Management Foundation Tailored to Sustainable Growth

Our Approach to Sustainability
Governance
The Chori Group has established systems to ensure appropriate operations with the aim of achieving soundmanagement and sustainable growth. The Company strives to strengthen corporate governance by complying withlaws and social norms, carrying out effective and efficient business operations, and ensuring the credibility of its
financial reports while positioning the Board of Directors as a body for making strategic decisions and overseeing
business operations.

Chori’s Sustainability Initiatives

Key Points

The spirit of coexistence and co-prosperity that our first president Riichiro Ohashi maintained, which is “todevelop our business for the benefit of the world and people and to always strive to grow together with ourcustomers,” and the integrity, dignity, and compassion that has continued to support this spirit have been
passed down to this present day.
As a multifaceted specialized trading company that handles fibers, textiles, and garments, as well as
chemicals and machinery, Chori not only builds relationships with its clients but also engages in capital investment
and production on the strength of its semi-industrial/semi-commercial business scheme. Underscoring the valueof its relationships with various stakeholders around the world, the Company strives to address poverty, health,resource waste, climate change, water shortages, and a range of other global concerns. In the face of ourradically changing social and economic environments, we are advancing our business in pursuit of not only thegrowth of the Company but also the sustainability and development of the world as a whole.
As declared in our corporate philosophy, at Chori we engage in business with sustainability at theforefront of our minds by developing environment-friendly products, conducting procurement and export
control activities that ensure compliance, and establishing a system to optimize operations so that we cancontribute to the realization of a better society as global citizens.

Establishment of Sustainability Promotion Preparatory Committee
With a view to establishing a specialized committee to promote sustainability (fromfiscal 2024), as announced in Chori Innovation Plan 2025, the Sustainability Promotion
Preparatory Committee was established in July 2023 to examine Chori’s basic policy
on sustainability, material issues, its value creation story, and other sustainability-related
matters. A working team consisting of members selected from various departments
and CARAT will also establish.

CHORI Innovation Activities (“CHOI-Katsu”)
We have been working to improve our employees’ operational efficiency through our Companywide CHORI Innovation
Activities (“CHOI-Katsu”), established in fiscal 2013 with the aim of achieving department- and division-specific goals.
Action Policies in Fiscal 2023
• Compliance with communication   • Health and communication   • Eco-friendliness and cleanlinessBusiness Environment and Chori’s Countermeasures
Strategy

Climate change

Business Environment

Chori’s Countermeasures• Importance placed on reducing companies’
financial risk through measures to address
climate change•D isclosure of information in accordance withthe recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD)
Page 45

Marine plastic
pollution• Need to ensure traceability and develop a
recycling system•D evelopment and deployment of BLUECHAINTM• Expansion of initiatives for biodegradable
resin

Pages 37 and 44

Escalation ofhuman rights
issues•G
 lobal need to improve working conditions
and respect human rights along the supply
chain• Formulation of human rights policy• Emphasis on CSR for procurement activities
Page 53

Changes in
consumerawareness• Increasing ethical consumption•E mphasis on the story behind each product• Growing demand for environment-friendly
products, including those based on the BLUECHAINTM concept and plant-based foods(plant-derived alternative meat)
Pages 37 and 44

41

CHORI CO., LTD.

In establishing a management foundation aimed at achieving sustainable growth, the Chori Group recognizes theimportance of taking a proactive approach to environmental issues, cooperating with business partners in CSR
procurement and other activities, promoting occupational safety management, developing human resources, andcontributing to the betterment of society and local communities. On April 28, 2023, we announced Chori
Innovation Plan 2025, our new medium-term management plan based on VISION2030—The Company We Aspire
to Be—focusing on the themes of “sustainability,” “well-being,” and “innovation.” Under Chori Innovation Plan
2025, we will enhance our corporate value by steadily implementing our three basic strategies and becoming a
corporate group that continues to evolve and change on a global scale, underpinned by our exceptional capabilities
and expertise. The Sustainability Promotion Preparatory Committee will examine our strategies related to all areasof sustainability.

Risk Management
The Chori Group has established and operates its risk management regulations for the purpose of identifying
potential risks in its business activities, reducing risks and preventing crises from occurring during the course of
normal business conditions, establishing a system for responding to crises that may present a significant impact
on its business activities, and responding promptly and appropriately to prevent the situation from deteriorating
and recover and normalize the situation as swiftly as possible.

Indicators and Targets
Recognizing the ongoing need to address sustainability issues, the Chori Group has established non-financial
targets ( see page 12) in an effort to “promote ESG management,” one of the basic strategies of Chori
Innovation Plan 2025.

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Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives

Environment
We understand the importance of respecting the environment when conducting our businessactivities and that it is our responsibility to address environmental issues in a proactive manner.

Basic Principle
With a view to generating substantive value and helping to realize a more enrichedsociety, Chori strives to provide accurate information and exceptional products tailoredto the needs of its customers. As the environment continues to garner global attention,
we believe the role we play in contributing to environmental conservation is essential toestablishing a solid management foundation.

Chori is committed to expanding its line of environment-friendly SDG-oriented products in the Fibers, Textiles, and Garments Businessand the Chemicals Business. As declared in Chori Innovation Plan 2025, we aim to increase sales of SDG-oriented products to ¥50.0
billion (two and a half times fiscal 2022 levels) in fiscal 2025.

Basic Policies
1. Consideration for the global
environment
2. Compliance with environmental laws
and regulations
3. Establishment and continuous
improvement of environmental
management system

Environmental Management Structure (As of July 1, 2023)
We have established the following structure in pursuit of our environmental initiatives.

Environmental Management Secretariat

Report internal
audit resultsAppoint

Internal Environment Auditors

Chemicals DivisionCorporate Management Division

Division Head

Division Head

Division Head

Division Environmental Manager

Division Environmental Manager

Division Environmental Manager

EMS Facilitator

EMS Facilitator

EMS Facilitator

Business Administration Dept.
(Textile)

Logistics Dept. (Textile)

Business Administration Dept.
(Chemicals)

Logistics Dept. (Chemicals)

Corporate Management Dept.

Human Resources &General Affairs Dept.

Synthetic Fiber
Business Dept.

Technical Material &Garments Business Dept.

Chemical & Materials
Business Dept.

Life & Fine Chemicals
Business Dept.

Information System Dept.

Internal Auditing Dept.

Affiliate Business Dept.

Pharmacovigilance &Quality Assurance Office

Health Insurance Society

Business Anchor Corporation* EMS: Environmental management system
Note: EMS facilitators concurrently serve as internal environment auditors and conduct internal audits in other divisions.

Environment-Friendly Business Activities
Since its acquisition of the ISO 14001 international standard forenvironmental management systems in 2000, Chori has continued
to conduct and engage in environmental conservation activities.
We adopted the 2015 standard in December 2017, acquired
ISO 14001 certification for our Hokuriku Branch and Okayama
Liaison Office in December 2019, and continue to engage inGroupwide efforts with Business Anchor Corporation and othersubsidiaries in our aim to help preserve the environment.

Close Up
In Pursuit of the SDGs
Chori’s initiatives in pursuit of the Sustainable Development
Goals (SDGs) are featured on its official YouTube channel.
The channel offers viewers an illustrated look into Chori’s
involvement in the world of environment-friendly, plant-based
foods and its participation in the lithium compound production
project in Chile.

https://www.youtube.com/watch?v=EfGtYiJVL0E

43

CHORI CO., LTD.

Fibers, Textiles, and Garments Business

The problem of environmental degradation, which has been a focus of attention for a variety ofindustries in recent years, has become a matter of significant concern in the fiber, textile, andgarment industries. The creation of new apparel made in response to recent trends and consumer
needs requires massive volumes of water and produces substantial amounts of greenhouse gases.
It is also true that large quantities of unsold clothing are discarded unused. To address theseissues, Chori introduced its BLUE CHAINTM initiatives to create environment-friendly products byseamlessly linking the vast and complex fiber, textile, and garment industries and integrating thefunctions of each company.

Lithium Compound Production Project in Chile 

Appoint

Environmental Management Officer

Textile Division

BLUE CHAINTM 

See “Branding in the Fibers, Textiles, and Garments Business” on pages 37 to 40.

President, CEO & COO
Propose EMS* revisions / improvements
Report EMS results

Chori’s Environment-Friendly Initiatives

Chemicals Business

The evaporation method commonly used to extract lithium components from brine water was
associated with concerns over its significant environmental impact. In contrast, Chori has been
participating in a project to produce lithium compounds through the use of a new method thatenables only lithium components to be extracted from brine water, thereby maintaining the water
volume of salt flats. Compared with our conventional approach, this new extraction method
contributes to significant reductions in production time, and because it does not hinge on weather
conditions, the production volume can be adjusted in line with market conditions. Through suchmeans, Chori will address the needs of the lithium-ion battery market, which we anticipate will
expand even more going forward.

Biodegradable Resin 

Chemicals Business

At Chori, we have recently been expanding our lineup of biodegradable resin, a raw material usedin seed sheets. Seed sheets serve as a means to prevent the evaporation of soil moisture and areused for weed and pest control. As they are made of biodegradable resin, seed sheets eventuallydecompose into water and carbon dioxide. Accordingly, they eliminate the need for disposing
waste while reducing the use of plastic, and because the seed sheets do not need to be collected,
they help enhance agricultural productivity.
We are also working to enhance our lineup of biodegradable resin derived from plants such as
cassava and taro, which we are utilizing as raw materials for garbage and shopping bags due tothe soft texture they generate.

Promotion of the Use of New Protein Sources Chemicals BusinessWith the global population projected to reach approximately 10 billion by 2050, there are concerns
over the potential imbalance between supply and demand for protein sources such as beef and pork.
At Chori, we have been focusing on soybeans, wheat, and green peas as a source of ingredients;
procuring ingredients of the highest quality and safety that comply with the Non-GMO Project
Standard from overseas; and supplying these ingredients to food processing companies in Japan.
We are also working to promote the use of sunflower protein, cricket powder, and other new
sources of protein throughout the Group. In addition, through our measures to prevent deforestation
for livestock and reduce the use of water and crops, we strive to help realize a greener and moreenriched global environment.

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Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives

Policies andRegulations

Risk
Type

Short-, medium-, and long-term climate-related risks and opportunities identified by the organizationand the impact thereof on the organization’s business, strategies, and financial plan
Strategy

Chori conducts scenario analyses to assess the transition risks and physical risks of climate change. In fiscal 2021, we
analyzed the 2°C and 4°C scenarios, and in fiscal 2022 we reanalyzed and examined the 1.5°C and 4°C scenarios. Under the
1.5°C scenario, similar to the 2°C scenario, the increase in physical risks is expected to be moderate, and we expect anincreasing number of opportunities to develop and expand sales of environment-friendly products. Meanwhile, under the 4°C
scenario, physical risks, such as unseasonable weather, will likely increase due to the lack of progress in climate change measures.
Based on the above assumptions and background, we conducted a scenario analysis for the period up to 2030. On thebasis of these results, we identified the following risks and opportunities related to climate change and determined theirimpact on our business and the measures we will take in response.

