SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Sustainability

Identifying Materiality

We developed a sustainability promotion system in April 2023 with the aim of establishing a sustainable
society for people to live with peace of mind, as is written in our corporate philosophy.
We will strengthen our sustainability management to help solve social problems as a member ofsociety.

The Company formulated a new long-term vision in February 2023, and in April, revised its corporate
philosophy. In order to realize Nishimatsu-Vision 2030, we are working to identify key issues to beaddressed with the aim of evolving existing materiality into a new materiality based on our new corporate philosophy and long-term vision.

Sustainability promotion system

Identification Process

Consult

Make final
decision

Board of Directors

Sustainability Committee

We will establish an identification process that is acceptableinterviews and employee awareness surveys. We aim to com-to our stakeholders, encompassing a variety of global andplete this identification process in autumn 2023.

other perspectives, while making use of management

ReportSupervise

References for potential issues to be considered

ReportApprove
Make policy

1

The World Economic Forum (WEF)
Global Risks Report 2023

2

Sustainable Development Goals (SDGs)

3

Sustainability Accounting Standards Board (SASB)
standards

26 items

4

SASB Materiality Map by Industry

24 items

Environmental Committee

5Issues identified using external frameworks

75 items

Give instructions

6

Issues identified in the Medium-Term
Management Plan, etc.

16 items

President and General Managers Meeting
Make policy

ERM
Specify targets, etc.
Identify risks andevaluate

ReportRisk and Opportunity Management Committee

Give instructions

Specify targets, etc.
Identify risks andevaluate

Plan, design
PromoteImplement

Give instructions

ReportReportSelectIssues to Be
Considered

Report31 items

Climate change/Biodiversity, etc.
Issues related to environment, andrisks and opportunities

Group-wide sustainability issues, risks,
opportunities (non-environmental)

169 items

Total 341 items
Integrate and aggregate these 341 issues to 84

Evaluate opportunities and risks regarding the 84 issues for society and the Company

Sustainability Committee
We established the Sustainability Committee as an advisory

We established the Risk and Opportunity Management

body to the Board of Directors. It consists of outside experts,

Committee after revamping the existing Group-wide risk andexternal directors, and internal directors. Incorporating theopportunity management system. The Committee is com-diverse values of internal and external committee members,

posed of the assistant general managers of each business

the Committee discusses and reports on Group-wide sustain-

division, and operates and monitors the risk and opportunity

ability issues in response to inquiries from the Board ofmanagement system in current business activities, which

Directors. These issues include materiality from a long-term,

includes identifying risks and opportunities at the Group-wide

multi-stakeholder perspective as well as the risks and oppor-

management level based on the policy for addressing

tunities associated with materiality.

materiality.

In the first year of its establishment, the Sustainability
Committee has worked to identify materiality, set materialitylinked KPIs, and formulate a sustainability policy.

36

Risk and Opportunity Management Committee

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

 See P.61

Evaluateand Reduce
Issues to Be
Considered

The evaluation results are organized along two axes, “importance to society”
and “importance to the Company,” and extract 13 issues

The 13 issues were identified as the most important based on management
interviews and employee awareness surveys, as well as stakeholder opinions

Identify
Materiality

After deliberation by the Sustainability Committee, issues are reported to
the Board of Directors, which makes decisions on them

Decide on Expression

The Risk and Opportunity Management Committee implements risk and opportunity management froma long-term perspective at the Group-wide management level based on the identified materiality.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

37

SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Environmental Initiatives

Today’s world is faced with climate-change issues that leave no time to waste, which has led to a growing movement unifying the environment, society, and the economy. Similarly, various initiatives are picking up speed with theaim of realizing a circular economy and a nature positive approach, both of which are seen as essential elements forachieving carbon neutrality. Nishimatsu Construction has also raised initiatives for carbon neutrality as an important
issue that it must undertake with priority in order to achieve sustainable growth. We have formulated Zero30 Road
Map 2023 in June 2023 as our plan for reducing CO2 emissions, we are also advancing activities that consider our
relationship with resource circulation and biodiversity. Based on the implementation of environmental management
systems that comply with ISO14001, we are committed to addressing other global standards, such as participatingin the RE100, acquiring SBT certification, and disclosing information related to climate-related risks and opportunities
in accordance with the TCFD. In this way, we will continue to meet the expectations of our stakeholders throughvarious efforts intended to pass on a healthy, sustainable global environment to future generations.

a level (40,000 t-CO2) that exceeds the remaining emissions(31,700 t-CO2) at the time target 1 is achieved. Here, we plan to
deploy solar, biomass, small-scale hydroelectric, geothermal, andother forms of renewable energy generation throughout thecountry in an effort to provide green energy to society. And we
aim for the CO2 reduction effects from renewable energy generation to equal the remaining Scope 1 and 2 emissions at the earliest possible stage prior to FY2030 [Target 3].

CO2 Emissions and Energy Generation in FY2030
Vision for target 1 (Scope 1 and 2) and target 3 (energy generation)

FY2030 Vision for target 2 (Scope 3 Category 11)

FY2030 (Target year/Vision)
Remaining Emissions

FY2020 (Base year/Actual Results)
Reduction Breakdown

Energy Generation✱ Base year (FY2020) emissions: 3,192,000 t-CO2
Scope 3 Category 11: CO2 emissions
coinciding with energy use during
the building operation stage after delivery

Estimated emissions*: 78,600 t-CO2
Scope 1: CO2 from fuel consumption
Fuel efficiency improvements forconstruction equipment: (8,500 t-CO2)

FY2020 remaining emissions:70,200 t-CO2

Past and Future Environmental Management Efforts

Energy conservation, diesel fuelcombustion improvers: (1,600 t-CO2)

Remaining emissions ❶:23,500 t-CO2

Zero 30 Road Map 2023
target 1:
Scope 1+2 as comparedto FY2020

54.8% REDUCTION
Scope 2: CO2 from power consumption

Zero 30 Road Map 2023
target 3:

ZEB promotion and expansion:(863,000 t-CO2)

Implement renewable energy
generation exceeding theremaining emissions at the earliest

Zero 30 Road Map 2023
target 2:

