Management
Organizer: General Manager, Risk Management Department

Furukawa Electric Group Quality
Management Committee

56

Committee President
chair:
Committee Management
members:
Organizer: General Manager, Quality

Promotion Department

Furukawa Electric Group
Occupational Health and Safety
Committee
Committee President
chair:
Committee Management
members:
Organizers: General Manager, Safety

Promotion Department,
General Manager,
HR & Organizational
Development Department

Furukawa Electric Group
Environment Committee

Central Disaster Prevention andBusiness Continuity Management
Promotion Committee

Committee General Manager,
chair:
Risk Management Division

Committee General Manager,
chair:
Risk Management Division

Organizers: General Manager, Environment

representatives, etc.
Organizer: General Manager,
Risk Management Department

Committee Management
members:

Department,
General Manager, Facility
Strategy Department, Facility
Assets Department

Committee General managers of eachmembers: business division, divisional

For more information, please see the 199th Securities Report pages 16 to 19, "Business-related Risks” (Only available in Japanese)
https://www.furukawa.co.jp/ir/library/sr/pdf/199_04.pdf(As of September 2021)

57

Risk contents

Management strategy(business portfolio,
business restructuring)

INTEGRATED REPORT 2021

Risk item

Board of Directors
Submit proposals and reports

management risk awareness, we have reviewed theitems and content since fiscal 2019, so as to be inalliance with the Group's materiality and ESG
management.
The forward-looking statements in the tablebelow are based on judgments made by theCompany as of March 31, 2021.

Corporate Information/
Data

Furukawa Electric Group has established the Risk
Management Committee, which comprises
management as members, with the President aschair and the General Manager of the Risk
Management Division as vice chair. The committee is
structured to supervise and promote risk
management, internal control and compliance.
Furukawa Electric Group Risk Management
Committee conducts regular risk assessment todetermine what risks exist, define important risks
that require a companywide response, and prioritize
measures to counter these risks. Through specializedcommittee activities in segment-specific areas—
occupational health and safety, quality control, theenvironment, and disaster prevention and business

Furukawa Electric Group’s management performanceis affected by economic conditions in various markets
where we sell our products and provide services.
Risks that may affect the operating performance,stock price, and financial situation of the Group
include the items and content listed in the tablebelow. In addition, as a reflection of the Group's

Business Foundation

risk between the Company and minority shareholdersof its listed subsidiary, we have taken measures tosecure the interests of minority shareholders of thelisted subsidiaries. Specifically, the ratio of independent
outside directors (outside directors who report to theTokyo Stock Exchange as independent directors) at their
Board of Directors has been increased to represent
more than a third. In addition, both Furukawa Battery
Co. and Totoku Electric Co. have established a Conflictof Interest Management Committee as an organization
to examine the rationality and fairness of transactions
with their parent company. Independent outside
directors represent a majority of the Committee at bothcompanies. We will continue to work with the listed
subsidiaries to establish and strengthen an effective
governance system that effectively utilizes independent
outside directors.

Business Strategy

While respecting the independence of each affiliatedcompany's management, Furukawa Electric shallunderstand the overall status of its management,
including compliance and risk management, and provide
appropriate management guidance, including advice andsupport on the establishment of each company's legal andinternal control systems. That is how we ensure thesoundness of each company's management, and we also
strive to strengthen the entire Group’s management
structure and to increase corporate value.
Furukawa Battery Co. and Totoku Electric Co.— oursubsidiaries — are listed on the Tokyo Stock Exchange.
With the aim of maximizing corporate value as a group, we
will continue to analyze the significance of the holding oflisted subsidiaries in light of the proper allocation ofmanagement resources across the entire Group.
Given the fact that there is a structural conflict of interest

About Furukawa
Electric Group

Group Governance / Risk Management

Business-related Risks

Human Rights

Basic Policy on Procurement*1. Furukawa Electric Group calls those who do business with us“partners” who collaborate with us to create value.

1

Fairness and Integrity

We are open to any and all business partners in accordance with theprinciple of free competition and we all act with fairness and integrity.

Compliance with Laws and Regulations and CSR
Procurement

2

Toward the realization of a sustainable society, we conduct our
procurement activities considering environment preservation and safe
operation in comply with all applicable laws and regulations and we do fulfill
our Corporate Social Responsibility.

Partnership3

We always value relationships of mutual trust with our business partners tocreate new values by collaboration.
We pursue to optimize our procurement conditions from the viewpoint ofquality, cost, delivery, technological capabilities and CSR activities.

Initiatives to Enhance the Supply Chain and the Value Chain

1 Positioning

4 Human Rights Due Diligence

7 Compliance with applicable laws and regulations

2 Scope

5 Remedy

8 Dialogue and consultation

within the value chain, such as efficient use of returnroutes to Furukawa Electric; 2) CO2 emission reduction
at the time of procurement; and 3) dealing with the risksof soaring logistics costs and of inability to transport. The
number of our collaboration partners engaged in CO2emission reductions in procurement logistics increased
from 24 in fiscal 2019 to 25 in fiscal 2020.
Decision based on the procurement
amount and the importance
Major partners

Partners (suppliers)

Approx. 5,000
companies

Existing partners:
Continue collaboration in
CRS procurement, basedon the CSR Deployment
Guideline(FY2020)

Approx. 80% ofmaterial/equipment
procurement amount

Initiatives to enhance
the supply chain andthe value chain

BCM of the value chain
Partners Meeting

54 online corporate

https://furukawaelectric.disclosure.site/en/themes/95

Human Rights Initiatives, including Supply Chains
Interest in human rights risks throughout the supply
chain, including forced labor, child labor, anddiscrimination, is growing. In response to these changes
and increases in social demand for human rights,
Furukawa Electric Group revised its Furukawa ElectricGroup CSR Code of Conduct in April 2019, andformulated its Furukawa Electric Group Human Rights
Policy in January 2020. We have thus started efforts toimplement human rights due diligence.

logistics 25 companies(FY2020)In the future, we will conduct a self-assessment
questionnaire (SAQ) survey based on the CSR
Procurement Guidelines with Group companies andpartners to assess human rights and promote
activities that reduce the negative impact of ourGroup's business activities. In fiscal 2021, we plan tocarry out a SAQ survey of 79 Group companies inJapan and overseas, and about 50 major partners,
expanding the scope of the survey.

Commitment to Responsible Mineral Procurement
The Group policy on responsible minerals
procurement is clearly stated in our CSR
Procurement Guidelines and is made known by ourGroup companies and partners. In fiscal 2020, we
used the survey form developed by the Responsible
Minerals Initiative (RMI) of the RBA, and conductedsurveys on the use of targeted metals in key

products of the Company and Group companies. We
have also actively promoted procurement fromsmelters certified by the Conflict-Free Smelter
Program. We will continue to work with Group
companies and partners to ensure responsible
mineral procurement in cooperation with industry
associations and the JEITA.

Supply Chain Data
FY2016FY2017FY2018FY2019FY2020

FY2021

196

199

213

199

198

―

Companies which attended the Partners
Meeting

57

55

57

59

―*2

54

Collaboration partners for CO2 emission
reduction in procurement logistics

4

7

20

24

25

―

Partners evaluated (Major Partners)*2. In fiscal 2020, the Meeting was canceled for the prevention of COVID-19 infections.

59

58

Ask for compliance to the
CSR Deployment
Guideline when we start
new business

Collaboration partners
for CO2 emission
reduction in procurement

9 Information disclosure

See details on our corporate website for “Human Rights”.

Partner evaluation

participants (FY2021)

New partners:

6

Training

INTEGRATED REPORT 2021

Promote CSR in
procurement
activities

198 companies

Responsibility to respect human rights

Furukawa Electric(non-consolidated)

FURUKAWA ELECTRIC GROUP

In relation to our selected partners, who collectively
represent about 80% of our overall material/
equipment procurement amount (“major partners”
hereafter), based on the procurement amount and thedegree of importance we evaluate indicators such as
quality, technology, pricing, delivery system, social andenvironmental contribution, and credit status. There
were 198 major partners in fiscal 2020. For thesemajor partners, we also conduct surveys in the form of
a questionnaire concerning their business continuity
management (BCM) initiatives. In fiscal 2020, we
conducted a manufacturing site survey, and compiled a
database of the answers from our partners. This has
enabled us to obtain a quick picture of partners who
are likely to be affected in the event of a disaster.
We regularly hold the Partners’ Meeting, explain our
corporate situation, procurement policy, and CSR
procurement activities. In fiscal 2020, the Meeting wascanceled for the prevention of COVID-19 infections,but we conducted individual meetings with partners,
gave them a feedback on the evaluation results, andexplained our situation and procurement policy. For
fiscal 2021, an online Partners’ Meeting was held inJune, with 117 participants from 54 major partners.
With regard to procurement logistics, we continued 1)
cost reduction based on optimal means of transportation

Furukawa Electric Group Human Rights Policy (items only) (established in January 2020)

3

Based on the CSR Deployment Guidelines for
Business Partners, we jointly strive with our existing
business partners to thoroughly adhere to laws andregulations, conduct fair trading, respect human rights
and consider safety and the environment, reduce
environmental impact, avoid the use of conflictminerals, and ensure other matters in procurement
activities. For new business partners, we request
compliance with our CSR Deployment Guidelines
when we start a new business relationship.

Declaration of Human Rights and International
Covenants on Civil and Political Rights), International
Labour Organization’s (ILO) Fundamental Rights at
Work, and the United Nation’s Guiding Principles on
Human and Business Rights, the Group has created
Furukawa Electric Group Human Rights Policy and is
promoting initiatives to respect human rights.

Corporate Information/
Data

As part of its activities in keeping with the best interests ofthe environment and society in general, Furukawa Electric,in its procurement activities, conforms to various CSR
practices and standards. In fiscal 2020, we issued
Furukawa Electric Group CSR Procurement Guidelines(3rd Edition), which added the latest social requirements,
based on the Code of Conduct of the Responsible
Business Alliance (RBA) and the Guidelines of theElectronic Information Technology Industries Association(JEITA), and made them known to our partners.

Under Furukawa Electric Group Philosophy, theGroup understands that the human rights ofeveryone affected by its globally expanding businessactivities must be respected. The Group respects
human dignity and all human rights that arerecognized internationally. In accordance with theInternational Bill of Human Rights (Universal

Business Foundation

Promoting CSR in Procurement Activities

Basic Policy on Human Rights

Business Strategy

Furukawa Electric Group contributes to creating
solutions for the new generation of global infrastructure
combining information, energy, and mobility bycollaboration with partners*1 based on relationships oftrust with them. In accordance with Furukawa ElectricGroup Procurement Policy, we are fully considerate ofsafety and the environment in our procurement activities
in order to realize a truly rich, sustainable society.

Furukawa Electric Group Procurement Policy

About Furukawa
Electric Group

Supply Chain / Human Rights

Supply Chain

Efforts to Reduce Greenhouse Gas (GHG) Emissions: Use of Renewable Energy

Environment / Climate Change
Furukawa Electric Group Basic Environmental Policy
We, the employees of the Furukawa Electric Group, recognize that conservation of the global environment is a serious issue confronting the international
community, and we pledge to contribute to a sustainable future for the world through technological innovation that utilizes our strength in advanced
materials.

ActionGuidelines

1

We shall comply with environmental laws and regulations as well as the demands of our customers and others, setting ever higher environmental targets as
we continuously improve our global environmental conservation efforts.

2

We shall strive to develop products that are friendly to the Earth, and create new environmental businesses.

3

We shall strive to reduce environmental risk by incorporating anti-climate change and resource conservation/recycling considerations, as well as a
reduction in the use of environmental impact causing substances, across the entire product lifecycle.

4

We shall evaluate the ecological impact of all of our businesses, and strive for the conservation of biodiversity and sustainable use of resources.

5

We will seek harmony with the natural environment and local communities through dialogue with our stakeholders.

Furukawa Electric Group Environmental Vision 2050

Environmental Targets 2030

Through the provision of environmentally friendly products and services
and recycling-based production activities, contribute to the realization of asustainable society throughout the value chain

Contribution to the decarbonized society: Aiming forzero emissions over the long term.

1

Contribute to a carbon-free society

Aim to reduce greenhouse gas emissions throughout the value chain(Greenhouse gas emissions from business activities (Scope 1 & 2): Challengetarget of zero emissions in 2050)

2

Minimize water usage, and promote the use of recycled materials, including waste
plastic, throughout the value chain3

Contribute to realizing a recycling-based society for water & resources

Contribute to society in harmony with nature

Minimize the impact on ecosystems through value chain
management that includes raw materials

Scope 1: Direct emissions from the company’s plants and offices
Scope 2: Indirect emissions from the electrical power and heatpaid by the company

2

Contribution to the sound material-cycle society:
Promote of the recycled materials usages aiming at thesound material-cycle society.

3

Contribution to the circular & ecological spheresociety: Minimize the impact on the ecological systemthrough the provision of the environmental activities
and products / services.

Furukawa Electric Group set the Environmental Targets 2030 andapplied for the Science Based Targets (SBT) in fiscal 2018 andobtained approval in fiscal 2019.

