Governance and Sustainability
Initiatives
February 2024
Inabata & Co., Ltd.

Copyright © INABATA＆CO., LTD. 2024

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Topics
 June 2023, Disclosure “Measures to Realize Management Conscious of
Cost of Capital and Share Prices”
 We madegreater-than-expected progress in reducing strategic（億円）
shareholdings.
（億円）
 In June
2022, we transitioned to a company with an audit and supervisorycommittee and moved to a monitoring-type Board of Directors with amajority of independent outside directors.

 Response to climate change
Disclosed Scope 1 and 3 in addition to Scope 2.
Conducted scenario analyses and estimated financial impact.
 KPIs for materiality are scheduled to be announced along with the new
medium-term management plan around May 2024.
Plan to set KPIs such as human capital and medium-term carbon
neutrality targets.
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Contents
1．Medium-Term Management Plan andShareholder Return Policy
2．Measures to Realize Management Conscious of
Cost of Capital and Share Prices
3. Corporate Governance・・・ Ｐ 4・・・ P 15・・・ P 21・・・ P 35

4．Sustainability

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Medium-Term Management Planand Shareholder Return Policy

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Company Overview
About Inabata:
1. Founded in 1890

The Company was founded in Kyoto in 1890 as animporter of dyestuffs. The business was later
expanded with a focus on chemicals.

Inabata Dye Shop (Nishijin, Kyoto)

2. A globally expanding, multifaceted
trading company

The company operates at 60 locations across 19 countries. Business
functions include market development, manufacturing and processing,logistics, and finance. Our plans and proposals are based on
specialized expertise and knowledge of products and markets.
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Company Overview
3. Four business segments

We operate in four segments: Information & Electronics, Chemicals,Life Industry, and Plastics.

Life
Industry
Chemicals

6%12%

FY03/23
Net sales: Plastics¥735.6 billion 50%

Information &Electronics

32%

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Our Medium-Term Management Plan
NC2023: Basic Policies
 Second-stage medium-term management plan on the way to our longterm vision, IK Vision 2030

MissionPeople come first, based on the spirit of "love ( ai )" and " respect ( kei )," andtogether we strive towards contributing to the development of society.

VisionIK Values

To continually evolve, serving clients and society, through global
operations and meeting their changing needs.
IK Values
Ethics, aspiration, organization, role, symbiosis

IK Vision 2030
IK Vision 2030 (envisioning ourselves around 2030)

Medium-term management plan

Second stage NC2023 (targets for FY03/24)
First stage NC2020 (concluding March 31, 2021)
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IK Vision 2030, Our Long-Term Vision Inabata’s aspirations for itself in around 2030
Reach consolidated net sales of ¥1 trillion
Further enhancing multifaceted capabilities (such as
manufacturing, logistics, and finance) in addition to trading
At least one-third of business from segments otherthan Information & Electronics and Plastics
Overseas business

70% or more

[ Formulated May 2017 ]Copyright © INABATA＆CO., LTD. 2024

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Quantitative Targets of NC2023
Net sales and operating profit are expected to reach the final year targets of NC2023;
ordinary profit and profit attributable to owners of the parent are projected to fall short of thetargets due to higher interest rates for securing funds.
(Billions of yen)
NC2023
FY03/2024 Final year
3Q Actual

FY3/24 Forecast

NC2023
FY03/2024
Final year targets*

Net sales

572.9

800.0

800.0

Operating profit

16.3

21.0

20.5

Operating profit margin

2.8%

2.6%

2.6%

Ordinary profit

16.4

20.0

21.5

Profit attributable to ownersof parent

16.6

21.0

22.5

ROE

－

10% or more

10% or more

Net debt/equity ratio

0.08x

－

0.5x or less

Equity ratio

46.4%

－

Approximately 40-50%

USD1=¥143.33

USD1=¥140.00

USD1=¥120.00

Exchange rate

*May 2022 disclosure
Note: Net D/E ratio = (interest-bearing debt – cash and deposits) / equity capital

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Key Initiatives for NC2023
 Six key initiatives are as follows
Key Initiatives for NC2023
1.

Further development of core businesses and horizontal
expansion into growth sectors

２.

Multi-faceted approach to markets with potential for future
growth and steady monetization efforts

3.

Intensification of investment targeting future growth

4.

Further improvement of global management information
infrastructure

5.

Continuous review of assets and further improvement of capitaland asset efficiency

6.