Marketchanges
associatedwith thetransition to
decarbonization

Transition Risk

The Company’s response to climate change and other environmental issues is reported regularly at Board of Directors’
meetings and discussions are held based on the details of these reports. Ultimately, it is the responsibility of the Board of
Directors to assess, respond to, and disclose details of the Company’s risks and opportunities related to climate change.
With the general manager of the Corporate Planning Division, who also serves as a director, in charge and the Corporate
Management Department as the responsible division, the Company manages and promotes organization-wide measuresagainst climate change, including the TCFD recommendations, and other environmental issues as well as compiling importantCompanywide policies and measures, which are reported and proposed to the Board of Directors for discussion at
Board meetings.
With regard to business-specific strategies, etc., on climate change and other environmental issues, the general managersof the respective sales departments, in cooperation with the general manager of the Corporate Planning Division and the
Corporate Management Department, report summaries of such strategies, etc., to the Board of Directors, which are thenassessed and discussed at Board meetings.
In addition, on April 28, 2023 we launched our medium-term management plan Chori Innovation Plan 2025. To address
all sustainability issues, including climate change, we will establish an expert committee and strengthen discussions on
strategies and initiatives related to all aspects of sustainability, including the TCFD recommendations.

Key CountermeasuresIncrease in purchase prices and various
costsContinue to monitor the actual amount andimpact of the Company’s GHG emissions
Strengthen lineup of zero-carbon products

Low impact*

 emporary declines in trading volume dueTto reduced production

Strengthen and expand global supply chain

MediumimpactExpansion of waste-reduction
efforts

 reater demand for recycling-relatedG
products
Greater demand for products that
contribute to waste reduction

Expand trading of recycled products· Recycled plastic chips· Recycled polyester fiber (ECO BLUE™)

MediumimpactIncreased use of renewable
resources

Greater demand for bio-related products

Expand trading of biodegradable resin
products· Seed sheets

MediumimpactExpansion of policies and initiatives
aimed at achieving carbon neutrality
throughout the automotive life cycle

 reater demand for lithium-ion-relatedG
products due to the shift to electricvehiclesExpand trading of lithium-ion-relatedmaterials· Participate in lithium compound production
project

MediumimpactExpansion of policies and initiatives
aimed at achieving a carbon-free
supply chain in the textile industry

 educed cost of decarbonizationRmeasures by spearheading sustainability
initiatives across the supply chain

Promote sustainability initiatives throughout
Chori’s unique supply chain (BLUE CHAIN™)

MediumimpactIntroduction and expansion ofStrengthening
carbon taxes
of decarbonization measures
Strengthening of regulations on
China, our largest export partner

Rapid expansion of circular
economyIncreasedstakeholderinterest in
sustainability

Increasing
frequency andseverity ofnaturaldisasters andunseasonable
weather

Financial
ImpactImpact on Business
Risk / Opportunity)

Risks and Opportunities

MarketGovernancePhysical Risk

The Board of Directors’ system for monitoring climate-related risks and opportunities andmanagement’s role in assessing and managing such risks and opportunities

Technology

In 2015, the Financial Stability Board (FSB) established the Task Force on Climate-related Financial Disclosures (TCFD) at therequest of the G20.
As the world strives to limit the increase in the earth’s average temperature to below 2˚C above preindustrial levels as
stipulated in the Paris Agreement in 2015, the aim of the TCFD is to encourage companies to disclose climate-related financial
information to enable investors to make appropriate investment decisions.
At Chori, we will work to appropriately disclose information on the recommended disclosure items in accordance with the
Recommendations of the Task Force on Climate-related Financial Disclosures, the final report released by the TCFD in June 2017.

Acute / Chronic

Information Disclosure Based on the TCFD Recommendations

Major Risks and Opportunities Related to Climate Change, Their Impact on Our Business, and Measures to Take in Response(

Greater demand for nonpetrochemical products and othersustainable products reater demand for environmentallyG
conscious products

Reluctance to buy petrochemical
products

 emporary decline in trading volume
Tarising from the shift to environmentfriendly products

Strengthening of information
disclosure requirements related toclimate change measures ecrease in corporate value and investD
ments due to inadequate response
Increase in customers and investments
due to climate change measures

Water shortages

 emporary declines in trading volume dueTto reduced production

Large-scale natural disasters
Rising sea levels

Rising average temperatures

1.5°C

Enhance lineup of environmentally conscious
products· Highly stretchable functional yarn (TEXBRID™) Medium· Environmentally conscious fiber materials
impact· Black and colored spun-dyed yarn
· Natural Dye™
· MEDITERRANEAN GIZA™
· MILLENNIUM ORGANIC™
· Non-toxic materials· Water-repellent, recycled yarn fabric (free Low impact
of fluorine)· Chemicals for cleaning agents (free ofchlorine gas)
· Promote GHG reduction measures anddisclose information based on the TCFD
framework

MediumimpactLow impact

Strengthen global supply chain· Strengthen lineup of water-consciousTemporary reduction in trading volume
products
and longer lead times due to supply chain · ECO BLUE™ × WS™
disruptions
Reduced trade of fall and winter apparel reater demand for agrochemical-relatedG
products
Greater demand for disinfection(mouthwash)-related products

4°C

Low impact
Low impact

Examples of Products· Strengthen lineup of next-generation
products· Agrochemical ingredients (disinfectants, riceherbicides, acaricides, and herbicides)· Pharmaceutical products (iodine)

MediumimpactNote: 1. Classified according to the scale of impact on sales and segment profit. Those deemed to have a greater impact are indicated with a darker shade.
2. Key reference scenarios include the World Energy Outlook 2022 of the International Energy Agency and the Intergovernmental Panel on Climate Change’s Shared
Socioeconomic Pathways.

* Financial Impact of Introducing and Expanding Carbon Tax (Quantitative Assessment of Business Impact)
1.5°C Scenario
2030

US$107,000 (approx. ¥13 million)

2050

US$191,000 (approx. ¥23 million)

Note: C alculated by multiplying fiscal 2021 GHG emissions by the amount of carbon taxes projected under the 1.5°C scenario (for Scope 2 emissions, calculated bymultiplying the CO2 emissions factor)
No estimates were made under the 4°C scenario as carbon trading in Japan is expected to remain unchanged.
In both scenarios, we found that the impact on our business will be very minimal and that opportunities to develop and expand sales of environment-friendly products will
increase. We will continue to conduct business impact assessments to ensure appropriate risk management and translate business opportunities, such as the greater demandfor environmentally conscious products, into increased earnings.

45

CHORI CO., LTD.

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Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives

Society
At Chori, we promote activities aimed at realizing the well-being of all stakeholders, including

The process for identifying, assessing, and managing climate-related risks and the approach to­integrating this process into the organization’s overall risk management
Risk
Management

employees, business partners, and local communities.

Operation of Risk Management Regulations 
At Chori, we have established and operate risk management regulations with the aim of identifying potential risks in our businessactivities, reducing risks and preventing crises from occurring during the course of normal business conditions, establishing a system
for responding to crises that may pose a significant impact on our business activities, and responding promptly and appropriately toprevent the situation from deteriorating and recover and normalize the situation as swiftly as possible.

Risk Management under Normal Business Conditions 
Under the guidance of the risk management deputy officer (the president of the Company), the risk management promotion officer (thedeputy general manager of the Corporate Planning Division, in charge of the Human Resources & General Affairs Department) and the
Human Resources & General Affairs Department (the organization responsible for risk management) identify material issues within theorganization; formulate various measures to mitigate, prevent, and promptly detect risks that may exist within the Company; andimplement the necessary educational and training programs in a voluntary and systematic manner. They also follow up on the results ofcrisis response measures, verify their impact, identify issues, and seek measures toward improvement.
In the Company’s risk management regulations, climate-related risks are defined as risks that relate to either the “external businessenvironment, including society, the economy, and politics,” or the “business continuity plan,” and are addressed by the Corporate
Management Department in cooperation with the risk management promotion officer and the Human Resources & General Affairs
Department. As demonstrated by the results of the aforementioned scenario analyses, ensuring a stable supply chain is extremely
important to the continuation of our business. With respect to transaction-related risks classified in our risk management regulations,in order to address the risk of supply chain disruptions that stem from various supplier-inflicted issues and to fulfill our social
responsibilities for procurement activities in Japan and overseas, the Company has established CSR procurement guidelines andpromotes procurement activities that underline the importance of corporate ethics, legal compliance, safety, disaster prevention,
environmental conservation, product safety, quality assurance, human rights, and working conditions.

Human Capital
Chori regards each and every one of its Group employees as its most valuable management resource and has established its policy
for human resources, “Utilize people, and be useful to them. Nurture people, develop with them. Connect people, and join together
with them,” to secure and nurture exceptionally talented individuals who are indispensable to the growth of its business.
As a company that has been in business for over 160 years, we believe it is our mission to continue to grow together with
our employees and pass on our traditions to the next generation. We aim to realize a cycle in which each employee gains a
sense of pride and accomplishment in their work, feels a sense of personal and professional growth, and gets a sense ofhappiness, which in turn, leads to the improvement of corporate value.

Comment

Crisis Response Measures 
In the event of a crisis, placing the highest priority on ensuring the safety and protecting the lives of each individual, the following
measures must be taken in accordance with Company regulations: communicate and report details of the crisis based on the crisis
communication system; establish a crisis response headquarters under the direction of the Risk Management Deputy Officer; andexecute tasks, communicate the emergency, report the results of investigations, and implement measures to prevent recurrence
through the crisis response headquarters.

Indicators
andTargets

Indicators used to assess climate-related risks and opportunities in accordance with the organization’s
strategies and risk management processes, targets used by the organization to manage these risks
and opportunities, and progress toward the achievement of these targets
The Group has been compiling data on the actual amount of GHG emissions produced by its business activities since fiscal 2020 andis aiming to reduce GHG emissions (Scope 1 and Scope 2) and achieve carbon neutrality by 2050. We will also look to reduce Scope
3 emissions in order to reduce GHG emissions throughout our entire supply chain.
In regard to our GHG emissions reduction targets, we intend to determine them through a dedicated sustainability committee thatis currently being developed.