Reduce Scope 3 Category 11
emissions by 27% comparedwith FY2020

possible stage prior to FY2030

Energy factor reduction: (9,200 t-CO2)
Renewable energy generation:

Remaining emissions:

108,000 MWh

2,328,000 t-CO2

Introduction of renewable energy:

Total remaining emissions (❶+❷):(27,300 t-CO2)

31,700 t-CO2

CO2 reduction effect: Equivalent to

N-TEMS, etc.: (400 t-CO2)

FY2015• Formulated Medium-Term
Management Plan 2017(accelerated initiatives tobecome a leader in environmental management)

FY2017FY2018FY2019FY2020

FY2021

FY2022• Received Japan’s Ministerof Land, Infrastructure,
Transport and Tourism
Award as part of the 3R
Promotion Merit Awards• Achieved a 100% usage
rate for e-Manifests atconstruction sites (first fora general contractor)• Participated in the Japan
Climate Initiative (JCI)• Received certification as
an official sponsor of the
ICRI International Year of
the Reef• Began responding to CDP• Renewed our Eco-First
Mission• Received an A- rating in
the CDP Climate Change
scoring category• Received Japan’s Ministerof the Environment Award
for Climate Action (ProductDevelopment andCommercialization
category)• Formulated Zero 30 Road
Map 2021 as our plan for
reducing CO2 emissions
from construction activities• Participated in RE100• Participated in JCLP

• Formulated SBT for theGroup and received SBT(WB2ºC) certification• Disclosed climate-related
information based on the
TCFD recommendations• Received Japan’s Ministerof Land, Infrastructure,
Transport and Tourism
Award as part of the 3R
Promotion Merit Award forthe 2nd time
• Participated in the 30by30
Alliance

FY2016• Acquired Eco-First
Company certification

Major Initiatives During FY2023

Initiatives Scheduled for FY2024•F ormulated Zero 30 Road Map 2023: Updated our CO2

reduction plan and expanded our energy generation
business•P roactively disclosed environmental conservation activities(1) Formulated Nishimatsu Climate-related Information
2023, compliant with our TCFD recommendations.
Revised our governance system, and updated

response measures for risks and opportunities(2) Responded to CDP• Responded to the questionnaire for water security andforests in addition to that for climate change• Applied for external awards, including the Reduce, Reuse,
and Recycle (3R) Promotion Merit Award• Renew our Eco-First Mission• Contribute to 30 by 30• Acquire certification for SBT 1.5ºC

FY2030• Achieve the Zero30 Road Map

FY2050• Achieve carbon neutrality

8,200 t-CO2*Estimated emissions: Estimated CO2 emissions in the case where no action is taken through FY2030. The portion reduced under the direction of the Company is accounted for by energy
conservation and diesel fuel combustion improvers, N-TEMS, etc., and the introduction of renewable energy (approximately -29,300 t-CO2)[Reference] About Scope 3 Category 11

Zero30 Road Map 2023 (Carbon Neutrality: Indicators and Targets)
FY2030 in working towards achieving carbon
neutrality in 2050. The first target aims to
reduce the Group’s Scope 1 and 2 emissions(CO2 emissions from directly owned or controlled sources) by 54.8% compared withFY2020 [Target 1]. In order to achieve thistarget, we plan to fully engage in energy conservation activities, aswell as introduce diesel fuel combustion improvers, N-TEMS, anda high standard of renewable energy power (77% by FY2030).
The second target covers Scope 3 Category 11 emissions (CO2emissions coinciding with energy use during building operation
after completion and delivery), and aims to reduce emissions by
27% compared with FY2020. Primarily, we plan to promote andexpand Net Zero Energy Building (ZEB) standards for properties
we design and construct [Target 2].
The third target covers renewable energy generation led by the
Regional Environmental Solutions Business, and has been set to

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Scope 3 Category 13: 0.8%

Scope 2: 0.8%
Scope 3 Category 1: 26.0%

Scope 3 Category 12: 1.1%

Scope 3 Category 2: 3.2%

Ratio of Scope 1, 2,
and 3 Emissions for
FY2022
Scope 3 Category 11: 65.5%

Scope 3 Category 3: 0.2%
Scope 3 Category 4: 0.9%
Scope 3 Category 5: 0.6%
Scope 3 Category 6: 0.01%
Scope 3 Category 7: 0.04%

See the Company’s website for details related to Zero30 Road Map 2023.
https://www.nishimatsu.co.jp/eng/esg/environment/

Comparison of the Reduction Levels in Zero30 Road Map
2023 Versus the SBT 1.5ºC Certification Criteriaof acquiring certification under the 1.5ºC criteria defined by the
SBT initiative, which can be considered the de facto international

standard. In the case of a base year of FY2020 and a target year
of FY2030, the SBT 1.5ºC certification criteria require a reductionin Scope 1 and 2 emissions of at least 42%, and a reduction in
Scope 3 emissions of at least 25%. The reduction levels set by
the Group are ambitious in that they exceed both of these.

Target 1: Scope 1+2

Target 2: Scope 3 Category 11

The CO2 reduction levels in the Road Map were set with the intent(t-CO2)(t-CO2)70,0003,300,000

60,000

SBT 1.5ºC assumption
3,000,000

50,00040,00042% reduction

30,00020,000

Our CO2 emissions declined significantly in FY2022
given that the renewable energy introduction rate
greatly exceeded expectations. This trend will potentially continue into FY2023 and beyond.
In FY2023, the number of buildings delivered is
expected to increase, which is anticipated to temporarily increase CO2 emissions to a significant degree.

