ENVIRONMENTESG Initiatives: Environment

Environmental Initiatives of the Asahi Holdings GroupThe Asahi Holdings Group strives to ensure that its business activities contribute tohealthy cyclical use of materials to protect the global environment.

Recycling
Expand Precious Metals
Recycling
We will expand our precious metals recycling
globally to promote more effective use of limited
resources.

Precious metal bullion

Recycling

216t

Amount of precious metals
recycled in FY2021

Products

Raw materials for recycling

OUTCOME
Fermented compost,
metal raw materials,
fuels and raw
materials for cement,
fire-proof brick andpaving materials, andwood chips

Industrial waste

Priority SDG-Related Goal

The precious metals we supply are certified to meetinternational standards and address the concernsof people, society, and the environment. Goingforward, we will continue our business activities
and initiatives with even greater consideration forethical, social, and environmental issues, and fulfill
our responsibilities by supplying precious metals.

Asahi
Gro

INPUT

Holdings
up

Products

million kWh/year

Kerosene324

kL/yearGasoline

PlantsBusinesssites,
research labs,
etc.

22,847t855

kL/year38

million m3/year

Up compared to the previous year

LPG

32

2.64

Down compared to the previous yeart/yearINTEGRATED REPORT 2022

All figures are for FY2021

Sludge89,00015,000t/yearOther (waste reagents, waste plastic, etc.)

98,000t/yearTotal

Chemicals

17,278t
Water

352,948m3

OUTPUT
102,957t
CO2

Priority SDG-Related Goal

Reduce CO2 Emissions
By FY2030, we aim to reduce energy-derived CO2
emissions by 50% compared to FY2015.

235,615m3

Light oil

Urban gast/yearWaste

kL/yearkL/year85,000Glass and ceramic wastet/yearEffluent

3,003

Liquid waste

21,000 308,000
t/yearHeavy oil765

Amounts of properly disposed industrial
waste FY2021 resultst/yearEnergy Sources

45.71

We will strive to ensure proper treatment of waste
as a waste disposal expert and work to help build a
recycling-oriented society.

Waste oil

EnergyElectricity

Expand Proper Industrial
Waste Disposal

E NV I R O NM E NT

Supply Precious Metals in Ways
That Are Friendly to People, Society,and the Environment

Recycling

Priority SDG-Related Goal

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Priority SDG-Related Goal[

Rate of reduction forenergy-derived CO2 emissions
FY2021 results

]

27

%
reductioncompared to FY2015

ASAHI HOLDINGS

39

E NVIRONMENTESG Initiatives: Environment
Priority SDG-Related Goal

Environmental Management

Climate Change Initiatives

ISO 14001 Certification

Climate change is a challenge shared by all humankind and is considered one of our business priorities. To make asustainable society a reality, we will continue to make contributions through our business activities and reduce ourown CO2 emissions.

Environmental Management StructureManagement
General Internal
Auditors

CO 2 Emission Trends■Energy-derived CO2 emissions (in Japan)

8.6

41.0

40

Environment Preservation
Administrator

1.7

Environmental Management Promotion System

Promoting Green Purchasing
The Group strives to solve serious environmental problems. This includes climate change, which is caused by emissions from mass production,
mass consumption, and mass disposal. To help build a sustainable society and protect the global environment, we have established guidelines
for green purchasing that comply with Japan's Act on Promotion of Procurement of Eco-Friendly Goods and Services by the State and Other
Entities (Green Purchasing Law), which encourages the use of products and services that help reduce environmental impact.

20

0Going forward, the Group will continue to actively pursue green purchasing.
We will carefully conserve limited resources and reduce waste generation,
thereby helping to build a recycling-oriented economic system.

22.3

2015

32.0
2.1

62.4

15.2

2020

2021

[FY]

In FY2021, the Group's total CO2 emissions were up approximately 4% from FY2015. This does not include the emissions
attributed to one site in Japan and one outside Japan that joined the Group after the base year. Energy-derived CO2 emissions
remained at about the same level overseas, but in Japan, they were reduced due to consumption of high-efficiency selfgenerated power using waste to energy facility as well as a review of each site's electricity contract plans. The result wasan overall reduction of 27%. On the other hand, non-energy-derived CO2 emissions generated through industrial waste
incineration were up approximately 29% from FY2015, but the lifespan of final disposal sites was extended by incinerating
waste plastic and drastically reducing its volume.
If we look at the CO2 emissions above by Scope, Scope 1 emissions account for 89,600 tons of CO2, and Scope 2 emissions
account for 13,400 tons of CO2. Scope 3 emissions account for 137,200 tons of CO2.
Scope of data
Headquarters, sites, sales offices and plants in Japan, as well as Group companies* and overseas subsidiaries* (calculation period: April to March)*The data pertains to consolidated subsidiaries as of March 31, 2022. Data for deconsolidated subsidiaries has been subtracted retroactively, while data for subsidiaries thatwere previously non-consolidated has been added retroactively, going back to the fiscal year when the subsidiary became consolidated.
Calculation method
Energy-derived emissions: Calculated based on the amounts of electricity and fuel consumed at each site (emissions in Japan calculated based on the Act on Promotion of
Global Warming Countermeasures and the Act on the Rational Use of Energy)
Non-energy-derived emissions: Calculated based on the amount of industrial waste incineration.

CO2 Emissions Reduction from Precious Metals Recycling

Effect of reducing emissions by precious metal recycling 438,000 t-CO2 >emissions
by the Asahi Holdings Group 103,000 t-CO 2 (Scope1, Scope 2)
Precious metals recycling is considered to have a lower environmental impact than producing new precious metals from virgin mining. For example, in terms of CO2 emissions, it is said to produce about one-tenth the emissions in the case of gold. If
this were applied to our precious metals recycling volume, this would result in an indirect reduction of 438,000 t-CO2, morethan four times our Group's emissions. In addition to continuing its own efforts to reduce emissions, the Group will continue
to help reduce CO2 through precious metals recycling. (The CO2 emissions reduction figure does not indicate the level of emissions directly reduced by the Group.)(t-CO 2)Emissions factors used for
calculation

Approximately
one-tenth

Contributing to Biodiversity

INTEGRATED REPORT 2022

20.8

2019

(Base year)*PEFC: Programme for the Endorsement of Forest Certification

The Group recognizes that biodiversity is essential for a sustainable society. We contribute to the preservation of ecosystems, aquatic
environments and oceans by providing recycled precious metals and proper treatment of industrial waste, which includes thedetoxification of waste liquids.

64.7

15.2

14.8

25.4

Recommended products(1)Products contributing to forest protection approved by the Programme for
the Endorsement of Forest Certification (PEFC)(2)Products that are certified by the Japan Environmental Association for their
low environmental impact and usefulness for environmental conservation(3)Products that meet the criteria for specific procured products under theGreen Purchasing Law(4)Products listed as eco-friendly by the Green Purchasing Network

15.3

37.3
1.4

E NV I R O NM E NT

Every year we develop company-wide Environmental Goals based on our Environmental Policy, which sets out our environmental
preservation philosophy. According to the above-established purposes and goals, each ISO 14001-certified site in Japan develops its own
Annual Environmental Goals and implements environmental preservation activities closely related to their business tasks. In addition, theEnvironment Committee of each site deliberates on such matters as compliance with environmental laws and regulations, revisions ofplans and environmental education, and provides reports to management. While the ISO Office controls the environmental management
system (EMS), an environmental preservation administrator is also assigned for each site in order to ensure thorough implementation ofenvironmental initiatives.

67.3

48.4

Environment
Committee
Departments

39.4

15.6

Supervisors

Internal Auditors

ISO 14001 certificate

70.9

60

ISO Office

Supervisors■Energy-derived CO2 emissions (Group basis for 2015 onward)■Non-energy-derived CO2 emissions (new incinerators)(1,000 tons CO 2)

General Environment
Committee

Supervisors■Energy-derived CO2 emissions (outside Japan)■Non-energy-derived CO2 emissions (existing incinerators)

Chief Environment
Control Manager

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In August 2018, we obtained ISO 14001 certification for our sites inJapan, including those at subsidiaries. As of March 31, 2022, we haveachieved certification for 31 sites at 4 companies. Going forward, we
will continue to focus on maintenance and improvement activities
with an emphasis on extending certification to all sites.

40

Reduce CO2 Emissions

Emissions fromrefining mined raw
material

Emissions fromrecycling

Refining
mined rawmaterial

Gold: 12,621 kg of CO2 /kg of gold
Silver: 95 kg of CO2 /kg of silver
Platinum / Palladium:
9,297kg of CO2 /kg of palladium

Recycling

Gold: 1,256 kg of CO2/kg of
gold
Silver: 22 kg of CO2/kg ofsilverPlatinum / Palladium:658 kg of CO2/kg of palladium

Reference: Calculated from “Life Cycle Assessment
Data for Computer Products, Mobile
Phones and Mixed Waste [homepage
on the internet], United States
Environmental Protection Agency

Environmental benefit of precious metals recycling
When CO2 savings are expressed as the amount ofgreenhouse gases absorbed by forests, it is equal to18,411hectares of forest

Emissions
reduction
benefit438

thousandtons-CO2(an area one-third the size of Lake Biwa)

Note: Calculation was based on the assumption that one cedar
tree absorbs 14 kg of CO2 annually (Source: Forestry
Agency of Japan), and 1,700 cedar trees are planted in anarea of one ha

ASAHI HOLDINGS

41

E NVIRONMENTESG Initiatives: Environment

Response to Recommendations by the Task Force on
Climate-related Financial Disclosures (TCFD)
Expressed Endorsement of the TCFD and Strengthening the Governance System
In December 2021, we expressed our endorsement for the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD) and established a cross-company team for TCFD consisting of the Business Unit, Technical Unit, andAdministration Unit in order to identify risks and opportunities related to climate change and understand the medium- to longterm impact of climate change on our business, and have considered relevant countermeasures. We have also strengthened our
Details on P23
Sustainability Promotion System.
The risks and opportunities identified in the TCFD actions will be reported to the Board of Directors and the Sustainability
Committee at least once every year.

Metrics and Targets● Reduce energy-derived CO2 emissions, such as electricity and gasoline, by 50%(compared to FY2015) by FY2030

We extracted risks and opportunities relevant to climate change that will affect our Precious Metals Business (domestic and North
American businesses) and Environmental Preservation Business in 2030. We qualitatively assessed them on three levels: "Large,""Medium," and "Small." At that time, we also considered the further impact of climate change from 2030 to 2050. As a result, "Policy and Legal," "Market," "Technology," etc. were identified.
Item
Transition
risks
Physicalrisks

Contents

1.5℃

-

Large

・Increased costs due to the application ofcarbon pricing (including carbon tax)

Acute・Intensifying natural disasters, such as
cyclones or floods, causing damage
to the facility and stopping long-term
operation-

・Recycled metals with relatively low CO2
emissions will be highly regarded andincrease in competitiveness with theapplication of carbon pricing
・Compliance with regulations andenhancing reporting of CO2 emissions

-

2050

Measures・Switching to CO 2 free power, replacing gasoline cars
by EVs and so on to achieve CO 2 reduction targets for
FY2030(4℃)

・E xpanding BCM at plants that are expected to be impacted
based on hazard maps
・Selecting disaster-resistant locations and implementing
measures against disasters upon large-scale capital
investment

Large・Strengthening value-added sales of recycled metals
utilizing traceability
・Strengthening consulting sales that add value, such as
CO 2 emissions analysis
・E xpanding business by supporting companies thatstruggle to comply with regulations

Market・Increase in recycling demand and target
products-

Large

・E xpanding consulting sales in the sector of materials
and chemical recycling
・Handling of low-grade scrap and expanding metals thatare handledTechnology

・Expanding the incentive to aim foraccelerating the development of technologies
that contribute to decarbonization such ashydrogen, and early commercialization-

Medium・Further promoting the utilization of hydrogen withsurplus power, etc.