GHG Emissions Results
Category
Scope 1
Scope 2
Scope 3Type

Direct emissions—
Indirect emissions—
Total (Scope 1 + Scope 2)
Category 1
Purchased goods and services
Category 2
Capital goods
Fuel- and energy-related activities not included in
Category 3
Scope 1 or Scope 2
Category 4
Upstream transportation and distribution
Category 5
Waste generated in operations
Category 6
Business travel
Category 7
Employee commuting
Category 9
Downstream transportation and distribution
Category 12
Processing of sold products
Scope 3 Total

Actual Amount of
FY2020 (t-CO2)

Actual Amount of
FY2021 (t-CO2)

385
956
1,341
—
—

330
866
1,196
1,090,766
131

—

41

—
—
126
238
—
—
364

113,462
102
128
243
461
1,318
1,206,654

Scope ofCalculation
Consolidated

Nonconsolidated

Consolidated
Nonconsolidated

Scope 1: Direct emissions
Scope 2: Indirect emissions
Scope 3: Supply chain emissions (actual amounts for fiscal 2020 consist only of emissions from “business travel” (category 6) and “employee
commuting” (category 7))
Note: GHG emissions are estimated using the GHG emissions calculation method defined in the GHG Protocol.

47

CHORI CO., LTD.

Satoko Nakayama
Senior Executive Officer,
Deputy General Manager ofCorporate Planning Division(Human Resources &General Affairs Department andInformation System Department)

A Company That Will Continue to Nurture and Utilize Its Employees
Over its more than 160 years in business, Chori has faced a number of challenges amid some turbulent times.
Through it all, what enabled Chori to overcome such challenges was its employees. As a trading company,
Chori’s most valuable management resource is not its products but rather its employees—a competitive
strength of the Company that has endured years of adversity. The willingness to boldly take on challenges is apart of the DNA that Chori has carefully cultivated over the years. “Utilize people, and be useful to them.
Nurture people, and develop with them,” which comprises a part of our policy for human resources, tells thetale of Chori, a company that will continue to nurture and utilize its employees.
Meanwhile, since 2003 Chori has continued to transform and grow as a company in accordance with
the needs of the times. Based on the theme of establishing various foundations to further evolve our business,
in Chori Innovation Plan 2025 we declared “improve employee engagement” as one of our top priorities fordeveloping human resources, given the importance of growing together with our employees in today’s age.
Unlike the approaches we have taken in the past, in order for the Company and its employees to continue totruly grow together, we must align our vectors by facing the same direction and pursuing the same goals, andthe Company must be fully committed to ensuring that its employees feel a sense of fulfillment and happinessthroughout this process of mutual growth.
Through this transformation and growth, Chori will advance together with its employees to its next stage
as a company.

Diversity and Inclusion 
CARAT is a Companywide business transformation project to be completed in April 2025 that involves replacing our manual mission-critical systemthat has been used for over 20 years with SAP, a management resource planning software, while changing various aspects of our business, ourorganization, and employee mindsets. By transitioning from our current organizational structure centered on the sales division to a flat organizational
structure, we will create an organization that allows women in divisions other than sales, such as logistics, to advance to management positions andbeyond. Many of our locally hired employees overseas are women, and we will continue to move gradually forward by promoting the advancementof women with immense potential, such as is the case with one of our Japanese employees working in China, who is the first employee with­children to be assigned overseas, and our second such employee who will be assigned to Taiwan this fall to become a store manager.
Chori also promotes diversity in its recruiting process. We are raising the percentage of women among new graduates while hiring
more students with foreign nationalities. Their global perspectives and sincere attitudes toward work are a tremendous source of inspiration
for Japanese students. Our new-graduate employees are the people who will continue to pass on Chori’s DNA to future generations. In
addition, for the past seven years we had devoted our time and resources to our mid-career hiring, which was relatively small in scale, but
recently our recruitment of new graduates has surpassed that of mid-career employees. In the past, mid-career employees were hired fortheir ability to make an immediate impact, but now they have become an extremely valuable presence that brings a breath of fresh air into
the organization. Upon joining the Company, mid-career employees are asked to offer their opinions in regard to the areas of our businessthat need to be improved as well as our areas of strength. In so doing, we are able to gain an overarching view of our business through theeyes of mid-career employees, which is used to make further improvements to our business. Our business opportunities have expanded asa result, and it has become completely ordinary for mid-career employees to be promoted to management positions. We are also actively
recruiting foreign nationals for mid-career positions, which truly embodies our commitment to diversity and inclusion.
In the final interviews for mid-career hires, we always ask if our potential employees would enjoy being a part of a company that willcontinue to change into the future. We strive to make Chori an even stronger organization by bringing in fresh perspectives from various angles.
At Chori, diversity is about respecting all genders, nationalities, backgrounds, experiences, and individualities, while inclusion is aboutbuilding an organization that embraces the uniqueness of each individual.

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Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives

Data Related to Work–Life Balance

Human Capital
Human Resource Strategies and the Personnel We Seek

2.

Always act responsibly as amember of Chori and keep
the Company charter close
to their heart

Have a spirit ofindependence

Use of Annual Paid Leave(Hours)(%)

18

As globalization continues to spread at a rapid rate, employees will be expected to utilize their full capabilities. We cultivate our
employees to be able to respond quickly to changes, to think and act on their own will with a sense of curiosity and a broad perspective,
and to become an integral part of carrying the Group forward into the future.

1.

Monthly Overtime Work

Personnel We Seek

3.

4.

5.

Constantly work hardand come up withcreative ideas as resultsfocused professionals

Expect the best andprepare for the worst

Respect the values andcultures of people fromaround the world

15.6

14.0

14.7
12.4

12

40

6

20

0

2018

2019

2020

2021

2022

（FY）

Note: M onthly average overtime hours for nonconsolidated employees(excluding managers and dispatched employees)

0

54.8

51.0

60

15.0

38.9

41.2

2018

2019

43.3

2020

2021

（FY）

2022

Note: A
 verage number of paid leave days taken per year by employees,
including those assigned overseas

Diversity and Inclusion
Basic Policy 

New Employee Training 

Chori actively recruits people who are diverse in terms of careerbackground, nationality, age, and ethnicity. The active participation of diverse personnel has changed not only our approach tobusiness but also the mindsets of our employees.
Moreover, to allow our employees to continue to work, wehave established a system that accommodates the life eventsof our employees and their families, such as marriage, childcare,illness, and nursing care.

Upon joining the Company, new employees receive orientation to acquire the basic knowledge
and proper etiquette to become a responsible working adult and attend 30 lecture sessions
and take certification exams twice a year. New employee training was held online once again in
fiscal 2022.

Career Development Support 
At Chori, we hold level-specific training for directors and employees, invite instructors fromoutside of the Company, and conduct lectures led by our employees. Moreover, in fiscal 2022,
these programs were once again held through online venues and the use of video. Moreover, tospeed up the pace of globalization, we will capitalize on our system for dispatching trainees
overseas while continuing to conduct our in-house training program.

Chori Innovation Plan 2025 KPIs
• Increase the percentage of women among career-trackhires and employees who have transferred to careertrack positions to over 30%• Increase the percentage of male employees taking
childcare leave• Increase the percentage of women in management positions

Supporting the Balance of Work Life and Childcare 

Employee Engagement
Through effective two-way communication from both top-down and bottom-up approaches, we will work to create an open andpsychologically safe work environment and improve the corporate culture so that each employee feels a sense of pride andaccomplishment in their work.
In fiscal 2022, we began engaging in face-to-face communication once again whenever possible, which we were unable to do
during the COVID-19 era, and held luncheon meetings for the president and employees on 20 occasions, which were attended byaround 100 employees in total. Through such opportunities to establish direct communication, we will expand the circle ofcommunication between senior management and employees.
An employee engagement survey will be conducted through an external organization to reconfirm the Company’s issues andfurther improve its corporate culture and working environment.

An increasing number of employees who have returned fromchildcare leave are utilizing the shortened work-hour system forchildcare to balance their work and family life.
Also, as a part of our employee benefit program, we have avariety of support systems in place that provide employees withfinancial assistance for childbirth, self-development, and childcare.

FY2020

FY2021

FY2022

17

13

Number of Employees
Taking Childcare Leave*13(9 of whom are male) (9 of whom are male) (6 of whom are male)

Number of Employees
Working Shorter Hours
Due to Childcare

9

12

14

* Number of employees who began taking childcare leave in each fiscal year

Recruiting Diverse Human Resources 
As a part of its action plan based on the Act on Promotion of Women’s Participation and Advancement in the Workplace, Choriestablished the goal of raising the percentage of women among new graduates to 20% between fiscal 2016 and fiscal 2022. Goingforward, Chori will strive to continue to promote diversity and inclusion in the workplace, which includes creating an environment
where women can maximize their potential and employing people with disabilities.

Creation of a Comfortable Workplace Environment We regard people as our most valuable management resource, and for that reason it is essential that we provide employees withworkplace environments that allow them to work in a healthy and active manner. We conduct the following initiatives with this in mind,
particularly with the aim of providing employees with a healthy work–life balance.
Eliminate Long Work HoursIn principle, designate one day of theweek as a no-overtime dayRequire all staff to leave their workplaceby 9 p.m. every dayRestrict the number of overtime hours
Automate work processes with robotic
process automation
Improve the efficiency of meetings

49

CHORI CO., LTD.

Encourage Employees to Take Annual Paid Leave equire use of annual paid leaveR(five days)
Encourage employees to takeseasonal holidays
Eliminate restrictions on the number oftimes half-day leave can be taken forthe purpose of childcare, nursing care,or hospital visits

Promote Flexible Workstyles

Improve flextime system (no core hours)Utilize work-at-home system andweb-conferencing system
Conduct one-on-one meetings
between employees and their superiors
Provide option to relocate to otherlocations (transfer to other branches
domestically and regionally)

Ratio of People with Disabilities

Number of New Graduates(%)(Number of employees)

3.0

2.0

2.4

2.9

2.3

2.3

2.2

2.2

2.3

2.3

30

2.3

21

2.1

18

20

1.0

10

11
3
8

0

2018

2019

Company employment rate

2020

2021

2022

Statutory employment rate

(FY)

0

Male

2018

8

4

13

14

2019

2020

18
12

5

4
8
2021

13
2022

(FY)

FemaleNote: Results as of March 31 of each fiscal year

Tsumugu Report 2023

50

Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives

Health and Productivity Management

Occupational Safety Management

Health Declaration February 14, 2018

Ensuring of the Safety of Our Employees Overseas

1. Enhancement of Awareness ofthe Health of Employees

2. Approach to Health andProductivity Management

3. Responsibility to Society andthe Future

Chori believes that the health of its employees andtheir families is significant to the success of its
business and that the vitality of its employeestranslates into the vitality of the Company. Basedon this belief, we strive on an ongoing basis toenhance awareness of the health of our employees.

Chori actively supports and promotes initiatives that
help maintain and improve the health of its employees
and their families with the goal of realizing healthand productivity management.