2,700,000
SBT 1.5ºC assumption
2,400,000

Zero 30 (Nishimatsu Construction target)

54.8% reduction
2,100,000

10,000025% reduction
Zero 30 (Nishimatsu Construction target)

27% reduction

1,800,000(FY) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
❋ Zero30 Road Map 2021: Domestic Construction Business

38

Scope 1: 0.7%

Scope 3 refers to indirect CO2 emissions that occur upstream anddownstream from a business, as opposed to CO2 directly emitted
by the business activities (Scope 1 and 2) of the business operator.
Scope 3 is classified into 15 categories. In regard to the emissionsof the Group falling under Scope 1, 2, and 3, Scope 1 and 2
together account for less than 2% of the total, whereas Scope 3
Category 11 (CO2 emissions coinciding with energy use duringbuilding operation after completion and delivery) accounts for thelargest portion at 65.5%.
WEB

Formulating Zero30 Road Map 2023
Under Zero30 Road Map 2021, we aimed to reduce Scope 1 and2 emissions to which the Domestic Construction Business is subject. And since its formulation we have steadily reduced emissions, emitting 50,200 t-CO2 in FY2021 against a target of at
most 60,500 t-CO2 and emitting 32,700 t-CO2 in FY2022 against
a target of at most 63,300 t-CO2. More recently we formulated
Zero30 Road Map 2023 as a new CO2 reduction plan that covers
the entire Group in line with the new Nishimatsu-Vision 2030 andMedium-Term Management Plan 2025. The new Road Map also
conforms to international standards by, for example, expanding
the target from the Domestic Construction Business to all businesses, including the International Business.
Zero30 Road Map 2023 includes reduction targets regarding
CO2 emissions for all of the Group’s business activities, as well as
energy generation targets for the renewable energy business. The
Road Map was also formulated with a target achievement year of

40,000 t-CO2

Remaining emissions❷:(FY) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Zero30 Road Map 2023: All businesses

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

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SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Environmental Initiatives
Carbon Neutrality Initiatives
Introducing New Diesel Alternative Fuels to Reduce Scope 1
Emissions
Nishimatsu Construction’s Scope 1 CO2 emissions are primarily
due to the use of diesel fuel to operate construction equipment. In
order to reduce these emissions, we have used biodiesel fuelsand diesel fuel combustion improvers in the past, yet we haveconcerns, such as manufacturer assurances and quality consistency. For this reason, we have investigated the potential of newdiesel alternative fuels.
In FY2022, we began introducing GTL (CO2 emissions reduction of 8.5%) and RD/Renewable Diesel (zero CO2 emissions) as
new fuels on a trial basis. We will confirm the feasibility of introducing each, including their reliability as fuels, before rolling out
their use Group-wide.

Circular Economy x Carbon Neutrality
Moreover, as we transition to renewable energy, we are also
considering a scheme that uses some of the power from renewable energy generation undertaken by the Regional Environmental
Solutions Business for use in business activities conducted by theCompany (in-house renewable energy generation andconsumption).
As it currently stands, the renewable energy introduction rate
for FY2022 reached approximately 24% for the Group as a whole.
Nishimatsu Construction Renewable Energy Introduction Plan
(GWh)

 Actual

80.00

 Plan60.00

Nature Positive x Carbon Neutrality

40.00

Construction that Considers Ecosystem Conservation
Nishimatsu Construction recognizes that having consideration forplants and animals helps to conserve ecosystems and forests,
and that this relationship ultimately contributes to achieving carbon neutrality through carbon fixation, for example. We therefore
engage in biodiversity preservation activities from various
approaches.
To minimize the impact of construction works on ecosystems,
we conduct biodiversity preservation activities at all of our construction sites. At the Minami Koma Worksite Office of the Kanto
Civil Engineering Regional Headquarters, for example, we areadvancing construction in a way that considers plants and animals that live in the habitat around the worksite, namely by using
earth-toned colors for temporary structures and by installing
detours for small animals because the construction site is locatedin the mountains.

20.00

0
(FY)

Comparative Investigation of GTL
Versus Diesel in Terms of Fuel
Efficiency when Used in Lighting
Generators(Chubu Branch, Kachigawa
Yamada Worksite Office)RD Use Impression and Fuel
Efficiency Investigation in an
Excavator(Kanto Architectural Regional
Headquarters, Keio Fujisawa Branch
Office)Shifting to Renewable Energy to Reduce Scope 2
Emissions
We are increasing the rate of renewable energy introduction byleveraging renewable energy options provided by power companies corresponding to RE100, as well as FIT non-fossil
certificates.
To get a reduction of 27,300 t-CO2 by FY2030, we plan toachieve a renewable energy introduction rate of 80% for theDomestic Building Business, 60% for the International Business,and 100% for activities conducted by the Asset Value-Added
Business, Group company businesses, and offices. These
efforts will realize an introduction rate of roughly 77% for theGroup as a whole.

Thorough Waste Sorting - Compliance with the Plastic
Resource Circulation Act
To form a circular economy, we have put activities to ensure
waste sorting and to avoid final disposal at the core of our activities regarding the handling of construction by-products generated
at construction sites. Similarly, we have Nishimatsu Construction
Waste Sorting Rules as a unique effort, have built sorting yards,
and thoroughly manage construction by-product sorting together
with partner companies in an effort to keep the final landfill disposal rate below 3%, which we have achieved each year.
Although various issues with plastics have grown increasingly
severe in recent years, one particular problem is the high degree

2020

2021

2022

2023

2025

2028

2030

Promoting ZEB Design to Reduce Scope 3 Emissions
To reduce Scope 3 Category 11 emissions (CO2 emissions coinciding with energy use during building operation after completionand delivery), which account for the largest part of total Scope 1,
2, and 3 emissions, we are promoting ZEB design for properties
that we design and construct. Likewise, we are working to perfecttechnologies to ensure design capabilities that reduce the primaryenergy consumption of buildings, excluding energy generation, by
75% (Nearly ZEB standard) for office building projects in FY2027.
These design capabilities include construction planning that considers energy efficiency, improved insulation performance, theintroduction of energy-saving facilities, and effective use of unharnessed energy. Along with receiving our first ZEB certification for adesign and construction project order, in FY2022, we also renovated our Technical Research Institute in a manner that demonstrates our ZEB design technology.