Metrics, Targets and Performance
Metrics

Base year

Greenhouse gas emissions (Scope1&2)

2017

FY2020Targets
Results
Reduction of 6.7%
Reduced28.3%*or moreEnvironmental impact
reduction

Renewable energy ratio to electric power
consumption

2017

Improvement of 1%
or moreEnvironment businesspromotion
External evaluation
improvement

FY2021
Targets
Reduction of 8.9%
or moreFY2025Mid-term targets
Reduction of 17%

Increased 2.3%

Improvement of 1.5%
or more–Improvement of 3%

Greenhouse gas emissions (Scope3)

2017

–

–

Reduction of 2%
or moreEnvironmentally friendly products ratio
to net sales–

60% or more

58.2%

62%

–

Contribution of products to avoided
environmental impact: reduction of CO2
emissions–

100,000 ton-CO₂
or more157,000 ton-CO₂

110,000 ton-CO₂
or more–CDP climate change score–

Score B or higher

A

Score A–

The Basic Concept of Carbon Neutrality

Specific Measures and Examples of Technology Development(operation start , April 2021)

Eliminate or reduce direct CO2
emissions(Risk)Development of business activities thatconsider climate change

Energy saving, fuel conversion, and recycling rate improvement
Use of renewable energy

2

Eliminate or reduce CO2
emissions by customers andsociety

Development of bipolar-type storage batteries
Development of the Blue-IR hybrid laser BRACE®

3

Capture or transform the CO2that is emitted.

(Revenue opportunities)
Creation of social issue-solving businesses
and creation of environment-friendly
businesses
Formation of partnerships with diverse
stakeholders

Development of technology for producing LPG with metal
encapsulated zeoliteTM

visible the reduction of GHG emissions from ourcore products, such as aluminum wiring harnesses
and copper foil, when used in customers' products.
We thus contribute to GHG emissions reduction
across the upstream and downstream operations ofvalue chain, in addition to reducing GHG emissions
from business activities.

We are working on reducing GHG emissions in the
upstream operation of the value chain: use ofaluminum bare metal, manufactured byhydroelectric power, to make aluminum wire rods—
the material of aluminum wiring harnesses; and useof recycled copper to make copper foil raw
materials. In the downstream operation of the value
chain, we adopt Life Cycle Assessment to makeAluminum substrate(Indonesia)

Copper substrate

Production
Aluminumdrawing
stock
TMS

Aluminum
conductor
wire

Product uses

Aluminum wire harnesses

FAPV

FAPV

(Indonesia)(Vietnam)(Vietnam)Original
copper alloys

αterminal,
etc.

Wire harnesses &components

Nikko Works

Mie Works

Hydroelectric power

Solar power(Furukawa Nikko
Power Generation)FALP

FURMEX

Geothermal power

Solar power(Philippines)

Electrolytic
copper foil

Reduce CO2 through the use ofrecycled material

Copper Foil Division

Solar power(Mexico)FME(India)Solar power

Recycled copper

Contribute to reducing CO2
through the use of aluminum
wire harnesses

Contribute to reducing CO2
through the use of copper foil
for lithium-ion batteries

66

60

1

(operation start, January 2021)

Introduction of green powerfrom hydroelectric power at the
Hiratsuka Works

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Materiality

Solar power generation panels
installed by Totoku Electric Co.

Efforts to Reduce GHG Emissions Throughout the Value Chain

Raw materials made using hydroelectric power

In fiscal 2020 we announced Furukawa Electric Group
Environmental Vision 2050. With regard to contributing
to a decarbonated society, we aim to reducegreenhouse gas (GHG) emissions throughout the value
chain, particularly by reducing GHG emissions (Scope 1
and 2) in our business activities. We have set the goal ofzero emission in 2050.
We will implement specific measures and develop
technologies for moving forward with the three
initiatives toward carbon neutrality.

Furukawa Electric Group’s Basic Policy for Carbon Neutrality
Three Carbon Neutrality Initiatives(operation start, April 2021)

Raw materials

In fiscal 2020, the CO2 emissions of the Group were drastically reduced 28.3% from fiscal 2017 because the COVID-19 pandemic depressed economic activities,
which affected the overall business of the Group.

The Furukawa Electric Group's basic concept for achievingcarbon neutrality consists of three initiatives: 1) eliminate
or reduce direct CO2 emissions; 2) eliminate or reduce CO2
emissions by customers and society in general, and 3)
capture or transform CO2 that is emitted. The concept also
resonates with the key management issues—materiality
for risks (the development of business activities thatconsider climate change) and opportunities (the creationof environment-friendly businesses, and the formation ofpartnerships with diverse stakeholders).

Solar power generation panels
installed by the Mie Works

Corporate Information/
Data

Activity

Furukawa Nikko Power
Generation hydroelectric power
generation

Business Foundation

1(1) The greenhouse gas emissions in the business activities:
Reduce absolute scope 1 and 2 GHG emissions 26% by
FY2030 from a FY2017 base year.
(2) The greenhouse gas emissions in the value chain: Reduce
absolute scope 3 GHG emissions 20% by FY2030 from a
FY2017 base year.

Business Strategy

Basic
Philosophy

We are working on GHG emission reduction by
utilizing the power generated from hydroelectric power
supplied by the Group company Furukawa Nikko
Power Generation Inc. and the solar power generated
at domestic and overseas bases, and purchases fromthe renewable energy menus of electric powercompanies and environmental certificates.

In our efforts to reduce GHG emissions in businessactivities, we are promoting energy saving and fuelconversion at our factories, and the use of renewableenergy throughout our domestic and overseas Group
companies. In fiscal 2020, the renewable energy ratio
was 16.5% for the non-consolidated company anddomestic Group companies, and 10.3% for the entire
Group, including overseas companies.

About Furukawa
Electric Group

Environment / Climate Change

Development of Business Activities
that Consider Climate ChangeCore Elements

Governancea) Describe theboard’s oversight ofclimate-relatedrisks andopportunities.

Recommended Disclosure (progress beyond FY2020 being underlined)

Disclose the organization’s governance around climate-related risks and opportunities.
Recognizing that climate-related risks and opportunities are important management issues (materiality), the Boardof Directors and the Management Committee conducted the following discussions related to climate change. The
Board of Directors also reports and shares quarterly progress related to climate change.
Board of Directors
Nov. 2018 – April 2019Feb. 2021

Formulated Furukawa Electric Group Vision 2030 and reviewed the Group’s Core Value.
Formulated Furukawa Electric Group Environmental Vision 2050.

Management Committee
Oct. 2018 – April 2019
Jan. 2019
Jan. 2020
Dec. 2020 – Feb. 2021

Formulated Furukawa Electric Group Vision 2030 and reviewed the Core Value.
Applied for SBT certification and formulated the Environmental Goal 2030.
Endorsed the TCFD’s recommendations and signed the UN Global Compact.
Formulated Furukawa Electric Group Environmental Vision 2050.

Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses,
strategy, and financial planning where such information is material.

a) Describe theclimate-relatedrisks and opportunities the organization has identified
over the short,medium, and longterm.

Scenario Analysis
Climate-related risks (transition risks, physical risks) and opportunities are identified by business area andcategorized for each time horizon (short, medium, and long term).
In FY2019, we participated in the Scenario Analysis Support Project for Climate-related risks and opportunities in linewith the TCFD, conducted by the Ministry of the Environment. We identified climate-related risks and opportunities
and conducted scenario analysis for our key infrastructure businesses (fiber optic cables of the Communications
Solutions Business and power cables of the Energy Infrastructure Business). In fiscal 2020, we identified climaterelated risks and opportunities and conducted a scenario analysis for our key automotive products business.
Climate-related scenarios are 2°C and 4°C scenarios. We set 2030 as the time axis for consideration, which is thetarget year of Furukawa Electric Group Vision 2030 and of achieving the SDGs. However, 2050 was set for physicalrisks.
Regarding the procurement of materials for the supply chain, the scenarios for the fiber optic cables and power cables
business conducted in fiscal 2019 covered copper only (glass and plastic materials were excluded). The analysis forautomotive products conducted in fiscal 2020 covered copper, aluminum, and plastics.
Power cables

Optical fiber cables*1

Automotive products

Production baseGlobal production bases (Asia,
North/Central America, EMEA)

Japan, China

Global production bases (Asia,
North/Central America)

Materials used

Glass material (fiber optics)
Plastic (cable coating materials)
Copper (metal communication
cables)

Copper (conductive material)
Plastic (cable coating materials)

Copper (wires, terminals)
Aluminum (wires)
Plastic (harness coating materials)

Supply chain

Covers copper only. Not include glass materials or plastics.

Covers copper, aluminum and plastics

Climate-related
scenarios

2°C scenario, 4°C scenario

Target time period

Up to 2030. Up to 2050 for physical risks

Opportunities

Transition
risks

Physical risks

Increased revenue from demand
Increased revenue from accelerating
growth for submarine cables and thedevelopment of 5G/B5G*2 along withenhanced core transmission network
the proliferation of smart cities and thealong with the spread of renewable
surge of communications trafficenergyIncreased revenue from increased
demand for products along with
automotive electrification andweight reduction

Carbon tax avoidance by adopting
renewable energy

Carbon tax avoidance by adopting
renewable energy

Carbon tax avoidance by adopting
renewable energy

Carbon tax on GHG emissions

Carbon tax on GHG emissions

Carbon tax on GHG emissions

Increased in renewable energy
procurement costs

Increased in renewable energy
procurement costs

ncreased in renewable energy
procurement costs

Increase in procurement costs due to Increase in procurement costs due
carbon tax on copper (not yet considered to carbon tax on copper (not yet
for glass materials and plastics)
considered for plastics)

Increase in procurement costs due
to carbon tax on materials (copper,
aluminum, and plastics)

Operation suspension caused bydrought

Operation suspension caused byweather disaster

No impact

Future measures
In fiscal 2020, we expanded the scope of scenario analysis to the automotive product business, but a task remains inthat the risks and opportunities that we have quantified are limited. We are now aware of the need to deepen theanalysis of each scenario and integrate them. In order to achieve Furukawa Electric Group Vision 2030 and
Furukawa Electric Group Environmental Vision 2050, we will continue to work on business impact assessment andresponse measures, and disclose information to strengthen our relationship of trust with our stakeholders.

Chair:President
Vice Chair:General Manager, Risk Management Division
Committee members:Management
Organizer:General Manager, Risk Control Department

Furukawa Electric Group
Environmental Committee
Chair:

General Manager, Risk
Management Division
Vice Chair: General Manager, Monozukuri
Innovation Division
Committee Management
members:
Organizers: General Manager, Environment
Department, and General Manager,
Facility Strategy Department,
Production Technology &Engineering Department

Central Disaster Prevention and
BCM Promotion Committee
Chair:

General Manager, Risk
Management Division
Vice Chair: General Manager, Business Base
Innovation Division and General
Manager, MONOZUKURI
Innovation Division
Committee General managers of eachmembers: business division, divisional
representatives, etc.
Organizers:General Manager, Risk Control
Department

Risk Item

Details of risks

Climate change

Increase in manufacturing costs and materials procurement costs, caused by carbon tax basedon GHG emission targets and policies of each country
Suspension of plant operations, due to natural disasters caused by the intensified abnormal weather
Exit from supply chains and markets due to insufficient measures to combat climate change

See details on page 59,"Business-Related Risks,” and the 199th annual securities report pages 16-19 “BusinessRelated Risks."
https://www.furukawa.co.jp/ir/library/sr/pdf/199_04.pdf (Only available in Japanese)c) Describe how
processes for
identifying,assessing, andmanaging climaterelated risks areintegrated into theorganization’s
overall risk
management.

Metrics and Targetsa) Disclose the metrics
used by the organization to assessclimate-relatedrisks and opportunities in line with its
strategy and risk
management
process.

b) Disclose Scope 1,
Scope 2, and, if
appropriate, Scope
3 greenhouse gas(GHG) emissions,and the relatedrisks.

c) Describe the targets
used by theorganization to
manage climaterelated risks andopportunities andperformanceagainst targets.