Recommended
Disclosures

Status of Efforts / Action Policies

Governance・Deliberating on climate change issues at the management level of the Sustainability Committee, which is chaired by theCEO, and which consists of directors from the Business Unit, Technical Unit, and Administration Unit・E stablishing the Climate Change Working Group under the Sustainability Committee to promote measures for climatechange・Building a system to supervise the matters discussed by the Sustainability Committee under the Board of Directors

Strategy・C onducting scenario analysis of risks and opportunities related to short-, medium-, and long-term climate change at 4°C
and 1.5°C・Setting "Reduction of CO 2 emissions" as one of our business materiality themes

Risk Management

Metrics and Targets

・Reporting the progress of measures on risks and targets extracted from scenario analysis, etc. to the Sustainability
Committee and the Board of Directors on a regular basis
・Incorporating the reported matters into the overall group's risk management system by reporting it to the Group Risk
Management Department

E NV I R O NM E NT

Policies
and
Legal

Policies
and
LegalTransition
risks

2030
4℃

In order to achieve this target, we are moving forward with switching to CO 2 free electricity, reducing fuel usage, andmaking our business offices ZEBs (Zero Energy Buildings).
We have also declared that we will aim for carbon neutrality in FY2050 (targets are Scope 1 and Scope 2).
Although we recycle industrial waste that can be recycled through our Environmental Preservation Business, it is also
true that there are some things that must be incinerated to ensure proper disposal, such as reduction and detoxification.
Therefore, we will first focus on achieving our energy-derived CO 2 emissions reduction target.

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Extraction of Risks and Opportunities

Opportunities

The Climate Change Working Group will compile the status of responses to risks and opportunities related to climate change and CO 2
emissions. The Sustainability Committee will monitor and evaluate them each year. The Board of Directors will also be informed of
the contents for supervision and direction. Also, by reporting it to the Group Risk Management Department, it will be reflected in theoverall group risk management.

One of our business materiality themes is to reduce CO2 emissions. Accordingly, we have set the following targets:

Strategy

Risk

Risk Management

・The Group has already set a target of reducing energy-derived CO2 emissions by 50% from the FY2015 level by 2030, and it has
already declared that it will achieve carbon neutrality in 2050 (Scope 1 and Scope 2)
・FY2021 reduction in energy-derived CO2 emissions (-27% compared to FY2015)
For details about Scope 1 - 3 emissions, see P41

Summary of Scenarios
In the next place, we conducted a scenario analysis to investigate the impact on the business. We adopted two scenarios. One is thatthe global average temperature is expected to increase by around 4°C by 2100, and the other is that the global average temperature is
expected to increase by 1.5°C by 2100, compared to that before the industrial revolution. The analysis was based on the World Energy
Outlook 2021 by the International Energy Agency (IEA), the reports by the Intergovernmental Panel on Climate Change (IPCC), andother materials published by the Japanese government.

Results of Scenario Analysis
The 4°C scenario is a world where the current situation continues on, and we found that there would be little impact as of 2030. On
the other hand, as we move toward 2050, we anticipate an increase in physical risk: the intensification of natural disasters such as
cyclones or floods caused by abnormal weather. In addition to formulating business continuity management (BCM), we are also taking
actions such as selecting a location that is strong against disasters when a plant is moved.
In the 1.5°C scenario, strong policy measures are expected to be taken to achieve carbon neutrality in the mid-century. One of theserisks is the introduction of carbon pricing including carbon tax. Being affected by cost increases will become a risk, especially in theenvironmental preservation business. On the other hand, in the precious metals business, it is likely that the evaluation of recycled
metals with relatively low CO2 emissions and their cost superiority will increase. This is an opportunity for the company, which has
strengths in the production and traceability of recycled precious metals. In the environmental preservation business, the shift from
simple incineration to thermal recycling during the transition to decarbonization will be an opportunity for our company which has
already been addressed. The expansion of recycling demand, including the expansion of the target product, will provide an opportunity
to take advantage of our strength in consulting sales (proposal-based sales).
While reducing risk, we will focus on expanding opportunities.

42

INTEGRATED REPORT 2022

Initiatives for a Hydrogen Society
Asahi Pretec has been working with FC Development
Co., Ltd., X-Scientia Co., Ltd., and Sumitomo Mitsui
Trust Bank, Limited since September 2021 on thedevelopment of a system for building a green hydrogen
supply chain through effective use of by-products
as part of the "FY2021 Cross-Regional Cross-Sector
Carbon Neutrality Technology Research, Development
and Demonstration Program" implemented by Japan’s
Ministry of the Environment.
This program involves utilizing unused electricity
from waste to energy plants owned by Asahi Pretec
to develop a hydrogen production system that cansignificantly reduce hydrogen production costs via theco-production of hydrogen and by-products. After thecompletion of the program, we will contribute to the
spread and expansion of hydrogen by manufacturing
inexpensive hydrogen and selling it externally, thus
helping to reduce greenhouse gas emissions.

Sell byproducts to ensure businessviability and contribute to
the expanded adoption of hydrogen

Reduced CO2
emissions
Enhancingresilience,
regionalcollaboration

Byproducts

Hydrogenproduction

H2
Fuel cells, etc.

Waste power generation(unused stable power supply)
Scope of demonstration
for adopted projects

Electricity

H 2O

Heat

Regional Co-creative/Cross-sector Carbon Neutrality Technology
Development and Demonstration Project (Guided Technology
Development and Demonstration Project for Improving CO2
Emission Reduction Measures)

ASAHI HOLDINGS

43

SOCIETY

ESG Initiatives: Society

The People We're Looking forWhen it comes to human capital, one of the cores of our approach is enhancing talent base with individuals who possess bothprofessional expertise and initiative. The basic qualities we require are the ability to acquire the knowledge and expertise necessary
for the job, as well as the willingness to think independently and utilize that knowledge to handle one's responsibilities on one's own.

Qualities we look for in core personnel
The core personnel who will drive our company's sustainable growth must possess the following three qualities. First, they must beable to innovate and take on challenges and act on new ideas without letting themselves be bound by existing frameworks. Second,
they must be open to diversity and accepting of differences in experience, ideology, and culture, and be able to communicate smoothly
and make the most of the abilities of those around them. Third, they must have a sense of how to manage risks appropriately for thevarious incidents that occur in a business environment that is changing at unprecedented speed.

Developing Personnel
To support the "scrap and build" approach of our resourceful businesses as well as the company's rapid growth, we have expanded
our personnel primarily through mid-career hires. One of our strengths is that we have personnel from diverse backgrounds, and it isimportant to establish a foundation that will enable each of them to maximize their potential and develop into core human resources.

Ensuring all employees are compensated based on performance and abilities● Training system diagram
New Graduate/New Recruit

Assistant Manager

Manager

General Manager

All

Basic education, e-learning, etc. (safety training, IT education, sustainability education, language learning support)
Training for new graduates andrecruits
Mentor system (for one year after
entering the company)

Level-Specific Training

Mid-career training for managers (guidance by Head of Department/on-site training)
New general manager training

New assistant manager training

Understand roles andexpectations

Correspondence education: Essential courses by level
Basic businessskillsIntermediate
courseManager fundamentals course

Practical business skills training

Priority SDG-Related GoalOur priority SDG-related goals for fiscal 2021 are as follows.
Rest intervals

99.9%

Holidays for
Refreshment

99.6%

Women in managerial
positions to all
female employees

5.8%(19.3% men)

Employees withdisabilities

1.9%

Improving work-life balance: Promotion of new work style models
Our turnover rate is around 3%, which is due to our fair evaluation system based on performance and ability as well as our safe andcomfortable work environment. Rather than grow complacent with the current state of affairs, we aim to further enhance the diverse
working lives of our employees. Specifically, we plan to introduce a new work style model in fiscal 2022 that will allow employees
to choose a "four-day workweek" option depending on their workplace and the type of work they do. We will strive to promote new
initiatives that are ahead of the times and "innovate and embrace challenges" in the way we work.

Diversity & inclusion
We are committed to making efforts to promote the advancement of women within our company. Last year, we launched the "Asahi
Cheer-Up Meeting" to enhance networking among female employees. For the first event, we had our female employees nationwide
who are assistant managers or above connect online, and we held a discussion with our female outside directors as panelists. In
addition to being exposed to the outside directors' diverse array of careers and experience, they were able to expand their networks
within the company and raise their awareness of the need for diverse career development. Besides expanding the existing support
system for balancing work and family life, we are also making efforts to transition toward work environments that are not affected byphysical disparities between genders in the various business fields, which will allow women to be active in more areas. For example,
in the dental sector, outsourcing the collection and transportation of waste materials, which has thus far been done alongside sales
activities, to a specialized company will foster an environment in which female sales staff can be more active. The percentage offemale employees among the new graduates who joined in fiscal 2022 is 60%, and we have already assigned some of them to sales
positions in the Precious Metals Business Division.
In April 2022, we established a policy to further support the increase in the rate of men taking parental leave to create a workplaceenvironment where men can take parental leave with ease, thereby lending indirect support to women being more active in the workplace.

Occupational Safety and HealthMid-career training (new hire training and follow-up training)

Manager course

Advanced management course

Training for new managers

Selective Training

44

We have established the "Asahi Intrepreneur Program," an in-house venture program that helps to commercialize employees' ideas.
By launching and managing businesses based on employees' own ideas, we can discover and cultivate future management talent.

SOCIETY

We have thoroughly implemented a system in which talented employees are given the opportunity to be promoted to higher positions
regardless of their career at the company or their age. To efficiently conduct evaluations for this purpose, by the end of fiscal 2022, weplan to launch a talent management system that makes it easy to visualize the qualifications and skills of each employee. We will use
this system to rotate and recruit personnel strategically in line with our business strategy.

Learn the core skills
necessary for business
operations

Asahi Intrepreneur Program, our in-house venture program

Results

To co-exist with society on a long-term basis, innovation that transcends conventional thinking is essential. It is also essential tosecure and develop human resources that can devise new paradigms for the industrial waste treatment process to create ways thattake climate change and biodiversity into further consideration. They should also have a high affinity for areas such as IoT and AI and
be able to accelerate and manifest the digital transformation of the industry. We believe that we can achieve our long-term vision of
being "a leader in creating a circular economy that connects society to the environment" by securing and cultivating personnel who
can propose solutions appropriate for the times at a variety of sites.