Enhancement of human capital utilization efforts
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Summary of progress in key initiatives for NC2023
 We made steady progress in measures for each initiative. We are prepared forfurther profit growth, especially through strengthened investment and financing.
Key Initiatives for NC2023
1. Further development of core businesses and horizontal
expansion into growth sectors

Specific measures underway• Expansion of business in the automotive, especially EV, field• Acquisition of Maruishi Chemical Trading (made it asubsidiary)

2. Multi-faceted approach to markets with potential for（億円）
futuregrowth and steady monetization efforts• Participation in biomass power generation business(Fukuyama, Sakaiminato)• Expansion of sales of products that reduce environmental
load• Investment in semiconductor-related companies

3. Intensification of investment targeting future growth• Acquisition of Daigo Tsusho (made it a subsidiary)• Establishment of a US subsidiary that manufactures lithium
ion battery-related materials• Reinforcement of Business Planning Office functions

4. Further improvement of global management
information infrastructure• Progress in the core operational system overhaul project• Progress in strengthening security measures, including inoverseas

5. Continuous review of assets and further improvement of
capital and asset efficiency• Fundraising for growth investment through the sale ofstrategic shareholdings• Issue of straight bonds (diversifying fundraising methods)

6. Enhancement of human capital utilization efforts• Introduction of a restricted stock incentive plan for theemployee shareholding association• Revision of HR systems to promote diversity• Enhancement of training systems to nurture global talent
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NC2023 Strategic shareholdings reduction policy (Key Initiative 5)
 We made greater-than-expected progress in reducing strategic shareholdings,
owing in part to a drop in market prices.
Policy for reducing strategic shareholdings• Reduce the balance of strategic shareholdings at the end of March 2021 by half during the three years of NC2023• Further reduce strategic shareholdings in the medium to long term, curtailing the balance of strategic shareholdings at theend of March 2021 by about 80% by the end of March 2027.

→Funds procured from the sale of strategic shareholdings are in principle allocatedto shareholder returns and growth investment*Only includes listed stocks in Japan
Sales value of strategic shareholdings(billions of yen)
60.0
40.0

Strategic shareholdings
50% reduction
80% reduction

20.0
0.0

EndEndEnd- End-Sep. EndFY03/21 FY03/22 FY03/23
2023
FY03/24

NC2023

EndFY03/27

FY03/21¥2,944 million

FY03/22¥9,367 million

FY03/23¥10,076 million

FY03/24*¥3,847 million*As of September 30, 2023

* As of March 31, 2023, there exists ¥2,321 million indeemed holding shares, and the total amount of nonlisted shares, shares other than non-listed shares anddeemed holding shares is ¥23,703 million. This was
13.1% of the consolidated net assets as of March 31,
2023. The amount obtained by multiplying the market
price of deemed holding shares on the last day of the
fiscal year by the number of shares subject to exercise
of voting rights.

Notes: The balance of strategic shareholdings in the figure above is the total of the Company’s shareholdings in listed companies in Japan.
Copyright © INABATA＆CO., LTD. 2024
Strategic shareholding balances have been calculated using fiscal year-end stock prices.

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NC2023 Returning Profits to Shareholders

Basic Policy on Shareholder Return
During NC2023

 Progressive dividends
We will ensure that dividend per share does not decline year on year by continually
increasing our dividends

 Target total return ratio of around 50%
However, in fiscal years when the Company has recorded a considerable amount ofcash inflows from the sale of strategically held shares, instead of being strictly boundedby the target total return ratio, the Company will return profits to shareholders after
comprehensive consideration of various factors including future funding needs, financial
position, stock price, and market conditions.

Note: Total return ratio (%) = (dividend amount + amount of treasury shares acquired) / consolidated net income x 100
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NC2023 Returning Profits to Shareholders
 For FY03/24, we plan to pay an annual dividend of JPY120 per share as planned (interim:
JPY55, year-end: JPY65).
 We will continue buying back and canceling shares to further improve capital efficiency.
110

Annual dividends per share and indicatorsof shareholder return
Dividend

(Yen)

33

Dividend payout ratio

40

36

31.1%

31.1%

24.1%

23.7%

34.8%
25.6%

115

120

Total return ratio

40

63

53

48

62.2%
47.1%

46.5%
30.0%

31.9%

27.6%

22.7%

28.1%

27.5%

36.4%

29.4%

33.5%

Approx.
50%
target31.9%

FY03/15 FY03/16 FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23 FY03/24
NC2020

NC2023

Treasuryshares

FY03/15

FY03/16

FY03/17

FY03/18

FY03/19

FY03/20

FY03/21

FY03/22

FY03/23

FY03/24*

Acquisition
amount

604

707

891

679

936

425

-

7,499

2,635

2,229

No. of shares
Acquired

600

600

600

400

600

300

-

3,085

1,035

765

(Thousandsof shares）

No. of sharescancelled

1,660

-

-

-

-

-

-

2,700

3,685

1,200

(Thousandsof shares）* Amounts current as of September 30, 2023

(Millions of yen)