Temporary fencing using earth tones(Kanto Civil Engineering Regional
Headquarters, Minami Koma
Worksite Office)Gutter staircase for small animals(Kanto Civil Engineering Regional
Headquarters, Minami Koma
Worksite Office)of thermal recycling that continues to be used to recycle plastic
waste. Following the enactment of the Plastic Resource
Circulation Act in April 2022, we began conducting oral surveys ofindustrial waste disposal companies regarding the potential ofshifting from existing thermal
recycling methods to bothmaterial recycling and chemical
recycling methods in working
towards a circular economy
and carbon neutrality.
Sorting Activity Based on the
Nishimatsu Waste Sorting Rules

JHEP Certification Renewal (Japan Habitat Evaluation andCertification Program)
JHEP certification is the only certification system in Japan thatquantitatively evaluates and certifies initiatives to maintain or
improve the biodiversity value before and after a project is implemented. Nishimatsu Construction received JHEP certification in2017 for the Keio University Hiyoshi International Dormitory that
we manage. This dormitory received a rank of AA+ when it wasrecertified in 2022 in recognition of the ongoing effectiveness ofthe design and construction approach’s consideration of biodiversity. This Dormitory is therefore expected to continue serving as
an important node in the ecosystem network of the city center.
We will continue aiming to achieve nature positivity in terms ofboth design and construction.

Managed by Nishimatsu
Construction, Keio University
Hiyoshi International Dormitory wasrecertified by JHEPThe original ecosystem of theregion is being preserved by selecting seedlings that grow naturally in
the Kanto Region

TOPIC
Reduce, Reuse, and Recycle (3R) Promotion Merit Award

Tunnel construction site using renewable energy for 100% of construction
power (Shikoku Branch, Fubahara Tunnel Branch Office)40

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Landcube Ageo (warehouse, steel construction, four above ground stories,
total floor area: 39,859m2)❋ Received our first ZEB Certification for a design and construction projectorder. In addition, we have 10 successful ZEB Ready projects and fivesuccessful ZEH projects (including those scheduled to receive
certification)

Nishimatsu Construction aims to eliminate all construction waste generated at every construction site in working towards a circular economy. As part of the Reduce, Reuse, and Recycle (3R)
Promotion Merit Award, in FY2022 the Sapporo Branch Ishikari Shinko Nishi Branch Office(project name: Ishikari Shinko Nishi Project) received the Minister of Land, Infrastructure,
Transport and Tourism Award and the West Japan Regional Headquarters Harima Architectural
Branch Office received the Chairman’s Award. We have received awards as part of this programa total of 21 times since FY2016. We will continue to promote efforts to eliminate all construction waste in an effort to create a circular economy.

Panorama of the Ishikari Shinko Nishi Construction Project.
Award Theme: Proactive 3R activities for construction workin a large-scale industrial park subject to various restrictions

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

41

SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Environmental Initiatives
Nishimatsu Climate-related Information 2023 - Disclosures in Line with the TCFD
Recommendations The Group recognizes that addressing climate change is an
important management issue for promoting our business activities,
and therefore endorsed the TCFD recommendations in June
2021. Likewise, we have disclosed climate-related information
since June 2022. More recently, as part of Nishimatsu

Climate-related Opportunities
Opportunity Category

Climate-related Information 2023 (June 2023), we revised parts ofour governance and risk management systems along with someof the assumptions for our scenario analyses. We also updated
response measures to climate-related risks and opportunities, andreviewed our indicators and targets.

Governance and Risk Management
Supervisory
Level

Board of Directors
Supervises enterprise risk management and opportunity management

HighestExecutive
Level

President & General Managers Meeting
Confirms and approves Group-wide risk and opportunity

ReportReportConsult
ReportSustainability
Committee(Advisory Body)

Approval/Instruction

Progress Status Monitoring

Approval/Instruction

ReportApproval/Instruction

Environment Committee(Working Group: Global Environment Subcommittee)
Confirms risk response measures for
all departments

Confirms opportunity realization measures for
all departments

Centralizes risk response measures foreach department

Centralizes opportunity realization measuresfor each department

Instruction

Financial Impact Analysis (overview)
In regard to the risks and opportunities that we ultimately determined
to be important issues, we verified the financial impacts for FY2030
and FY2050 (for both 1.5ºC and 4ºC scenarios) using FY2021
operating income as the basis for impact assessment. As a result,when including recovery through responses to risks and opportunities, the negative impact of climate-related factors on our financial standing (operating income) was found to be limited to 5%.

Confirms and determines assessment details

Impact on Business

Instruction

Head Office Departments
Identify and assess risks and opportunities and plan response measures

Response
measures, reportprogress

Construction
Business

Loss of sales opportunities due to a delayedtechnological response to wooden high-rise
construction
Loss of sales opportunities coinciding withlower labor productivity caused by risingtemperatures
Rising construction costs coinciding with lower
labor productivity caused by rising temperatures
Loss of sales opportunities due to a delayed
response to the shift to precast in preparation
for less manpower caused by risingtemperatures
Higher sales due to the increasing need for building ZEB-compliancy
Higher sales from renewable energy-related
projects

Strategy

Higher sales from rapid recovery response toincreasingly severe natural disasters

Assumptions for scenario analysis
In anticipation of a highly uncertain future coinciding with the transition to a decarbonized society, as part of Nishimatsu Climaterelated Information 2023 we conducted scenario analyses for aworld in which temperatures rise 1.5ºC and 4ºC compared topre-industrial temperatures covering every business activity conducted by the Group. We also revised the time frames, with shortterm now covering up to FY2025 as the period addressed by the
Medium-Term Management Plan, medium-term covering FY2026
to FY2030, and long-term covering FY2031 to FY2050.

1.5ºC/4ºC
1.5ºC

Short/Medium/Long

1.5ºC

Medium/Long

1.5ºC

Short/Medium/Long
Medium/Long

1.5ºC/4ºC
1.5ºC/4ºC

Business Impact Responses and Their Relationship with
Nishimatsu-Vision 2030 and Medium-Term Management
Plan 2025
Nishimatsu Construction has incorporated forward-looking
responses regarding climate-related risks and opportunities into
our management strategy, and is working to strengthen our
response to internal and external challenges related to climatechange through ongoing investigations.