Obtain the knowledge andbusiness skills that form
the foundation of ouroperations

While we still provide a variety of training and self-development programs, we will further enhance our training opportunities, which
includes strengthening our selective training programs. One particular example is establishing a new "mentor system" and "mentor
development training." We will select senior employees to provide on-the-job training to new employees and formally appoint themas "mentors," and new employee training will be considered an official personal mission as well as an evaluation item. At the sametime, mentor development training will be provided for those employees who will become mentors so that they can learn how to guideand train junior employees and subordinates. Doing this will achieve both uniform, high-quality training for new employees and thedevelopment of future candidates for management positions.
One specific example is the establishment of a new "Global Course," which combines support for language exams and training
programs at overseas offices to enhance the development of personnel who can achieve their potential on the global stage inaccordance with our business strategy.

Enhance Work-Life Balance and Employee Diversity

Generating innovation

Qualification Level

Enhancing training opportunities to develop human capital

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Human Capital to Support Business and Strategy

Correspondence education: Essential courses for knowledge/skills
Accounting, finance andLogical writing
labor management

Health and productivity management
We consider the physical and mental health of each and every employee a corporate asset, and under the "Asahi Holdings Health
Declaration," we are working to make healthy and productive workplaces a reality. The company has a comprehensive health checkup
system that exceeds the statutory requirements, including a recommended gastrointestinal endoscopy for employees aged 35 andolder and periodic advanced medical examinations, including MRI/MRA and PET scans, for all employees aged 40 and older, and has
been recognized as a "2022 Certified Health & Productivity Management Outstanding Organization." With regard to mental health,
we are also promoting the creation of a workplace where employees can work with peace of mind in collaboration with occupational
physicians specializing in mental health.

Creating a safe workplace

Mentor development training
Domestic business schools (short-/long-term)

Gain advanced expertise
Developing global andmanagerial talent

INTEGRATED REPORT 2022

Specialized courses by job category (competence certification, on-site education, external training, support for qualification acquisition, etc.)
Global Course (support for language examinations, overseas trainees)

To reduce the occurrence of occupational accidents, we have adopted the Occupational Safety and Health Management System(OSHMS) to improve the level of safety and health in the workplace through continuous safety and health management. We willcontinue to focus on preventing serious accidents and disasters through accident prevention efforts and improved safety education,such as risk assessments and hazard prediction training.
ASAHI HOLDINGS45

S OCIETY

ESG Initiatives: Society

The Asahi Holdings Group is engaged in global procurement of the materials from which it recovers precious metals,
which are essential for manufacturing products such as electronics, auto parts, and jewelry. We have established amanagement system that complies with guidance issued by relevant international organizations. As a member of the
precious metals supply chain, we promote Responsible Precious Metals Management. This is an important part offulfilling our social responsibilities for compliance with laws, respect for international norms, human and labor rights,
health and safety, environmental preservation, fair trade, and ethics.

What is Responsible Precious Metals Management?
Responsible Sourcing of Minerals
The Dodd-Frank Act was enacted in the United States in 2010 out of concern that mineral resources were being used as sourcesof funds for armed groups causing conflict and human rights abuses. The act regulates the use of conflict minerals from the
Democratic Republic of the Congo and nine surrounding countries. Companies that are publicly listed in the U.S. and which procuretin, tantalum, tungsten, and gold (3TG) are required to carry out due diligence, survey country of origin, and report on the use of any
conflict minerals.
The Organization for Economic Co-operation and Development (OECD) has issued Due Diligence Guidance for Responsible Supply
Chains of Minerals from Conflict-Affected and High-Risk Areas. This OECD Guidance sets out a five-step framework for companies:(1) establish strong company management systems; (2) identify and assess risks in the supply chain; (3) design and implement
a strategy to respond to identified risks; (4) carry out independent third-party audits; and (5) report annually on supply chain due
diligence.
The Conflict Minerals Regulation also came into effect in the European Union in January 2021. It applies to importers of materials
containing 3TG into the EU from conflict and high-risk areas, and they are now required to carry out due diligence in their supply
chain. As a result, responsible sourcing of minerals is expanding globally.

Responsible Precious Metals Management

Asahi Holdings Group’s Action
Based on the Group's corporate philosophy and code of conduct, the "Asahi Way," we have set out a Responsible Precious Metals
Management Policy at Asahi Pretec, and a Precious Metals Procurement Policy at Asahi Refining. We conduct due diligence forsuppliers and materials of precious metals in accordance with the LBMA and LPPM Guidances, and we practice responsible
precious metals procurement.
The compliance status is audited annually by a third party, and then reported to the LBMA and LPPM. These reports are disclosed
on our website along with the assurance reports issued by the auditing organizations.
To fulfill one of our Priority SDG-Related Goals, “supply precious metals in ways that are friendly to people, society, and theenvironment,” we work to maintain the Asahi brand as a trusted presence that reassures customers all over the world that wepractice highly transparent procurement and traceability of raw materials as certified by third parties, and that our precious metal
products are made with consideration for human rights and the environment.

Asahi Pretec’s Responsible Precious Metals Management Policy ➡ https://www.asahipretec.com/responsible-sourcing/
Asahi Refining’s Precious Metals Procurement Policy

46

INTEGRATED REPORT 2022

➡ https://www.asahirefining.com/corporate-responsibility/

Utilizing its sales network that covers all of Japan as well as other sites in Asia, Asahi Pretec collects and recycles recyclable
materials containing precious metals from sources such as e-scrap, plating treatment, precision cleaning, catalysts, dentistry, andjewelry. By recycling gold, silver, platinum, palladium, and other precious metals that are essential for modern manufacturing, Asahi
Pretec is contributing to the effective use of resources and the development of the industry.
The Asahi Pretec brand is recognized worldwide for its gold, silver, platinum, and palladium products. In addition to LBMA and LPPM
Good Delivery accreditation, its products have also been accredited as a deliverable brand by futures exchanges such as the Osaka
Exchange (OSE) in Japan, as well as the Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) in the UnitedStates.
In July 2019, Asahi Pretec became the first Japanese refiner to obtain the Code of Practices (COP) certification from the Responsible
Jewellery Council (RJC)*. In July 2021, the company also obtained
Chain of Custody (COC) certification. Asahi Pretec’s operations
meet the RJC’s strict standard for code of practices on ethics,
human rights, society, and the environment, as well as COC for due
diligence and traceability, and the company will continue to fulfill
its responsibilities as a member of the precious metals supply
chain.
* RJC: A non-profit organization that promotes transaction transparency
and responsible corporate behavior in the jewelry industry. This includes
businesses that handle precious metals and diamonds, from mines toretailers.

Responsible Precious Metals Management System
Based on our Responsible Precious Metals (RPM) Management
Policy, we have established the Responsible Precious Metals
Management Committee (RPM Committee) to oversee our RPM
management across the company. The President of Asahi Pretec
has ultimate responsibility for our RPM management, and wehave appointed a Compliance Officer, who is chairman of the RPM
Committee, to manage our RPM. The RPM Committee, chairedby the Compliance Officer, adopts and revises policy, decides
on important measures, implements the management system,
monitors the operation status, provides training to employees,
and reports to senior management.
We consider any transactions that adversely impact our precious
metals supply chain to be high-risk. Any transactions considered
to be risky are deliberated by the RPM Committee, and additional
due diligence is carried out as necessary to enhance themanagement system.
In FY2021, while there was one supplier that fell into the highrisk category, we continued to do business with the supplier once
the risks were mitigated.

Ultimate
responsibility

Representative
Director andPresident

RPM Committee(Administration)

Compliance
Officer(RPM members)
General managersof collection,
manufacturing, andsales departments

Business unit
managers

Plant managers(Promoters)
Staff of collection,
manufacturing, andsales departments

Staff of business
units andsales offices

Staff of plants

SOCIETY

Refiners who meet criteria in areas such as quality of products, assaying capability, and responsible sourcing, and which havepassed testing procedures, are accredited by the London Bullion Market Association (LBMA) for gold and silver or the London
Platinum and Palladium Market (LPPM) for platinum and palladium as Good Delivery refiners. Asahi Pretec has received Good
Delivery accreditation for gold, silver, platinum, and palladium, while Asahi Refining (USA and Canada) has received the same forgold and silver. These accreditations ensure the companies are trusted by customers in the global market.
To maintain Good Delivery status, in addition to regular quality and technical testing procedures, Good Delivery refiners are
required to be audited annually by a third-party for the LBMA Responsible Gold and Silver Guidance (hereafter LBMA Guidance),
and the LPPM Responsible Platinum and Palladium Guidance (hereafter LPPM Guidance) in compliance with OECD Guidance.
In addition to avoiding conflict minerals, human rights abuses, money laundering, terrorist financing, and fraudulent transactions,the LBMA Guidance also now requires refiners to fulfill their social responsibilities related to the environment and sustainability.
Asahi Pretec and Asahi Refining (USA and Canada) are also accredited by the Responsible Minerals Initiative (RMI) as conflict-freegold refiners that comply with the Responsible Minerals Assurance Process (RMAP).

Asahi Pretec's Action

Supply Precious Metals in Ways That
Are Friendly to People, Society, and theEnvironment

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Initiatives for Responsible Precious Metals
Management

Priority SDG-Related Goal

Supply Chain Management
Our due diligence process is carried out using a risk-based approach addressing the risks in the precious metals supply chain,such as conflict, compliance with laws, human rights, labor rights, health and safety, and the environment. By communicatingwith suppliers and conducting know-your-customer questionnaires, we understand the transaction and origin of materials, andwe assess risks of suppliers and materials. We send a consent form to all of our suppliers requiring them to confirm that theyconsent to our RPM Management Policy, and we ask them for their understanding and cooperation in responsible precious metals
sourcing. We establish relationships of trust with our suppliers and conduct continuous due diligence to mitigate supply chain risk.
(1) Implementation of due diligence for suppliers (risk assessment based on information such as nature of business, location of business, type ofmaterials, county of origin)(2) Communicating our Responsible Precious Metals Management Policy to suppliers(3) Recording transactions and managing traceability(4) Providing training to employees on Responsible Precious Metals Management and due diligence(5) Monitoring implementation status and reviewing by management(6) Conducting annual independent third-party audits

ASAHI HOLDINGS47

S OCIETY

ESG Initiatives: Society

Relationship with Society
The Group has relationships with various stakeholders.
We place special emphasis on maintaining good communication with stakeholders and strive to build strong
relationships with them.

Main Initiatives
Ethical Sustainable Jewelry

Strengthening Cooperation with Outside Stakeholders
The role of the Group in the circular economy is much like the veins of the human circulatory system, and this role will become evenmore important in the future. Since our business brings back waste resources from local communities and companies for reuse,
we must further strengthen our relationships with those stakeholders. Accordingly, the Group engages in various initiatives, suchas those organized by national and local governments as well as industry groups, while conducting its own social contribution andsponsorship activities.