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Measures to Realize Management
Conscious of Cost of Capital andShare Prices

June 2023

Explanation from the President at the financial results briefing
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Measures to Realize Management
Conscious of Cost of Capital and Share Prices

Current Status: Cost of Capital vs. Return on Capital Since the start of NC2023, ROE rose to the level exceeding the cost of equity.
 If we can maintain ROE at 10% or higher, the target set forth in NC2023, we can keep
ROE above the cost of equity.
15.0%

ROE and cost of equity
ROE

12.8%

Cost of equity

10.0%

11.0%

8.5%

7.4%

7.1%

8.6%

the end of March 2023.)

5.0%• β 1.25• Market risk premium 6.5%
• Risk-free interest rate 0.32%

4.7%

0.0%

* Recorded allowance for doubtful accounts
at the Europe business in FY03/18

FY03/17

FY03/18

FY03/19

FY03/20
NC2020June 2023* Assumptions for calculating cost of equity
Based on CAPM, (The figures below are as ofExcerpt from financial results briefing materials

FY03/21

FY03/22

FY03/23

NC2023Copyright © INABATA＆CO., LTD. 2024

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Measures to Realize Management
Conscious of Cost of Capital and Share Prices

Current Status: Share Price and the Market’s Valuation of the Company
 Share prices steadily increased, reflecting earnings growth and a substantial improvement in shareholder
returns.
 PBR was below 1x, but rose mainly on the back of an increase in ROE (0.90x as of May 31, 2023*).
 PER largely remained unchanged at a low level, suggesting that investors have low expectations for our
future profit growth.
*Obtained by dividing the closing price on May 31, 2023 by BPS at
Stock price and market capitalization

the end of FY03/23

ROE

Market cap (hundred millions of yen)
Stock price (yen)

1,357
861

1,616
1,026

1,505
955

1,180
749

1,658
1,052

2,063
1,254

2,687
1,534

FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23

PBR

1.20

0.60
0.40

0.70
0.56

0.49

0.57

FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23

Excerpt from financial results briefing materials

8.6%

PER

TSE Prime
wholesaleaverage:
8.7x*

14.7

0.67

*Recorded allowance for doubtful accounts at the Europe business in FY03/18*All figures are as of the end of the fiscal year

June 2023

4.7%

7.4%

11.0%

FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23

0.84
0.57

8.5%

PBR of 1x

1.00
0.80

7.1%

12.8%

8.7

7.1

6.2

7.2

5.5

7.8

FY03/17 FY03/18 FY03/19 FY03/20 FY03/21 FY03/22 FY03/23*As of March 31, 2023

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Measures to Realize Management
Conscious of Cost of Capital and Share Prices

Policies/Targets, and Timeline At a Board of Directors meeting held in May 2023, we have resolvedon the following policies.

 Policies
Increase the share price so that PBR stays above 1x at all times, assoon as possible, through the following four measures:① Firmly implement growth strategies to drive sustainable growth in businessvalue, and foster expectations for future profit growth② Maintain ROE of 10% or above③ Control and/or curtail the cost of capital, including by utilizing financial
leverages④ Continue buying back shares

June 2023

Excerpt from financial results briefing materials

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Measures to Realize Management
Conscious of Cost of Capital and Share Prices

Specific Measures: Maintain ROE of 10% or above
 Maintain ROE of 10% or above, largely by expanding profits,enhancing profitability, and continuing to control the cost of equity

 Expand profits and increase GPM• Grow mainstay businesses• Increase the share of earnings accounted for by highly profitable businesses• Make aggressive investments, including in M&A, and generate revenue at an
early stage• Steadily dispose of strategic shareholdings

 Control of equity• Continue flexible share buybacks andcancellations• Maintain a progressive dividend
policyJune 2023

Excerpt from financial results briefing materials

Maintain a total return ratio ofaround 50%

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Measures to Realize Management
Conscious of Cost of Capital and Share Prices

Specific Measures: Control and Curtail Cost of Capital By promoting indirect measures in addition to direct measures, reducerisks and information gaps with the market and control and/or curb thecost of capital Direct measures• Utilize debt (diversify funding methods, including the issue of corporate
bonds)• Buyback and cancel own shares Indirect measures• Enhance information disclosure• Actively engage in dialogues with investors (step up efforts to provide
explanation)• Strengthen the Board’s monitoring function to continuously monitor
performance• Be selected as a constituent of many ESG indexes by increasing ESG
scoresJune 2023