Climate-related risks are considered as the priority issue for environmental risk, and are of direct concern to generalmanagers of each business division and divisional representatives, who are members of a special committee, Furukawa
Electric Group Environmental Committee (Chair: General Manager of the Risk Management Division; Vice Chair: General
Manager of the MONOZUKURI Innovation Division). The Committee meets every three months, examines climaterelated risks, and reports and proposes on the monitoring status of climate-related risks and environmental issues to theManagement Committee and the Board of Directors.
In fiscal 2020, we discussed the formulation of Furukawa Electric Group Environmental Vision 2050, including the 2050
Challenge goal, and made a proposal to the Management Council and the Board of Directors. In FY2021, we are discussing
raising the 2030 environmental target for reducing greenhouse gas emissions (scope 1 and 2) to a level that is consistent
with our aim to become carbon neutral in 2050.
For risks related to natural disasters, another special committee, the Central Disaster Prevention and BCM Promotion
Committee (Chair: General Manager of the Risk Management Division; Vice Chairmen: General Manager of the Business
Base Innovation Division and General Manager of the Monozukuri Innovation Division), is held regularly every threemonths to establish Business Continuity Management (BCM), identify business continuity risks, including natural
disasters, and promote and manage the identification process.
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities wheresuch information is material.
Science Based Target (SBT)The greenhouse gases (GHG) emitted by our Group are primarily carbon dioxide (CO2) and sulfur hexafluoride (SF6),
which are derived from energy. Our Group's long-term goal of reducing GHG emissions by 2030 compared to a basein fiscal 2017 is certified as an SBT (2°C target).
Indicators and targets (non-consolidated + domestic Group companies + overseas Group companies)
In fiscal 2020, we set the target of zero by 2050.
Metrics

Units

GHG emissions(Scope 1 and 2)

Results

Targets (2017 as a base year)

Challenge goal

FY2017FY2018FY2019FY2020

FY2021

FY2025

FY2030FY2050

10 4 t-CO 2e

90.3

84.3

74.2

64.8

-8.9%

-17.0%-26.0%

Zero

Renewable energy
ratio

%

7.9

8.9

11.0

10.3

+1.5%

+3.0%

GHG emissions(Scope 3)

10 4 t-CO 2e

163.6

168.9

176.4

141.0

-2.0%

-20.0%

Internal carbon pricing
Estimation of internal carbon pricing began in fiscal 2019. By making carbon prices visible for each business unit, we
encourage preparation for avoiding climate change risks with the ultimate goal of decarbonizing.
Disclosure of environmental information and improvement of external evaluation
We have responded to the CDP questionnaire regarding CDP climate change since fiscal 2008 and CDP water
security since fiscal 2013. We obtained A rating in CDP climate change and B rating in CDP water security in fiscal 2020.
In cooperation with customers who utilize the CDP Supply Chain Program, we will participate in explanatory
meetings and workshops, and in order to maintain and improve the CDP score, we will continue to expand the scopeof disclosure of environmental information and increase reliability. We successfully obtained an A rating in the CDP
Supplier Engagement Assessment for fiscal 2020 for the second consecutive year, thanks to collaboration withinterested parties.
With regard to Scope 3, we began disclosing GHG emissions by category in fiscal 2020.
See details on our website for “ESG Data / Environment Greenhouse gas emissions disclosed to CDP”.
https://furukawaelectric.disclosure.site/en/themes/108

63

62*1..A summary of the results of the scenario analysis is posted on the Ministry of the Environment's Website: “Best practices for planning amanagement strategy utilizing TCFD” 2. B5G: Beyond 5G

Proposals and reports

Risk Management Committee

INTEGRATED REPORT 2021

Risks

FURUKAWA ELECTRIC GROUPc) Describe theresilience of theorganization’s
strategy, taking into
considerationdifferent climaterelated scenarios,
including a 2°C or
lower scenario.

Targetmanufacturing itemsb) Describe theorganization’s
processes for
managing climaterelated risks.

Board of Directors

Corporate Information/
Data

Strategyb) Describe the impact
of climate-relatedrisks and opportunities on theorganization’s
businesses, strategy, and financial
planning.

a) Describe theorganization’s
processes for
identifying andassessing climaterelated risks.

The Company’s overall risk
management is supervised andpromoted by the Risk Management
Committee (Chair: President; Vice
Chair: General Manager of the Risk
Management Division). The Committee
meets every six months to discuss
issues such as risk management,internal control, and compliance.
Subcommittees are established foreach risk of high importance, such asenvironmental risk.
We have added climate change as arisk item to the “Business-Related Risks”
in fiscal 2020, in order to show ourrecognition that climate change is a riskthat could affect the Group's
performance, stock price and financial
situation. The content of the risk reflects
the results of the scenario analysis.

Business Foundationb) Describe
management’s rolein assessing andmanaging climaterelated risks andopportunities.

by the Ministry of the Environment. In order to realize
a sustainable society, we will continue to use TCFD tostrengthen our relationships of trust with our
stakeholders. Toward the realization of a sustainable
society, we will continue to use TCFD to strengthen
our trust relationships with our stakeholders.
The status of the Furukawa Electric Group's
response is as follows:

Recommended Disclosure (progress beyond FY2020 being underlined)
Disclose how the organization identifies, assesses, and manages climate-related risks.

Business Strategy

In January 2020, recognizing that climate-relatedrisks and opportunities are an importantmanagement issue, Furukawa Electric Groupdeclared its endorsement of the Climate-related
Financial Information Disclosure Task Force (TCFD).
At the same time, we participated in the “Climaterelated risks and opportunities scenario analysis
support program in line with the TCFD,” implemented

Core Elements

Risk Management

About Furukawa
Electric Group

Environment / Climate Change

The Status of the Furukawa Electric Group's Response to the
TFCD’s Recommendations

About Furukawa
Electric Group

Human Resources Development
Human Resource Management Policy
Furukawa Electric Group maintains a basic policy of
securing diverse human resources and supporting the
growth of people who continue to take on challenges,
and believes that strengthening human capitalmanagement and organizational execution abilities is
the most important challenge (material issue) thegroup faces for the realization of Furukawa ElectricGroup Vision 2030.

Based on Furukawa Electric Group Vision for Our
People, the group strives to share an ideal of humanresources within the group, construct a personnel
management system based on common guidelines,
and take individual measures (i.e., training systems,
consultation systems, and compensation and benefit
plans) to ensure that diverse human resources areable to work autonomously and successfully.

Furukawa Electric Group Vision for Our People

Challenge Program (GCP), which dispatches young
employees to foreign countries. We are working to alignthese various programs to develop human resources
who can play a dynamic role on the global stage.
Global Human Resource Training System
Training global human resources
Renewed andcontinued

SP2
Generalmanagers
Sectionmanagers

GBL

Recommend
key people ineachdepartment
for training as
global humanresources

GlobalDevelopment
Program

FY 2006–2012

GlobalMindset Program

GDP

GMP

FY 2013–

Data Base
Assistantmanagers

GlobalBusiness Leader(For local
employees)
FY 2010–

Partially carriedout jointly

Mini MBA
Accounting
Diversity
Strategy,
Global Mind Set
etc.
Global Leadership
Business Situation

1O ne Furukawa Course

GlobalChallenge Program(Overseas training program)

2 Frontier course (JICA)

GCP(Overseas training
program)Development of Management Personnel (Succession Planning)
Furukawa Electric's management personnel
development system ensures that candidate humanresources are selected and given opportunities todevelop in the following two tiers:
1 The manager and pre-manager tier
2 The general manager tier for corporate vice president

candidates

Overall Image of the Initiatives for “Strengthening Human Capital Management and Organizational
Execution Abilities”
Furukawa Electric Group Vision for Our People
TargetIncrease satisfaction at workand engagement
Become more independent
Expand individual capabilities

Superiors

Support the growth ofeach employee
Build good teams
Achieve results as a team

Basic stance

Promote new challenges
Implement fair, open systems
that are trusted by
employees

Main initiatives and future direction

Work style reforms
Career design training
Job rotation program
In-house secondary job system (trial
introduction)
Professional program
Train management personnel
Formulate and implement “Furukawa
Seven”
Promote 1on1
Measure the organizational execution
abilities
Advance the behavior reform program
Promote diversity
Target management system
Various interview systems
Revise the personnel compensation
systemMaintain the new office of the head
officeRealize work styles not limited to particular
workplaces
Increase the desire for independent careerformation
Capability development through training andplanned assignments
Transform leadership
Accelerate the changes to the organizational
cultureUtilize career-track hiring, and promote diverse
personnel in the workplace
Realize a culture that promotes new challenges
in both dialogue (feedback and careerinterviews) and systems (side job in thecompany, clearly defined compensation)

Efforts for Leadership Transformation: Furukawa
Electric's Seven Principles for Leaders (Furukawa Seven)
In order to continue generating corporate value in a
fast-changing, uncertain environment, a working
team can deliver results only when the psychologicalsafety of its members is ensured. For this reason, we
have established the Seven Principles for Leaders(Furukawa Seven), which consists of one basic
mindset and six action principles for a leader to build
a good working team. To put these to work, at thestart of every day our officers and executives, anddepartment and section managers declare theseprinciples and act accordingly every day. Our efforts
on leadership transformation also include use of
behavior retention tools such as mobile apps, andsurveys to check practices and organizational health.

1 important mindset and 6 action standards

Take theinitiative

Have gratitude
and trustActionMindsetCommunicate
to beunderstood
ActionEncourage
the challenges

Furukawa S even

7 principles for leaders in the workplace

Give
appropriate
feedback
ActionListen anddialogue
ActionEmpowerand hold
accountable
ActionAction

65

66

Secure diversity

Materiality “Strengthening human capital management and organizational execution abilities”

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Individual

Category

Selection is based on internal and external assessments.
To help candidates develop, we provide individualinternal training programs and personnel transfer plansand promote their participation in external training. We

also prepare succession plans for important positions
within Furukawa Electric Group and supervise successor
development and preparation. We systematically
position human resources in co-ordination withmanagement personnel development plans.
The Nominating/Compensation Committee, mainly
consisting of outside directors, monitors theappropriateness and the operations of the management
personnel development system. The committee also
discusses the appointments of corporate vice presidents
and selects personnel for the CEO succession plan.

Corporate Information/
Data

1. NS: National staff (local employees)
2. SP: Succession Plan

Business Foundation

Development of Global Human Resources
In accordance with “Furukawa Electric Group Vision for
Our People”, we are training human resources who haverich humanity and strong challenge spirit, for the sake ofour group development. The state of our leaders affects
corporate culture and reflects in our business results,
which is why we give training at each level to develop
leadership, and construct relationships between people
by “dialogue” among all our employees. We work hardto instill a mind that is interested in people and respects
others.
We started our Global Business Leader (GBL) training
in 2006 in order to develop personnel who will take on
the role of management in the future. Since fiscal 2013
this has been reformed to Global Mindset Program(GMP), with its extra emphasis on global human resource education. We have also operated a Global
Development Program (GDP) for overseas local
employees since 2010 with the aim of strengthening
links within the Fu-rukawa Electric Group, thecurriculum being partly shared with the GMP.
Furthermore, in fiscal 2014 we launched the Global

Business Strategy

Strengthening Human Capital Management and Organizational Execution Abilities

Strengthening Human Capital Management
and Organizational Execution Abilitiesorganizational culture reform and efforts to improve
the organizational capability to complete tasks.
Looking ahead into the post-COVID-19 world, weare strengthening our internal systems, operations,and infrastructure in fiscal 2021, with the aim topenetrate and establish “new ways of working” thatmaximize the benefits of both remote work andface-to-face communication. We will also continue
to promote employee awareness reform.

Implement and operate programs

Enhance the infrastructure

Transform employee awarenessPromoteremotework

Introduce a telework allowance
Settle commuting expenses based on actual
cost

Enhance the telecommunications lines
Strengthen information security
Enhance the remote tools
Promote digitalization of internal approvaland contracts

Executive management will lead by example
in relation to utilizing remote work
Set targets for limiting office attendance
Hold internal meetings and events on-line
Quick survey of employee needs

Establish
new workstyles

Improve the use of the Internet and SNS formaking internal announcements andcommunicating with customers

Revise the head office functions with an eye
on post-COVID-19, and move into the newhead office building
Promote digitalization of internal documents
Establish satellite offices
Start implementing the manufacturing
workplace remote measures

Activities to promote “Furukawa Seven”
Recommend team learning

Measuresto prevent
infections

Group and global follow-up
Partner with industrial physicians
Thoroughly implement the guidelines of theJapan Business Federation

Utilize partitions and face shields
manufactured in-house

Continually revise and call attention to theguidelines for preventing infection and in
relation to the work styles

Creation of a collaborative space where internal and outside people fortuitously meet, collaborate, create,
and transmit
Creation of diverse communication spaces to stimulate communication through real dialogues and enhance
the power of teams (for team meetings, stand-up meetings, one-on-one meetings, etc.)

reimbursement, we have changed the payment
method from fixed-rate reimbursement toreimbursement of actual commuting expenses.

See details on page 29 “Fun Lab®, a space that creates open innovation”.

Team meeting space

Office space

Refreshing space

Tokiwabashi Tower
The Tokiwabashi Tower, where Furukawa Electrichas moved its head office, is one of Japan’s
leading buildings in respect of environmental andsocial considerations. It obtained the SITES® firstgold certification for a domestic urban complex

building development project (a preliminary
certification) because of various efforts to reduce
environmental impact, in line with ESG
management as promoted by Furukawa ElectricGroup.

* The Sustainable SITES Initiative (SITES®), administered by Green Business Certification Inc. (GBCI®) in the U.S., is a rating program of the landscape for efforts to
reduce environmental impact from three perspectives: 1) design (conservation of water resources, soil and planting, human health and wellbeing), 2) construction(reuse of materials, protection of the air environment during construction), and 3) operation (management plan, explanation to users).

P romotion of electronic documentation(introduction of cloud electronic folders, establishment of file operation rules)

In order to stimulate communication in the remote
work environment, we have switched from ourown servers to a global cloud service, have

simplified access from outside, and have enabledsharing files with users outside the Company,
under a robust security environment.

COVID-19 preventive measures
We strive to constantly follow our internal COVID-19
preventive measures, while making sure that our
workforce follows the guidelines for both infection
prevention and business continuity. As measures toavoid the Three Cs (Closed spaces, Crowded places,
and Close-contact settings), we use desk partitions
and face shields, which are manufactured byourselves, and donate face shields outside our Group.

67

66

we are committed to realizing a new way of working
and creating higher value through dialogues in a
comfortable workplace, collaboration with diverse
people, and improved team strength.

Collaborative spaces

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

participation. This has enabled remoteparticipation from multiple locations, including
overseas, and more active exchange of opinions
than before. In addition, the “Fun Lab®”, an openinnovation base in Yokohama Works, has started
virtual tours utilizing VR technology.