Asahi Jewelry Journal

In recent years, ethical and sustainable jewelry has been gaining attention as products made frommaterials that are friendly to people, society, and the environment. As a company, we can help solve various
environmental and social problems by supplying this kind of jewelry. Sustainable jewelry is also very suitablefor use as special gifts such as engagement rings. This is because consumers appreciate knowing that
their piece of jewelry has not negatively impacted the environment or contributed to other social problems.
In recent years, famous jewelry brands have launched products based on a sustainability concept, whilebrands specializing exclusively in ethical and sustainable jewelry have also emerged. The new trend is evenbeing featured in women's magazines. Asahi Pretec supports the ethical and sustainable jewelry movement by supplying precious
metals that are friendly to people, society and the environment.

Nowadays, all companies are expected to promote their environmental, social,and governance activities. The Group also believes it must take its own particularmeasures such as Responsible Precious Metals Management, and widely share
information about them.
Asahi Pretec launched the Asahi Jewelry Journal in June 2020 for its partners in
the jewelry business. Published on a regular basis, it covers SDGs initiatives andother relevant topics.

Participating in Social Contribution Activities

Serving Our Customers● Asahi Refining Canada● Asahi Refining Florida

Food and toys being donatedFood and toys being donatedDonating food to the UTAH FOOD BANK and

to KNIGHTS TABLE

to FEEDING SOUTH FLORIDA

toys to CHRISTMAS BOX HOUSE● Asahi Refining USA
SOCIETY

Our motto is “the customer comes first,” and we mean it. We do all that we can to provide finely tuned responses to the wide-ranging
needs of each of our customers.

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The Group encourages and supports activities in which employees
contribute to the SDGs as members of society, such as volunteer
activities by individuals and groups, as "Asahi Holdings SDGs
Activities." On April 1, 2021, the "Asahi Clean Project" was launchedto promote activities specializing in cleaning up litter in which a totalof 527 employees and their family members participated. We areengaged in cleanup activities not only around our offices and sales
offices, but also in various areas.

As a corporate citizen, the Group carries out social contribution activities rooted in local
neighborhoods and environmental preservation. The initiatives are promoted in various
ways and are important for remaining an organization that supports local communities.
As part of its social contribution activities, Asahi Pretec participates in the TOOTH FAIRY
project, which is jointly run by the Nippon Foundation and the Japan Dental Association.
The project promotes the collection and recycling of gold, palladium, and other precious
metals that have served their purpose at dental clinics across Japan. Profits obtained
from selling the resulting recycled precious metals are used for social contribution
activities such as support for children with intractable diseases and their families in Japanand building schools in Myanmar. Asahi Pretec provides support for these activities by recycling the precious metals donated to the
TOOTH FAIRY project.
At Asahi Refining companies, the employees cooperate in making donations. In FY2021, a large number of food and toys werecollected and donated to food banks and other organizations.

Asahi Clean Project

Fair Trade Measures
As part of the Asahi Way, the Code of Conduct of the Asahi Holdings Group prohibits any behavior that impedes faircompetition, violates the confidentiality of supplier information and technology, or results in improper benefits. These rules
are strictly enforced to ensure compliance with fair business practices and corporate ethics.

Quality Assurance System
At Asahi Pretec, quality assurance is positioned as the coredepartment, and it works closely with the sales, technology
development, and product manufacturing departments. It sharescustomer feedback and market trends with these departments andcooperates with them to improve customer satisfaction. In addition,
the Asahi Holdings Group maintains ISO 9001 certification to ensurethat its products deliver satisfaction and peace of mind to customers.
We strive to continuously improve our quality management system
and maintain the highest quality possible.

Procurement Initiatives
Asahi Pretec has implemented a CSR Procurement Policy. It pertains
to the procurement of secondary materials such as chemicals
and consumables used in the precious metals recycling andEnvironmental Preservation Businesses.

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INTEGRATED REPORT 2022

CSR Procurement Policy
Procurement is carried out based on the following sevenpoints: 1. Environmental preservation
2. Quality control 3. Fair trade 4. Information
security 5. Crisis management 6. Social responsibility
7. Human rights protection and occupational safety
and healthTransactions are promoted basedon relationships of trust with ourbusiness partners. The aim is toimprove corporate value for both thecompany and our business partners.

Other social contribution activities
・Support for the activities of nonprofits like Médecins du Monde Japon
・Support for the activities of nonprofits like the Japan Cleft Palate Foundation
・Nippon Foundation donations through vending machines, etc.

ASAHI HOLDINGS

49

GOVERNANCE

ESG Initiatives: GovernanceCorporate Governance

Adherence to Japan’s Corporate Governance CodeOrganization Design

Practicing effective corporate governance is a key part of corporate social responsibility. Good governance enhancesmanagement efficiency and transparency, and it helps keep corporate value growing.
The Asahi Holdings Group’s practice of corporate governance seeks to earn the confidence of shareholders,business partners, employees, local communities, and other important stakeholders. In addition to fulfillingthe social mission and responsibilities of a publicly listed company, we aim to keep growing corporate value by
maintaining a corporate governance system that can quickly respond to changes in the business environment while
always securing compliance.

Board of Directors

Corporate Governance Structure
General Shareholder’s Meeting

Appoint/Dismiss

Appoint/
Dismiss

Board of Directors(with a majority of independent
outside directors)

Appoint/Dismiss/Supervise

Representative
Director

Appoint/
Dismiss

Audit and Supervisory
Committee Director

Audit/Supervise(with a majority of independent
outside directors)

Inquire/Reply

Audit and Supervisory Committee

Nominating
Committee
Compensation
Committee

Direct/Report(with a majority of
independent outside
directors)

Audit Department

Support/
Educate/Guide/
Monitor

Safety Management
Meeting

Departments and Group Companies

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INTEGRATED REPORT 2022

Under Japan’s Companies Act, Asahi Holdings has elected to be
a company with an Audit and Supervisory Committee, and has
four independent outside directors.
This structure has strengthened the supervisory function of
the Board of Directors. It also delegates important executive
decisions to the executive directors for quicker decision-making
and improved management efficiency.

Nominating and Compensation Committees

Collaborate

Internal Control
Promotion Meeting

Collaborate

Internal audit

Collaborate

A Nominating Committee, consisting of one internal director andtwo independent outside directors, as well as a Compensation
Committee, have been established as advisory bodies to theBoard of Directors. The chairpersons of both committees areappointed from among the independent outside directors. The
aim is to further enhance corporate governance by ensuringtransparency, fairness, and objectivity for the appointment anddismissal of directors and key management team members, aswell as for the determination of director remuneration.

Group Executive Committee
Important matters delegated to the executive directors aredeliberated and decided by the Group Executive Committee.
Other matters related to business execution are deliberated anddecided by the Group’s key company management meeting.

Aiming to reinforce internal controls, we have established an Audit and Supervisory
Committee within the Board of Directors. It includes four independent outside
directors and cooperates with Audit Department and other related departments.
The Audit Department assesses the appropriateness and effectiveness ofoperations, while also auditing compliance with laws, regulations, and company
rules. It advises and makes recommendations to each department, and promptly
reports to senior management. In addition, trained staff in each department
conduct internal audits based on an annual plan and report their findings at theInternal Control Promotion Meeting.

Evaluating the Effectiveness of the Board of Directors

As part of corporate governance enhancement, we are engaged in a continuous
process of analyzing and evaluating the effectiveness of the Board of Directors aswell as in the investigation of improvement measures. The analysis and evaluation
for the fiscal year ended March 2022 has been completed.

1 Analysis and evaluation methods for the fiscal year

ended March 2022

A questionnaire consisting of multiple evaluation items in six categories was
distributed to all directors, including directors who are Audit and Supervisory
Committee members. Responses were obtained from all directors, and theevaluation results were reported to and examined by the Board of Directors.

Questionnaire evaluation categories(1) Discussion of main strategies, such as corporate strategy (2) Creating anenvironment that promotes appropriate risk taking (3) Execution of highly effective
oversight (4) Appropriate communication with shareholders (5) Composition of theBoard of Directors (6) Management of the Board of Directors

2 Summary of evaluation results for the fiscal year ended

March 2022

The results of the evaluation of the Board of Directors' effectiveness are
summarized as follows.
(1) Discussion of major strategies, such as corporate strategy⇒Discussion was sufficient. We hope for there to be continued sharing of theGroup's vision and other information both internally and externally.
(2) Creating an environment that promotes appropriate risk taking⇒Risks related to important matters are shared appropriately throughmeetings that facilitate discussion between outside directors and executive
directors as well as corporate officers, and methods for dealing with suchrisks are given sufficient discussion. We continuously hope for sufficient
opportunities for timely and appropriate information sharing and discussionof important issues.
(3) Execution of highly effective oversight⇒Oversight is highly effective. In addition to regular discussions with theBoard of Directors and the executive directors as well as corporate
officers, the Audit and Supervisory Committee shares its opinions with theexecutive directors and corporate officers as required. To promote themanagement of human capital going forward, it is desirable to increase theinvolvement of outside directors when formulating CxO development plans,
as well as deepen discussions on the nature of succession plans for senior
management.
(4) Appropriate communication with shareholders⇒Information is disclosed in an appropriate manner, and feedback fromshareholders and other stakeholders is shared in a timely manner toensure proper communication. Going forward, in addition to conventional
IR activities, we expect to see activities that help to enhance brand value
for general consumers.
(5) Composition of the Board of Directors⇒The majority of independent outside directors provide the appropriate
combination of knowledge and skills required for effective discussions.
Diversity is sufficiently achieved as well, including an increase in thenumber of female directors and the appointment of female corporate
executives.

GOVERNANCE

Group Risk
Management
Department

AssistAudit andSupervisory
Committee
Secretariat
Collaborate

Group Executive
Committee

Outside Directors
Independence criteria have been established, and independent
outside directors with the capacity to perform their duties
independently from the management of the company have been
appointed, taking into consideration their individual backgrounds
and relationships with the Group. They attend Board of
Directors meetings and fulfill their roles and responsibilities
as directors. Whenever possible, they also attend the executive
and management committee meetings of Group companies. As
part of their wide-ranging activities, the outside directors share
their opinions from an independent point of view. In addition, inorder to further strengthen cooperation between independent
outside directors and the executive directors and to establish asystem that enables smooth communication and coordination,
we appointed one of the independent outside directors to serveas the head of the independent outside directors.

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Executive Director

The Board of Directors comprises executive directors who areknowledgeable concerning their respective Business, Technicalor Administration Units, as well as outside directors withvarious types of expertise essential to corporate management.
To further enhance the objectivity and independence of theBoard of Directors and ensure that discussions are active andeffective, the majority of members are independent outside
directors. The Board consists of two executive directors andfive Audit and Supervisory Committee members, including four
independent outside directors, two of whom are women, for a
total of seven board members. All directors share their opinions
actively and freely on important subjects such as the Group’s
management strategies and business plans.

Maintaining an Internal Control System

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Basic Corporate Governance Approach

The Asahi Holdings Group adheres to all the principles of Japan’s Corporate
Governance Code formulated by the Tokyo Stock Exchange. We submit Corporate
Governance Reports, which provide investors with 83 points of governanceinformation in a standard format, to the Tokyo Stock Exchange, and these areavailable on our website. In addition, we have formulated the Asahi Holdings
Corporate Governance Policies and are implementing each one to continuously
enhance corporate governance.

