3. ESG

ENVIPRO Group Sustainability Report 2023

GovernanceSupporting Sustainable Growth by Instilling Our Corporate Culture into Every Corner of the Organization

History of Corporate Governance
2010

2011

Corporate Governance Structure• Established current ENVIPRO HOLDINGS Inc.
• Introduced executive officer system

General Meeting of Shareholders
Appointment/Dismissal• Established Internal Control Committee

2013• Listed on the Second Section of the Tokyo Stock Exchange

2015• Established the Internal Control Basic Policy

201720182021•Established the Appointment and RemunerationCommittee• Established the Audit and Supervisory Committee

Internal Control Committee•IT Promotion Committee•Human Resources and• Formulated criteria for the selection of outside auditors

Board of Directors

Met 15 Times in Fiscal 2022

The company’s Board of Directors has 11 members, of whom six are outside directors(including three members of the Audit and Supervisory Committee). In principle, the board
meets monthly. The Board of Directors makes decisions on matters important to theexecution of the company’s business, and oversees the execution of directors’ duties. At
meetings of the Board of Directors, the president acts as chair to respectfully draw out theopinions of directors, not from the viewpoint of short-term benefits, but rather to discusseven seemingly irrelevant policies or measures and other matters from the perspective ofmedium- to long-term business growth.

Promotion Committee

Labor Reform Committee•Operations ReformCommittee

Audit
Corporation

ReportSelection

ReportCollaboration

Dismissa

ReportReport• Disclosed a medium-term management plan
•Changed the Sustainability Committee to a key meeting

Collaboration

Audit and Supervisory
Committee

ReportManagement Supervision
Committee
Supervision•Environmental & Safety(Sustainability Strategy)

Supervision

Appointment andRemuneration Committee• Listed on the First Section of the Tokyo Stock Exchangebody for promotion of the medium-term management plan2022

Proposals

Appointment/Dismissal
Audit/Supervision

Board of DirectorsAdvising2016

42G ov er n an c e

Representative Director
Instruction
Instruction
Collaboration

Instruction

ReportAccounting audit

ReportDepartments, Group companies

Audit and Supervisory Committee

Collaboration

ReportSustainability
Committee

Instruction

Internal Audit
OfficeInternal audit

Met 14 Times in Fiscal 2022

The Audit and Supervisory Committee consists of three outside directors. In addition to attending General Meetings of Shareholders and Board ofDirectors meetings, directors who are Audit and Supervisory Committee members actively participate in internal meetings and work to understandthe situation within the company, including the management system and the execution of business. The Audit and Supervisory Committee also
meets regularly with the president and representative director to exchange views and maintain communication on issues that the company should
address, the state of the environment for auditing by the Audit and Supervisory Committee, and other important matters pertaining to auditing. Inorder to maintain close collaboration with the Internal Audit Department and the accounting auditor, the Audit and Supervisory Committee holds
regular liaison meetings with these and otherwise engages in exchanges of information to enhance auditing functions. In addition to the Internal
Audit Office, the committee also collects information from the internal control departments to conduct more thorough audits.

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G ov er n an c e

GovernanceAppointment and Remuneration Committee

Met Three Times in Fiscal 2022

The Appointment and Remuneration Committee is composed of five members: the representative director, one senior
managing director, and three outside directors who are independent senior executives. As an advisory body to theBoard of Directors, it conducts preliminary deliberations on the nomination of director candidates (excluding those whoserve as members of the Audit and Supervisory Committee), remuneration for directors, and other matters.

Management Committee

Met 12 Times in Fiscal 2022

The Management Committee consists of the full-time directors and the chair of the Audit and Supervisory Committee.
It may also include some executive officers, department managers, and members of Boards of Directors of Groupcompanies, as required for matters to be deliberated. The Management Committee generally meets once a month.

Sustainability Committee

Met 12 Times in Fiscal 2022

The Group has an Internal Control Committee chaired by the company president. This committee consists of four
subcommittees: the Environmental & Safety Promotion Committee, IT Promotion Committee, Human Resources andLabor Reform Committee, and Business Operations Reform Committee. The committee identifies risks, formulates
countermeasures, and builds and operates internal controls across the Group, including awareness-building activities.
The Internal Control Committee generally meets once a month and is composed of the company’s full-time directors,executive officers, the chair of the Audit and Supervisory Committee, the presidents of affiliated companies (excludingaffiliates accounted for under the equity method), and the chairs of subcommittees.

Assessment of Board of Directors EffectivenessIn order to analyze and evaluate the effectiveness of the Board of Directors as a whole, the company conducts aquestionnaire survey of directors each June to inform future initiatives.
Questionnaire Content
1 Operation of board meetings•Are the materials, progress, explanations, etc. sufficient?
2 Matters for discussion at Board of Directors meetings

•Are you able to participate appropriately in decisions on business strategies?

3 Roles and responsibilities of the Board of Directors

•Are you able to effectively monitor the execution of business strategies, etc.?

Basic Policy
Remuneration should be commensurate with the responsibilities and roles of directors.
In addition to compensation based on short-term performance, incentives should be provided that comprehensively take
into account the improvement of corporate value over the medium to long term.
Directors should share an awareness concerning profits with shareholders.
Compensation levels should be effective in retaining excellent human resources.
The system should be flexible at adapting to changes in the market and industry environment and to changes in strategic
objectives.
Directors should contribute to the development of a positive corporate climate and a strong corporate culture.
Components of Remuneration

Met 11 Times in Fiscal 2022

The Sustainability Committee consists of full-time directors, executive officers, and some related department
managers, meeting once a month. The Sustainability Committee seeks to promote the medium-term management
plan that forms our strategy for achieving sustainable development for both the group and society. As an organization
assisting decision-making by the representative director, it flexibly and actively discusses and examines the status ofstrategy promotion and future directions, including new business and M&A, from a long-term perspective.