Illustrations

Corporate Information/Dataraising awareness, such as by having executives set
examples, 2) undertaking system development(teleworking allowance, reimbursement of actual
commuting expenses, coreless flexible time system
during the teleworking period), and 3) enhancing
infrastructure (communication line enhancement,
adoption of enhanced laptop security software,digital signatures of documents).

Establish a new workstyle
Review of head office functions and move to a new head office in view of the post-COVID-19 era
On July 19, 2021 we moved our head office from the
Marunouchi Nakadori Building to the Tokiwabashi
Tower in Tokyo Torch (a large-scale redevelopment
district near Tokyo Station). In the new head office,office and securing social distance. Even after the
move, we intend to flexibly review office
functions, taking into account changes inworkstyle and diverse needs of the office.

Refreshing space with an emphasis on reducing physical and mental stress and promoting wellbeing

Online and offline participation of in-house meetings and events
From the viewpoint of preventing the spread of
COVID-19 infections, we are thoroughly
implementing operational guidelines to holdManagement Meetings and other major in-housemeetings online, to the extent possible, in fiscal
2021. The Group's research presentations andtechnical exchange meetings have been heldusing a hybrid method of actual and online

As remote work and other workstyles that are notconfined to locations are rapidly being adopted,
the layout of the new head office reflects thevalue of the office by way of providing a place torealize new workstyles, assuming 50% work at theFree allocation of the office space to enable individuals to choose a location to work according to their task
and mood of the day

Setting of a telework allowance
We have established a new teleworking allowancefor employees who work primarily at home. For
those eligible for commuting expense

An office environment in which each employee demonstrates diversity and realizes a new workstyle

Space for online meetings and enhanced communication functions

Utilization of remote work
Setting of a target rate of work at the office
We are promoting remote work by setting a target
of around 30% work at the office for employees
who can telework and are engaged mostly work in
back-office sections such as at headquarters andbranch offices, located in areas subject to theJapanese Government’s state of emergency orareas of semi-emergency COVID-19 measuresdesignated by local governments. We have been 1)

The relocation project members, selected from various
sections of the entire company, considered office
functions of a new head office based on the idea of an
Activity Based Working (ABW) under the concept “Mix!
Own colors. - Let's draw the future in new colors.” The
ABW idea is that each person selects where to sit
depending on their task or how they feel at the time.
During the process, the COVID-19 breakout prompted thesocial transformation and the functions required for thehead office were revisited.

Business Foundation

Objective

Concept of relocation: “Mix! Own colors. - Let's draw the future in new colors.”

Business Strategy

We established the Workstyle Reform Committee(President as chair and the management as
members) in May 2015 and started workstyle reform
activities led by a dedicated team in the office.
The dedicated team system was changed to theOrganizational Empowerment Team within the Group
Transformation Division in May 2019 and since April
2021, the Human Resources and Organization
Development Department of the Business Basis
Transformation Division has been engaged in

About Furukawa
Electric GroupStrengthening Human Capital Management and Organizational Execution Abilities

Workstyle Reform and New Ways of Working

fostering, women’s career formation support,
promotion of autonomous work-life management, etc.,
aiming at building an environment where diverse
human resources can be active.
We regularly hold events, such as lectures by experts,
aimed at promoting understanding on Diversity &Inclusion (D&I), and corporate-wide forums aimed atpromoting women’s empowerment.

Main recent activities

Occupational Health and Safety
Basic Approach to Occupational Health and Safety Management
In addition to basic legal compliance, Furukawa
Electric Group prioritized initiatives that promote"becoming a safety conscious person" and "realizing
fundamental safety." Our basic approach is to aim forzero accidents and zero illness through safety activities
focusing on three initiatives, that is, safety
management in addition to the abovementioned two
initiatives.

Basic Policy on Health and Safety Management

FY2018A diversity promotion event, including lectures and a panel discussion by directors and managers from Furukawa Electric LatAm
S.A. (Brazil) and OFS Fitel, LLC (USA), was held based on the theme of “Working flexibly and globally.”

FY2019A workshop for directors was held based on the theme of “Unconscious bias.”
An in-house networking event based on the theme of “Diversion & inclusion as a driver for innovation” was held, and a female
outside director of Furukawa Electric and female general managers of group companies participated as panelists.

2 Nurture safety conscious persons that can avoid danger by pointing & calling and by complying with rules.

FY2020One of our female technical employees was invited as a speaker to a seminar of professionals in the scientific field (for the 10th
grade students), held at a girls’ high school in Kanagawa Prefecture. The students eagerly listened to guest speakers about thework of science employees, their day's schedule, and their reasons for choice of career. This seminar has been held for 10 years
since fiscal 2012, including fiscal 2021.

4 Raise the quality of safety management by implementing SIDIS cycle based dialogue, empathy andstandardization.

1 Endeavor to eradicate accidents by inspections and management in accordance with the Industrial Safety and
Health Act.
3 Realize “fundamental safety” in which people and facilities are separated to eliminate unsafe conditions.

*SIDIS: (1) Stare & Imitation (SI), (2) Dialog (D), (3) Improvement (I), (4) Standardization (S)success of womenin the workplace

Occupational Health & Safety Promotion System
Furukawa Electric Group has established Furukawa
Electric Group Occupational Health & Safety
Committee (on which the President serves ascommittee chairman) as the highest body forpromoting occupational health and safety at a grouplevel. The committee membership is composed of
executives, and carries out deliberation, decision-

1 We aim for 7% of females in managerial positions by fiscal 2025
2 We aim for 15% of females in chief positions by fiscal 2025
3 We aim for 40% of females in university graduates recruits by fiscal 2025

A summary of our company’s initiatives is available on the Ministry of Health, Labour andWelfare’s “Enterprise database promoting women’s success”.
https://positive-ryouritsu.mhlw.go.jp/positivedb/detail?id=529 (Only available in Japanese)

The subsidiary employs 43 people with disabilities atthree locations. They engage in cleaning and electric
wire disassembly. Furukawa New Leaf is proactively
contributing to the community, focusing on
recruitment and training and increasing the number ofjobs it provides by introducing new businesses.

Human Resources (Diversity & Inclusion) Data
Unit
Employees in total*1
Share of women in employees
New hires in total*2
Share of women in new hires

President

Committee
members:
Management

Organizer:
General Manager, Safety
Promotion Department,
General Manager, HR &Organizational
Development Department

FY2016FY2017FY2018FY2019FY2020

FY2021

Persons

3,651

3,685

3,816

3,925

4,084

–

%

8.6

9.1

9.2

9.6

12

–

Persons

60

107

150

161

174

168

On May 15, 2017, Furukawa Electric Group announced“Furukawa Electric Group Health Management
Declaration” with the purpose to promote the “HealthManagement” which is working for the strategic healthmanagement and health promotion. Based on thisdeclaration, we are supporting that employees will risein health awareness and actively implement own
health maintenance.

Furukawa Electric Group Health Management Declaration
Furukawa Electric Group recognizes the mental and physical health improvement of its employees as an importantmanagement issue and will further advance activities that have been undertaken as part of health and safety
management.
In order to "nurture human resources at every level, so that we can become a more diverse and creative
organization" as stated in our Management Philosophy, it is important that employees face work in good mental
and physical conditions, as a basis of their work style. Furukawa Electric Group has therefore given priority toemployees’ safety and health. We are committed to building a company which continues to grow with its
employees working vigorously and being proud of their company, by implementing various activities for healthmanagement throughout the Group.
Moreover, we will strengthen the work style reform program and our cooperation with the
May 15, 2017
Health Insurance Union and be aggressively engaged in initiatives to help employees
Keiichi Kobayashi
improve health and raise health awareness.
*The term “health and productivity management” is a registered trademark of the Workshop for the Management of Health on Company and Employee.

25

29

21

20

20

13

20.2

20.1

19.7

20.8

20.2

–

Female employees’ average length of service*1

Years

19.7

18.9

18.4

18.2

17.2

–

Coverage

Unit

FY2016FY2017FY2018FY2019Managers in total*1

Persons

937

936

960

940

964

–

Furukawa Electric*1

The frequency rate of accidents resulting in time off work*2

–

0.28

0.63

0.48

0.59

0.11

%

2.8

3.3

3.2

3.4

3.4

–

Domestic group companies*1

The frequency rate of accidents resulting in time off work*2

–

0.72

0.30

0.56

0.32

0.21

Persons

18

21

23

20

22

23

Persons

1

1

1

1

1

2

1,490

Persons

4

4

4

3

3

3

2.31

2.23

2.12

2.14

2.09

2.32

Share of women in managers
Executive officers who do not concurrently serve as directors*2
Female executive officers
Foreign executive officers
Employment rate of people with disabilities*

3%*1. Numbers of employees and managers, and data of average length of service are as of the end of fiscal year.
*2. Numbers of new hires and executive officers are as of April 1.
*3. Numbers of employment rate of people with disabilities are as of June 1.

Occupational Health & Safety Data

Furukawa Electric

FY2020

Employees receiving safety training

Persons

979

1,001

1,345

1,890

Employees receiving health training

Persons

2,073

3,707

7,109

6,271

7,391

Total time of receiving health training

Hour

2,451

3,111

3,584

2,929

2,803

*1. The calculation for fiscal 2020 covered full-time employees and temporary staff at Furukawa Electric and 34 domestic group companies.
*2. Frequency rate = (the number of casualties / Total actual work hours) x 1,000,000

69

68

%
Years

Male employees’ average length of service*1
Furukawa
Electric

Committee chair:

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Coverage

Furukawa ElectricGroup Occupational
Health and Safety
Committee

Health Management

The Activity to Promote the Employment of People with Disabilities

Furukawa Electric established special subsidiary
Furukawa New Leaf in fiscal 2004 to create anenvironment where more people with disabilities areable to work in a better setting, provide a place forthem in society so that they are able secure stability
and peace of mind, and develop independent workers
who follow rules and actively participate in society.

making and follow-up activities for Furukawa ElectricGroup as a whole in respect to policies and initiatives
in health and safety.

Corporate Information/
Data

Objectives related
to support thepromotion of women's careers.
In fiscal 2018, we will develop and promote newtargets and action plans.

Business Foundation

5 Promote mental and physical health improvement by Furukawa Electric Group’s health management activities.

The Activity to Promote Women's Careers

In April 2016, we acquired Level Three of the "L-Mark",
which is an accreditation for out-standing companies in
the implementation of initiatives related to theBusiness Strategy

One of our Group’s management philosophies is to“nurture human resources at every level, so that we canbecome a more diverse and creative organization”.
It is essential for the progress of our Group’s global
management to create a corporate culture in whichmore diverse personnel can succeed. In April 2014, we
set up a Diversity Promotion Section, and are working
on various measures such as organizational mind

About Furukawa
Electric GroupStrengthening Human Capital Management and Organizational Execution Abilities / Occupational Health and Safety

Using Diverse Human ResourcesOverall Business Condition and Business Results

750(Billion yen)

811.6

(Billion yen)

20

30

23.6

22.8

20

20

750
10.0

10
10

8.4

0

0
2019

2020

(FY)

2020

(FY)

2019

2020

(FY)

600

832.0

2020

521.6

(Yen)

(FY)

100

250.25
200

200

60.0

(FY)

50

100

0
2020

25
0

0
2019

2020

(FY)

85.0

75
141.882019

Annual dividend per share
(Yen)

300

540.4

400

0
2019

Net income per share(Billion yen)

250

0

0
2019

Total liabilities

500

5

5.2

794.6

(infrastructure/automotive markets) that support
the Group's sustainable growth, and prioritize
capital investment and R&D for the creation of new
businesses, thereby strengthening the Group's
profitability and continuing to improve its financial
structure in accordance with our medium-term
management plan Furukawa G Plan 2020.
For fiscal 2020, we paid annual dividends of 60 yen
per share, in view of the financial results of the year.

2019

2020

(FY)

2019

2020

(FY)

77

70

10

Total assets
1,000

15

500
250

We aim to manage the company with a focus on
capital efficiency and have set forth a basic policyof balancing between providing shareholder returns
and making strategic growth investments, fostering
next generation new businesses, and improving
financial health.
Under this basic policy, we position thecontinuation of stable dividends as one of thepriorities of management. At the same time, we
focus on expanding profits in key business areas(Billion yen)

17.6

by 1.9 billion yen (31.2 billion yen less than in
FY2019) mainly due to purchase of property, plantand equipment of 33.4 billion yen, proceeds fromsales and redemption of investment securities of
14.8 billion yen, and proceeds from sales of noncurrent assets of 22.4 billion yen.
Net cash flow from financing activities increased by
35.1 billion yen (35.3 billion yen more than in FY2019)
mainly due to net increase in long-term debt.

Basic Policy on Profit Distribution and Dividends

Net income attributableto owners of the parent
company(Billion yen)

30

Cash and cash equivalents increased by 32.1 billion
yen to 87.2 billion yen at the end of FY2020
compared to the end of FY2019.
Net cash flow from operating activities decreased
by 0.5 billion yen (42.4 billion yen less than in
FY2019) due to the combination of profit before
income taxes of 21.3 billion yen and loss on disposalof non-current assets of 20.8 billion yen.
Net cash flow from investment activities decreased

INTEGRATED REPORT 2021

914.4

Cash Flows

Corporate Information/
Data

Ordinary income

decrease related to disposals and sales.
Total liabilities increased 18.8 billion yen from theend of FY2019 to 540.4 billion yen. Interest-bearing
liabilities, including debt, corporate bonds, andcommercial paper, increased 39.5 billion yen to 290.6
billion yen, while provision for product defectcompensation decreased 13.7 billion yen.
Net assets increased 18.6 billion yen compared tothe end of FY2019 to 291.6 billion yen. As a result of
an increase in net income attributable to owners of
the parent company, retained earnings increased 3.4
billion yen, and total accumulated othercomprehensive income increased 15.9 billion yen.
The equity capital ratio increased 1.0 percentage
point from the end of fiscal 2019 to 31.2%.