Business Impact Responses and Their Relationship with Nishimatsu-Vision 2030 and Medium-Term Management Plan 2025

ReportFirst Tier

1.5ºC

Medium/Long
Medium/Long

Approval/Instruction

Confirms risk response and opportunity realization measures for all departments
Integrated with ERM
ReportSecondTier

Resilience

Risk and opportunity extraction
The Head Office departments (First Tier) identified and extracted
climate-related risks and opportunities, at which point the upper
tiers (Tier 2 and above) assessed these using the three scales ofLikelihood of Occurrence, Qualitative Impact if they become manifest, and Quantitative Impact, ultimately determining the important
issues.

Higher sales from disaster prevention and mitigation related projects
Asset ValueAdded
Business

Higher sales from responding to decarbonization
demand for real estate properties (energy-savings,
ZEB-compliancy, renewable energy use)

Regional
Environmental
Solutions
Business

Higher sales from energy generation related
business
Higher sales from decarbonization related urban
development projects (smart grid, electricity
storage related technologies)
Higher business costs due to the introduction ofcarbon taxes.

Group-wide

Financial Impact

Response

Legal and
Regulatory
Transition Risk
Technical

Physical Risk

42

Chronic Risk

Risk Details

Impact Period

Applicable Scenarios

Introduction of Carbon Tax (cost increase)

Medium/Long

1.5ºC

Delayed technological response to wooden high-rise construction trends (sales decrease)

Medium/Long

1.5ºC

Decline in manpower caused by rising temperatures →Delayed response to the shift to precast (sales decrease)

Medium/Long

1.5ºC/4ºC

Decrease in labor productivity caused by rising temperatures →Loss of sales opportunities coinciding
with longer construction times (sales decrease)

Medium/Long

1.5ºC/4ºC

Decrease in labor productivity caused by rising temperatures →Higher construction costs (costincrease)

Medium/Long

4ºC

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Relationship with Nishimatsu-Vision 2030 andMedium-Term Management Plan 2025

1.5ºC

4ºC





–





–

∙ Develop large-scale precast technologies∙ Accumulate construction experience and expand orders





∙ Conduct demonstrations of ZEB-compliancy at our facilities∙ Design, construct, and operate demonstration facilities thatoffer 75% energy savings

Develop high added-value buildings: ZEB/ZEH–Take part in offshore wind power generation
projects









∙ Acquire fire resistance technologies for wood materials∙ Work to make wood construction practical (small/medium
scale→high-rise construction)∙ Develop and test construction robot technologies∙ Develop autonomous and labor-saving tunnel construction
technologies∙ Implement initiatives for wind power generation projects∙ Construct a rapid response system for emergencies∙ Strengthen procurement capabilities for emergency materials,
equipment, and manpower through collaborations withpartners∙ Implement construction technologies based on the application of autonomous construction technologies∙ Maintain and improve construction capacity for projects
related to disaster prevention and mitigation, including rainwater main construction using the shield method∙ Promote ZEB compliancy and energy savings for newbuildings∙ Make energy-saving investments in existing real estate properties and engage in asset replacement∙ Actively use renewable energy options

Acquire pioneering construction technologies:
Wood construction technologies∙ Increase Construction Business productivity:
Automated tunnel construction, construction
RX (robotic transformation)∙ Promote smart construction sites utilizing DX
Promote the development of technologies forroad slab replacement––∙E xisting properties: Promote energy savings(equipment upgrades), promote the shift torenewable energy∙N ew properties: Promote specifications thatmeet ZEB Ready standards
PPA business, power generation business(small-scale hydroelectric, geothermal, woody
biomass, etc.)–∙ Promote the energy generation business–∙ Actualize EMS projects and demonstrate storage batteries
with local government partners

–

Deploy comprehensive partnership agreement
projects with multiple local governments∙ Introduce and develop CO2 reducing technologies for theconstruction stage∙ Promote the introduction of renewable energy and decarbonized fuels–

Zero30 Road Map

Risks: (small)/(medium)/(large)

Climate-related Risks
Risk Category

Applicable Scenarios

Nishimatsu Climate-related Information 2023 more specificallyillustrates the variation in impact value using waterfall charts.

Risk and Opportunity Management Committee
Third Tier

Products and Services

Impact Period
Short/Medium/Long

Analysis time frame (FY): Short-term: 2020 - 2025 Medium-term: 2026 - 2030 Long-term: 2031 - 2050

See the Company’s website for details on Nishimatsu Climate-related Information 2023.
WEB https://www.nishimatsu.co.jp/eng/esg/environment/climate.html

Nishimatsu Construction has an Environment Committee (SecondTier) as a meeting body to discuss climate-change response(identify climate-related risks and opportunities, formulate specificresponses, manage targets, etc.), and expanded the role of theprevious meeting body above this committee in the hierarchy (theInternal Control Committee) by reorganizing it as the Risk andOpportunity Management Committee (Third Tier) in April 2023.
With the Risk and Opportunity Management Committee, we haveintegrated our climate change response with Enterprise Risk
Management (ERM), thereby forming a structure that reports to
the President & General Managers Meeting (highest executive
level). As in the past, the Board of Directors provides oversightafter deliberations by the President & General Managers Meeting,and offers instructions as necessary. We engage in climate-related risk and opportunity management twice per year throughthe above process.

Resource Efficiency

Opportunity Details
Response to demand for decarbonization in real estate properties (energy-savings, ZEB-compliance,
renewable energy use) (sales increase)
Increasing demand for building ZEB-compliancy (sales increase)
Expansion of projects related to renewable energy (sales increase)
Greater demand for energy generation-related projects (solar power, small-scale hydroelectric, woody biomass, geothermal, biogas) (sales increase)
Greater demand for decarbonization related urban development projects (smart grid, electricity storage
related technologies) (sales increase)
Rapid recovery response to increasingly severe natural disasters (sales increase)
Increase in disaster prevention and mitigation related projects (sales increase)

We will contribute to solutions for social issues by appropriately
advancing efforts to realize climate-related opportunities throughthe reduction, transfer, and avoidance of climate-related risks in

Opportunities: (small)/(medium)/(large)

an ongoing manner. At the same time, we will ensure resilience as
a company as a means of connecting to sustainable growth.