Internal Control Committee

Director Compensation System

Basic remuneration  

Performance-linked remuneration  

Restricted share-based remuneration

Future Policy on the Executive Remuneration System
The Appointment and Remuneration Committee deliberates and makes decisions on the structure of executive compensation
to enhance long-term corporate value. Looking forward, we have determined that emphasizing a medium- to long-term
perspective is more important than pursuing short-term profits. Specifically, we plan to reduce short-term performancebased pay and instead focus on promoting a medium- to long-term strategy centered around the concept of “Lead a circulareconomy,” as well as building organizational and personnel frameworks. Additionally, we recognize that fostering a strong
corporate culture based on a positive corporate environment is crucial for sustainable corporate growth. We will continue tohave ongoing discussions on the structure of executive compensation to further enhance corporate value.

Dialogue with Shareholders and Investors
The ENVIPRO Group places great importance on engaging in dialogue withshareholders and investors through investor relations. In addition to timely and fairdisclosure of information, we regularly hold explanatory meetings where thepresident personally provides explanations, fostering a trusting relationship andfacilitating exchanges of opinions. Through this dialogue with shareholders andinvestors, we strive to enhance corporate value for the benefit of all stakeholders.

Plant tour

Future Initiatives
We will provide information to outside directors in particular in an earlyand smooth manner in order to secure time for prior deliberations.
We will continue to review the scope of business execution byeach organization with respect to matters to be deliberated by
the Board of Directors.

Details and Frequency of Dialogue with Shareholders and Investors (Fiscal 2022)
Financial results briefings(explanations provided by the representative: Yes)

Individual investor briefings(explanations provided by the representative: Yes)

2 times

Individual IR meetings

62 times

1 timeEvents for institutional
investors

Business briefings 1 time (35 participants)
Plant tours 1 time (9 participants)

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G ov er n an c e

Governance

Executives

Executives
Number of Directors

Of Which, Outside Directors

Number of Independent Directors

1166

Term of Director Appointment
1 year(2 years for directors who are Audit and Supervisory Committee members)

Executive Skill Matrix
Name

1 President,

Representative Director

Tomikazu Sano

2 Vice President, DirectorFumikatsu Sano

6 Outside Director

7 Outside Director[Independent Director]

Newly
appointed

Hiroko Nomura

Tomikazu
SanoPresident,
Representative Director

132Fumikatsu
SanoVice President, Director

13Kozo3Haruyama

Newly
appointed

Norihiro
4Nakasaku

3 Senior Managing Director

Kozo Haruyama

4 Managing Director

Norihiro Nakasaku

8 Outside Director[Independent Director]

Keiji Imajo

9 Outside Director(Audit andSupervisory Committee member)[Independent Director]

Kiyoshi Shinohara

Newlyappointed

Naoki Takekawa

10 Outside Director(Audit andSupervisory Committee member)[Independent Director]

Hiroshi Kamiya11 Outside Director(Audit andSupervisory Committee member)[Independent Director]

Tomoya Shiraishi

Senior Managing Director

Naoki
Takekawa

6

Keiji Miyaki Outside Director

Hiroko7
NomuraCN/CE

Finance/
Legal/
Human
Accounting/Taxation Compliance Resources

ITIR

ExpertKnowledge

8
Newly
appointed

Managing Director

54Director

5Outside Director

1
Newly
appointed

8

Keiji Imajo

Outside Director

9Kiyoshi
Shinohara

Outside Director(Audit and Supervisory Committee Member)

1

10Hiroshi
KamiyaOutside Director(Audit and Supervisory Committee Member)

2

Tomoya11Shiraishi

5 Director

Years in Corporate Management Production
Overseas
Strategy TechnologyPosition Culture

1[Independent Director]

Keiji Miyaki

Position in the company

Outside Director
Newly(Audit and Supervisory Committee Member) appointedAkiko Ishii

Managing Executive Officer
In Charge of Internal Audits-Kenta Imai

Executive Officer
Special Assignment to the President-YasushiSugiyama

Executive Officer
In Charge of General Affairs and Information Management-Kazutaka
Kitazume

Executive Officer
In Charge of Overseas Strategy and R&D Laboratory-

Reasons for Appointment of Newly Appointed Outside Directors
Keiji Imajo
The ENVIPRO Group judges that Keiji Imajo is capable of providing valuable advice on the Group’s management strategy by drawing
on his knowledge and experience gained through serving as an executive manager and investment officer of listed companies.

Tomoya Shiraishi
The ENVIPRO Group judges that Tomoya Shiraishi is capable of providing valuable advice on the Group’s management strategy by drawing
on his knowledge and experience gained through serving as a director of listed companies and a representative of listed companies.

Reasons for Selecting Skill Matrix Criteria
Corporate Culture

We have adopted this approach because we believe that the topmost priority for ensuring long-term profit and thehighest level of governance is to ensure that our corporate philosophy permeates every corner of our organization.

Production Technology

We have adopted this criterion because knowledge of our areas of business and production technologies are necessary
in order to expand our plants and introduce new technologies in line with our business investments.

Carbon Neutrality
Circular Economy

We have adopted this criterion because this type of expertise is necessary in order to achieve carbon neutrality andexpand our business related to the circular economy.