Chori will do what is necessary to ensure the healthof its employees and achieve sound corporate
management. In so doing, we will make a difference
to society and realize sustainable growth.

 ealth and Productivity Management
H
Promotion Structure
We established our Health Promotion Committee in April 2018 andhave since been promoting efforts to realize health and productivity
management. Chaired by the deputy general manager of the
Corporate Planning Division (in charge of the Human Resources &General Affairs Department), the Health Promotion Committee
consists of industrial physicians and nurses from Chori’s in-house
health clinics as well as the employees of the Human Resources &General Affairs Department and members of the Chori Health
Insurance Society. Through the initiatives of the Health Promotion
Committee, Chori aims to maintain and improve the health of its
employees and their families and fulfill its Health Declaration. In
addition, a debriefing session on White Paper for Chori’s HealthManagement is held once a year to assess the current state ofhealth management and to discuss any issues.
President, CEO & COO

Ensuring the Health of Employees
We conduct oral and dental checkups and flu vaccinations on a
yearly basis. As part of the regular health examinations,employees aged 30 and 35 years and over can undergo acomprehensive medical checkup once a year at the expense of
the Company, and dependents aged 35 years and over of theinsured party are entitled to receive up to ¥32,000 in subsidies
for medical checkups.
We also conduct stress checks to prevent the possibilityof our employees suffering from mental illnesses. Employees
who work over 40 hours of overtime ina month are required to consult with anindustrial physician in the following
month. In these ways, we work toensure the health of our employees
through the support of medical
Certified for the fifth
consecutive year since 2019
experts.

Health Declaration
Deputy General Manager of
the Corporate Planning Division(in charge of the Human Resources & General Affairs Department)
Health Promotion Committee
White Paper for Chori’s Health Management(analyze, set targets, and examine
effectiveness)

CHOI-Katsu(Companywide activities)

Health Management Meeting
Prevention of serious lifestyle-related diseases
Promotion of health checkups

Health Promotion Subcommittee
Health seminars, yoga classes, etc.
Specific events and internal education

In-house health clinic

Health insurance association

Comment

Yuya Fujishima
Supervising physician at Chori’s
in-house health clinic inside
Osaka Headquarters

51

CHORI CO., LTD.

Rate of Employees and Family Members
Who Undergo Regular Health Checkups
FY2020

FY2021In the event of a natural disaster or a terrorist attack, whether inJapan or overseas, we must be fully prepared to immediately
identify the whereabouts of our directors and employees,
confirm their safety, and respond appropriately in a timely
manner. Chori has in place a proprietary system dubbed
Overseas Business Trip Inquiry (OBTI), which manages theoverseas business trips of domestic employees as well as thebusiness trips of employees dispatched abroad and of theemployees of overseas offices and helps to identify thelocation of each employee at a particular point in time.

Employees dispatched overseas and their families as wellas employees on business trips outside of Japan are also
enrolled in Chori’s overseas healthcare support program, which
provides medical assistance in Japanese in the event of an
accident or illness while abroad. The program helps to minimize
employee concerns regarding healthcare overseas due to its
differences from Japan.

Business Continuity Plan
Chori’s business continuity plan has been designed to place theutmost priority on the safety of its directors and employees andto enable the swift recovery of business operations after serious
disasters. We have implemented a safety confirmation system,
which verifies the safety of all directors and employees and theirfamilies in a timely manner, and we examine the system regularly.
A business continuity plan training course is also held once a
year, ensuring that we are fully prepared in the event of an
emergency.
Chori’s business continuity plan manual calls for a swift
recovery of business operations by the sales divisions. For the
corporate divisions, we have established a core operations
manual to maintain systems, finances, and other basic
business functions. Moreover, we have established a response
headquarters and operational procedures in preparation for
major disasters and pandemics.

Crisis Response Headquarters
Incident

ConvenePrimary Recipient ofInformation

Primary Members for
Response Measures
Employees of Human Resources &General Affairs Dept.

Department Manager of
Human Resources &General Affairs Dept.
ReportDeputy General
Manager of Corporate
Planning Division(Human Resources &General Affairs Dept.)

Establish contact /share information

Cooperate

DivisionsManager ofCorporate
Management Dept.

Relevant
Companies

Supervisor ofOverseas Stores

President, CEO & COO

FY2022

Employees

100%*

100%

100%

Family Members

52.9%

61.5%

62.1%

* Excludes expatriates who were unable to return to Japan due to COVID-19

Labor union

We offer a health support system that is attuned to changes in lifestyles.
At Chori, we have internal health clinics in place at both headquarters in Tokyo and Osaka where employees
can receive medical care and health guidance after receiving the results of their medical checkups. This
enables the early prevention of lifestyle-related and various other diseases from becoming more serious andthe therapeutic intervention for such diseases.
In recent years, we have seen a decline in the percentage of male smokers as well as a reduction in excessive
alcohol consumption due mainly to the effects of COVID-19. However, I have the impression that the conditionsof employees with preexisting lifestyle-related diseases, such as diabetes and dyslipidemia, and mental healthissues have worsened due to a lack of exercise. In the post-COVID-19 era, it will become essential to introduce
health initiatives that are suited to new ways of living as well as to individual workstyles and work environments.
Our clinics will continue to do everything possible to help maintain the health of each employee and provide
information and support that helps promote healthier lives amid these new ways of living.

Safety and Health Management
Each month, a Safety and Health Committee member visits ourhead offices in Tokyo and Osaka to assess the workplaceenvironment. Comprising employees of the Human Resources &General Affairs Department, nurses of our in-house healthclinics, and representatives from the Chori Labor Union, theSafety and Health Committee ensures a safe workplaceenvironment for all of our employees through the regularmonitoring of humidity, temperature, and CO2 concentrationlevels by the floor patrol officer.
Moreover, our Tokyo and Osaka head offices, Hokuriku
Branch, and Okayama Liaison Office operate in compliancewith the Building Sanitation Law of the Ministry of Health,Labour and Welfare, with the facilities constantly ventilated at a
rate of 30 m3/h or more per person.

Safety and Health Committee
Committee Members

Chairperson

CompanyUnion

No. of Members

One
Occupational
physicianOne

Health clinic

One

Safety officer

One

Health officer

One

Referee
Total

Four or more
Nine or more

Tsumugu Report 2023

52

Management Foundation Tailored to Sustainable Growth

Chori’s Sustainability Initiatives

Local Communities and Society

Supply Chain Management
 perational Rules RegardingO
CSR-Based Procurement

CSR-Based Procurement Surveys

In order to fulfill its social responsibilities for procurement activities
in Japan and overseas, Chori has established its CSR
Procurement Guidelines and promotes procurement activities
that underline the importance of corporate ethics, legal compliance,
safety, disaster prevention, environmental protection, productsafety, quality assurance, human rights, and working conditions.
Within these guidelines, the Company has prescribed its 11
Guidelines for Corporate
Behavior in order to ensure that
employees are fully aware of its
social mission and the ways inwhich they must act at all times.

Declaration of Partnership Building

In an effort to promote procurement activities that focus on
corporate ethics, legal compliance, safety, disaster prevention,
environmental protection, product safety, quality assurance,
human rights, and working conditions, Chori conducts a CSRbased procurement survey once every two years, in principle,
to periodically check the status of the CSR-based promotion
activities of each supplier. In fiscal 2022, a follow-up survey
was conducted with suppliers that did not meet the CSR­procurement standards in fiscal 2021. By working collectively
with the sales departments, we identified the specific reasonsfor not meeting these standards and urged these suppliers tomake the necessary improvements. As a result, all but one
supplier taking part in the survey met the CSR procurement
standards. We will continue to follow up with the one remaining
supplier to ensure that it meets the standards.

Ensuring of Strict Compliance
Recognizing the importance of complying with laws and social norms when engaging in business activities with our suppliers, weundertake the following measures to ensure rigorous compliance throughout our operations.

Security Trade Control With the objective of maintaining peace and security around the world, Chori has formulated its Internal Regulations on Compliance with Export-Related
Regulations and Regulations on Fair Reporting and Management of Imports and Exports. We undertake strict export controls to prevent countries inpossession of weapons of mass destruction and conventional weapons from getting access to the highly sophisticated equipment and technology ofdeveloped countries.

Export Control Process and Training 

Cooperation with the Hokuriku Region
The Hokuriku region (Fukui Prefecture, Ishikawa Prefecture, andToyama Prefecture) boasts an extensive track record in the
manufacture of yarn and textiles spanning over 400 years andthrives on the production of synthetic fiber fabric. Since theestablishment of branch offices in Fukui Prefecture in 1929 and
Ishikawa Prefecture in 1934, Chori has worked to develop ayarn and textile business that is deeply rooted in this region. In
cooperation with synthetic fiber manufacturers, Chori began
wholesaling raw yarn to the textile industry (textile manufacturers)
and producing textiles with the industry. After the end of WorldWar II, Chori took sole responsibility for the sale of woolly nylon,
a raw material used in stockings, and grew in step with the
Hokuriku region during a period of high economic growth inJapan. SPX™ is a highly crimped polyester stretch yarn madefrom PIN texturizing processing technology in the Hokuriku regionof Japan that is highly regarded for its unique texture and isused in a wide range of products from fashion to sportswear.
On the strength of our high quality and footwork that can only
be realized through domestically made products, we willcontinue to work with local companies to provide products that
fulfill the needs of each customer and communicate the valueof made-in-Japan quality to the rest of the world.

Chief Export Control Officer
President, CEO & COO

Once applications for list control and catch-all control are filed by Chori’s Sales
Department, the Corporate Management Department conducts final approval. In October
2020, we began implementing a system that integrates the management of information
on export products and transactions, ensuring rigorous security trade control and stronger
compliance measures. This system is also designed to improve work efficiency andeliminate the use of paper.
In addition, Chori encourages its employees to obtain the STC Associate certificate
and holds internal workshops and training sessions to enhance their understanding ofexport control. In fiscal 2022, 27 employees acquired the STC Associate certificate.

Export Control Representative
Corporate Management Department(transaction screening / consultation)

Logistics Department (Textile) / Logistics Department (Chemicals)(transaction screening)

Chori has been able to maintain its presence in yarn andtextiles in the Hokuriku Region because of the cooperation ofits local business partners. The Fukui Chori Committee and the
Kanazawa Chori Committee were established by these business
partners as support groups for Chori’s business in the region.
These committees were combined and renamed as the
Hokuriku Chori Committee in 2001 and it continues to operate
to this day. Chori works alongside its member companies tohold annual meetings, cross-industrial exchanges, and lectures,
as well as publish newsletters to facilitate member interaction
and share information.

Highly Crimped Stretch Yarn SPX™
Chori’s official YouTube channel features a video withinterviews conducted at its cooperating plants in the
Hokuriku region. Along with the features of SPX™, the video
showcases the strengths of the Hokuriku region and theissues facing these companies such as labor shortage.
https://youtube.com/
playlist?list=PL7CfBM6uI5LZ-is6Rl9tBUE1ncJF69qUQ

Regulatory Trade Control Officer
General Manager of Corporate Planning Division
Export Control Officer
Manager of Corporate Management Department(approval of transaction screening)

Activities of the Hokuriku Chori Committee

Toyama Prefecture
Ishikawa Prefecture
Fukui Prefecture

Product Safety Initiatives 
In accordance with product safety management regulations, Chori establishes a productsafety inspection committee whenever a product is launched, sold, or used externally forthe first time.