Business Foundation

Net sales

Total assets at the end of FY2020 totaled 832.0 billion
yen, an increase of 37.4 billion yen from the end of
FY2019. Current assets were 429.8 billion yen, up 43.6
billion yen from the end of fiscal 2019, and noncurrent assets were 402.2 billion yen, down 6.2 billion
yen from the end of fiscal 2019. While cash anddeposits, inventories, and intangible assets increasedby 30.0 billion yen, 5.0 billion yen, and 4.2 billion yen
respectively, deferred tax assets decreased by 7.8
billion yen. Working capital, which is current assets
less current liabilities, increased 48.1 billion yen from ayear ago to 114.6 billion yen. Tangible and intangible
fixed assets fluctuated due to an increase of 40.0
billion yen in capital expenditures, a decrease of 32.2
billion yen in depreciation and amortization, and a

Business Strategy

FURUKAWA ELECTRIC GROUP

review of capital investment plans, based on the
expectations of deteriorating profits. We also
formulated guidelines concerning the COVID-19
preventive measures and working practices, andestablished a working system that ensures the safetyof employees and their families, including promotionof remote work and thorough measures for infection
prevention at work. Moreover, we revised the layoutof the new head office (and moved in July 2021) inanticipation of the new post-COVID-19 workstyle.
The Furukawa Electric Group’s net sales decreased
year-on-year in fiscal 2020. Our overall business,
including the Communications Solutions business,
was sluggish due to the COVID-19 impact as well as
the sale of the copper tube business and thereorganization of a part of the wire business, which
resulted in both businesses dropping out of thescope of consolidation. Profit also decreased fromthe previous year due to significant impact from thestagnant global economic activities caused by
COVID-19, in spite of some positive impact from
efforts for cost reduction and cost control, whichwere mainly spearheaded by the Emergency
Management Measures Team.
As a result, net sales were 811.6 billion yen (down
11.2% from the previous year), operating income was
8.4 billion yen (down 64.2%), and ordinary income
was 5.2 billion yen (down 77.2%) on a consolidated
basis. As a result of extraordinary income (including
gain on disposal of non-current assets) of 33.4 billion
yen and extraordinary losses (including provision for
product defect compensation) of 17.3 billion yen, net
income attributable to owners of the parent company
was 10.0 billion yen (a 43.3% decrease from theprevious fiscal year). Overseas sales were 376.4
billion yen (down 10.1%), and the ratio of overseas
sales was 46.4% (up 0.6 percentage points from theprevious year).

(Billion yen)

1,000

Financial Position

In fiscal 2020, the global economy was significantly
affected by the COVID-19 pandemic and theeconomic environment deteriorated rapidly. In the
United States, the government's major measuresagainst the COVID-19 pandemic supported its
economy but the pace of economic recovery wasmoderate. In Europe, the stay-at-home measures
implemented in the UK and other countries
significantly restricted individual consumption andcorporate production activities, and economic
activities have been substantially reduced. In China,
the economy significantly contracted temporarily
but has then been recovering, despite the uncertain
economic environment, partly driven by theheightened political tensions with various countries
including the United States and Europe.
In Japan, a state of emergency was declared due tothe spread of COVID-19, and the economic activities
were greatly affected. In the second half of the year,
the spread of infections tapered, but spiked in
January 2021, increasing uncertainty about theeconomic outlook.
Meanwhile, prompted by the COVID-19 pandemic,
digitalization accelerated across society, interest in
ESG and SDGs increased, and the global supply
chains were reviewed. These were among thechanges newly important for looking beyond thepost-COVID-19 world.
In this environment, Furukawa Electric Group
promoted measures based on the medium-term
management plan Furukawa G Plan 2020. In addition,
we established the Emergency Response Team andimplemented various measures to minimize theimpact of the pandemic. Specific measures included
the investigation of the COVID-19 impact on eachbusiness area, formulation of several recovery
scenarios, as well as thorough management of
inventories, cost reduction, and curbing of expenses,
and improvement in operating cash flow through a
Operating income

About Furukawa
Electric GroupManagement Analysis of Operating Results and financial Position

Management Analysis of Operating Resultsand Financial Position

Initiatives for the Medium-term Management Plan Furukawa G Plan 2020
Based on the Medium-term Management Plan, Furukawa G Plan 2020 with the final year set for fiscal
2020, Furukawa Electric Group has made various efforts to achieve the following financial targets.
Furukawa G Plan 2020 (FY2016-2020) Results and Financial Targets for FY2020
FY2018 results

FY2019 results

Operating income¥38.6bn¥44.8bn¥40.8bn¥23.6bn¥8.4bn ¥40.0bn or more ¥55.0bn or more

Net income attributable to owners of theparent company¥17.6bn¥28.5bn¥29.1bn¥17.6bn¥10bn ¥20.0bn or more ¥30.0bn or more

0.99

0.88

0.81

0.82

0.79

-

Less than 0.8

Equity capital ratio

27.6%

29.2%

30.3%

30.2%

31.2%

-

More than 30%

ROE

9.3%

12.9%

12.0%

7.2%

4.0%

More than 8%More than 10%

12.1%

13.1%

11.2%

6.1%

2.2%

10% or more

10% or more

Return on operating
assets

Initial in May 2016

Revised in May 2018

Key initiatives of the Furukawa G Plan 2020, which began in FY2016, are 1 to strengthen priority areas,
namely the Infrastructure (Communications Solutions / Energy Infrastructure) and Automotive segments,
2 expand sales in the global market, and 3 accelerate the creation of new business.

Furukawa G Plan 2020: Group Global Growth
Achieving unwavering growth

Priority measures
1. Strengthen and transform business
2. Expand sales in the global market
3. Accelerate the creation of new businesses

improve productivity. In the automotive sector, wesought to obtain orders for wiring harnesses for global
models, and we promoted the optimization of
production systems and the enhancement of
production capacity in the Asian region.
We have also taken steps to improve our lowmargin businesses and products, using the return on
operating assets*1 as an indicator. We have also
reviewed our business portfolio based oncomprehensive considerations such as businesssynergies with the priority areas.

FURUKAWA ELECTRIC GROUP*1. R
 eturn on operating assets = Operating income / Operating assets(inventories + tangible and intangible fixed assets)

Major Actions to Revise the Business Portfolio
Sold all of held shares of a subsidiary, FCM Co., (listed on the JASDAQ market at that time).

2

Reorganized the sales and distribution business of general-purpose power cables for the construction andwholesalers markets. (Established a joint venture company with Showa Densen Holdings Co.)

3

Sold the copper tube business. (Sold to a special purpose company of Japan Industrial Partners, Inc.)

4

Reorganized part of the wire business. (Established a joint venture with the Superior Essex Group.)

2

Opened a base in Silicon Valley in the United States for exploring collaboration opportunities with Americancompanies and universities.

3

Established industry-academia collaboration courses at several national universities.

4

Concluded agreements with several local governments on disaster prevention, disaster reduction, etc.

At the beginning of the Furukawa G Plan 2020, we
had strong business results, mainly due to thesteady capture of strong demand for optical fiber,
etc. in North America in the infrastructure sector
and increase in wiring harnesses-related sales in theautomotive sector. As we achieved the initial targets
earlier than planned, with consolidated operating
income of 44.8 billion yen and net income
attributable to owners of the parent company of
28.5 billion yen in fiscal 2017, we revised our targets
upward in May 2018. Since then, however, earnings
in the Communications Solutions businessdeteriorated due to a worsening supply-demandbalance of optical fiber, etc. originating in China andthe loss of sales opportunities that stemmed fromdelays in productivity improvement of optical fiber
cables in North America. Furthermore, since 2020,
the COVID-19 pandemic significantly depressed
global economic activities and we could not achieve
our revised targets. Nevertheless, we have beenable to achieve certain results from the initiatives toimprove our financial structure and to strengthen
our corporate base. In March 2020, Rating andInvestment Information, Inc. (R&I) upgraded
Furukawa Electric to “A-” in March 2021 for the firsttime in the 19 years (since June 2002).

Building a Base for the Next Medium-term Management Plan
We originally scheduled to start the next mediumterm management plan in fiscal 2021, but havesuspended its formulation and postponed the startof the plan because the COVID-19 pandemic hassignificantly changed the business landscapesurrounding the Group. The analysis based on theefforts and results of the 2020 medium-term plan
will therefore be reflected in the future plan.
In fiscal 2021, we are working on the measureslisted on the right in order to build a base for the
implementation of the next 2025 medium-term plan
toward the achievement of Vision 2030. We are
currently formulating the 2025 plan, which will beannounced as soon as it is finalized.

FY2021 Management Policy
In FY2021, we will become a stronger company and makedefinite preparations for the 2025 medium-term management
plan. In addition, we will implement mainly the following
initiatives.

Transform the businesses

Strengthen the key businesses and continue to revise the businessportfolio through responses to the low-margin and non-corebusinesses

Establish and foster new businesses

Create environment-friendly businesses and businesses that solve
social issues

Strengthen management focus on capitalefficiency

Evolve the “return on operating assets” used as an indicator in the2020 medium-term management plan, and shift to target
management with a focus on capital efficiency and greater awarenessof “cost of capital”

73

72

1

Established the open laboratory FunLab® inside the Yokohama Works as a place to co-create with participationby the outside world.

INTEGRATED REPORT 2021

In strengthening priority areas, we have promoted
sales of optical fiber and fiber cables (hereafter statedas “optical fiber, etc.”) and development of new
products related to digital coherent transmission in
North America, and expanded the solution business inSouth America. In addition, capital investment wasmade to increase production capacity mainly in our
North American base for optical fiber, etc. In theenergy field, we focused on steadily capturing
demand for ultra-high voltage underground cables inJapan and receiving orders for submarine cables forrenewable energy projects, which are expected to
expand demand. We also made capital investments in
response to long-length undersea lines and to
1

1

Corporate Information/
Data

Furukawa Electric Group Medium-Term
Management Plan FY2016-2020

Major open innovation initiatives

Business Foundation

FY2017 results

harnesses to respond to the progress of CASE
(Connected, Autonomous, Shared & Services, andElectric).
In addition, as an effort to create a new businessmodel, we commercialized industrial lasers that
contribute to mobility electrification by utilizing ourknowledge of fiber laser technology and materials
technology. Other R&D projects we concentrated on
include a power supply system utilizing non-contact
power transmission technology, bipolar-type
storage batteries, which contribute to the stablesupply of electricity generated by renewable energy,
and LP gas generation technology by use of metal
encapsulated zeoliteTM. We have also actively
engaged in open innovation that combines ourlong-standing technologies with external
technologies and ideas, toward achieving Furukawa
Electric Group Vision 2030.

Business Strategy

FY2016 results

Net D/E ratio

FY2020 results

FY 2020 targets

Financial Indicators

Concerning sales expansion in the global market,
we have made efforts to establish a system for
global management of production and supply
systems for optical fiber, etc. in the Communications
Solutions business. In addition, we have establisheda system to undertake global business activities bytransferring a corporate supervising function of theSoutheast Asian region to our Thai subsidiary.
Group-wide development of potential management
candidates, including those in overseas subsidiaries,
was another initiative we have worked on.
3 Concerning the creation of new businesses, we
accelerated growth investment in the infrastructure
and automotive areas and focused on productdevelopment for low-loss, high-density fiber optics,
development of submarine line element technology
for renewable energy, and development of
peripheral monitoring radars and aluminum wire2

About Furukawa
Electric Group

Mid- and Long-term Management Strategy

Mid- and Long-term Management Strategy

Mid-term
management plan

New Frontier 2012
(Millions of yen)

FY2010Financial position(at the end of fiscal year)

Per share data*2

Ratios

FY2019FY2020991,590

914,439

811,600

Operating income

35,144

15,947

17,76325,456

17,873

27,116

38,62344,80440,842

23,565

8,429

Ordinary income

31,422

12,872

17,612

25,532

18,59818,71036,02446,90839,07822,771

5,189

Net income attributable to owners of theparent company

12,213∆ 11,123

3,576

5,608

7,355

10,007

17,57028,547

29,10817,63910,001

Capital investments (CAPEX)