Indicators and Targets
The Group has defined greenhouse gas emissions (Scope 1, 2,
and 3) as an indicator used to manage climate-related risks andopportunities, and formulated Zero30 Road Map 2023 regarding

the related targets. For details, see P. 38 Zero30 Road Map 2023
(Carbon Neutrality: Indicators and Targets).

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

43

SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Human Resource Strategy
Nishimatsu Employees’ University System

Basic Approach to Human Resources

Grade

Resourcefulness

Basic knowledge

Education Faculty

General Education Faculty

Civil Engineering Faculty

Building FacultyInternational Faculty Five other faculties

Business skill (Ability to formulate tasks,
ability to accomplish tasks)

Corporate philosophy,business, medium-term
plan, etc.

CIM, professional engineer
preparation, research, etc.

BIM, architecturalpreparation andresearch, etc.

Overseas civil engineering, building,research, etc.

To put our corporate philosophy into practice and realize ourview each of our employees as capital and take measures tovision, we share the following basic values: an enterprisingcontinuously increase the value of our human capital. Basedspirit, a feeling of gratitude, and an ethical attitude. We haveon the concept that the Company and the employees are

Officers

always been grateful to our stakeholders and committed topartners who enhance each other, we will gather employees

Grades 1-4

Training for those promoted to 4th grade

high ethical standards.

with diverse values, knowledge, and experience, and foster

5th gradeTraining for those promoted to 5th grade

6th gradeTraining for those promoted to 6th grade

7th gradeTraining for those promoted to 7th grade

8th gradeTraining for those promoted to 8th grade

higher expertise and management skills. We also provide aa higher level of diverse value to our stakeholders amid thework environment in which each individual can maximize theirincreasing speed of social and environmental change, we must

talents in a manner not bound by conventional norms.

10th grade

The Reform Program based on our human resource strategy

ture development to the rebuilding of social functions as a

Reforming ourmindsets andactions

Strengthening
our organizational abilities

Development of Nishimatsu
Employees’ UniversityPromoting dialogue between
officers and employeespart of efforts to generate new business opportunities, we will
set the direction of our human resource strategy and pursue
specific initiatives based on the three frameworks of reforming
our mindsets and actions, strengthening our organizational
abilities, and creating growth resources, which comprise theReform Program outlined under Nishimatsu-Vision 2030 and

Promoting diversity

Medium-Term Management Plan 2025.

Commencing operation of theTalent Management SystemTo create an environment in which all of our employees canmaximize their potential, we will also continuously work tomaintain and promote employee health, reduce long working
hours, and prevent employee turnover, as well as promote theuse of flexible work systems, such as flextime systems.

Revitalizing workplacecommunication
Creating an environment inwhich diverse human resources
can maximize their abilities



Creating
growthresources











Matters related toissues in response tosocial changeManagement(Succession plan)
Literacy, leadership, and education necessary for future
management
Plan for the development of
the next generation ofmanagement

SDGs
Training for
mid-career hires

Expertise training for mid-career and higher employees(expert course)

New employee training Performance in role (position)

Compliance
ICT literacy
and related training

Expertise training for young employees(standard course)

New employee follow-up training

Nishimatsu employee skills

Overseas on-site workshops Commencing operation of the talent management
systemWe took steps to introduce a talent management system in
FY2021 to maximize the abilities of our diverse array of personnel. We finished building this system in FY2022. Going for-

 Performance in grade

By Business
Division/
Department

 ExpertiseCommon to all employees

To expand our value creation activities from social infrastruc-

Visible areas

Human Resource Strategy

Reskilling

Deepening research and exploring new areas ineach field to further enhance corporate value

9th grade

Elements that make up human resources

This stance will not change in the future, but in order to provide

Expertise Basic knowledge Resourcefulnessward, the system will incorporate data on the requirements forP lanning, design, construction management, management maintenance, etc.
 ompany: Corporate philosophy, ESG, finance, ICT literacy, etc.
CBusiness: Nishimatsu’s business (business activities, markets,
organization, profit structure, proprietary technologies, etc.)
Construction: Safety, quality, cost, process, environment, etc.
A bility to formulate tasks, ability to accomplish tasks, ability toutilize human resources, ability to interact with people, etc.

each position as well as the abilities, skills, and experience of
employees, using this data for optimal placements and effective human resource development.

 Initiatives for revitalizing workplace communication
Maximizing the talents of all employees requires the creation of aworkplace culture with a high degree of psychological safety andwhere diverse opinions and ideas are freely and openly exchanged.
To this end, from FY2023 we will provide educational oppor-

Initiatives based on the Human Resource Strategy Development of Nishimatsu Employees’ University
In addition to cultivating advanced technical skills, theCompany launched the Nishimatsu Employees’ University in2019 in order to foster employees able to accurately respondto changes in society with a broad perspective. The university
defines the abilities that Nishimatsu employees should possess
as resourcefulness, basic knowledge, and expertise. The university has offered a series of courses to provide systematiclearning opportunities in each of these areas. By FY2022, wedeveloped a training system centered on a standard course foryoung employees to develop their professional skills. Going forward, we will provide a higher level of education and create amechanism for employees to learn independently. In addition,
we will provide training programs to cultivate a spirit of taking
on challenges and growth in new fields.
Developing an expert course
In Medium-Term Management Plan 2025, we will establish an
expert course for mid-career and higher employees in an effort tocontinuously improve the system to enhance employee abilities
and pass on skills.

44

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

 Promoting dialogue between officers and employees

tunities for employees to improve their communication skills

Starting in FY2023, officers led by the President began visiting

and have introduced one-on-one meetings in workplaces.

Developing DX Human Resources
To develop DX human resources, we provided basic education on
DX until FY2022. In FY2023, we will open a new DX Faculty toprovide more advanced education with the aim of fostering digitaltalent who can provide new value to companies by utilizing cutting-edge digital technology.

business sites nationwide to engage in dialogue with

Systems for employees to learn independently
We introduced a credit system in some faculties and courses fromFY2022 that shows the accumulation of competencies acquired by
the employees themselves as a mechanism to ensure that employees steadily develop their skills. In the current fiscal year, we will continue to introduce this credit system and develop a mechanism thatallows employees with high motivation for growth to learn independently, including a flexible curriculum selection system.