Excerpt from financial results briefing materials

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Corporate Governance

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Continue to Strengthen Corporate Governance Promoted strengthening corporate governance toachieve the Group's management philosophy and vision• June 2003

Executive officer system introduced• June 2006

Term of appointment of directors reduced from two years to one year

• June 2013
• June 2015

Appointment of two outside directors
Appointment of three outside directors• November 2015

Nominating and Remuneration Committee (voluntary) established
Evaluation of the Board of Directors introduced• June 2022

Transition to a company with an audit and supervisory committee
Transition to having outside directors comprise the majority of directors

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Basic Views on Corporate GovernanceA strong corporate governance foundation is essential toachieving our Mission and Vision→Continue revamping and strengthening the governancestructure[Mission]
People come first, based on the spirit of “love (ai)” and“respect (kei)” and together we strive towards contributing
to the development of society.
[Vision]To continually evolve, serving clients and society, throughglobal operations and meeting their changing needs.

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Corporate Governance Structure Transition to Company with Audit and Supervisory Committee in June 2022
 Transition to monitoring-type Board of Directors where independent
outside directors account for more than half

 Added one more outside director (Audit and Supervisory Committee
member) in June 2023
Ratio of independent
outside directors

58％ (7 out of 12)

Directors (excluding audit andsupervisory committee
members)

7 personsOutsideDirectors (audit andsupervisory committee
members)

5 personsOutsideCopyright © INABATA＆CO., LTD. 2024

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Experience and expected roles of directors
In light of our mission, aspirations, long-term vision IK Vision 2030, and medium-term management plan
NC2023, we, as a global business operator, have identified skills necessary to build a framework to enable
the Board of Directors to fulfill their roles of decision making and supervision of business execution, andcreated a skills matrix as below.
Business strategy & industry knowledge
Name

Katsutaro Inabata

GlobalElectronics
management&
energy●Toyohiro Akao

Materials

Food&chemicals

&
Life

●
●

●

●

Masahiro Sugiyama●

Takashi Shigemori

Directors(Audit andSupervisory
Committee
members)

●

●

●

●

●

●

Kenji Hamashima*●IT& digital

ESG

●

●

●

●

●

Osamu Chonan*

●

●

●
●

●

Satoshi Tamai*
Minoru Sanari*HR& labor●●Takako Hagiwara*

Legal, risk
management,& internal
control●

Kenichi Yokota
Directors

Finance &accounting

●
●

●
●

Tomokazu Fujisawa*●

Noriya Yokota*

●

●
●

●

●

●

* Independent outside director
Notes: An explanation of each skill is provided on pages 45-46 of this Corporate Governance material or on page 16-18 of the Notice ofConvocation of the Ordinary General Meeting of Shareholders held in June 2023.
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Composition of Board of Directors (Outside Directors 1)
・Two outside directors who are not audit and supervisory committee members
We aim to enhance supervisory functions and increase corporate value by taking advantage ofthe outside directors’ extensive experience and wide-ranging insight into company business.

Takako Hagiwara*

Lead outside director/Chair of Nominating
and Remuneration Committee
Background

Former Representative Director, Sony Kibou/Hikari Corp.
Current Representative Director, DDD Corp.
Current Outside Director, Twinbird Corp.
Current Outside Director, NEC Capital Solutions Ltd.

Reasons for appointment

Ms. Hagiwara has extensive experience as a member of
top management in charge of HR at a major electronics
manufacturer that operates multiples businesses globally.

Osamu Chonan*

Nominating and Remuneration Committee
MemberBackground

Former Representative Director, President andChief Executive Corporate Officer, Kewpie Corp.
Current Chairman, Kewpie Miraitamago Foundation

Reasons for appointment

Mr. Chonan has extensive experience as the head of thesales department and as an executive at a global food
manufacturer.

(*) Ms. Takako Hagiwara and Mr. Osamu Chonan are registered as independent outside officers with the TSE.

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Composition of Board of Directors (Outside Directors 2)
・Five outside directors who are audit and supervisory committee members

Kenji Hamashima*
Head audit and supervisorycommittee / Nominating andRemuneration Committee
memberBackground

Former President and Chief
Executive Officer – Ushio Inc.
Current Outside Director, Nichirei
Corp.

Reasons for appointment

Mr. Hamashima has extensive
experience in global business
operations as top management ofa manufacturer handling applied
optics products and industrial
machinery.

Satoshi Tamai*

Minoru Sanari*

Background

Background

Reasons for appointment

Reasons for appointment

Current Representative,
Satoshi Tamai certified Public
Accountant Office
Current Outside Auditor, Toho
Lamac Co., Ltd., PC Dept Corp.