27,94733,58147,77237,43630,67425,68731,58438,53950,03653,14439,963

Depreciation

40,396

39,21635,347

28,10622,50823,23523,307

25,10626,271

29,42332,163

Research and development expenses

18,296

18,94920,21017,461

16,59916,845

17,454

19,532

21,141

21,65020,217

Net assets

215,904

197,569

222,843

199,733

214,743

198,587

237,051

272,071

279,911

273,030

291,617

Total assets

826,944790,114819,702714,845734,125

705,725

750,126

808,632

818,021794,616

832,044

Equity Capital

165,968

144,694

165,739

177,237

190,741

173,163

206,712236,518

247,659

240,280

259,870

Operating Assets*1

389,193

370,989

396,951

294,333

307,688298,228

319,588341,825

364,456

386,176

387,832

99,907

94,888104,249

93,66899,443

93,167104,355

113,792

122,890

115,862

120,836

Cash flows from operating activities

37,121

30,77454,947

18,912

41,48941,56940,402

38,42946,46041,942∆ 479

Cash flows from investing activities∆ 21,382∆ 20,252∆ 44,939∆ 40,290∆ 23,533

1,947∆ 36,361∆ 34,319∆ 31,042∆ 33,119∆ 1,908

Cash flows from financing activities

35,140∆ 22,845∆ 11,402

29,917∆ 15,537∆ 20,942∆ 10,378∆ 1,943∆ 19,414

∆ 171

17.30

∆ 15.75

5.07

7.94

10.42

14.17

249.17405.05412.98250.20141.88

Net asset per share (Yen)

235.1

204.9

234.7

251.0

270.2

2,452.6

2,933.2

3,355.8

3,513.6

3,408.9

3,686.4

Operating income margin on sales (%)

3.80

1.74

1.92

2.73

2.06

3.10

4.58

4.63

4.12

2.58

1.04

Equity capital ratio (%)

20.1

18.3

20.2

24.8

26.0

24.5

27.6

29.2

30.3

30.2

31.2

Return on operating assets (%)*3

9.0

4.3

4.5

8.6

5.8

9.1

12.1

13.1

11.2

6.1

2.2

ROE (%)

7.4

∆ 7.2

2.3

3.3

4.0

5.5

9.3

12.9

12.0

7.2

4.0

3.8

1.6

2.2

3.3

2.6

2.6

4.9

6.0

4.8

2.8

0.6

1.11

1.14

1.15

1.21

1.20

1.22

1.16

1.24

1.21

1.13

1.00

Unit

FY2016FY2017FY2018*1. Operating Assets are the total of inventory and tangible and intangible fixed assets.
*2. We conducted a one-for-ten reverse stock split of our company’s common shares effective October 1, 2016.
*3. Return on operating assets is the ratio of the operating income over operating Assets.

FY2019FY2020104 t-CO2e

88.1

90.3

84.3

74.2

64.8

Total electric power consumption

GWh

1,323

1,387

1,379

1,293

1,179

Renewable energy

GWh

105

110

123

142

121

Renewable energy ratio to electric power
consumption

%

7.9

7.9

8.9

11.0

10.3

Energy consumption

1,000 kℓ

412

419

424

396

351

Water usage

1,000 m3

12,86813,014

13,14012,535

11,799

Greenhouse gas emissions

104 t-CO2e

42.0

44.3

38.7

34.2

31.6

Total electric power consumption

GWh

619

644

643

613

569

Renewable energy

GWh

105

110

109

113

94

17.0

17.1

17.0

18.5

16.5

Renewable energy ratio to electric power
consumption%
1,000 kℓ

192

198

198

191

176

Water usage

1,000 m3

10,28910,362

10,516

9,912

9,602

ConsolThe frequency rate of accidents resulting intime off work*6

-

0.28

0.63

0.48

0.59

0.11

-

0.72

0.30

0.56

0.32

0.21

Employees receiving safety training

Persons

979

1,001

1,345

1,890

1,490

Employees receiving health training

Persons

2,073

3,707

7,109

6,271

7,391

Total time of receiving health training

Hour

2,451

3,111

3,584

2,929

2,803

*5. The calculation for fiscal 2020 covered full-time employees and temporary staff at Furukawa Electric and 34 domestic group companies.
*6. Frequency rate = (the number of casualties / Total actual work hours) x 1,000,000

FY2017FY2018FY2019FY2020

Employees in total*7

Persons

52,25451,92552,21550,232

48,449-

Employees in total*7

Persons

3,651

3,685

3,816

3,925

4,084

-

Furukawa
Electric

New hires in total*8

9.1

9.2

9.6

12

-

60

107

150

161

174

168

%

25

29

21

20

20

13

20.2

20.1

19.7

20.8

20.2

-

Female employees’ average length ofservice*7

Years

19.7

18.9

18.4

18.2

17.2

-

Persons

937

936

960

940

964

-

%

2.8

3.3

3.2

3.4

3.4

-

Persons

18

21

23

20

22

23

Female executive officers

Persons

1

1

1

1

1

2

Foreign executive officers

Persons

4

4

4

3

3

3

Senior Fellows*8

Persons

3

2

2

2

1

1

Directors*9

Persons

12

12

12

12

12

11

Outside directors

Persons

5

5

5

5

5

5

Independent directors

Persons

3

3

3

5

5

5

Female directors

Persons

0

0

0

1

1

1

Persons

6

6

6

6

6

6

Outside members

Persons

3

3

3

3

3

3

Independent members

Persons

3

3

3

3

3

3

Female members

Persons

0

0

0

0

1

1

Audit & Supervisory Board members*9

Furukawa
Electric

8.6

Years

Share of women in new hires

Executive officers who do not concurrently
serve as directors*8

Furukawa
Electric%
Persons

Male employees’ average length of service*7

7
Furukawa Managers in total*
Electric
Share of women in managers

Furukawa
Electric

FY2021*7. Data of employees, managers and employees’ average length of service are as of the end of fiscal year.
*8. Numbers of new hires, executive officers and Senior Fellows are as of April 1.
*9. Numbers of directors and Audit & Supervisory Board members are as of the end of fiscal year, but are as of June 24 for fiscal 2021.

75

77

The frequency rate of accidents resulting intime off work*6

FY2016

Share of women in employees*4. The coverage of group companies for fiscal 2020 is 30 domestic and 58 overseas group companies. For details, please see the “Scope of the environmental
management (FY2020)” on page 79 of this report.

Occupational health & safety data

Unit

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Energy consumption

Human resources data

Corporate Information/
Data∆ 18,317

Net income per share (Yen)Greenhouse gas emissions

Furukawa Electric

FY2018967,333

Climate change data

Domestic groupcompanies*5

FY2017

843,344

Figures are rounded down to the nearest one million yen. Other figures of financial data and non-financial data are round to the nearest value.

Furukawa Electric*5

FY2016874,879

Total asset turnover ratio (times)

Furukawa Electric+
Domestic groupcompanies*4

FY2015

867,817

ROA (%)

Furukawa Electric+
Domestic and overseas
group companies*4

FY2014

931,781Business Foundation(fiscal year)

FY2013924,717

Balance of inventory assets

Cash flows

FY2012918,808

Business Strategy(fiscal year)

Furukawa G Plan 2020

Furukawa G Plan 2015

925,754

Net sales

Operating results

FY2011

About Furukawa
Electric Group

Main Financial and Non-Financial Data

Financial and Non-Financial Data

Consolidated Statement of
Income and Consolidated Statement ofComprehensive Income

Consolidated Balance Sheet (Millions of yen)
Assets

As of March 31,
2020

As of March 31,
2021

Current assets

84,362

Notes and accounts
receivable-trade192,513

191,930

899

Notes and accounts payable- trade111,586

115,502

Short-term debt

110,515

103,523

2,923

Current portion of bonds

15,00030,000

Income taxes payable

2,785

2,033

Merchandise and finishedgoods

34,55038,210Work in process

33,849Raw materials and supplies
Other

Total; Current assets

34,512

Provision for product defectcompensation

17,711

4,022

47,462

48,114

Other

62,04860,121

23,80130,653

Total; Current liabilities

319,647

315,204∆ 1,254∆ 894

Non-current liabilities

386,179

429,812

Property, plant and equipment

229,611

235,399

Machinery and delivery
equipment

475,766

446,936

Tools, furniture and fixtures

74,79874,520Land

36,35435,127

1,261

1,257

Right-of-use assets

10,934

11,390Construction in progress

34,52927,108

Accumulated depreciation∆ 609,037∆ 584,996

Total; Property, plant andequipment

254,219

246,744

Intangible assets
Goodwill

2,072

1,450

Other

14,022

18,79916,095

20,250Investment securities

100,933

101,708

Investments in capital

6,466

8,965

Deferred tax assets

14,726

6,948

Net defined benefit asset

5,899

6,859

Other

11,162

11,788

Allowance for doubtful
accounts∆ 1,065∆ 1,034

Total; Investments andother assets

138,122

135,236

Total;Non-current assets

408,436402,231794,616

832,044

Total; Intangible assets
Investments and other assets

Total; Assets

For the Fisical Year
Ended March 31,
2021

Net sales

914,439

811,600

Cost of sales

764,200

682,288

Gross profit

150,239

129,31138,752

34,621

SG&A
Selling expenses

87,921

86,260Total; SG&A

G&A expenses

126,674

120,881

Operating income

23,5658,429Interest income

584

611

Dividend income

2,067

1,690

Profit in equity method affiliates

2,458

-

-

502

Non-operating income

Foreign exchange gains

Bonds payable

30,00030,000Long-term debt

95,573127,094

Provision for environmental
measures10,396

10,229Net defined benefit liability

53,46044,514

Asset retirement obligations

1,304

1,323

Other

11,203

12,061

Total; Non-current liabilities

201,937

225,222

Total; Liabilities

521,585

540,426

Gain on valuation of derivatives
Other
Total; Non-operating income

548

-

1,786

1,918

7,446

4,723

4,326

3,586

Non-operating expenses
Interest expenses
Loss in equity method affiliates
Foreign exchange losses
Loss on valuation of derivatives
Other

-

893

1,014

-

-

1,167

2,900

2,316

Total; Non-operating expenses

8,240

7,963

Ordinary income

22,771

5,189

Extraordinary income

Net assets
Shareholders' equity
Capital stock

69,39569,395

Other capital surplus

22,78723,028Retained earnings

165,101

168,542

Treasury shares

∆ 598

∆ 576

Total; shareholders' equity

256,685

260,388

Accumulated other comprehensive income

Gain on disposal of non-current assets

5,848

22,144Gain on sales of investment securities

7,494

9,521

Other

1,590

1,763

14,93433,430Loss on disposal of non-current assets

798

1,303

Impairment loss

623

2,542

Provision for product defectcompensation

65

4,820

Loss on fire958-

Total;Ordinary income
Extraordinary losses

Loss on change in equity-

490

Loss on transfer of business

-

3,770

Loss on COVID-19

-

1,385

Valuation difference on
available-for-sale securities

10,95013,929Deferred gains or losses onhedges∆ 1,691

2,677

Foreign currency translation
adjustment∆ 12,853∆ 13,295

Remeasurements of defined
benefit plans∆ 12,810∆ 3,829

Total; Accumulated othercomprehensive income∆ 16,405∆ 518

Non-controlling interests

32,75031,747

Total;Net assets

273,030

291,617

Net income attributable to owners of
the parent company

794,616

832,044

Total; Liabilities and net assets

4,508

2,991

Total; Extraordinary losses

Other

6,953

17,303

Profit before income taxes

30,751

21,316

Income taxes - current

7,793

6,047

Income taxes - deferred

3,960

3,171

Total; Income taxes

11,754

9,219

Net income

18,997

12,097

Net income attributable to noncontrolling interests

1,357

2,095

Consolidated Statement ofComprehensive income
Net income

10,001for the Fisical Year
Ended March 31,
2020

for the Fisical Year
Ended March 31,
2021

18,997

12,097

Other comprehensive income∆ 10,119

2,945

Deferred gains or losses on hedges∆ 1,604

4,235

Foreign currency translation adjustment∆ 3,905

244

Remeasurements of defined benefit
plans, net of tax∆ 3,942

8,124

Share of other comprehensive incomeof entities accounted for using equity
method

∆ 1,485294

Total;Other comprehensive income∆ 21,058

15,844Comprehensive income∆ 2,060

27,941

Comprehensive income attributable toowners of parent∆ 3,272

25,888Comprehensive income attributable tonon-controlling interests

1,211

2,053

Comprehensive income attributable to30,751
29,423∆ 2,458

21,31632,163893∆ 7,462∆ 9,166

-

3,770

1,102

236

∆ 5,050∆ 20,840

623
958
388
∆ 2,652
4,326
∆ 591

2,542
∆ 1,281
1,385
1,246∆ 2,302
3,586
338

23,499∆ 13,788

4,071∆ 13,770∆ 17,252

12,161387

1,059∆ 10,667∆ 13,706

1,873
51,273
4,682∆ 4,344∆ 8,952∆ 717
41,942

2,009
7,852
3,287
∆ 3,603∆ 8,2091,281∆ 1,088∆ 479

39∆ 1,5434∆ 2,112

10,916

14,804-2,306∆ 47,312∆ 6,550
6,789∆ 33,386∆ 7,325
22,370

4,950

3,540

∆ 427
261

∆ 1,796
1

∆ 242

∆ 315

∆ 33,119∆ 1,908

1,735

2,008

15,00015,0008,935∆ 27,390
10,000728

55,965∆ 30,100
452

∆1

∆9

∆ 151

-

∆ 5,998∆ 6,001∆ 1,379∆ 521∆ 1,649∆ 171∆ 1,651
35,140

∆ 928

∆ 594

7,722

32,15846,83855,055

494

819

-

∆ 866

-

22

55,05587,18977

76

Valuation difference on available-forsale securities

Other
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease; ∆) in short-termloans payable
Net increase (decrease; ∆) in commercial
papersProceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Proceeds from non-controlling shareholders
Payment for purchase of common treasury
stock
Payment for purchase of common treasury
stock by subsidiaries
Cash dividends paid
Cash dividends paid to non-controllingshareholders
Other
Cash flows from financing activities
Effect of exchange rate change on cash andcash equivalents
Net increase (decrease; ∆) in cash and cash
equivalents
Cash and cash equivalents at beginning of theyear
Increase in cash and cash equivalents fromnewly consolidated subsidiary
Decrease in cash and cash equivalents
resulting from exclusion of subsidiaries fromconsolidation
Increase in cash and cash equivalents
resulting from merger
Cash and cash equivalents at end of the year