(6) Management of the Board of Directors⇒Meetings are held with appropriate frequency, and there is an active
exchange of views. For matters that have a significant impact onmanagement, we expect progress reports and the active sharing of
background information. We would also like supplementary materials forbudgets and financial statements to be visualized, as well as supplementary
explanations for areas that are difficult to understand.

3 Measures to improve effectivenessBy taking the following measures, we will further improve the effectivenessof Board of Directors management and strive to keep strengthening
corporate governance.
⃝Actively hold meetings for exchange of opinions between senior management andoutside directors to encourage appropriate information sharing and discussion ofimportant issues⃝Expand investment in human capital by enhancing education, training, and so on tonurture the next generation of executives⃝Make discussion more active by further enhancing supplementary explanatory
materials related to the budget and financial statements

ASAHI HOLDINGS51G OVERNANCE

ESG Initiatives: GovernanceDirector Skill Matrix
Industryknowledge

Director and Chairman●●

Representative Director, President & CEO

●

●

●

●

●

Mitsuharu Terayama
Tomoya Higashiura

Director, Chairman of the
Independent
Audit and Supervisory
OutsideCommittee
Director
Yuji Kimura
Director, Audit andIndependent
Supervisory Committee
OutsideMemberDirector
Kyoko Kanazawa
Director, Audit andIndependent
Supervisory Committee
OutsideMemberDirector
Yoshinori Hara
Director, Audit andIndependent
Supervisory Committee
OutsideMemberDirector
Miyoko Kimura
Director, Audit and Supervisory
Committee Member

International
experience

Sales

Technology andinnovation●●

Administrative
experience

Legal

Finance andaccounting

●

●

●

●

●

●
●

●

●

●

●

Compliance●Corporate Officer●●

Corporate Officer

●

●

●

●

Corporate Officer

●

●

●

●

Hiroyuki NakanishiNobuo Tajima
Shohei Yasuda●●●

Reasons for Selection of Skill Matrices
Our directors include executive directors who are knowledgeable concerning their respective Business, Technical or
Administration Units, as well as outside directors with various types of expertise essential to corporate management. Basedon the characteristics of our business, such as the international experience essential for conducting business on a global
scale and the administrative experience gained from operating businesses that necessitate licenses, we have identified eightskills that are required overall.

Remuneration for Directors
Policy for Determining the Details of Director Renumeration●Remuneration policy determination
The Board of Directors requests the volunteer Compensation Committee, which consists of three board members, including
two independent outside directors, to draft a recommendation for remunerating the directors of Asahi Holdings. Based on
this recommendation, the Board of Directors determines a policy detailing the remuneration for each director.
●Overview of the remuneration policy
Director renumeration must be within the limits approved by the General Meeting of Shareholders. The Board of Directors
determines the specific director renumeration policy within these limits, based on the recommendation from theCompensation Committee, which plays an advisory role. The remuneration system is designed to motivate directors to
improve the Group's business performance. Their remuneration consists of basic compensation, bonuses, and performancelinked stock-based compensation. However, directors who are Audit and Supervisory Committee members receive only
basic compensation.

Total Amount of Director Remuneration

Directors excluding those who are Audit and Supervisory
Committee members (outside directors only)
Directors who are Audit and Supervisory Committee members(outside directors only)
Total (outside directors only)

134 ( 0 )Total amounts by type of remuneration (million yen)
Stock-based
Monetary compensationcompensation
Fixed
Performance-linked
Non-monetarycompensationcompensation
remuneration

Performance-linked
coefficient

100%

1.0

50% or more

0.5

Less than 50%

0Business Continuity Management (BCM)
Various factors such as large-scale disasters entail the riskof impairing the functions needed for business continuity.
As an action plan to achieve quick restoration of missioncritical functions even after a disaster, we created abusiness continuity plan (BCP). In addition to the BCP, we
are conducting systematic business continuity management(BCM) activities to constantly improve the BCP and business
continuity endeavors.

The following statement is part of our Corporate Governance
Policies, and is understood by all our executives andemployees. "We will never have any relationship, including
business relationships, with anti-social forces that threaten
the social order and sound corporate activities. In theevent of an illegal request, we will take a firm attitude andrespond to it organizationally in accordance with the laws
and internal rules."Anti-Corruption Measures
As part of our Group Philosophy, the Asahi Way, we have aten-point Code of Conduct. One of these points states that
"we refrain from providing or receiving meals or gifts inpursuit of personal benefit." Group employees ensure thatthey do not engage in any transactions that could resultin bribery, such as providing some benefit to a business
partner or competitor for personal gain. Moreover, Asahi
Pretec, which manages the Group's Precious Metals
Business, has established a Responsible Precious Metals
Management Policy. It has declared and implemented apolicy of avoiding transactions that could result in money
laundering or fraudulent transactions in the precious
metals supply chain. Asahi Pretec also conducts employee
education on this topic on a regular basis.

Information Security
The laptops and tablets used by the Group’s sales force
are equipped with the latest security measures. Even if a
device is lost or stolen, the possibility of information leakage
is virtually zero thanks to technology such as remote data
wiping.

Number ofapplicabledirectors(people)65 ( 0 )

55 ( 0 )

14 ( 0 )4 (0)37 ( 23 )

37 ( 23 )

0 (0)

0 (0)

6 (4)

171 ( 23 )

102 ( 23 )

55 ( 0 )

14 ( 0 )

10 ( 4 )Notes 1. The amount paid to directors (excluding those who are Audit and Supervisory Committee members) does not include employee salaries for directors who also serve in employee positions. 2. The indicator used
for performance-linked compensation (bonus and performance-linked stock-based compensation) is consolidated operating profit, which is considered to be the most suitable management index for profits
earned by the main business. The result of fiscal year ended March 2022 was 26,446 million yen. The performance-linked compensation (bonuses) is calculated by first multiplying the consolidated operating
profit for the relevant fiscal year by a certain ratio to calculate the total amount for all directors including the corporate officers of Asahi Holdings and the directors of Asahi Holdings subsidiaries. The amounts
for each director are then determined according to the weighting for each position and the degree of individual contribution to business performance. 3. Performance-linked stock-based compensation is a nonmonetary compensation system in which Asahi Holdings shares are awarded to eligible directors according to their position and performance target achievement rates. Since the purpose is to provide incentive
to improve corporate value over the medium- and long-term, allocation points are awarded according to the achievement rate of the performance target, namely consolidated operating profit each fiscal year.
Those who are enrolled as of May 1, 2024 after the completion of the 9th Medium-Term Business Plan are eligible for the award. At the 12th Annual General Meeting of Shareholders held on June 15, 2021,
continuation of the performance-linked stock-based compensation system was approved. The shareholders also approved the number of allocation points to be awarded to directors in their positions for thethree years from FY2021 to FY2023, not including outside directors, part-time directors, and Audit and Supervisory Committee members. The performance-linked coefficients are provided below.

Performance target
achievement rate

We consider compliance a priority issue in delivering fairbusiness activities and ensuring legal compliance and highethical standards. Particularly, operations related to theproper processing of waste are based on environmental
laws and regulations as well as governmental licenses, andeach and every employee is required to always act with ahighly compliant mindset. We are conducting activities toraise the legal compliance awareness of each and every
employee through education and mutual communication,
along with rules and manuals related to compliance.

Avoiding All Interactions with Organized Crimeand other Anti-Social Forces

GOVERNANCE

Total amount of
remuneration(million yen)Classification

In order to appropriately manage various apparent and latent risks relating to corporate activities, the Groupidentifies risks comprehensively, evaluates them, and implements mitigation measures. By implementing
risk management, we strive to prevent risk materialization and minimize losses in the event of an incident.

●●

Mitsutoshi Kagimoto

Compliance and Risk Management

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Generalexecutive
management
skillsName

Internal Reporting System (Whistle-Blowing System)
To quickly identify and resolve problems such as unlawful
and unjust behavior, we have set up the Asahi Hotline. All
employees in and outside of Japan can directly report toeither an internal desk or an external law firm anonymously.
We take corrective actions to address the reported mattersafter investigation, without revealing the identity of thedisclosing or disclosed parties.

4. At the 6th Annual General Meeting of Shareholders held on June 16, 2015, the monetary compensation for directors (excluding those who are
Audit and Supervisory Committee members) was established at a total of no more than 200 million yen per year. (This does not include, however,
employee salaries for directors who also serve in employee positions.) The number of directors (excluding those who were Audit and Supervisory
Committee members) at the end of that general meeting was five. 5. Also at the 6th Annual General Meeting of Shareholders, the amount ofmonetary compensation for directors who are Audit and Supervisory Committee members was established at a total of no more than 100 million
yen per year. The number of directors who were Audit and Supervisory Committee members at the end of that general meeting was four. 6. At the12th Annual General Meeting of Shareholders held on June 15, 2021, continuation of the performance-linked stock-based compensation system
was approved. In addition to the above monetary compensation level, the amount and details of remuneration was determined for Asahi Holdings
directors (excluding directors who were Audit and Supervisory Committee members or outside directors) who were in their positions for the three
years from FY2021 to FY2023. At the end of the general meeting, the number of directors (excluding directors who were Audit and Supervisory
Committee members and outside directors) was two. Further, the maximum total number of points to be granted to directors per fiscal year was
set to 40,000 points, and the maximum total number of shares to be issued to directors for the target period was set to 120,000 shares.

Calculation Formula (number of points per fiscal year)→ Base number of points x performance-linked coefficient x assessment coefficient52

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ASAHI HOLDINGS53G OVERNANCE

ESG Initiatives: GovernanceDirector Profiles
Asahi Holdings has established a system to appropriately
oversee and audit Group companies from every angle toensure these businesses are always operating properly.
Important executive decisions for Group companies arecarefully deliberated and made by the Group Executive
Committee, attended by directors of Asahi Holdings, Inc.,and its Group companies. Particularly important matters
are submitted to the Asahi Holdings Board of Directors fordetermination. Directors who are Audit and Supervisory
Committee members also participate in the management
meetings of Group companies and actively provide input.
The management situation and sales activities of Group
companies are regularly reported to the Board of Directors of
Asahi Holdings. In addition, the company's Audit Department
audits Group companies on a regular basis and wheneverrequired, and the resulting audit reports are shared with the
Audit and Supervisory Committee and relevant departments.

Strengthening Group Risk Management
As compliance is essential to maintaining trustworthy
corporate activities, the Group ensures legal complianceand thorough adherence to corporate ethics among its
members. While developing human resources that embraceinnovation and challenge-taking by continuously expanding
the types of challenges they undertake, the Group mustalso recognize the increasingly diverse needs and valuesof society. To pursue sustainable growth going forward,
the Group must not only comply with laws and regulations,but also enhance management of all kinds of risks. Whilerisk management is practiced at each business location,
management standard-setting and location monitoring mustbe performed independently. Recognizing this, Asahi Holdings
decided to enhance its organizational response capabilities
by introducing a unified management framework for theGroup. Through these circumstances, the Audit Department
was placed under the Audit and Supervisory Committee toenhance the independence of the function responsible forchecking and monitoring business execution. We have alsoestablished a General & Legal Affairs Department and taken
other steps to bolster the framework for minimizing various
legal risks at our business locations. We will continue tofurther enhance our risk management system going forward.