Mr. Tamai has extensive
experience as a representative
partner at a major Japanese
auditing corporation , and as
an outside auditor at multiple
companies.

Former Executive Officer,
Tokyo Gas Co., Ltd.
Current Senior Adviser, Tokyo
Gas Co., Ltd.

As an attorney at Japan’slargest city gas company, Mr.
Sanari has specialized
knowledge and extensive
experience in corporate legal
affairs and governance.

(*) Mr. Kenji Hamashima, Mr. Satoshi Tamai and Mr. Minoru Sanari are registered as independent outside officers with the TSE.

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Composition of Board of Directors (Outside Directors 3)
・Five outside directors who are audit and supervisory committee members (Continued)

Tomokazu Fujisawa*
Background

Noriya Yokota*
Background

Former Director, Audit & Supervisory
Committee Member, Astellas Parma Inc.

Former Director, Senior Executive Officer, Kirin
Holdings Co., Ltd.

Reasons for appointment

Mr. Yokota has extensive experience as a factory
manager and head of the manufacturing divisionof a manufacturer engaged in producing andselling alcoholic and non-alcoholic beverages,
pharmaceuticals, etc. worldwide. After serving as
an executive at an overseas subsidiary, he wasan executive officer in charge of humanresources, finance, IT, and management strategy.

Mr. Fujisawa has experience in auditing
operations and at overseas subsidiaries for a
global pharmaceutical company, as well as
extensive experience as a director andmember of the Audit & Supervisory
Committee.

Reasons for appointment(*) Mr. Tomokazu Fujisawa and Mr. Noriya Yokota are registered as independent outside officers with the TSE.

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Deliberations by the Board of Directors
The Board of Directors transitioned to the model of a company with anaudit and supervisory committee, adopting a monitoring-type approach.
Main deliberations at the Board of Directors' meeting for FY03/23 after the transition
Item

Main deliberations

Management
strategy

Repurchase of treasury shares, report on review of significance of strategic
shareholdings, report on reduction of strategic shareholdings.
Appointment and compensation of directors and executive officers, businessexecution reports, delegation of important business execution decisions,establishment of rules for the Board of Directors, liability limitation agreements with
Director-related
directors who do not fall under the category of executive directors, etc., revision ofregulations for the Nominating and Remuneration Committee, officer liability
insurance contract
Corporate governance reports, evaluation of the effectiveness of the Board ofGovernanceDirectors
Sustainability reports, ESG rating agency score reports, succession planning
Sustainability
reports
Institutional investor shareholder identification survey report, domestic andInvestor relations overseas institutional investor post-hearing report, individual investor questionnaire
results report
Basic policy on internal control, direct reports from the internal audit office, Audit
Audit
and Supervisory Committee audit plan
FinanceAnnual securities reports, financial results, interim dividend payments
Investment andLithium-ion battery-related investment projects, report on determination offinancingsubsidiaries falling under criteria for withdrawal consideration

Note: The above deliberations were held from June 22, 2022 (after the transition to a company with an audit
Copyright © INABATA＆CO., LTD. 2024
and supervisory committee) to March 31, 2023.

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Nominating and Remuneration Committee[Nominating and Remuneration Committee] (Voluntary)
Established in 2015

Ensures objectivity, fairness and transparency with respect to appointing
senior management, nominating director and executive officer candidates,
and making decisions on director remuneration

Independent outside directors are key members• Chairperson : lead independent outside director• Current membership: 3 independent outside directors and 1 internal
director• Number of times held: FY03/2023 10 times
Item

Main deliberations and activities

Nominationrelated

Individual interviews with director/executive officer candidates
Selection of director/executive officer candidates
Remuneratio Review of director compensation KPIs
(ROE and stock price were added to the KPIs based on feedback
n-related
mainly from dialogue with shareholders and investors.)Committee- Revision of rules for the Nominating and Remuneration Committee
related
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Evaluation of Board of Directors
Objective - To increase corporate value by enhancing theeffectiveness and transparency of the Board of Directors; evaluationof the Board began in 2015
■ FY03/2022, FY03/2023

Performed a self-evaluation of all directors using a survey format■ FY03/2024

Conducted third-party evaluations of all directors through questionnaires andinterviews⇒Plans to disclose results of the evaluation and measures to be taken in April 2024

*Each cycle lasts for three years in which self-evaluation is carried out for the first two years andthird-party evaluation is carried out in the third year.
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Evaluation of Board of Directors
Summary of evaluation in FY03/2023（self-evaluation）