For the Fisical Year
Ended March 31,
2021

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP(Millions of yen)

17,639Cash flows from operating activities
Profit/Loss before income taxes
Depreciation
Loss (profit; ∆) in equity method affiliates
Loss (gain; ∆) in sales of marketablesecurities and investment securities
Loss (gain; ∆) on sale of businesses
Loss (gain; ∆) on valuation of investment
securities
Loss (gain; ∆) on disposal of non-current
assetsImpairment loss
Loss on disaster
Insurance claim income
Loss on COVID-19
Loss on valuation of inventories
Interest and dividend income
Interest expenses
Foreign exchange losses (gains; ∆)Decrease (increase; ∆) in notes andaccounts receivable - trade
Decrease (increase; ∆) in inventories
Increase (decrease; ∆) in notes andaccounts payable - trade
Increase (decrease; ∆) in liability for
retirement benefits
Increase (decrease; ∆) in provision for
product defect compensation
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes (paid; ∆) refund
Loss on disaster paid
Insurance claims received
Loss on COVID-19 paid
Cash flows from operating activities
Cash flows from investing activities
Decrease (increase; ∆) in time deposits
Purchase of investment securities
Proceeds from sales and redemption of
investment securities
Proceeds from sales of investments in
subsidiaries resulting in change in scope of
consolidation
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sales of non-current assets
Decrease (increase; ∆) in short-term loans
receivable
Payments of long-term loans receivableCollection of long-term loans receivable

For the Fisical Year
Ended March 31,
2020

Corporate Information/
Data

Leased assets

For the Fisical Year
Ended March 31,
2020

Consolidated Statement ofincome (Millions of yen)

Business Foundation

Non-current assets
Buildings and structures

As of March 31,
2021

Business Strategy

54,357

Allowance for doubtful
accounts

As of March 31,
2020

Current liabilities

Cash and deposits

Securities

Liabilities

Consolodated Statement of Cash Flows (Millions of yen)

About Furukawa
Electric Group

Consolidated Financial Statements

Consolidated Financial Statements

Scope of the Environmental Management (FY2020)
30 Domestic Group Companies

North and Central America
Group companies in total

U.S.A.

Consolidated net sales

4

Greenhouse gas emissions

2

Denmark

MexicoGermany
Czech

U.K.
Columbia

Hungary

Brazil

Italy

Spain

Group employees in total
Group companies in total

Furukawa Electric Group

Consolidated
net sales
Greenhouse gas
emissionsGreenhouse gas emissions(As of March 31, 2021)

4

2

1

(As of March 31, 2021)

4

2

2

(Fiscal year ended March 31, 2021)(FY2020)*1. Combined total for Furukawa Electric, 109 consolidated subsidiaries and 13 equity-method affiliates*2. Combined total amount for Furukawa Electric, 30 domestic and 58 overseas group companies

China
Group employees in total
Group companies in total
Consolidated net sales
Greenhouse gas emissions

4,791
17
82.8 billion yen
12.4 10 t-CO e
4

India

Group companies in total

China

South Korea
Japan

Consolidated net sales
Greenhouse gas emissions

10,79842435.2 billion yen
31.6 10 t-CO e
4

2

TaiwanPhilippines

Asia (ex. Japan and China)
Group employees in total

Singapore

Consolidated net sales
Greenhouse gas emissions

4

2* The number of group companies inJapan includes Furukawa Electric.
* Net sales by region are based on thelocation of customers and are classified
by country or region.
* Greenhouse gas emissions by region are
based on the location of the companies
and are classified by country or region.

Furukawa Automotive Systems Inc.

Furukawa Sangyo Kaisha, Ltd.

Furukawa Communication and Broadcasting Co., Ltd.

Furukawa Industrial Plastics Co., Ltd.

Furukawa Precision Engineering Co., Ltd.

Furukawa Techno Material Co., Ltd.

Furukawa Electric Advanced Engineering Co., Ltd.

Furukawa Electric Ecotec Co., Ltd.

Furukawa Electric Industrial Cable Co., Ltd.

Furukawa Electric Power Systems Co., Ltd.

The Furukawa Battery Co., Ltd.

Furukawa Logistics Corp.

Furukawa Magnet Wire Co., Ltd.

The Furukawa Finance and Business Support Co., Ltd.

Miharu Communications Inc.

Riken Electric Wire Co., Ltd.

Furukawa Network Solution Corp.

Furukawa New Leaf Co., Ltd.

Furukawa Research Inc.

Foam Kasei Co., Ltd.

Furukawa Nikko Power Generation Inc.

Furukawa Elecom Co., Ltd.

Myojodenki Co., Ltd.

Furukawa FITEL Optical Device Co., Ltd.

58 Overseas Group Companies
Shenyang Furukawa Cable Co., Ltd.

Suzhou Furukawa Power Optic Cable Co., Ltd.

P.T. Tembaga Mulia Semanan Tbk.

Furukawa Electric LatAm S.A.

Furukawa Industrial Optoelectronica Ltda.

Furukawa Industrial S.A. Sucursal Argentina

Furukawa Industrial Colombia SAS

OFS Fitel, LLC

OFS FITEL Deutschland GmbHOFS Fitel Denmark Aps

Furukawa Electric Morocco SARLJIANGSU OFS HENGTONG OPTICAL TECHNOLOGY CO., LTD.

OFS RUS Fiber Optic Cable Company

Thai Fiber Optics Co., Ltd.

P. T. Furukawa Optical Solutions Indonesia

Furukawa FITEL (Thailand) Co., Ltd.

Furukawa FITEL Optical Products (Shanghai) Co., Ltd.

Thai Furukawa Unicomm Engineering Co., Ltd.

Trocellen GmbHPOLIFOAM MUANYAGFELDOLGOZO KFT

HT Italia Holding S.r.l.

Trocellen Italy S.p.A.

Trocellen S.E.A. Sdn Bhd

FE Magnet Wire (Malaysia) Sdn.Bhd.

Taiwan Furukawa Magnet Wire Co., Ltd.

Furukawa AVC Electronics (Suzhou) Co., Ltd.

FURUKAWA ELECTRIC THERMAL MANAGEMENTSOLUTIONS AND PRODUCTS LAGUNA, INC.

Taiwan Furukawa Electric Co., Ltd.

Furukawa Automotive Systems (Thailand) Co., Ltd.

Furukawa Wiring Systems Mexico, S.A. de C.V.

P.T. Furukawa Automotive Systems Indonesia

Furukawa Electric (Shenzhen) Co., Ltd.

Furukawa Automotive Systems Vietnam Inc.

Furukawa Electric Autoparts Philippines Inc.

Permintex Furukawa Autoparts Malaysia Sdn. Bhd.

Furukawa Electric Autoparts Central Europe, s.r.o

Furukawa Automotive Parts (Vietnam) Inc.

Furukawa Automotive Parts (Dong Guan) Ltd.

Furukawa Auto Parts (Huizhou) Co. Ltd.

Furukawa Mexico S.A. De C.V.

American Furukawa, Inc.

Tianjin Jinhe Electric Engineering Co., Ltd.

Furukawa Automotive Systems Lima Philippines, Inc.

Wuhan Furukawa Automotive Systems Co., Ltd.

Chongqing Changhua Automobile Harness Co., Ltd.

Furukawa Automotive Systems Mexico S.A. de C.V.

Furukawa Minda Electric Pvt. Ltd.

Furukawa Precision (Thailand) Co., Ltd.

Furukawa Electric Copper Foil Taiwan Co., Ltd.

Furukawa Circuit Foil Taiwan Corporation

Siam Furukawa Co., Ltd.

Furukawa Electric Institute of Technology Ltd.

SuperPower Inc.

Furukawa Electric Europe Ltd.

Furukawa Electric Singapore Pte. Ltd.

Furukawa Shanghai, Ltd.

Furukawa (Thailand) Co., Ltd.

Furukawa Electric Hong Kong Ltd.

79

78

Indonesia

Group companies in total

23,06233
141.0 billion yen
9.7 10 t-CO e

FITEC Corp.

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Malaysia

Group employees in total

2

VietnamThailandJapan

TOTOKU Electric Co., Ltd.

Corporate Information/
Data

Group companies
in total

48,449123*811.6 billion yen
64.8 10 t-CO e*

Consolidated net sales

3,059
17
74.4 billion yen
2.3 10 t-CO e

Shoden Seiwa Co., Ltd.

Business Foundation

South America, Europe, and others

Argentine

Group employees
in total

RussiaOkano Electric Wire Co., Ltd.

KANZACC Co., Ltd.

Business Strategy

6,739
14
78.2 billion yen
8.6 10 t-CO eGroup employees in total

NTEC Ltd.

About Furukawa
Electric Group

Overview of Furukawa Electric Group

Furukawa Electric Group Outline

Company Profile

Furukawa Electric Organization Chart
Furukawa Electric Co., Ltd.

Company name

General Stock Information(As of Apr.1, 2021)
ChairmanPresident

Distribution of Ordinary Stock Among
Shareholders (As of March 31, 2021)(As of March 31, 2020)

Auditing Dept.
Corporate Strategy& Direction Div.

Corporate Planning Dept.
Headquarters Transformation Team

Stock code on the Tokyo
Stock Exchange

5801

Stock exchange listings

Tokyo Stock Exchange, First Section

Treasury stock

President

Keiichi Kobayashi

Founded1884

Social Design & New Business
Development Dept.

Number of sharesauthorizedCommon Stock 250,000,000 shares

Established

June 25, 1896

One Furukawa Mobility Business
Development Team

Common stock issued

Common Stock 70,666,917 shares

ICT Strategy Planning Dept.

Minimum trading units

100 shares

Corporate Sustainability Office

Number of shareholders

Common Stock 49,322 persons

Shareholder register
agent

2-1 Yaesu 1-chome, Chuo-ku, Tokyo, Japan
Mizuho Trust & Banking Co., Ltd.*Fiscal year

From April 1 to March 31

Secretary Office

Shareholders’ meeting

June each year

Administration Dept.

Accounting auditor

Deloitte Touch Tohmatsu LLC(As of March 31, 2021)

Net sales(Years ended March 31, 2020)

Number of employees(As of March 31, 2021)

Business Basis
Transformation Div.

¥69,395 million

Public Relations Dept.

¥811,600 million (consol.)¥392,616 million (non-consol.)

Strategic HR Management Dept.
HR & Organizational Development Dept.
Risk Management
Div.

48,449 (consol.)
4,084 (non-consol.)

Risk Management Dept.

+81-3-6281-8500

Websitehttps://www.furukawa.co.jp/en/(As of March 31, 2021)

Equity-method affiliates(As of March 31, 2021)

Nikko Works
Mie Works
Yokohama Works
Finance & Global
Management Div.

109

Research &Development Div.

13

Finance & Accounting Dept.
Investor Relations Dept.

43.1%

12,116,491 shares
Securities companies

Domestic companies,
others5.4%

7.3%

3,829,995 shares

5,152,568 shares

Number of shares

Shareholding ratio

The Master Trust Bank of Japan, Ltd. (Trust Account)

6,864,600

9.72

Sustainable Technology Laboratory

Custody Bank of Japan, Ltd. (Trust Account)

4,664,400

6.61

Automotive Products &Electronics Laboratories

Custody Bank of Japan, Ltd. (Trust Account 4)2,484,100

3.52

Telecommunications & Energy
Laboratories

Custody Bank of Japan, Ltd. (Mizuho Trust & Banking; Employee Retirement Benefit Trust, Mizuho Bank Account)

2,413,500

3.42

Asahi Mutual Life Insurance Company

1,365,050

1.93

FURUKAWA CO., LTD.

1,329,045

1.88

Custody Bank of Japan, Ltd. (Trust Account 9)1,225,600

1.74

Fuji Electric Co., Ltd.

1,100,000

1.56

Custody Bank of Japan, Ltd. (Mizuho Trust & Banking; Employee Retirement Benefit Trust, FURUKAWA CO., LTD. Account)

1,091,900

1.55

Credit Suisse Securities (Japan) Limited

1,054,500

1.49

Planning Dept.

Intellectual Property Dept.
MONOZUKURI
Innovation Div.

Planning & Administration Dept.
Facility Assets Dept.
NF Production System Dept.
Quality Promotion Dept.
Safety Promotion Dept.
International Trade Control Dept.

Hokkaido Branch

Global Marketing
Sales Div.

Business Promotion Dept.

Infrastructure Sales Dept.

Okinawa
Sub Branch*1. Shareholding ratio is calculated with the number which deducted 49,804 shares of the Company’s treasury stock.
*2. In addition to the 2,413,500 shares in a retirement benefits trust mentioned above, Mizuho Bank, Ltd. has a further 173 shares in the Company.
*3. In addition to the 1,365,050 shares mentioned above, Asahi Mutual Life Insurance Company has a further 1,050,000 shares in a retirement benefits trust.