Group Risk Management Department Created

On April 1, 2021, a Group Risk Management Department was
created to properly identify potential risks in the Group's businessexecution processes and business structures. It was establishedto evaluate risks in business activities and implement mitigation
measures across the Group. The department implementscompliance risk management for each business unit from an
independent perspective, and it strives to ensure appropriate
governance in collaboration with the Audit Department. We havealso established a compliance and safety system under which we
hold Internal Control Meetings and Safety Management Meetings
regularly to prevent risks from materializing.

Strengthening Risk Management in the North American
Business

In our North American business, we are working to establish amodel to expand our business into related areas, using refining asa platform. In particular, we will continue to aggressively promote
financial services such as "advance trading," and we will also
develop new financial products. To do this, we will first need toestablish strong mechanisms to ascertain and monitor the credit
risk of our business partners. In addition, identity verification(Know Your Customer, a.k.a. KYC) procedures are becoming
increasingly important to prevent the funding of organized crime
and terrorism. Accordingly, we will work to strengthen credit
risk management of business partners and enhance systems
at individual sites as we promote the expansion of our North
American business, which is one of our growth drivers.

Mitsuharu Terayama

Tomoya Higashiura

Profile(Born March 10, 1940)

Profile(Born January 26, 1961)

Apr 1964: Joined Kuraray Co., Ltd.
Jul 1973: Joined Asahi Pretec Corp
May 1981: Appointed Representative Director
and President of Asahi Pretec Corp.
Apr 2009: 	Appointed Representative Director and Presidentof Asahi Holdings, Inc.
Jun 2014: 	Appointed Representative Director, President andChairman of Asahi Holdings, Inc.
Apr 2018: 	Appointed Representative Director, Chairman of
Asahi Holdings, Inc.
Jun 2020: 	Appointed Director and Chairman of Asahi
Holdings, Inc. (to present)

Apr 1984: Joined NEC Corporation
Feb 2001: Joined Asahi Pretec Corp.
Jun 2006: Appointed Director of Asahi Pretec Corp.
Apr 2011: Appointed Director of Asahi Holdings, Inc.
Jun 2014: 	Appointed Representative Director
and President of Asahi Pretec Corp.
Apr 2017: 	Appointed Representative Director and President of
Asahi Americas Holdings, Inc.
and President of Asahi Pretec Corp.
Apr 2018: Appointed Director of Asahi Pretec Corp. (to present)
Apr 2018: 	Appointed Representative Director and President of
Asahi Holdings, Inc.
Jun 2020: 	Appointed Representative Director,
President & CEO of Asahi Holdings, Inc. (to present)

Audit and Supervisory Committee Members
Yuji Kimura

Kyoko Kanazawa

Profile(Born July 23, 1955)

Profile(Born October 11, 1965)

Apr 1979: Joined the Environment Agency
Jul 2006: Appointed General Manager of Industrial Waste	Management Division, Waste Management and Recycling
Department of the Ministry of the Environment
Aug 2010:	Appointed Director-General of Kyoto Mechanism
Business	Promotion Department of New Energy andIndustrial Technology Development Organization
Jul 2012:	Appointed Director-General of Hakodate Customs,
Ministry of Finance JapanOct 2014:	Appointed Executive Director and General Manager ofTokyo Office, Global Environment Centre Foundation (topresent)
Jun 2017: 	Appointed Independent Outside Director (serving as Audit
and Supervisory Committee Member) of Asahi Holdings,
Inc.
June 2021:	Appointed Head of Independent Outside Director
(serving as Chairman of Audit and Supervisory
Committee) of Asahi Holdings, Inc. (to present)

Apr 1989: Joined Fuji Research Institute Corporation
Apr 2000: Registered as attorney/Joined Hata & Co. Law Offices(to present)
Jun 2017: Appointed Independent Outside Director(to present)

Yoshinori Hara

Miyoko Kimura

Profile(Born July 21, 1958)

Profile(Born June 12, 1964)

Apr 1983: Joined NEC Corporation
Aug 1990: Became a Visiting Researcher, Stanford University
Jul 2004: Supervised NEC’s Kansai Research Laboratories
Apr 2006: 	Professor of Graduate School of Management,
Kyoto University (to present)
Apr 2018: 	Dean of Graduate School of Management, Kyoto
University
Jun 2019: 	Appointed Independent Outside Director (serving as
Audit and Supervisory Committee Member) of Asahi
Holdings, Inc. (to present)

Apr 1988: Joined PLUS Corporation
May 1999: Joined ASKUL Corporation
Feb 2010: 	Appointed Representative Director and President of
ASMARU Corporation
May 2017: Appointed Chief Marketing Officer (CMO),
Executive Officer, Executive Officer of Life Creation Unit
and Value Creation Center Unit,
B-to-C Company of ASKUL Corporation
Mar 2020: Appointed Director,
Supervisor of Merchandising Unit,
Chief Marketing Officer (CMO), Executive Officer 		of ASKUL Corporation
May 2021: Appointed Director in charge of branding, designing,and supplier relations of ASKUL Corporation
Jun 2021: 	Appointed Independent Outside Director of Asahi
Holdings, Inc. (serving as Audit and Supervisory
Committee Member) (to present)
Aug 2022 ASKUL Corporation Senior Fellow

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Group-Wide Oversight and Auditing by Directors

GOVERNANCE

Mitsutoshi Kagimoto
Profile(Born June 15, 1958)
Apr 1984: Joined Teijin Limited
Feb 2006: Joined Asahi Pretec Corp.
Mar 2009: Appointed Assistant General Manager
of Kitakanto Office of Asahi Pretec Corp.
Dec 2009: Appointed Representative Director and Presidentof Asahi Pretec Corp.
Apr 2013: 	Appointed General Manager of Purchasing Division of
INTER CENTRAL, INC.
Oct 2015: 	Appointed General Manager of Audit and Supervisory
Committee Secretariat of Asahi Holdings, Inc.
Jun 2021: 	Appointed Director of Asahi Holdings, Inc. (serving as Audit
and Supervisory Committee Member) (to present)
Dec 2021: Appointed Auditor of Asahi Pretec Corp. (to present)(As of June 15, 2022)

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INTEGRATED REPORT 2022

ASAHI HOLDINGS

55

Outside Director

Mitsuharu
Terayama
Director and Chairman

Yuji
KimuraOutside Director

YoshinoriHara
Outside Director

Kyoko
Kanazawa
Outside Director

ーTo start things off, please share how you view
your responsibilities as outside directors and therole of the Board of Directors.
Special Feature

Roundtable Discussion with
Outside Directors

Based on the spirit of“innovate and embracechallenges,” we willcontinue to strengthen
our governance system.
In an effort to further enhance corporate governance,
Asahi Holdings has appointed four individuals witha wide range of expertise and experience as outside
directors. The Chairman of the Board of Directors alsojoined us on this occasion to speak frankly about the
governance reforms we have been working on and ourgoals for the future.

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INTEGRATED REPORT 2022

(Yuji) Kimura: I believe that outside directors are
responsible for utilizing their expertise and experience tocontribute to healthy, sustainable corporate growth andthe enhancement of corporate value. This entails looking
at matters from the perspective of every shareholder
and stakeholder and remaining independent frommanagement so that one can ensure corporate complianceand governance and monitor the execution of business
operations to confirm management risks, as well as provide
advice on business strategies and other matters. I havebeen involved in waste management, recycling and global
environmental issues as a government official for many
years. I would like to bring my experience to bear by offering
advice and contribute to the monitoring of proper businessexecution, including compliance, as well as climate change
initiatives, which will become increasingly important.
The waste recycling sector is one of the major pillars ofour business. We are also expanding our precious metal
recycling focused business. Compliance is particularly
important in the sector of waste management and recycling,
and up until now I have offered many opinions and piecesof advice at board meetings based on my experience. I
hope to continue to apply my experience in this area going
forward. Climate change is another important issue. How do
we curb the greenhouse gas emissions produced by waste
incineration? How do we reduce greenhouse gas emissions
produced during the course of our corporate activities? How
do we raise awareness about our climate change initiatives
to the outside world? This will be a very important initiative,
and I will continue to apply my own knowledge to fulfill my
responsibilities as an outside director.

how to expand to the rest of the world from Japan.
(Miyoko) Kimura: To follow up on Director Hara’s mentionof innovation, when I joined our Board of Directors last June,
I myself was very surprised to see how the company has
continued to innovate without growing complacent due to its
success, in spite of our 70 years of history. “Innovation andtaking on challenges" are not easy, but I believe that the factthat we continue to do so is one of the great things about ourcompany. The spirit of "innovate and embrace challenges,"
respect for our employees, and our insistence on profits haveall been part of our company's DNA since its founding, but
at the same time, if we examine the history of our businessdevelopment, we have taken an aggressive “scrap and build”
approach, and this is the point I appreciate it. I agree with what
everyone has said regarding the role of outside directors, but
I believe that as a representative of general shareholders andas a member of society, it is important for us to occasionallybe able to express our opinions without worrying about how
we might be perceived, particularly when we are monitoring
executive operations from an independent and objective
standpoint. However, doing this naturally requires that I deepen
my understanding of the company. I have had the opportunity
not only to communicate with management, but also to visit
actual company sites, such as the Technical Research Centerand plants. This allowed me to get a feel for the reality on the
ground and the actual products, as well as the sincere andearnest attitude and culture with regard to workplace safety
and security. I will leverage my management experience asa founding member of a mail-order sales company for officesupplies, and I would like to contribute to the enhancement ofour medium- to long-term corporate value by incorporating
what I experienced on the ground and drawing on theexperience and knowledge I have cultivated in the launch anddevelopment of new B2B and B2C businesses, as well as in
the marketing sector. I believe that our strengths lie in the factthat our businessitself contributes to acircular economy thatlinks the environmentand society, that
we have a clear
management strategy
for expanding globallyon the strength of ouradvanced technologicaland sales capabilities,
and that we value ourcorporate culture andhuman resources
based on the "AsahiWay." In the coming
era, which willemphasize climatechange and ESG, Asahi
Holdings, Inc. will bepositioned right inthe middle of these
Yuji Kimura
issues, and I hope to
Head of Independent Outside Director (Chairman of thelend my support by
Audit and Supervisory Committee) of Asahi Holdings, Inc.
After working for the Environment Agency, the New Energy andcommunicating its
Industrial Technology Development Organization, and the Direcbranding and initiatives
tor General of Hakodate Customs at the Ministry of Finance, he
was appointed Executive Director and General Manager of Tokyo
to the outside world in
Office, Global Environment Centre Foundation in 2014. He hasserved as an independent outside director for Asahi Holdings,
a more active manner.
Inc. since June 2017, and he has been the Head of Independent