・ The operating status of the Board received high marks overall
・ Open and lively discussions were confirmed
・ Outside directors contributed
・ The Nomination and Remuneration Committee and the audit and supervisory committee were
properly operated
・ There was sufficient reporting on the status of dialogues with investors and shareholders

Improvements based on issues raised in self-evaluations in FY03/2022

・Discussions on succession planning and sustainability-related issues
・Provision of sufficient information by the Nomination and Remuneration Committee to the Board
・Communication among outside directors, which had been insufficient due to the impact of COVID-19
・Further improvements in communicating information to the capital market

Issues to be addressed in the future

・Further discussions on longer-term management policy and succession plans for CEO and outside
directors
・ Provision of sufficient information by the Nomination and Remuneration Committee to the Board of
Directors and communication between them・ Further improvements in communication among outside directors
・ Further improvements in communicating information to the capital market

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Officer Remuneration
From FY03/2024, adopted ROE and share price as indicators for performance-based
remuneration■Remuneration for directors who are not Audit and Supervisory
Committee members*

1) Fixed remuneration
2) Performance-based remuneration:- Profit before taxes (excluding gains on the sale of a portion of strategically held shares)- Return on invested capital (ROIC and ROE)
- Share price- ESG scores from several outside evaluation agencies (FTSE Russell and MSCI)
Performance-based compensation is calculated by multiplying each of the above coefficients.
3) Board Benefit Trust (BBT)Introduced in June 2018 to enhance motivation to contribute to medium- to long-term
expansion in corporate value

Ratio of performance-based remuneration to fixed remuneration in FY03/2023
Performance-based remuneration
58.2％

Fixed remuneration
41.8%

Target: six directors
Total: 335mn yen■Remuneration for directors who are Audit and Supervisory Committee

members

1) Fixed remuneration only
* Remuneration for directors who are not executive directors is fixed remuneration only.

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Major Business Risks
The 14 risks outlined in the matrix below are considered significant risks the Group is facing.
The matrix maps out the risks in terms of their potential impact on business performance andthe possibility of occurrence, taking into consideration the results of risk evaluation analysis
and management’s response to risk awareness in the Board Effectiveness Assessment
conducted in FY03/23.

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Sustainability

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Sustainability Initiatives
 We will push forward with sustainability management in accordance with our corporategroup's mission, which emphasizes respect for humankind.
October 2021

Established Sustainability Committee
Chaired by the Company president; all directors, including thosefrom outside the Company, participate in the Committee as amember or observer

November 2021

Formulated the Inabata Group Sustainability Basic Policy andthe Code of Conduct

March 2022

Formulated Inabata Group Human Rights Policy

April 2022

Signed UN Global Compact (UNGC)

June 2022

Announced “2050 Carbon Neutrality Declaration*”
Defined materiality issues
Began disclosures in accordance with TCFD recommendations

August 2022

Selected as a component of the FTSE Blossom Japan Sector Relative Index

March 2023

Certified as a Health & Productivity Management Outstanding Organization
2023

April 2023

Endorsed the recommendations of TCFD

August 2023

Selected as a component of the FTSE Blossom Japan Index

September 2023

Forged a business alliance with Asuene Inc. to support decarbonization of
corporations* Targets the amount of internal emissions(Scope 1 and 2)

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Identifying Materiality Issues
 Inabata Group Materiality
Creating
Sustainable
Value

Contributing to a decarbonized and circular society, sustainable use ofnatural capital
Contributing to safety, security, and well-being
Providing value through resilience in procurement and supply functions

Strengthening
Foundation for
Business
Continuity

Respecting human rights in the spirit of love (ai) and respect (kei) andgrowing together with local communities
Fostering and strengthening the human capital driving the value creation
Enhancing governance and risk management

 We have identified priority issues with impact on our pursuit ofsustainable growth (June 2022).
 KPIs for materiality will be announced around May 2024.
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Fostering and Strengthening Human Capital
Our strengths lie in our human resources and information
 Made progress in improving diversity.
 Conducted an employee engagement survey, with a greater number of targets. Key scores
improved.
 Conducted the Human Rights Due Diligence Digital Survey and identified risks in business
operations.
 Global HR Management Department further focused on centralized management and trainingof global personnel.
Number of overseas personnel in the trading divisionand people on overseas assignment
Trading division(People)

693

95

737

764

94

90

People on overseas assignment
849 875828
783 787

93

92

96

98

98

End-FY03/17 End-FY03/18 End-FY03/19 End-FY03/20 End-FY03/21 End-FY03/22 End-FY03/23 End-Sep. 2023

President of Inabata and
IK Plastic Compound Mexico employees

Note: The number of people on overseas assignment is as of the first day of the following month.
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Fostering and Strengthening Human Capital
Identifying issues through engagement surveys to increase HR capabilities, the source of value
creationPositive responses to the human resources system and training, which were issues in FY2021, increased
due to various measures implemented based on the survey results (career training, open recruitment system,
rotation, etc.)