Sales Department(application for transaction screening)

Legal Compliance Committee
Chair: President, CEO & COO
Manager of Internal Auditing Dept.,
Members: General Manager ofManager of Logistics Dept. (Textile),
Manager of Logistics Dept.
Corporate Planning Division,(Chemicals),
Deputy General Manager ofManager of BusinessCorporate Planning Division,
Administration Dept. (Textiles),Department Manager of Human
Resources & General Affairs Dept.,
and Manager of Business
Manager of Corporate
Administration Dept. (Chemicals)Supervisor: Audit & Supervisory
Management Dept.,
Manager of Affiliate Business Dept.,
Committee
Manager of Information System Dept.,

President, CEO & COO
Report results

Arrange

Product Safety Inspection Committee
Chair: Deputy General Manager of Corporate
Planning Division (Human Resources & General
Affairs Department and Information System
Department) and inspection committee members
Inspection committee members: Appointed by thecommittee chair
Held: As necessary• Inspect product safety

Secretariat(Human Resources & General Affairs Department)

Request product safety inspection
and use of company name, etc.

Command

Product Safety Management Manager
Manager of Business Administration Dept. (Textiles) andManager of Business Administration Dept. (Chemicals)• Aggregate and analyze issues• Comply with relevant laws and compile information

ReportInstruct andprovideinformation• Deliberate on important product safety matters (including reviews ofregulations and systems and follow-ups on the results of inspection meetings)

Departments• Secretariat of the Product Safety Inspection Committee• Prepare product management procedure•P roduct liability insurance coverage• Manage product safety•S tore and manage relevant documents• Respond to and resolve accidents•C ooperate with Toray Industries' affiliated divisions (reports, • Store and manage relevant documents
consultations, etc.)• Provide advice to and cooperate with subsidiaries and affiliates•P rovisional point of contact in the event of accidents•R eport to and consult with relevant and supervising ministries,
the National Institute of Technology and Evaluation (NITE), etc.

53

CHORI CO., LTD.

Propose product management procedure
Report accidents and submit detailed report
Approve product management procedure

Charity Walk Event
Chori is a co-sponsor of the WFP Walk the World charity walk event organized by the United
Nations World Food Programme (WFP). The Company also conducts a charity-linked projectcalled “CHOI-Aruki” in which donations are made to the WFP according to the number ofsteps walked by participants.

Sponsor of the 7th IR Presentation Contest for University Students
Chori was a sponsor of the 7th IR Presentation Contest for University Students held on
February 17, 2023. This year, thirteen teams belonging to the Union of Student Investment
Clubs (USIC) conducted 10-minute presentations based on their respective reports andresearch on a listed company, whom they were assigned to at random. The companies
provided information to their respective teams, reviewed their presentations, and helped students
improve their presentation skills. Chori was represented by Seinan Investment, an investment
club of Seinan Gakuin University (Fukuoka City), which won the Special Jury Award.

Tsumugu Report 2023

54

Management Foundation Tailored to Sustainable Growth

Corporate Governance
Chori has established systems to ensure appropriate operations with the aim of achieving sound management and sustainablegrowth. The Company strives to strengthen corporate governance by complying with laws and social norms, conducting
operations efficiently and effectively, and ensuring the credibility of its financial reports, while positioning the Board of Directors
as a body for conducting strategic decision-making and business oversight.

Composition and Overview of the Board of Directors, Executive Committee,
and Other Principal Committees
Description

Number of
Meetings Heldin Fiscal 2022

Board ofDirectors

The Board of Directors consists of all directors and has been positioned as the committee
responsible for making strategic decisions and overseeing the Company’s operations.
The Board of Directors meets at least once a month, in principle, to make decisions onimportant management matters and to supervise the directors’ execution of duties.

16

96.1%

95.8%

Executive
Committee

The Executive Committee consists of executive officers and those who were approved by
the Board of Directors and was established as an organization for conducting discussions
and exchanging important information and opinions on matters related to businessexecution.

26

100%

—

Audit &
Supervisory
Committee

The Audit & Supervisory Committee convenes regularly once a month to discuss mattersrelated to management conditions and audit results upon the exchange of information withoutside directors. In addition to attendance at important meetings of the Board of Directors,
directors who are Audit & Supervisory Committee members conduct individual meetings
with those in charge of the Sales Department and the Corporate Planning Division to makedecisions on important management-related matters (including on their process) andsufficiently audit and monitor the appropriateness of the execution of duties by each director(excluding those who are Audit & Supervisory Committee members) and executive officer.

15

100%

100%

GovernanceCommittee

The Governance Committee aims to enhance the Company’s corporate governancestructure in order to strengthen the independence and objectivity of the functions andaccountability of the Board of Directors regarding director nomination, remuneration, etc.,
and to protect the interests of minority shareholders.

5

100%

100%

Legal
Compliance
Committee

The Legal Compliance Committee is chaired by the president, CEO & COO and consists ofthe general manager of the Corporate Planning Division, the heads of corporate divisions,and other members. The committee deliberates on important compliance-related issues andreports the results to the Board of Directors and the Executive Committee as necessary.

6

—

—

Business
Investment
Committee

Chaired by the president, CEO & COO, the Business Investment Committee discusses
and deliberates the appropriateness of risk–return assessments and plans and thefeasibility of important investments and financing.

3

—

—

M&A
Promotion
Committee

The M&A Promotion Committee is chaired by the general manager of the Corporate
Planning Division and consists of the general manager of the Sales Department and othermembers. The committee deliberates on and examines matters pertaining to the businessportfolio of Group companies, including M&As and the Group’s medium- to long-term
management plan, from the perspective of improving consolidated management.

1

—

—

Name

Corporate Governance Structure (As of June 16, 2023) General Meeting of Shareholders
Election / dismissal

Audit /
supervision

Election /dismissal

Board of Directors

Cooperation
Audit & Supervisory Committee

Directors Who Are Not Audit &Supervisory Committee Members

Audit & Supervisory
Committee Members

Election /dismissal

Accounting Auditor

Governance Committee

1 internal director

4 internal directors

1 internal director

2 outside directors

1 outside director

Cooperation

2 outside directors

Inquiry

Cooperation

ReportReport on the status ofimportant businessexecution and other matters

ReportLegal Compliance
Committee

Supervision

Direct control
Supervision
Business Execution
Executive Committee

Internal Auditing
Department

President, CEO & COO

Executive Officers

Business Execution Organization (Business Departments / Administrative Departments) /Group Companies

Accounting audit
Internal audit

Attendance Rate
Attendanceof All Directors and Rate of Outside
Executive Officers
Directors

Committee Members
Overview of Corporate Governance Structure and Reasons for Its Adoption
To strengthen the management transparency and oversightfunction of the Board of Directors, Chori has an Audit &Supervisory Committee in place, the majority of which
consists of outside directors.
At the Board of Directors’ meetings, the directors(including those who are Audit & Supervisory Committee
members) engage in lively and sufficient discussions anddeliberations from a free and independent perspective inregard to the supervisory status of decision-making andbusiness execution. The Board also consists of two outside
directors who are Audit & Supervisory Committee membersthat audit the legitimacy and appropriateness of the statusof business execution from an external perspective in an
objective and rational manner. The Company therefore
believes that it is sufficiently fulfilling its management supervisory
function. Moreover, to ensure the prioritization of results, theCompany has set the term of office of directors (excluding
those who are Audit & Supervisory Committee members)
and executive officers to one year and has established amanagement structure that can respond to changes inbusiness conditions in a timely manner.



Organizational Structure

Company with an Audit andSupervisory Committee

Number of Directors (excluding
Those Who Are Audit &Supervisory Committee Members)

5 (of whom, 1 is an outside
director)

Term of Office of Directors
According to the Articles ofIncorporation
Number of Directors Who Are
Audit & Supervisory Committee
Members
Term of Office of Directors Who
Are Audit & Supervisory
Committee Members
According to the Articles ofIncorporation

1 year3 (of whom, 2 are outside
directors)

2 years

Number of Independent Officers

3

Executive Officer System

Yes

Performance-Linked
Remuneration System

Yes

Accounting Auditor

Deloitte Touche Tohmatsu
LLC: Committee chair: Committee member: Nonmember attendee

Fiscal 2023 Committees and Committee Members / Fiscal 2022 Attendance(Number of Meetings Attended/Number of Meetings Held*)
Name

Position

Board ofDirectors

Executive
Committee

Kazuo
Sakihama

President, CEO &COO, President andExecutive Officer

16/16

26/26

Tatsuyuki
SakodaDirector, Managing
Executive Officer

12/12

26/26

Kazuhiro
Tohge

Director, Executive
Officer

16/16

26/26

Kazuhiko
Shuto

Director

HirokoNoda

Outside Director

Audit &
Supervisory
Committee

GovernanceCommittee

Legal
Compliance
Committee

Business
Investment
Committee

5/5

6/6

3/3

5/5

3/3

11/12

M&A
Promotion
Committee

1/1

3/3

Shigemasa
Yabu

Director, Full-Time
Audit & Supervisory
Committee Member

16/16

Masaaki
SawanoOutside Director, Audit& Supervisory
Committee Member

15/16

15/15

5/5

4/6

Hiromasa
Suzuki

Outside Director, Audit& Supervisory
Committee Member

16/16

11/11

3/3

5/5

6/6

11/11

6/6

* Number of meetings held indicates the number of meetings held during each director’s term of office in fiscal 2022.

55

CHORI CO., LTD.

Tsumugu Report 2023

56

Management Foundation Tailored to Sustainable Growth

Corporate GovernanceDiversity of the Board of Directors

Executive Remuneration

The Board of Directors must decide on matters in a transparent, fair, prompt, and decisive manner, and therefore consists of memberswith a diverse range of views, experience, and skills. To strengthen corporate governance by ensuring the objectivity and appropriatenessof decisions made by the Board of Directors, at least one-third of the members are independent outside directors.