 Promoting Diversity

health of our employees, such as the introduction of a flextime sys-

We are actively recruiting women for career-track positions

tem, expansion of support systems for balancing work and child-and as mid-career hires to create a more dynamic organiza-

care, and reduction of total work hours. Particularly in terms oftion where people with diverse abilities, skills, and values canmeasures to support a better balance between work and childcare,

come together and mutually enhance each other. Fromin October 2022 we established the Post-birth Papa Leave System

FY2020, we have set a target of increasing the percentage of(paid) in accordance with revisions to the applicable laws to develop

females hired for career-track positions to 20% of all career-an environment that facilitates the participation of male employees.

track recruitments. Since then, the number of women weThis childcare leave system allows male employees to take up to 20

Developing candidates for management-level positions
To contribute to our sustainable growth and medium- to longterm corporate value enhancement, we have been implementing
the Next Generation Management Development Plan since
FY2021. Looking ahead, we will develop a system for the continuous training of young management personnel who will become
candidates for management-level positions.

have hired has been close to our target. As a result, the num-days in addition to annual paid leave, as a way to create an environ-ber of female career-track positions has increased to 6.5% ofment where men can easily participate in childcare. As a result, theall career-track positions. Although the number of female

percentage of male employees taking childcare leave reachedmanagers is still low at 0.4% of all management-level posi-

55.6%, significantly higher than the 17.6% in FY2021.

philosophy and the direction of the Company has enabled us Creating a workplace where a diverse array of
employees can maximize their talents

to share a common direction while developing personnel who

To enable our diverse human resources to maximize their abilities,

can take on challenges with an open mind.

we have been promoting initiatives to create an environment that

employees. Exchanging opinions about the corporate

allows flexible work styles, as well as to manage and promote thetions, the number of female managers is increasing year by

Looking ahead, we will continue to promote the use of various

year, and we are steadily pursuing initiatives for diversity.

systems and implement measures to enable employees to maximize their abilities.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

45

SUSTAINABILITYINTRODUCTION

Health and Productivity Management

VALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Quality Management

Employee happiness is the source of corporate vitality, and the foundation of happiness is health

For 150 years, the Company has been engaged in the business of building social infrastructure andstructures that form the foundation of people’s lives. For us, quality is the foundation of our business, so
we will continue to place the highest priority on quality and work to improve quality to meet the expectations of our customers and society.

We believe that the happiness of employees is the source ofsubsidies for women’s cancer screening, providing physical andenergy for sustainable corporate growth, and that good health ismental consultations by medical staff, free smoking cessation

the source of this happiness. To achieve this, we recognize that

programs, and introducing a system to visualize working hours,

the loss of work opportunities due to illness is a management

etc. We were evaluated and certified as among the “White 500”

issue, and aim to improve productivity by preventing it. Therefore,

Certified Health & Productivity Management Outstanding

we are promoting health and productivity management®* by com-

Organizations (large enterprise category) promoted by thebining measures aimed at improving employee health awarenessNippon Kenko Kaigi and Japan’s Ministry of Economy, Tradefrom the four perspectives of physical health, mental health, healthand Industry in recognition of our efforts to continuously improve

Based on its corporate philosophy, Nishimatsu Construction will

literacy, and long working hours, with measures in which medical

these and other measures. This was the fifth consecutive timedeliver valuable buildings and services through an ongoing com-

We will accurately identify the increasingly diverse needs ofprofessionals are directly involved with employees.

we received this designation since FY2018.

mitment to earn the trust of customers and other stakeholders.

customers, thoroughly pursue manufacturing excellence that(1) P roviding Trusted Buildings and Services

surpasses the expectations of customers and the world,

Based on the idea that the Company is responsible for sup-We are implementing a host of specific measures. This

Policy on Quality(2) Improving Customer Satisfaction

includes establishing subsidies for medical checkups (including

porting the health of employees, we will continue to promote

Each employee will hone their skills with pride in being a spe-

optional examinations) (similar subsidies are available for depen-

health and productivity management by strengthening our

cialist, undertake the work before them with rigorous caredent spouses), putting forward recommendations for complete

occupational health system and taking measures to encour-that remains faithful to the basics, and deliver buildings andWe will continually improve our quality management sys-

medical examinations after regular health checkups, providing

age employee awareness of health maintenance.

services that are worthy of society’s trust and expectations.

tem to achieve quality targets.

and aim to elevate customer satisfaction as a reliable entity.
(3) C ontinual system improvement

Quality Management System

Promotion system chart
Chief Health Officer (CHO)
President Takase

President and General Managers’ Council

Participation*T his is a management-level body that makes decisions atregular sessions

Report and Consultation

In the civil engineering and building divisions, we have establishedsystem at each stage of sales, design, construction, and after-a Building Quality management system based on ISO 9001, andsales service to achieve our quality policy of Providing Trusted

are working to ensure quality and continuously improve the

Buildings and Services and Improving Customer Satisfaction.

Report and request approval

Quality control systems in construction projects

Various discussions, coordination and cooperation on promotion of health management

Workers’ union

To prevent issues from recurring based on lessons learned

through a consistent work flow from design to construction

from past construction defect cases, we assure quality

and after-sales service following delivery.

Quality control flow

Completion inspection

Administrative inspection

In-house inspection

In-house voluntary inspection

After sales service
liaison meeting

DeliveryCompletion

Administrative midterm
inspection

Stage inspection by
construction supervisor

Self-inspection prior to stage
inspection

Completion inspection

In-house inspection prior tocompletion inspection

Inspection by the client(interim technical inspection, inspection of previously completed sections)

Periodic quality patrols for construction
management

Construction
management inresponse to inspections

During construction

Daily management ofconstruction progress

Plan confirmation meetings

Verification of quality confirmation
personnel, etc.

Daily management of construction
progress(including confirmation of client phase)

Determination of who approves, is
responsible for, and is in charge of quality,
work progress, and photographic control

Preparation of construction plans
Briefing on the main purposeof the design

On-site construction
management

Pre-construction

Quality control
support services

Basic design and implementation drawings* Veggie Score™: Numerical score of vegetable intake using the Veggie
Meter®, a device that measures the amount of skin carotenoids.