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MiyokoKimuraKanazawa: I believe that the responsibilities generally expectedof outside directors are as Director (Yuji) Kimura described at thestart. I think that one of our main characteristics is constantly
innovating and challenging ourselves, as evidenced by the factthat we have achieved growth while revamping our businessportfolio. Assuming that these characteristics remain, I believethat the most important role of the Board of Directors is to pointout the risks involved when the company is both considering andimplementing innovation and taking on challenges. This ensuresthat judgments of risk are made in an appropriate mannerand monitors whether our risk control system is in place andfunctioning. The Board of Directors should also point out when
the company is not acting as it should, such as when it is notinnovating or taking on challenges, or such efforts appear tobe weakening. In addition, given that we are a company that isalways innovating and taking on challenges, it may sometimes
be difficult for stakeholders to understand what we do. When
this happens, I would like to ask the Board of Directors to devise
ways for helping stakeholders to understand the company,
and as a member of the Board, I would like to be part of thisprocess. When it comes to my duties as an outside director
for the company, I value the approach of "harmonizing withoutagreeing." In fact, I have always emphasized this approach, evenwhen I was working as an attorney. A professor who mentored
me during my legal training told me that my duty and approachas a lawyer should be to "listen carefully, investigate carefully,
think carefully, and then repeat this process, cognizant of thefact that this occasionally means you have to say things you thinkothers may not want to hear. Even if this ends the relationship,
you have conveyed what is important." I believe this concept is
applicable not only as an attorney, but also when fulfilling myresponsibilities of an outside director.
Hara: I feel that the idea of "harmonizing without agreeing"
is vital not only for individuals, but for organizations as well.
Among the many responsibilities required of an outside
director, I believe it is particularly essential to remain unboundby internal considerations and provide candid opinions andrecommendations based on the general situation outside thecompany. I am currently conducting educational researchon innovation management at a graduate school of businessadministration. From my perspective, in addition to thenonferrous metals industry, we are a company with a very
unique business model in that, we create service innovations
that generate new added value while simultaneously creatingsocial innovations that are essential to achieving a recyclingoriented society. In the past, it has been said that achieving
the balance between economic value and social value that
we have aspired to since our founding would be difficult, but
recently, the value of ESG and non-financial information has
become more prominent, and there is a growing emphasis onbalancing economic and social values. As an academic withexpertise in business administration as well as electrical andelectronic informatics, I will contribute in terms of both theory
and practice from the perspective of the impact on stakeholder
value and strengthening governance. By taking firm steps topromote and raise awareness about the value we offer, I would
like to contribute to the sustainable growth of our company andthe enhancement of our corporate value over the medium andlong term. In addition, during my career thus far, I spent about
10 years conducting research in Silicon Valley in North America,and I have hands-on experience at an in-house research
institute. As such, I would like to lend my services by providing
both practical and academic advice on how to introduce
approaches both from abroad and from the IT field, as well as

Roundtable Discussion with Outside Directors

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Special Feature

Outside Director (Chairman of the Audit and Supervisory Committee) since June 2021.

ASAHI HOLDINGS

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Special Feature

After working for Fuji Research Institute Corporation, she was registered as an attorney in April 2000 and joined
Hata & Co. Law Offices, where she is currently employed. She has served as an independent outside director(Audit and Supervisory Committee Member) for Asahi Holdings, Inc. since June 2017.

ーWe have been pushing for governance reform
for the past several years. Please tell us whatchallenges you have faced in the past and what
specific reforms have been made to address them.

(Yuji) Kimura: In the past, there have been areas where
it appeared that a systematic and organized approach tolegal affairs and risk management had not been sufficiently
established. Such issues have been identified at Board of
Directors meetings and Group company management meetings,
and this has led to a strengthening of the organizational
structure.
Kanazawa: The Audit and Supervisory Committee, including theoutside directors, have pointed out three issues: strengthening
the legal and risk management functions, ensuring andenhancing the independence of the internal audit function,and promoting stakeholders’ understanding of the company.
Regarding the third issue in particular, visible reforms areunderway, such as adjusting how IR materials are presented
so that stakeholders can more accurately understand thecompany's capabilities.
(Yuji) Kimura: Right. I believe that we will continue to takeactions that we feel are necessary in a timely manner. In
promoting the advancement of various aspects of governance,
I consider risk management to be the most important issue.
As Director Kanazawa mentioned earlier, the company is toanticipate social trends and develop businesses in new sectors
without growing complacent with the status quo. However,starting new businesses always entails risk. Looking back on
our company's development to date, I believe that rather than
avoiding risks, it has taken risks and managed to overcome
them in an effort to develop new businesses. The natureand content of these risks differ by business sector, and wehave also been working to make our risk management moreadvanced while taking such differences into account, such as
by establishing a new Group Risk Management Department
in April 2021 that manages risks across the entire company.
While we have always been skilled at reviewing and adapting ourorganizational structure in response to changing circumstances,
as we look ahead to future business developments, the weightof our overseas businesses is likely to increase, so we must
continue to review our risk management structure as required
to keep pace with the development of our businesses. I think it
is important to continue to recognize that risk management will
always be a challenge.
Hara: I think you’re right. Some aspects of our previous

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ーWhat kinds of specific proposals or measures
were implemented to reform governance?
Additionally, what is your assessment of our current
governance structure?
Hara: To continue on the topic of diversity management that I
just mentioned, because I work at a university, I have organizeda variety of diversity-related events, introduced them to
employees, and actually had them participate in them remotely.
Further, when Outside Director (Miyoko) Kimura visited ourTechnical Research Center and plants, she had the opportunity
to discuss diversity with female employees, and I took part aswell. I know that it takes time to solve diversity issues, but when
I actually talked with the employees, I got the impression thatmany of them have very high potential, so I believe that we can
expect to see an increase in the number of female managers
depending on future initiatives. As for the current governancesystem, my assessment is that we are currently implementing
effective governance that is receptive to what is being said.
(Yuji) Kimura: Right. I believe that the executive side of thecompany has listened to the opinions of the outside directors
and created systems that are optimal for that particular point intime. I think there is a high degree of flexibility and adaptability
even as a strong core is maintained.
Kanazawa: Actually, I believe that comments from Outside
Director (Yuji) Kimura, the Chairman of the Audit andSupervisory Committee, are reflected at the Board of
Directors meetings We outside directors speak our minds,
and our opinions and suggestions are faithfully reflected in
the company’s governance management. The fact that thisattitude is present in our governance operations is appreciated.
I also find it very easy to participate in discussions at the
Audit and Supervisory Committee meetings that are held
right before the Board of Directors meetings. The Audit andSupervisory Committee is a forum for auditing the legality andappropriateness of the directors' execution of their duties, but
we consider auditing to mean monitoring in a broader sense,
and the Audit and Supervisory Committee Members(outside
directors), with their wide range of expertise, use this forum toactively ask questions, deliberate, and exchange opinions on the
Board of Directors' proposals in advance. I believe that this has

for by revisions to the 2021 Corporate Governance Code andother guidelines. This will enable us to continue to enhance ourcorporate value.
(Yuji) Kimura: Right. Regarding the first point you mentioned,
given that our expansion overseas, such as our North Americanbusiness, has become even more important, we have beenutilizing various financial methods to increase profits throughadded value in addition to refining virgin gold and silver ore. I
agree that one challenge is maximizing profits while appropriately
managing the risks associated with the use of these financial
methods. Risk assessment and management requires specialized
knowledge, and we must continue to improve efforts to ensurethat error-free management decisions are made based on
the newly developed internal system. In addition, because it ispossible that the same type of business model may be developed
in regions other than North America, it is essential to utilize theexperience gained in North America and turn it into a profitablebusiness even more quickly when making decisions on theimplementation of such business models and developing systems.
Also, with regard to the Environmental Preservation Business, I
have some challenges, or rather expectations for our company
based on my experience as an official in this sector. Looking at
the structure of this industry, the overall reality is that there are a
lot of small- and medium-sized businesses, some of which are in
non-compliance, some of which operate in a gray area, and someof which have even experienced problems with local residents.
In such an industry, we have a very high level of complianceawareness and possess excellent in-house waste treatment
and recycling technologies. Given that we also work with othercompanies to develop consulting services that allow waste
disposal to be reliably outsourced for waste generators, there is
no doubt that we are positioned as a leading company. I am verymuch looking forward to the company further enhancing this
sector to promote modernization, streamlining, and optimizationof the industry as a whole, and more broadly, to serve as a driving
force in the transition of Japanese society toward a recyclingoriented society. If this is achieved, there would be a tremendous
impact not only in terms of increasing the company's own profits,
but also in terms of contributing to society at large.

ーWhat issues do you think need to be addressed
to further enhance the company's governancestructure in the future?

(Miyoko) Kimura: I think there are two major points. The
importance of risk management was touched upon previously,
but one is strengthening cooperation with the Group Risk
Management Department and Audit Department to monitor
the establishment and operation of internal control and risk
management systems comprehensively and from a broad
perspective without becoming too removed from the situationon the ground. This is to promote "innovation and challenge" inan effort to further develop and accelerate businesses in new
sectors, such as the North American business and new DXE
businesses in the future. The other is supporting our company
in making proactive efforts to disclose information based on the
TCFD recommendations and address human rights issues in theface of new ESG-related disclosure provisions that are called

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Independent Outside Director (Audit and Supervisory Committee Member)

resulted in more effective sharing of questions, opinions, andproposals from the outside directors at the Board of Directors
meetings. In particular, I feel that the outside directors are able
to make proposals and engage in discussions regarding the
medium- to long-term direction of the company as a whole as
opposed to as individuals.
(Miyoko) Kimura: Right. I’ve also found that the Audit andSupervisory Committee discussions that take place just prior
to the Board of Directors meetings have been excellent. Having
a diverse group of experts freely share opinions and proposals
with the executive side and direct questions to the Board of
Directors in advance of the meeting has felt easy to manage.
(Yuji) Kimura: At the preliminary review for discussions at theBoard of Directors meeting held by the Audit and Supervisory
Committee prior to the Board of Directors meeting, while no
resolutions are reached, I get the impression that the outside
directors, who each have different areas of expertise, shareopinions and questions, which allows a certain degree of
direction regarding the agenda to take shape. As the Chairmanof the Audit and Supervisory Committee, I sometimes speakat Board of Directors meetings, but each outside director also
actively speaks at these meetings from the perspective of theirown area of expertise. I believe this is another part of their roleas outside directors.
Kanazawa: Director (Miyoko) Kimura mentioned earlier that
it is important to deepen one's understanding of the company
and its businesses to speak without concern about how one
is perceived. Being able to participate in Group company
management meetings in addition to Audit and Supervisory
Committee meetings has been very beneficial in terms of me
fulfilling my role as an outside director. I am grateful to have achance to gain a firsthand understanding of the situation a little
more closely by taking part.
(Yuji) Kimura: That truly is the case. In fact, without suchopportunities, I think our opinions would tend to be superficial.
Of course, compared to the executive side, our knowledge of thebusinesses and the situation on the ground is quite limited, but
I feel that through such opportunities I have gained a great dealof information that is required to participate in discussions as
an outside director and to contribute to the management of thecompany. While the agenda of the Board of Directors meetings
is limited to very broad topics, some of the topics discussed
at the management meetings naturally involve specific risks,
so I make a conscious effort to ask questions and listen to theanswers before responding to them when it comes to areas that
I need to understand as an outside director.