Directors
Name

Gender

Kazuo
Sakihama

Length ofService*1

Area of Expertise and Experience
Independent Director(Outside)

Corporate
Management

Global Business

Finance & Accounting

Legal & Compliance

Overview of Executive Remuneration System

10 years

Tatsuyuki
Sakoda1 yearKazuhiroTohge

5 years

Kazuhiko
Shuto

Newly
appointed

Hiroko Noda

1 yearFixed remuneration

Length ofService*2

Shigemasa
Yabu*3

1 year

Masaaki
Sawano5 years

Hiromasa
Suzuki*4

1 year10%45% (single year)(medium to long term)
Note: Percentages apply in thecase of full achievement of targets

Basic Remuneration
Remuneration
Type

Eligible
Recipients

Directors Who Are Audit & Supervisory Committee Members
GenderVariable remuneration

45%*1 Indicates number of full years of service as of June 16, 2023

Name

Basic Policy
A remuneration structure in which the remuneration of Chori’s directors (excluding directors who are Audit & Supervisory Committee
members; the same shall apply hereafter) is linked to shareholder interests shall be in place in order to fully function as an incentive tocontinuously improve corporate value. Our basic policy in determining the remuneration of each director is to set it at an appropriate
level based on their position, performance, and other factors. Specifically, director remuneration consists of three types: monthly baseremuneration, a yearly bonus, and performance-linked stock remuneration based on a stock remuneration scheme called Board
Benefit Trust-Restricted Stock (BBT-RS).

Grant Method

Area of Expertise and Experience
Independent Director(Outside)

Corporate
Management

Global Business

Finance & Accounting

Legal & Compliance*2 Indicates number of full years of service as of June 16, 2023
*3 Shigemasa Yabu served as a director of the Company for six years prior to concurrently serving as an Audit & Supervisory Committee member.
*4 Hiromasa Suzuki served as a director of the Company for one year prior to concurrently serving as an Audit & Supervisory Committee member.

Reason for Nomination of Outside Directors
The Company’s outside directors were nominated for the reasons outlined below as well as their ability to supervise managementfrom an external point of view, such as through the proactive exchange of opinions and advice at the Board of Directors’ and otherimportant meetings.
Name

Reason for Nomination

Masaaki
SawanoHe has been appointed as an outside director as he is expected to provide appropriate advice regarding the management of the Company
and on the grounds that he is deeply familiar with corporate legal work as a lawyer and has sufficient insight to supervise corporate management.
In addition, it has been deemed that he has no material conflict of interest with the Company and that no conflict of interest will arise withgeneral shareholders.

Hiromasa
SuzukiHe has been appointed as an outside director based on his many years of involvement in the management of Fujirebio Inc. and his wealth ofexperience in group management as a top executive of a company, which involved orchestrating the establishment of Miraca Holdings Inc. Asan outside director, he is expected to provide appropriate advice regarding the management of the Company. In addition, it has been deemedthat he has no material conflict of interest with the Company and that no conflict of interest will arise with general shareholders.

HirokoNoda

She has been appointed as an outside director based on her knowledge, experience, and abilities as a certified public accountant as well as
her sufficient expertise in management gained through her years of experience as an outside director and a management consultant. As an
outside director, she is expected to provide appropriate advice to the Company’s management. In addition, it has been deemed that she has
no material conflict of interest with the Company and that no conflict of interest will arise with general shareholders.

Performance-Linked Stock Compensation

Short-term incentive remuneration
Linked to performance in relevantbusiness year

Medium- to long-term incentive remuneration
Linked to degree of achievement of medium-term
management plan

• Directors who are not Audit &Supervisory Committee members• Directors who are Audit &Supervisory Committee members• Outside directors• Directors who are not Audit &Supervisory Committee members• Directors who are not Audit & Supervisory
Committee members

Cash

Cash

Stocks and cash—•N et profit before income taxes results• Progress of medium-term
management plan, etc.

•N et profit before income taxes over three-year period• Progress of medium-term management plan, etc.

Directors who are not Audit &Supervisory Committee members:
No more than ¥300 million annually

Directors who are not Audit &Supervisory Committee members:
No more than ¥300 million annually

Directors who are not Audit &Supervisory Committee members:
Maximum Number of Points(However, excludes the portion of employee salaryof directors who concurrently serve as employees)(However, excludes the portion of employee
salary of directors who concurrently serve as
employees)

The maximum number of points that may be granted to directors
during each applicable term (the adjusted number of points after
the end of each term) is the number of points obtained bymultiplying the number of fiscal years during the applicable termby 80,000 points (of which, 40,000 points are for directors).

(Resolution passed at the 69th General Meetingof Shareholders held on June 15, 2016)(Resolution passed at the 69th General Meetingof Shareholders held on June 15, 2016)(Resolved at the 76th Ordinary General Meetingof Shareholders held on June 16, 2023)

Monthly fixed remuneration based on
position• Paid at a certain time of the year
• Amount calculated according to theprogress of the medium-term
management plan and net profit
before income taxes in the given
business year

Based on their position, the Company shall provisionallygrant points to directors each fiscal year as stipulated
in the director stock benefit regulations. The number ofpoints shall be determined based on the directors’
contribution to business performance by multiplying
the degree of achievement of net profit before taxes
and other achievements by the performance-linked
coefficient at the conclusion of the medium-term
management plan, in principle. As a general rule, theCompany will grant one share per point in proportion to
the number of points determined.

Evaluation Index(Variable
Remuneration)

Maximum
Amount ofRemuneration

Bonuses

Fixed remuneration

Directors who are Audit &Supervisory Committee members:
No more than ¥100 million annually

Grant andCalculation
Method————Director Remuneration in Fiscal 2022
Total of Remuneration by Type (Millions of Japanese Yen)
Total Remuneration(Millions of Japanese
Yen)

Fixed remuneration(monetary)

Bonus* (monetary)

Restricted stockcompensation*3(non-monetary)

Directors (excluding Audit &Supervisory Committee Members)*1,2(Of Which, Outside Directors)

165
(7)

91
(7)

58
(—)

15
(—)

6
(2)

Directors(Audit & Supervisory Committee
Members)(Of Which, Outside Directors)

36
(18)

36
(18)

–
(—)

–
(—)

5
(3)

Total
(Of Which, Outside Directors)

201
(25)

128
(25)

58
(—)

15
(—)

11
(5)

Classification

Performance-Linked Remuneration
3

No. of Eligible
Directors*4*1 N ot including the portion of employee salary for directors who concurrently serve as employees.
*2 T he number of eligible directors above does not include one director (excluding directors who are Audit & Supervisory Committee members) serving without remuneration.
*3 O
 f the above items, bonuses and restricted stock compensation are stated as payment amounts corresponding to a performance benchmark of ¥12,400 million forconsolidated ordinary profit for fiscal 2022.
*4 A lthough the total number of directors paid is shown, the actual number of directors eligible for payment was 9 (including 4 outside directors).

57

CHORI CO., LTD.

Tsumugu Report 2023

58

Management Foundation Tailored to Sustainable Growth

Corporate Governance

Measures to Strengthen Corporate GovernanceRisk Management

Chori recognizes that the enhancement of its corporate governance is a matter of priority for management and has taken and willcontinue to take the following measures. We have expanded our profit margin through the introduction of a performance-linked
remuneration system and the efforts of directors to instill the same level of awareness for profits in all shareholders in order tostrengthen the Company’s performance over the medium to long term.

The Company shall identify the potential risks of business activitiesof the Group, make efforts to reduce the level of such risks, andprevent the occurrence of risk events, as well as develop asystem to promptly respond and take appropriate actions incase of the occurrence of risk events. The Risk Management
Rules, the Credit Management Rules, the Rules for Information
Security Management, the Rules for Protection andManagement of Personal Information, and other rules shall beestablished in respective departments in charge and be fully
understood by all through training and the preparation anddistribution of manuals. Those rules shall be continuously
reviewed and revised. Corporate divisions and businessadministration departments shall collaborate in monitoring thestatus of the Group’s risks and responding to risks. For newly
identified risks, departments shall be promptly assigned to be
responsible for said risk management and appropriate
measures shall be taken.

2001

2005

2012

2016

2018

2020

2021

2022

Separation ofManagementand Execution

Promotion ofCompliance

Revision of
Remuneration
SystemStrengtheningof Audit
Function

Promotion ofDiversity

Management
Transparency
and Fairness

Strengtheningof GovernanceTransition to
Prime Market

Discontinues the
Directors’
Retirement Benefits
SystemTransitions to a
Company with an
Audit andSupervisory
Committee

Increases the ratioof outside directors
on the Board of
Directors to morethan one-third

Implements
measures based on
TCFD
recommendations

Introduces the
Executive Officer
SystemEstablishes theLegal Compliance
Committee, withthe president, CEO& COO as thechairmanAppoints a female
director and a female
outside director (whois also an Audit &Supervisory
Committee member)

Institutes theGovernanceCommittee

Business and Other Risks•R isks related to changes in the external business environment• Risks related to the concentration of business in China’s
regions and markets• Country risk
• Credit risk of business partners• Risks related to exchange rate and interest rate fluctuations• Risks related to fluctuations in the price of raw materials• Inventory-related risks• Risks related to tax litigation• Risks related to business investments• Risks related to impairment of securities• Risk related to information systems and security• Compliance-related risks• Risks related to social and environmental issues andclimate change• Risks related to human resource activities• Risks related to natural disasters, infectious diseases, etc.

Evaluation of the Effectiveness of the Board of Directors
Chori conducts an evaluation of the effectiveness of the Board of Directors each year in order to realize a more effective Board of
Directors. The evaluation process involves conducting a questionnaire with all directors on the composition, operation, discussions,and support system of the Board of Directors and then compiling the views of each director.
Based on the results of the questionnaire, the Governance Committee and the Board of Directors evaluate and analyze theeffectiveness of the Board of Directors as a whole. Through this process, it was determined that the Board of Directors is composedof suitably qualified members that include outside directors, and the Board of Directors’ meetings are held in a free and open environment that facilitates constructive discussions and the exchange of opinions. Accordingly, it has been deemed that the Board of
Directors is operating appropriately on the whole and that its effectiveness is ensured.
Respondents

All eight directors (including those who are Audit & Supervisory Committee members) in fiscal 2022 (anonymous questionnaire)

Method of
Evaluation andAnalysis

Evaluation and analysis conducted by the Governance Committee and the Board of Directors upon aggregation of results bya third-party institution and ensuring confidentiality

Questionnaire
Content

Questions are based on the following nine major themes• Composition of the Board of Directors • Operation of the Board of Directors • Discussions of the Board of Directors• Monitoring function of the Board of Directors • Support system for directors (including those who are Audit & Supervisory Committee members)• Training • Dialogue with shareholders (investors) • Individual initiatives • General overview

Overview of
Evaluation Results

In our medium-term management plan, we have adopted ROE and ROIC as key performance indicators of profitability and capitalefficiency, which were viewed as issues in fiscal 2021, and set the ROIC for the fiscal 2025 plan at approximately 10% with the aim ofincreasing corporate value. Although the status of dialogue with shareholders and investors is reported to the Board of Directors by the
director in charge of investor and public relations, directors expressed the desire for more detailed feedback on the content of dialogues
on a regular basis. In following up on the progress of our medium-term management plan, we will promote further discussions on the
management and business issues that are identified going forward in order to continue to enhance the effectiveness of the Board of
Directors.