Administrations Dept.
Customer RelationshipManagement Dept.

Cash Dividends per Common Share

Electronics Sales Dept.

Fisical year

Kansai Branch
Chubu Branch
Kyusyu Branch

Tohoku Branch

Hokkaido Branch
Tohoku Branch
Chugoku Branch

Nikko Works
Head Office
Chiba Works

2016

2017

2018

2019

2020

0

0

0

0

0

Interim dividend (yen)Okinawa
Sub BranchYear-end dividend (yen)

55

80

85

85

60

Total dividend (yen)

55

80

85

85

60

Shikoku
Sub BranchCommunications Solutions Div.
Optical Fiber and Cable Products Div.

Stock Price and Trading Volume

FITEL Products Div.

(Yen, points)

Broadband Solutions Business Div.

Trading volume

8,000

Closing price(Millions of shares)

TOPIX

20

Energy Infrastructure Div.
Haneda Office
Yokohama Works

Power Cable Div.
Industrial Cable & Power Cable Accessories Div.
Electronics Component Material Div.
Electric Conductor Div.

Hiratsuka Works

Copper & High Performance Material Products Div.
AT & Functional Plastics Div.
Thermal Management Solution & Products Div.
Memory Disk Div.
Copper Foil Div.
Automotive Products Div.

15

4,000

10

2,000

5

0

0
2016/4/1

2017/4/3

2018/4/2

2019/4/1

2020/4/1

2021/4/1

note) We have carried out a reverse stock split at a ratio of 1 share for every 10 ordinary shares with an effective date of October 1, 2016. In addition, the number of sharesin unit of the company’s ordinary shares has changed from 1,000 shares to 100 shares. Because of this, in the graph, the pre-September 2016 stock prices areshown as 10 times, and the trading volume is shown as 1/10.

8880Functional Products Div.

6,000

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Copper Foil Division

Kansai Branch
Shikoku Sub Branch

Financial Institutions
30,456,367 shares

17.1%

Name of major shareholders

Procurement Dept.

Kyushu Branch

70,666,917shares

Corporate Information/
Data(As of March 31, 2021)

Mie Works

Total number of sharesissued and outstanding

Major Top 10 Shareholders of The Company and the Company’s Capital Contributions
to Such Shareholders (As of March 31, 2021)

Incubator Dept.
Digital Innovation Center

Domestic Locations (Furukawa Electric)

Chugoku Branch

Foreign corporations* The head office of Mizuho Trust & Banking Co., Ltd. will be relocated to
the following address on November 22, 2021.
3-3 Marunoichi 1-chome, Chuo-ku, Tokyo, Japan

Corporate Management Dept.

Chubu Branch

27.0%

19,061,692 shares

Hiratsuka WorksTEL.

Consol. Subsidiaries

Environment Dept.
Chiba Works

Individuals, others

Business Foundation

Tokiwabashi Tower, 6-4 Otemachi
2-chome,
Chiyoda-ku, Tokyo 100-8322, Japan

Head office

Legal Dept.

0.1%

49,804 sharesBusiness Strategy

Paid-in capitalBusiness Transformation Team

About Furukawa
Electric Group

Company Profile and Stock / Dividend Information

Company Profile and Stock / Dividends Information

External Evaluation

Furukawa Electric participates in the following ESG-related initiatives.

Furukawa Electric became a constituent of the following ESG-related indices and received external evaluation andcertifications as follows during a period from April 1, 2020 to July 31, 2021.

United Nations Global Compact
Furukawa Electric has been involved the United Nations Global Compact since February 24, 2020. The Group believes
that respecting and fulfilling the ten principles of the United Nations Global Compact will lead to the strengthening of
the management base in order to continue sustainable growth as a global company.

Human Rights

Principle 1:
Principle 2:
Principle 3:

LabourAnti-Corruption

Principle 4:
Principle 5:
Principle 6:

Businesses should uphold the freedom of association and the effective recognition of
the right to collective bargaining;
the elimination of all forms of forced and compulsory labour;
the effective abolition of child labour; andthe elimination of discrimination in respect of employment and occupation.

Principle 7:
Principle 8:
Principle 9:Businesses should support a precautionary approach to environmental challenges;
undertake initiatives to promote greater environmental responsibility; andencourage the development and diffusion of environmentally friendly technologies.

FTSE4Good Index Series/
FTSE Blossom Japan Index
Furukawa Electric was selected as a constituent of the FTSE4Good
Index Series and the FTSE Blossom Japan Index of FTSE Russell forthe first time (June 2021).
FTSE4Good Index Series
https://www.ftserussell.com/products/indices/ftse4good
FTSE Blossom Japan Index
https://www.ftserussell.com/products/indices/blossom-japan

MSCI Japan Empowering Women Index (WIN)Furukawa Electric was selected as a constituent of the MSCI Japan
Empowering Women Index (WIN) (June 2021).
THE INCLUSION OF Furukawa Electric Co., Ltd. IN ANY MSCI INDEX, AND
THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEXNAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENTOR PROMOTION OF Furukawa Electric Co., Ltd. BY MSCI OR ANY OF ITS
AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI.
MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS ORSERVICE MARKS OF MSCI OR ITS AFFILIATES.

Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Furukawa Electric supports and has signed “A Statement from Business Leaders for Renewed Global Cooperation,”
which was submitted to the Secretary-General of the UN by the UN Global Compact in September 2020. This is astatement that promotes greater unity between governments and private businesses.

S&P/JPX Carbon Efficient Index

Furukawa Electric Group defined “materiality” as important management issues that the Group should address inorder to achieve Vision 2030. The SDGs that are highly relevant to identified materiality are associated with multiple
SDG targets. By working on materiality, the Group will contribute to the achievement of the United Nations SDGs.

Furukawa Electric was selected as a constituent of the S&P/JPX
Carbon Efficient Index, within the “Capital Goods” industry group,with decile classification 8 and carbon disclosure status as “disclosed”(March 2021).

CDP
Furukawa Electric received an “A: Leadership Level” evaluation for“Climate Change” of the CDP in 2020, and was also selected as a“Supplier Engagement Leader” in the CDP Supplier Engagement
Rating (SER) (February 2021).

SDGs
Materiality

1

Creating businesses thatsolve social issues

Corporate Information/
Data

SDGs: Sustainable Development Goals

Business Foundation

Environment

Businesses should support and respect the protection of internationally proclaimed
human rights; andmake sure that they are not complicit in human rights abuses.

Business Strategy

The Ten Principles of the UN Global Compact

About Furukawa
Electric Group

Participation in Initiatives / External Evaluation

Participation in Initiatives

2 Open, Agile, Innovative
Building partnerships with

SBT (Science Based Targets)

3 various stakeholders
E

The Furukawa Electric Group’s targets for reducing greenhouse gas
emissions by 2030 were certified by the Science Based Targets (SBT)
Initiative (August 2019).

Developing businessactivities that consider
climate change
Strengthening human capital

MSCI ESG Rating
Furukawa Electric received a “BBB” evaluation for the MSCI ESG
Rating (December 2020).

S management and organizational
execution abilities

Building a governance system

G to strengthen risk management* Materiality and each SDG goal are associated with multiple SDG targets.

Furukawa Electric expressed approval of the recommendations by the Task Force on
Climate-related Financial Disclosures (TCFD) in January 2020.

Health & Productivity Management Organization
Furukawa Electric was certified by the Ministry of Economy, Tradeand Industry as one of the Health & Productivity Management
Organizations (March 2021).

Clarivate Top 100 Global Innovator 2021
Furukawa Electric was awarded the “Clarivate Top 100 Global
Innovator 2021” by the Clarivate Analytics plc. (February 2021).

INTEGRATED REPORT 2021

FURUKAWA ELECTRIC GROUP

Task Force on Climate-related Financial Disclosures

83

82
For details, please see Furukawa Electric’s website.
Participation in initiatives https://furukawaelectric.disclosure.site/en/themes/110

For details, please see Furukawa Electric’s website.
External evaluation https://furukawaelectric.disclosure.site/en/themes/109

Editorial Policy

Fiscal 2020, from April 1, 2020 to March 31, 2021
(Note) Includes selected information on past initiatives and activities during fiscal 2021.

Organizations
coveredThis report covers Furukawa Electric Co., Ltd. and group companies in Japan and overseas.
Where activities are limited to specific regions or companies, this fact has been clearly indicated in thereporting.

Disclaimer
Regarding Forecasts
and Projections

This Integrated Report includes statements concerning the future strategies and earnings forecasts of
Furukawa Electric Group. These forward-looking statements are based on information that is currently
available to the Group. As it is subject to changes in the business environment surrounding the Group, theactual strategies and business may differ from those projected.

Information Disclosure System and Positioning of This Report
Summarized

Integrated Report

Corporate website

https://www.furukawa.co.jp/en/

IR Information

https://www.furukawa.co.jp/en/ir/

First Publication of Integrated Report

First ESG Briefing

Our first integrated report
was published in 2020. It was
selected as a “HighlyImproved Integrated Report”
by asset managers that are
entrusted with the domestic
equities of the Government
Pension Investment Fund(GPIF).

We held our first ESG briefing online on March
4, 2021. We discussed our Group's efforts todate regarding ESG management and theconcept of thevalue creation
process toward2030.

Satoshi Miyamoto

https://furukawaelectric.disclosure.site/en/themes/193

https://www.furukawa.co.jp/en/ir/library/esg-briefing/

Sustainability

https://furukawaelectric.disclosure.site/en/

Sustainability Book
Corporate Governance Report

Quarterly ReportIntellectual Property Report

Financial Summary, etc.

Furukawa Electric Review, etc.

Financial

Non-financial

For inquiries

Editing and Publication

Investor Relations Department
Finance & Global Management Division
Furukawa Electric Co., Ltd.
Tokiwabashi Tower, 6-4, Otemachi 2-chome, Chiyoda-ku, Tokyo
100-8322, Japan

Corporate Sustainability OfficeBusiness Basis Transformation Division
Furukawa Electric Co., Ltd.

Inquiry form

https://www.furukawa.co.jp/srm/form/index.php?id=enir

85

Detailed

88

Securities Report

INTEGRATED REPORT 2021

Coverage

FURUKAWA ELECTRIC GROUP

This Integrated Report has
concisely stated importantfinancial and non-financial
information regarding Furukawa
Electric Group with the aim ofpromoting a better understandingof our medium- to long-term
initiatives and measures for the
improvement of corporate value
by investors and othershareholders. Please also refer toFurukawa Electric’s website andother reports, which post or
publish other information notcovered in this report or moredetailed information.

Director,
Corporate Senior Vice President,
and General Manager,
Business Basis
Transformation Division

October 2021

Corporate Information/
Data

Period Covered

and Audit & Supervisory Board Members go about
their work and how lively are the Board of Directors
meetings. Hopefully this Furukawa Electric Group
Integrated Report 2021 will help our shareholders,investors, and other stakeholders better understandour Group and lead to opportunities for constructive
dialogues.
We are committed to further improving the qualityof integrated reports, enhancing information
disclosure and transparency, and promoting
dialogue with stakeholders. We would appreciatehearing your unrestrained comments or requests inthis regard.

Business Foundation

Scope of This Report

I would like to say a few words on this occasion of
issuing the Furukawa Electric Group Integrated
Report 2021.
In fiscal 2020 we issued the Integrated Report2020 and also held an ESG Briefing as the firstattempt to make better known our Group's efforts
to date regarding ESG management and theconcept of the value creation process toward 2030.
The Integrated Report 2020 was singled out by anasset manager as a “Highly-Improved Integrated
Report, selected by asset managers that are
entrusted with the domestic equities of theGovernment Pension Investment Fund (GPIF).”In this new Integrated Report 2021, we present the
progress of our initiatives of materiality towardachieving Vision 2030, in line with the concept of thevalue creation process with a plan period ending in
2030. Noteworthy points include the section on ourbasic policy toward carbon neutrality, particularly
concerning environmental and climate change, andthe expanded disclosure of skills matrices for
directors and audit & supervisory board members,
executive compensation systems, etc., particularly
concerning corporate governance. A message froman outside director is also presented for the firsttime. We hope that you will see how our Directors

Business Strategy

Since fiscal 2012, Furukawa Electric Group has published its Sustainability Report, containing
Environment, Social, Governance (ESG) and other non-financial information beside businessresults, strategies, and other financial information. Since fiscal 2020, we have been publishing
the Furukawa Electric Group's integrated report in order to help investors and otherstakeholders better understand our Group's efforts and measures to improve corporate value
over the medium to long term. We sincerely hope that this report will help you understand ourimportant management issues we face as we advance toward achieving Furukawa ElectricGroup Vision 2030, as well as our efforts concerning climate change and corporate governanceto strengthen all of the foundation of our ESG management, our Group's values, history, andour current situation.
We have used the following guidelines for reference.
International Integrated Reporting Framework (International Integrated Reporting Council (IIRC))The Guidance for Collaborative Value Creation (the Ministry of Economy, Trade and Industry)
Guidance on Climate-related Financial Disclosure (TCFD) Guidance 2.0 (the Ministry of Economy,
Trade and Industry)

About Issuing of the Furukawa Electric Group Integrated Report 2021

About Furukawa
Electric Group

About the Furukawa Electric Group Integrated Report 2021

About the Furukawa Electric Group Integrated Report 2021