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Kyoko Kanazawa

governance structure that I found to be challenge were, in
addition to risk management, the lack of communication
between internal management and employees and outside
directors, as well as the inadequacy of our governance structure
due to a lack of communication among company departments.
This is because creating social capital requires each individual
in a trust-based organization to believe that they have apersonal stake in environmental issues and social values
such as the SDGs, and to pursue these issues with a sense ofownership. While I believe that organizational measures to set
and implement goals such as the SDGs have been thoroughly
implemented, there remain issues from the perspective of
diversity management, for example, particularly in termsof gender diversity. The number of female outside directors
has increased, and the percentage of women on the Board of
Directors has surpassed that of other companies. However, weneed to further increase the number of female managers andeven the number of female employees themselves, so we must
further strengthen measures to increase the number of female
managers. We believe that it is necessary to further enhancemeasures that will lead to an increase in social value, such as
promoting understanding of diversity and introducing a system
to lend support to female employees.

Roundtable Discussion with Outside Directors

Yoshinori Hara

Independent Outside Director (Audit and Supervisory Committee Member)
After working at NEC Corporation, as a visiting researcher at Stanford University, and supervised NEC’s
Kansai Research Laboratory, he became a professor at Kyoto University's Graduate School of Managementin 2006. Later, he also served as Dean of the Graduate School of Management at Kyoto University. He hasserved as an independent outside director (Audit and Supervisory Committee Member) for Asahi Holdings,
Inc. since 2019.

ASAHI HOLDINGS

59

Special Feature(Miyoko) Kimura: I believe that increasing corporate value
through intangible assets will become increasingly importantfor differentiating companies and achieving sustainable growth.
In particular, making a conscious effort to incorporate a diverse
array of human resources, including women, people fromoverseas, young people, seniors, and people with experience inother industries, will be essential for generating future-oriented

Miyoko Kimura
Independent Outside Director (Audit and Supervisory Committee Member)
After joining ASKUL Corporation and serving as Representative Director and President of ASMARU Corporation
and Chief Marketing Officer (CMO) of ASKUL Corporation, then becoming a Director of the company in charge ofbranding, designing and supplier relations, she became a Senior Fellow of the company in August 2022. She hasserved as an independent outside director (Audit and Supervisory Committee Member) for Asahi Holdings, Inc.
since June 2021.

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our human resource strategy and carrying it out. In a society thatis placing increasing emphasis on making a circular economy
and decarbonized society a reality, our company's position insociety is more important than our employees realize. Still,when I look at the degree to which our corporate philosophy
and perspectives have been instilled in our employees, I feelthat we are relatively underperforming. That being said, it isalso important to maintain a certain level of distance from ourcorporate philosophy and purpose. When I did research on what
influences corporate sustainability, I conducted a survey ofapproximately 6,000 companies that have been in business formore than 100 years and analyzed the trends in the responses
I received from approximately 450 of those companies. The
results showed that, for a company to survive over the long term,
it is best to maintain a certain degree of freedom within one’s
corporate character. In the case of our company, this meansthat our employees should be able to exercise a certain degreeof freedom of behavior that exists between what is typical ofthe "Asahi Way" and what is not. This will allow us to promote
new businesses and other activities that enhance sustainability.
As times continue to change, we should not bind ourselves
too closely to the corporate philosophy, but rather take onchallenges with a certain degree of freedom even as we continue
to respect it. I think this is a good approach to take.
Kanazawa: Regarding my involvement as an outside director
in terms of human capital management, if we look back overthe past few years, we transitioned to the Higashiura CEO
system, and last year we transitioned to a monitoring model,
so I think we were in the phase where we were keeping watch
over how these changes were coming along. I believe that weare now entering the next phase. As stipulated by the Corporate
Governance Code, I believe that we must require the executiveside to formulate a broader human resource strategy, including
a succession plan, and have the Board of Directors discussand approve it, then monitor whether the approved plan isbeing implemented. The Corporate Governance Code requires
outside directors to be actively involved in human resource
strategies, especially when it comes to succession planning.
The company’s governance system is well-organized at leastin terms of form, given that the company has established a
Nomination Committee and Compensation Committee, outside
directors comprise the majority of members on the Board of
Directors, and an outside director has been appointed as the
Chairman of the Audit and Supervisory Committee. However,there are also social demands for which form-related aspects
alone are not sufficient. Under such circumstances, in termsof the involvement of outside directors in the succession plan,
the executive side may ask, "What does an outside director
know about personnel affairs?" I am sure some share this view,
and I can understand the intent behind it. However, as long as
stakeholders demand that outside directors be substantively
involved in succession planning, it is necessary for outside
directors to consider and devise some measures for doing so.
Terayama: We have been keenly aware of the need to strengthen
governance, and we have introduced systems as well as
enhanced the content of these systems, such as by instituting acompany with Audit and Supervisory Committee and establishinga Compensation Committee and Nominating Committee We
have also made efforts to apply the feedback received fromoutside directors as quickly as possible. We will continue tostrengthen governance as we confront new challenges, but
the spirit of "innovate and embrace challenges" is key to ourefforts. As everyone pointed out today, there are always risks
involved in any new business venture. We have always taken risk

Mitsuharu Terayama
Director and Chairman
After joining Asahi Pretec in 1973, he served as President and Representative Director of Asahi Pretec Corp.
Then he served as President and Representative Director of Asahi Holdings, Inc. in 2009 and was appointed
Representative Director, Chairman, and President of the company in 2014. He has served as Director andChairman of the company since June 2020.

into consideration when conducting business, and we are very
grateful for the opportunity to receive feedback on these risks
from experts in their respective fields with perspectives different
than those that we have within the company. I believe that
discussions with outside directors are as indispensable as thetwo wheels of a car when it comes to management. The mostcommon advice we received from you today concerned humancapital. We believe that succession planning is a top priority
on the executive side, and we know that outside directors arealso keenly aware of the issue. We will take your comments
into consideration and respond to them in future. We will also
continue to promote the development of executives and midcareer employees, and in the year since the new personnel
system was launched last year, we have also promoted town
hall meetings at all sites to allow direct contact with employees
and facilitate exchanges of views. This is also where the spiritof "actual sites, actual things, and actual facts" espoused in the"Asahi Way" originated. In terms of knowing what is happening
on the ground, you mentioned earlier that Group company
management meetings are helpful for understanding ourbusiness. While we would ordinarily be happy to invite you toattend management meetings held in other countries such as
South Korea, Malaysia, and North America, it is difficult to do sogiven the COVID-19 pandemic, so they are now held remotely.
We are very grateful for your enthusiastic participation, not onlyin terms of monitoring the situation on the executive side, butalso in terms of understanding our business.
(Yuji) Kimura: I believe we are a company that incorporates
protection of the global environment into our business structure,
but there are considerable obstacles that we must overcome toachieve carbon neutrality by 2050. In this respect, I believe that
our corporate stance of taking the initiative to achieve carbon
neutrality will lead to returns in the form of increased corporate
value for our company, and I would like to see our company
make a strong, concerted move in this direction.
Terayama: I couldn't have put it better myself. I hope that ourshareholders understand our stance.
ASAHI HOLDINGS

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ーThroughout the discussion thus far, we’ve touched
upon diversity in human resources as well as
succession planning. In closing, please share yourthoughts about the issues facing the management of
human capital as well as measures that can be taken.

innovation. As Director Hara mentioned earlier, particularly
from the perspective of women's advancement, I think it isessential to create an environment that facilitates an increasein the number of female managers in key decision-making
positions throughout the company. In February of this year,
as part of the women's advancement action plan, the "Asahi
Cheer-Up Meeting," led by CEO Higashiura and the directors ofthe Human Resources Department, was launched to empower
female employees. As female directors, I and Director Kanazawa
support the promotion of diversity and inclusion for thecompany's corporate strategy. We were given the opportunity
to hold a discussion with 26 female employees at the assistantmanager level and above about our own careers, the ease withwhich women can work, past failures, and more. Besides thismeeting, I have had other opportunities to exchange views
with female employees as well since assuming my position. As
Director Hara mentioned, I was very impressed by the high levelof communication skills and the earnest, honest, and positive
attitude many of them displayed. In addition, I learned that thecompany has a good support system for balancing work withchildcare and nursing care, and that it is convenient for working
women. If we can bring out the best in these women, have themchannel those aspects into their careers, and develop them into
core personnel, I believe that we will be able to generate evenmore innovation in the future. It is also important to promote
diversity in conjunction with the succession plan mentioned
earlier by Director Kanazawa. How do we develop humanresources for the next generation, and what kind of humanresource strategy do we formulate to achieve this? As the Boardof Directors, I would like us to provide support for the company
to continue to remain sustainable while expressing our views on
issues related to such a strategy.
(Yuji) Kimura: Regarding diversity in human resources, as
Director Hara and Director (Miyoko) Kimura have pointed
out, in terms of gender diversity, the reality is that we do notnecessarily have that many female employees. I believe this isin no small part due to the nature and content of the business
we are developing. Recently, we have been reviewing job duties
in a way that is not affected by gender differences, and we arepromoting a number of initiatives, such as exchanges among
working women inside and outside the company, to enablefemale employees to advance their careers. In addition, I believethat it is essential that this issue does not only raise awarenessamong women concerning the importance of diversity, but
among male employees as well. If we examine our company's
employee composition from perspectives other than gender,
unlike most companies, we have a large number of careerhires, as well as career personnel hired with the expectationthat they will become future management candidates, midcareer executives and career personnel with expertise in
specific fields, personnel who became group employees through
M&A, and recent graduates. Our employees come from an
extremely diverse set of backgrounds, including their expertise,
experience, and careers. Because we established our corporate
values and philosophy, as represented by the "Asahi Way," in theearly stages, I believe that working to raise awareness of andinstill them within employees from diverse backgrounds will
strengthen our human capital, which will be extremely impactfulin enhancing our corporate value.
Hara: I think you are absolutely right. With regard to the raisingawareness of our corporate values and philosophy that Director(Yuji) Kimura just mentioned, I believe that we still have a lot ofwork to do in terms of instilling these values and our philosophy
within individual employees, as well as ensuring consistency with

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Kanazawa: I think that's exactly right. I would also like to add
that, to further improve governance and achieve sustainablegrowth for our company going forward, we must also think longterm and devise a plan to develop personnel who can become
our successors.
Hara: Right. As for human resources, I believe that what weneed for sustainable growth is people with an entrepreneurial
spirit. I am sure that many of the people had such a mindset
when founded, but once a company grows to a certain degree,
it becomes easier to tolerate the types of situations that ail big
companies. We are in the VUCA era, and I believe that personnel
who are willing to take action, make proposals, and assume
some degree of risk to meet challenges and seize business
opportunities are essential for our company's growth. Not
just our company, but Japanese companies in general, have aproblem with intangible assets such as human capital not being
properly reflected as corporate value, despite having extremely
high potential. We need to strengthen our public relations
strategy in a broad sense so that our intangible assets canbe properly evaluated, and we need to strive to get people tounderstand the potential of our activities and businesses. I thinkthat preparing an integrated report, which is exactly what thisroundtable discussion will address, will serve as one of the tools
for fulfilling this function.
Kanazawa: I agree. I also think that the integrated report will be
an important tool.

Roundtable Discussion with Outside Directors

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