Maintenance of a Certain Level of Independence from Our Parent Company
As of March 31, 2023, Chori’s parent company Toray Industries, Inc. held 52.77% of voting rights in the Company. We
constantly work to strengthen the combination of our ability to sell and collect information on textiles and chemicals, which represent
our core business, in Japan and overseas and Toray Industries' ability to develop materials in order to generate synergies andenhance corporate value for both companies. By operating under a parent company, Chori is able to gain a better understanding ofmarket trends and the business environment, enhance its credibility, and enjoy other benefits that come with being a Group company.
With the exception of one director who does not execute business, the executives and employees at Chori do not concurrently
serve as executives or employees at the parent company or Group companies and the Company does not accept employees throughtransfers from other companies. In addition, at Chori we have our own management plan in place, through the execution of which wehave developed and will continue to develop our business. Transactions between Chori’s parent company, Toray Industries, Inc., andits corporate group are assessed and verified annually by the Governance Committee.

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CHORI CO., LTD.

Ensuring of Thorough Compliance
Rules concerning compliance systems, such as the Guidelines for
Corporate Behavior, shall be established to set compliance withlaws and regulations and social ethics as a code of conduct ofour business. In order to make all directors, executive officers,
and employees of the Group fully aware of the initiatives forcompliance, corporate divisions shall collaborate to hold compliancetraining and other training programs. The Legal Compliance
Committee, with the president, CEO & COO as the chairman,
shall discuss important matters regarding the compliance of theGroup and report the results to the Board of Directors and the
Executive Committee as necessary. In the event of a significant
legal violation or compliance violation on the part of a management
executive, in accordance with the laws and regulations and the
Articles of Incorporation, the Governance Committee shall deliberateon the dismissal of the management executive in question and
the Board of Directors shall adequately discuss and consider hisor her dismissal based on those results.
A system of contact has been established throughout
Chori whereby executives and employees (including contract,
temporary, and other employees) can receive consultation andreport on compliance violations and other matters. In this way,
we have established a framework for reporting incidents byensuring the full confidentiality of whistleblowers, who are able
to receive consultation either in-house or through an external
point of contact depending on the nature of the incident.

Internal Whistleblower System
Consultant
KIITE (Fully confidential)
A system of contact through which whistleblowers can receive consultation andrequest warnings to be given to the person being reported while maintaining fullconfidentiality and without undergoing an in-depth investigation.
Human Resources & General Affairs Department

KOTAETE (Confidentiality possible at the request of the whistleblower)
A system of contact through which requests for consultation and investigation
involving both the whistleblower and the person being reported can be madeand matters such as workplace harassment and serious compliance violations
requiring investigation can be reported.
Legal Compliance
Committee
Internal
hotlineAudit & Supervisory
Committee

Law firm
External
hotline()Advisory office /external firm

Internal Control
Our Basic Policy on the Internal Control System was formulated
in May 10, 2006 to serve as a set of fundamental guidelines forthe establishment of a framework for ensuring the appropriate
execution of business toward realizing sound corporate
management and sustainable growth.
Since then, this policy has been amended to reflect changes
in the Group’s business environment and business activities.

For details on our internal control system,
please refer to our Corporate Governance
Report (in Japanese only).
https://www.chori.co.jp/sustainability/
governance/pdf/governancereport_20230616.pdf

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Management Foundation Tailored to Sustainable GrowthManagement Foundation Tailored to Sustainable Growth

Corporate GovernanceRoundtable Discussion with Outside Directors

Internal Audit
In regard to internal audits, the Company has established theInternal Auditing Department (consisting of six members as ofJune 16, 2023) directly under the president, CEO & COO.
The Internal Auditing Department conducts audits on theappropriateness and efficiency of the Company’s businessactivities from a fair and independent point of view. The
Internal Auditing Department also evaluates the status of theimplementation and operation of internal controls concerning
financial reporting in accordance with the Financial
Instruments and Exchange Act.

Outside directors and the Audit & Supervisory Committee
receive reports regularly on audits conducted by the Internal
Auditing Department and verify the status of business executionof each department and subsidiary. The Audit & Supervisory
Committee reports the results of audits to and exchanges
opinions with the Internal Auditing Department. The Audit &Supervisory Committee requests the Internal Auditing
Department to provide information or conduct investigations
when necessary, thereby working closely together to ensurethat audits are carried out efficiently.

Cross-Shareholdings
The Company and its subsidiaries may acquire and hold sharesof listed companies (hereinafter “cross-shareholdings”) in orderto maintain, expand, and sustainably develop their businesses.
In such cases, the Board of Directors and other bodies decideon acquisitions after determining the department in charge ofthe acquisition and considering the business conditions of theinvestees and the profitability of the investment. The Board of
Directors verifies the significance of the cross-shareholdings
each year and considers the sale or reduction of shares that are
deemed to be of no significance. Those shares that are held
are verified each year for their economic rationality from theperspectives of the significance of each acquisition and holding,
profitability of the investment, transaction scale, and relevant
profits and are either held or replaced upon resolution of theBoard of Directors and other bodies.

The Company appropriately exercises the voting rights ofcross-shareholdings from the perspective of whether or not theCompany and the investee company can expect increases intheir corporate value over the medium to long term, while
respecting the management policies of investee companies.

Holding of Shares for Purposes Other than Pure
Investment (Cross-Shareholding)
FY2020

FY2021

FY2022

Shares Held

30

31

27

Total Amount (Billions of Yen)

4.1

4.6

4.2

Note: The shareholdings of CHORI CO., LTD. for which the largest monetary amountis recognized on the balance sheets in relation to investment in equity securities(the monetary amount of equity securities recognized) have been stated.

Outside Director,
Audit & Supervisory
Committee Member

Outside Director,
Audit & Supervisory
Committee Member

Outside Director

Masaaki Sawano

Hiromasa Suzuki

Hiroko Noda

Leveraging Chori’s Strengths to Achieve Further Growth
Policies Regarding Constructive Dialogues with Shareholders

As outside directors, we will support Chori in its efforts to continue to evolve over the medium tolong term and strengthen its governance to facilitate this growth.

The Company promotes constructive dialogues with shareholders based on the following five policies.

(1) The executive officer in charge of information handling oversees
matters related to investor relations (IR) and public relations,cooperates with the Corporate Management Department andrelevant departments, and communicates information to­shareholders and investors. If a request is made for an interview
with an executive officer other than those in charge of mattersrelated to IR and public relations (including outside directors),
the Company will consider responding to the request withinreasonable limits based on its details.
(2) The relevant internal departments proactively cooperate toachieve constructive dialogues with shareholders and investors
through the preparation of disclosure materials and the sharing ofimportant information while conducting their business activities.

	Institutional investors
For institutional investors, the Company holds financial briefings
attended by the president, CEO & COO and management
executives upon the conclusion of its six-month and full-year
financial results announcements. At these financial briefings, theCompany reports on the details of its financial performance,
addresses various questions, and collects the opinions of its
shareholders. In addition, the department in charge of IR andpublic relations conducts individual visits and briefings for
institutional investors.
(4)Results of fiscal 2022 activities• Financial briefings for institutional investors and analysts: Twice• Company briefings for individual investors: Once
• Individual IR meetings: 10 times(3) Methods of dialogue other than individual meetings

General meeting of shareholders
	

The Company regards the general meeting of shareholders as
an opportunity to fulfill its responsibility of providing explanations
to shareholders and works accordingly to carefully address theirquestions and understand the intent of their opinions.
Individual investors
The Company promotes dialogue with its individual shareholders byholding company briefings exclusively for such investors, which areattended by the president, CEO & COO of the Company.

61

CHORI CO., LTD.

(5) Feedback
The Company promotes the sharing and use of information
obtained from dialogues through the reporting of opinions ofshareholders to the respective committees and their disclosure to
the directors, management executives, and relevant departments
as necessary.

What is your assessment of
Chori’s governance structure?

Sawano Chori has been working to develop its internal audit
system in order to realize a more robust governance structure.
As a part of this effort, the departments in charge of internal
audits at Chori’s head office and consolidated subsidiaries were
centralized in the Internal Auditing Department in fiscal 2021.
It has been stipulated that the activities of the Internal Auditing
Department be reported to the Board of Directors and the Audit& Supervisory Committee on a regular basis and to the Legal
Compliance Committee as necessary.
Suzuki
The centralization of auditing operations has enabled
the entire Group to be internally audited based on a single setof auditing standards. I applaud the fact that a foundation forGroup governance has been put in place once again. Moreover,in fiscal 2022 the reporting of activities of the Internal Auditing
Department enabled the Audit & Supervisory Committee todiscuss issues from a different perspective than in the past. In

this way, the Internal Auditing Department’s operations are also
making improvements each year.
Noda
I was appointed as an outside director at Chori in
2022, upon the establishment of its internal audit system.
I believe the Internal Auditing Department is operating at an
exceptionally high level and the contents of its reports to theBoard of Directors are highly sufficient. I commend the fact that
Chori is highly committed to steadily enhancing its governancestructure as a company that is listed on the Prime Market of theTokyo Stock Exchange. Meanwhile, one of the challenges toaddress moving forward is ensuring that the skills and knowledge
gained by employees in the Internal Auditing Department over
the years are passed on to the next generation of employees tosupport their development.
Sawano In addition to improving its internal audit system,in fiscal 2019 Chori established its Governance Committee,
consisting of a majority of outside directors. The GovernanceCommittee is a voluntary advisory body that assumes theduties of a nomination committee, remuneration committee,
and other committees that do not exist within the organization.

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Management Foundation Tailored to Sustainable GrowthRoundtable Discussion with Outside Directors

In fiscal 2022, the committee held concrete discussions on theselection and dismissal of directors, succession planning, andother matters based on the medium- to long-term projections
for the business. The substance of discussions has been
improving over these last few years, and going forward we willcontinue to invigorate discussions that contribute to Chori’s
next generation of growth.

Hiromasa Suzuki

What kind of discussions were held by the Board of Directors in regard to

the formulation of Chori Innovation Plan 2025?

In formulating Chori Innovation Plan 2025, discussions
were held, including by outside directors, on the issues facing
Chori in achieving medium- to long-term growth and its
approach to overcoming them. One of the issues raised was theneed to strengthen not only the financial aspects of its operations
but also the non-financial aspects, such as ESG considerations.
In order to clearly define the type of company Chori should be inlight of its corporate social responsibility, non-financial targets
were declared, in addition to financial targets, under Chori
Innovation Plan 2025. Further, VISION2030 was compiled toserve as a vision of the company Chori aspires to be seven years
from now based on the three themes of “sustainability,” “wellbeing,” and “innovation.” Although it is still in the preliminary
stages of achieving these goals, the Company has been making
strides toward its next stage of growth by duly taking into
account the non-financial aspects of its business. As an outside
director, I will offer advice to ensure that Chori steadily achieves
these targets and that it establishes its non-financial targets more
effectively by bearing in mind the needs of society.
Sawano Under Chori Innovation Plan 2025, the Company has
declared “promote ESG management” as a basic strategy withthe aim of further strengthening its governance structure.
When operating a business in this era of increasing uncertainty,
particular emphasis must be placed on risk management. We
will fulfill our supervisory function as outside directors by ensuringthat Chori strengthens its measures against developing country
and geopolitical risks. In so doing, when we look back on
Chori Innovation Plan 2025 in its final year, we will be able toacknowledge it as a three-year period in which steady progress
was made in strengthening its governance.
Suzuki63

CHORI CO., LTD.