Number of employees
surveyed (people)

2021

2022

2023

1,400

1,697

1,901

Inabata & Co., Ltd.

587

606

652

Main overseas trading companies

813

1,091

1,249

49

73

72

70

73

76

75

80

80

83

85

83

70

73

73

59

55

57

41

48

54

64

69

75

Total

Response rate (%)
【Engagement】
I am satisfied with the work I am doing at Inabata now.
【Relationship with superiors 】
I have the necessary collaboration with my supervisor at work.
【Organizational culture】
When a problem occurs in the course of my duties, my supervisor andthe people around me provide appropriate support.
Main items*(%)

【Corporate philosophy】
I can relate to Inabata’s philosophy, vision and management policies,
and I want to participate in achieving them.
【Human resources system and benefits】
Inabata’s salary standards are satisfactory, compared to othercompanies in the same industry.
【Human resources system and training】
Inabata supports employee training to improve their skills.
【WLB (work-life balance)】
Overtime is kept to a level that is acceptable for me.

*From among a five-point evaluation by employees(5. Strongly agree / 4. Agree / 3. Neither agree nor disagree / 2. Disagree / 1. Strongly disagree), the ratio of positive responses (5. and 4.)

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Fostering and Strengthening Human Capital
Institutional improvements
1. Diversity and Inclusion
Diverse workstyles
 Established remote work and work-from-home systems to accommodate flexible
workstyles (for all employees)

Promoting participation by women Messages from top management communicated through internal
website and newsletters Conducted briefing meetings on changes of positions andinterviews with female employees Expanded work-from-home systems and support in balancing workwith caring for children and seniors, or with treatments for personal
injuries or illnesses

Supporting participation by seniors

Video message from the
President, posted on theinternal website

 Extended retirement age to 65, established a senior employment contract system and areemployment contract system for employees over 65, and conducted career training
and skills development for employees in their 40s and 50s.

2. Introduced restricted stock units for employee stock ownership plan
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Human Rights DD
In accordance with the Inabata Group Human Rights Policy established in 2022, weare striving to give consideration to human rights in our business activities.

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Climate Change■ Identified as a priority issue (materiality) “Contributing to a decarbonized andcircular society”■June 2022 Announced “2050 Carbon Neutrality Declaration*”■June 2022 Began disclosures in accordance with TCFD recommendations
 June 2023 Began disclosure of Scope 1 and 3 in addition to Scope 2
Conducted 1.5°C and 4°C scenario analyses to estimate financial impact
Complied with all TCFD requirements⇒ 2030 medium-term target for carbon neutrality to be disclosed in 2024

* Targets the amount of internal emissions(Scope 1 and 2)

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Products that reduce environmental load
Expand sales of products that reduce environmental impact, as part of “Multi-faceted
approach to markets with potential for future growth and steady monetization efforts,” a key
initiative in NC2023(Billions of yen)
Sales

Field

Main contents

FY03/22(actual)

FY03/23(actual)

FY03/24(forecast)

Energy & Power

Renewable energy-related, batteryrelated, etc.

13.4

17.5

25.0

Resources &Environment

Sustainable raw materials, recycling,water-related

4.2

7.5

11.2

Materials &Chemicals

Low carbon materials, reduction ofenvironmental pollutants, etc.

0.7

1.5

3.5

Environmental
certifications

Certified products of FSC, PEFC,
MSC, ASC, etc.

0.3

0.3

0.4

18.7

26.9

40.3

Total**Simple aggregate value

Forest Stewardship Council: FSC certification ensures that products come from responsibly managed forests and recycled resources.
Marine Stewardship Council: MSC certification ensures that marine products obtained through sustainable fishing.
Aquaculture Stewardship Council: ASC certification ensures that marine products produced through sustainable farming.
* From FY03/23, some product categories have been reclassified (solar cell and EV battery materials were moved from Materials & Chemicals to Energy & Power).
FY03/22 sales figures have been retroactively adjusted to reflect this change.
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Reference:
Net Sales and Operating Profit(Operating profit: Billions of yen)

(Net sales: Billions of yen)
1,200.0

Net sales

35.0

Operating profit

1,000.0 30.0

1,000.0(forecast))