What are the key elements to strengthening
Chori’s human capital?

Noda
The key to strengthening Chori’s human capital is thepromotion of diversity and inclusion. Improvements must be
made particularly in the area of recruiting women and promoting
them to management positions. Although the number ofwomen in career-track positions in the trading industry is lower
than the average of other industries, Chori will not evolve as acompany over the medium to long term unless it continues toimprove in this area. Because this is not a problem that can beeasily overcome in two or three years, it is important that a
number of concrete measures be taken immediately. As a stepin that direction, a Companywide business transformation
project called Chori Accelerate Renovation Achievement
Transformation (CARAT), which also aims to reform workstyles,
was launched in 2022. I hope the creation of a more comfortableworkplace environment for everyone through the standardization,
automation, and integration of business processes will encourage
more active participation by women.
Sawano In order to continue to attract highly qualified personnel
in this day and age, where various industries are being called
upon to address the issue of labor shortage, Chori must firstdevelop an awareness of its brand. The key to doing so is toreiterate the Company’s strengths and uniqueness in comparison
to its competitors. Chori draws on its strengths in covering
every stage of the supply chain, from upstream to downstream,in all of its businesses and, while collaborating with manufacturers
from time to time, provides high-value-added products to markets
around the world. Chori’s semi-industrial/semi-commercial
business model, which extends beyond the confines of trading,is one aspect of its uniqueness as well as its appeal. In thepast, Chori’s human resources and business activities werefeatured in a TV program. Enhancing media exposure may be
one means of attracting human resources.

Masaaki Sawano

It is important, first and foremost, that people know
about the Company. Chori has the ability to deliver whatever isneeded at times of need while adjusting to the changing times,
as was the case in the COVID-19 era when it continued to
improve business results. Along with contributing to thebetterment of society through its role as a trading company, it isSuzukiimportant that Chori reiterates the strengths of its humanresources—a defining feature of the Company—to the outside
world. One of the many strengths of Chori’s human resources istheir high level of expertise. Chori’s employees possess highly
specialized knowledge of the wide range of products handled
by the Fibers, Textiles, and Garments Business, the Chemicals
Business, and the Machinery Business and of the markets inwhich they operate. Moreover, its younger employees are also
active on the global stage. Each employee plays a significant
role in society, and this is what makes Chori intriguing. The key
to attracting highly qualified personnel is to continue to be acompany where people want to work or, in other words,
assume a role that only Chori can fulfill.
Noda
Along with acquiring human resources, developing
them is also important. As a company, it must support its
employees, regardless of gender, so that they can continue tohone their skills and develop with the right opportunities. For
Chori to continue to grow as a company, it will also be essential
to develop a human resource portfolio that determines the typeof employees that are needed in each department. Chori is acompany brimming with employees who work to the best of
their abilities by taking the initiative. I will continue to offer advice
to ensure that Chori becomes a company where diverse employees
can play an even more active role in the years to come.

is your assessment of Chori’s initiatives on Whatclimate change and other sustainability issues?
Chori began disclosing information based on the TCFD
recommendations in 2022 and continues to strengthen its
measures against climate change one step at a time inresponse to the needs of society. Meanwhile, because Chori
engages in every stage of the supply chain, from upstream todownstream, it can monitor the progress of measures against
climate change throughout the supply chain. Through the useof this information, I believe Chori can play an even greater rolein society by encouraging its business partners to becomecarbon neutral and contributing in other ways to overcome theissue of climate change. Chori will aim to further strengthen its
climate change initiatives by capitalizing on its ability to monitor
the flow of goods. The Company is also focusing on expanding
its lineup of environment-friendly SDG-oriented products,
particularly in the Fibers, Textiles, and Garments Business.
Under Chori Innovation Plan 2025, the Company has declared
the goal of achieving ¥50.0 billion (two and a half times fiscal
2022 levels) in sales from SDG-oriented products in fiscal 2025.
As an outside director, I will oversee the Company’s efforts to
reduce its environmental impact so that it continues to climb up
the ranks of the industry.
Noda
In addition to its handling of SDG-oriented products,
Chori is also a strong contributor to regional revitalization. Since
the early days of the Showa Period, Chori has been working
together with the Hokuriku region of Japan. Even today, theCompany still works with manufacturers in this region to
Suzukiexpand the scope of its sustainability initiatives, such as the useof scrap wood and the recycling of textile products. Having
reaffirmed the fact that the Company is expanding its businesswhile valuing its connection with the local community andcontributing to regional revitalization as a result, we will ensurethat the Company continues to promote such activities throughour advice. On the other hand, Chori’s supply chain extends
across the globe, and therefore it must also focus on its measures
to promote the human rights of its employees. I will do my part incontinuing to grow the business by remaining up to date on thelatest information regarding the types of risks facing not only theCompany but also its business partners and customers.

you have any additional messages for Do
Chori’s stakeholders?
Since the arduous years of the 1970s, Chori has
continued to grow as a company by focusing on profitablebusinesses. As a company that has quickly responded to thechanges in its business environment and created new value
over the years, Chori offers potential for even further growth.
As outside directors, we will continue to support Chori from agovernance point of view to ensure that it steadily realizes thispotential.
Noda
It is our duty to ensure that Chori achieves sustainablegrowth and increases in corporate value over the medium tolong term. While the Company has continued to improve its
business results by making quick decisions in response to thetimes, we will ensure that it is even better prepared to respondto country risks through the advice we provide.
Suzuki

Hiroko Noda

Chori is responsible not only for achieving the financial
targets of Chori Innovation Plan 2025 but also for actively fulfillingits corporate social responsibility while promoting business
management by paying due consideration to all stakeholders,
including employees, business partners, and shareholders.
Setting our sights on Chori’s future growth, we will make sure thatit seizes every business opportunity, strengthen its human resource
development structure with an eye on medium- to long-term
growth, and provide oversight to ensure that it steadily advances
toward the launch of its digital transformation project CARAT.
SawanoTsumugu Report 2023

64

Management Foundation Tailored to Sustainable Growth

Directors, Audit & Supervisory Committee Members, andExecutive Officers (As of June 16, 2023)
Directors“Number of shares held” indicates the number of CHORI CO., LTD. shares held.

President, CEO & COO,
President and Executive
Officer

Kazuo Sakihama
Number of shares held: 35,017
CEO & COO

Outside Director*

Hiroko Noda
Number of shares held: 0

Independent Director

Significant concurrent positions• Representative of Noda Certified Public
Accountant Office• Representative Director of Probity
Consulting Co., Ltd.
• Part-Time Lecturer at Graduate Schoolof Asian and International Business
Strategy, Asia University• External Director of MODEC, Inc.
• Outside Director (Audit & Supervisory
Committee Member) of Okabe Co., Ltd.
• Outside Director of S.T. CORPORATION

Director, Managing Executive
Officer

Tatsuyuki Sakoda

Kazuhiro Tohge

Kazuhiko Shuto

Number of shares held: 9,551

Number of shares held: 0
Significant concurrent positions
Toray Industries, Inc.
Executive Vice President (Member of theBoard)

Director, Full-Time Audit &Supervisory Committee
MemberOutside Director,* Audit &Supervisory Committee
MemberOutside Director,* Audit &Supervisory Committee
MemberShigemasa Yabu

Masaaki Sawano

Hiromasa Suzuki

General Manager of Corporate Planning
Division,
Executive Chief Representative for Chinaof the Company,
and General Manager of
Pharmacovigilance & Quality Assurance
OfficeNumber of shares held: 18,138

Number of shares held: 0

Number of shares held: 0

Significant concurrent positions

Independent Director• Partner of CITY-YUWA PARTNERS• Member of Advisory Council on
Fundamental Issues in Corporate
Management of Urban Renaissance Agency• Member of Advisory Council on
Fundamental Issues in Corporate
Management and Rent Council of Urban
Renaissance Agency• Member of Business Evaluation Monitoring
Committee of Urban Renaissance Agency• Outside Auditor of Japan Federation of
Certified Public Tax Accountants’ Associations• Member of Kanto Regional Government
Asset Council, Kanto Local Finance Bureau,
Ministry of Finance• Chairperson of Tokyo Metropolitan Government
Election Administration Commission• Director of Japan Bar Association

Significant concurrent positions• Outside Director of Nitta Gelatin Inc.

Independent Director

Managing Executive Officer

Managing Executive Officer

Senior Executive Officer

Senior Executive Officer

Hiroshi Yoshida

Yoshihiro Teratani

Satoko Nakayama

Masao Nakamura

Number of shares held: 14,210

Number of shares held: 14,729

General Manager of Textile Division,
Senior Manager of Synthetic Fiber
Business Department,
General Manager of Logistics Department(Textile),
and General Manager of Hokuriku Branch

General Manager of Chemicals Division,
Senior Manager of Life & Fine Chemicals
Business Department,
and General Manager of Logistics
Department (Chemicals)

Deputy General Manager of Corporate
Planning Division (Human Resources &General Affairs Department andInformation System Department)
and General Manager of CHORI
Innovation Activities

Number of shares held: 2,965
Senior Manager of Chemical &Materials Business Department

Senior Executive Officer

Executive Officer

Executive Officer

Naohiko Ashida

Satoshi Shiragami

Yasuhiro Oiwa

Number of shares held: 13,491

Number of shares held: 2,965
Senior Manager of Technical Material &Garments Business Department,
Chairman of CHORI (DALIAN) TRADING
CO., LTD.,
and Chairman of CHORI (DALIAN)
COMMERCIAL IMPORT EXPORT CO., LTD.

CHORI CO., LTD.

Director (Part-Time)

Special Appointee of the President(in relation to the Textile Division)

Number of shares held: 9,302

Executive Officers (Excluding Those Who Concurrently Serve as Directors)

65

Director, Executive Officer

Number of shares held: 2,592
Deputy General Manager of the
Corporate Planning Division (Corporate
Management Department and Affiliate
Business Department)

Number of shares held: 700
Chairman and President of
CHORI (CHINA) CO., LTD.,
Chairman and President of CHORI(SHANGHAI) CO., LTD.,
and Chairman and President of
CHORI (TIANJIN) CO., LTD.

* Outside director as stipulated in Article 2, Item 15 of the Companies Act.

Tsumugu Report 2023

66