800.0

561.1

600.0

400.0

410.7

469.0 464.4 479.9
10.9
7.9

200.0

572.1 577.0 586.6

7.6

10.7

11.3

621.1 634.7
14.0

12.6

600.3

800.0

25.0

735.6
680.9 20.3 21.0
20.0

20.0

577.5
14.9

15.0

13.2

10.0

7.7
5.9

5.5

5.0

0.0

0.0
Around 2030
IK Vision 2030
NC2016

NC2020

NC2023

Notes: *Inabata has adopted Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) effective from FY03/22.
*Recorded allowance for doubtful accounts at a European subsidiary in FY03/18: Full Year: ¥6.65 billion.
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Reference:
Skills that our Board of Directors are expected to have
1. Global management
We are developing our business globally, and in particular, our long-term vision IK Vision 2030 envisages
increasing the ratio of our business conducted overseas to 70% or more. From this perspective, we believethat it is extremely useful to appoint people with knowledge of global corporate management to the Board of
Directors in order to promote our future growth. For this reason, when inviting outside directors, we takeparticular care to ensure that their experience includes top management of companies with global
operations, or equivalent experience. The “global management” item in the skills matrix is based on thepresence or absence of top management or equivalent experience at companies with global operations.
2. Business Strategy/Industry Knowledge
In managing a specialized trading company like ours, first and foremost, vast expertise and experience ineach business field is indispensable. In particular, regarding executive directors who are in charge ofbusiness execution, it is extremely important in practice to the development of the business of a trading firm
like ours to hold a wide range of knowledge, experience and personal connections in each of our businessfields, and when appointing executive directors, we give consideration to balance among those who haveknowledge of the Company’s business fields.
When inviting outside directors, we give consideration to the broad knowledge and experience in various
business fields, and aim to include individuals capable of providing supervision and opinions on businessstrategies from an objective perspective.
3. Finance & accounting
The importance of financial strategy (corporate finance) in corporate management goes without saying. We
believe that it is necessary for some executive directors to be in charge of financial strategy, and tospearhead initiatives to enhance corporate value through various dialogues with investors. In addition, inorder to strengthen the supervisory function over business execution, we believe that it is useful to ensurethat directors who are familiar with finance and accounting are included on the Audit and Supervisory
Committee.
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Reference:
Skills that our Board of Directors are expected to have
4. Legal/Risk Management/Internal Control
At Inabata & Co., Ltd., which is expanding its business globally, there are various risks such as credit risk ofbusiness partners, risk related to business investment, country risk associated with overseas business,foreign exchange risk, and the product market fluctuation risks. Therefore, risk management is extremely
important for management. In addition, we are committed to management that emphasizes complianceabove all else, and in order to strengthen the supervisory function for business execution, we believe it isuseful to include those who are familiar with the law among directors who are Audit and Supervisory
Committee members without fail.
The Company has chosen to be a company with an audit and supervisory committee with the aim ofexpediting management decision-making and strengthening the supervisory function for business execution.
Companies with an audit and supervisory committee are required to make effective use of the company
internal control system to conduct systematic audits. From this point of view, we believe that it is essential toinclude those who have specialized knowledge and experience in internal control and auditing among
directors who are Audit and Supervisory Committee members.
5. HR & labor
For a trading company such as Inabata, human resources are our greatest asset, and human resource
development is an important management issue over the medium to long term. In our medium-termbusiness plan, the NC2023, we are working to improve our initiatives for training global human resources,
further enhancing our systems to increase diversity, boosting employee engagement, and reforming work
styles. From this perspective, we believe that it is desirable to have directors with experience and skills inhuman resources and laboraffairs, and we place importance on these perspectives when inviting outside directors.

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Reference:
Skills that our Board of Directors are expected to have
6. IT & digital
Knowledge of IT and digital technology is indispensable for promoting digital transformation (DX). In addition,
threats to information security are increasing year by year, and we believe that IT and digital skills arenecessary to strengthen our countermeasures against such threats.
7. ESGWe established the Sustainability Committee in October 2021, and regard the promotion of sustainability as
an important management issue. We also consider the improvement of external ESG assessments to be an
important issue. From this perspective, we believe that it is necessary to include persons with knowledge ofsustainability and ESG in corporate management on the Board of Directors, and we take these points into
consideration when inviting outside directors.

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 IR-related inquiries:

IR Department, Financial Management Office
Inabata & Co., Ltd.
E-mail: inabata-ir@inabata.com

Cautionary note regarding forward-looking statements
The data and future predictions contained in this document are forward-looking statements, based on
information available and judgments applicable at the time of the document’s release. The data andforecasts contained herein may include elements that are subject to change. This document and its
contents are no guarantee of future performance.
Presentation of numerical figures
Figures in this document presented in millions and billions of yen have been rounded down.
Consequently, certain discrepancies may exist between individual values and total values, or values
showing changes between sets of data.

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