Design stage*

Construction work

In cooperation with the health insurance association of which we are a member, we held a Veggie Score™ measurement session in
the employee cafeteria at our Head Office (Toranomon Hills Business Tower). The employee cafeteria provides a well-balanced menu
on a daily basis, and the results show that many employees meet the standard for vegetable intake compared to the average
Japanese person.
This event provided an opportunity for employees toreevaluate their thinking about the content of their meals.
We will continue to hold various events related to
employee health to raise health awareness among all
employees.

Issuance of design documents

Veggie Score™* measurement sessions are held at the employee cafeteria at our
Head Office

Design verification

Topic

Design review (meetings)* Health and productivity management® is a registered trademark of Non-Profit Organization Kenkokeiei

Diagram inspection and design review

Nishimatsu Construction Employees

Daily construction
management

In-house inspection prior to inspection“Drop-off” for employees and fostering a culture of health in the workplace

Preparation of design documents

Implementationof measures

General Manager ofBranch Office and Healthand Safety Committee

Identification of important matters

Dissemination of various informationand implementation of measures

Human Resources
Department

Preparation of design brief (requirements verification)

Health insurance
association

Organize customer and legal requirements, relevant laws and regulations, and internal standards

HealthpromotioncenterCivil Engineering

Disseminationof healthproductivity
management
policies

Quality patrols by engineering, building construction,and equipment construction sections

*In the case of design and construction by Nishimatsu

46

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

47

SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Safety, Human Rights, Supply Chain
Building safe construction sites

Co-creation with the supply chain Training and support of skilled construction workers

Ideals outlined in Nishimatsu-Vision 2030

“Compassion and consideration throughout the workplace” isour safety slogan. Based on this slogan, we focus on risk•

Establishing Nishimatsu as a brand of safety

management at the planning and implementation stages along

Japan Construction Retirement Allowance System

Target: Frequency rate of injuries requiring four or more days ofabsence from work: 0.2 or below

with the training of supervisors who are key personnel forelectronic usage)

safety management at our worksites in order to ensure that all•

people working there can do so safely and with peace of mind.
quency rate of injuries was 0.49. With this, we achieved ourtarget for FY2023 of less than 0.5 a year early.
Frequency rate and future targets

Safety management based on the priorities of risk assessment

1.5

0.5

0.67

0.49

0.72

E.g., reduce high elevation work by taking a unit-focused
approach

0.50
0.20

0

2016 2017 2018 2019 2020 2021 2022 2023 2030 (FY)No. of attendees in supervisor ability
improvement training (FY2022)
North Japan
Supervisor ability improvement
training

162

Kanto Civil
Kanto
West Japan
Engineering Architectural
82

182

2. Engineering measures

E.g., measures to prevent unauthorized entry; training & drills

KyushuTotal

4. Personal protective equipment
countermeasures

108

801

E.g., protective glasses, safety belts

267

initiatives listed below)

Measures1&2
come first

and their supervisors. We believe that training and support

communication  • Introduction of Koteizu to centrally manage
process information  • Improve brochure production and website to support Promote the use of the Construction Career Up
System (CCUS)•  • Hirose River 10,000 People Project (Tohoku branch)  • Clean Beach Ishikari Beach Cleanup Activities

Safetymeasurescurrently being
widelyimplemented(Sapporo branch)

Due to a declining and aging workforce and harsh working conditions, it is becoming increasingly difficult to secure  • Nishimatsu Forest woodland preservation activities

workers in the construction industry. Until now, the amount(Kanto Civil Engineering Division)of income generated by what qualifications and how much  • Clean Ota River Activities (Chugoku branch)experience one had, had been unclear in the industry.

  • Aso Mizukake terraced paddy revitalization activities

Against this backdrop, we are working to alleviate thehigh-caliber technician system that is linked to the CCUS
Ministry of Land, Infrastructure, Transport and Tourism.

priorities to address.

The Nishimatsu Group believes that the fundamental human(1) Adequate management of working conditions and provi-rights of all people involved in its business should be
respected. Based on the United Nations’ Guiding Principles

sion of a comfortable working environment

on Business and Human Rights, the Group formulated the(2) Prohibition of harassment and discrimination

Nishimatsu Group Human Rights Policy in March 2023 and is(3) Human rights of foreign workers in domestic operations

promoting initiatives for respecting human rights.

In addition, we have established a human rights due  • Information security briefings by our instructors (totalof 10)  • Invitations to civil engineering symposia and technicalinstitute presentations sponsored by the Company(since FY2015)
High-caliber technician system and CCUS relationshipCommitment

Impact assessment

Assess human rights impact
Assess human rights risk
Conduct internal surveys on human rights initiatives once a year
Identify human rights risks (revise humanrights risk map)AnnualcycleMonitoring and information disclosure

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Corrective measures
Take corrective measures based on humanrights impact assessment results
Consider and implement an improvementplan

Set up and operate Nishimatsu Hotline(Reporting desk)

Human rights due diligence process

Periodically disclose information
Monitor the progress of the Company’s
human rights efforts and disclose the results
in reports, websites, etc.

Held various study sessions and seminars  • Labor hour seminars by the labor & human resources
office (total of 7)

external experts, we identified the following items as the main  • Invoice seminars by tax accountant firms (total of 4)

diligence process and are continually working to improve it.

Through dialogue with stakeholders and consultations with

(Kyushu Division)  • Kuma River Cleanup Activities (Kyushu Division)and competency evaluation systems promoted by Japan’s

Formulate and Implement Policy
Formulate and revise a human rights policyImplement human rights-conscious procurement
Reflect in the procurement policy and procurement guidelines

Joint participation in various CSR activities (activities in
FY2022 below)

Expand and enhance programs for high-caliber technicians (awards and certification programs)

Addressing Human Rights Issues

Implement training on human rights  • Introduction of business chat “direct” to stimulate

tractors consist of individual skilled construction workers

shortage of skilled workers by developing our own

48

work safely and comfortably

The prime contractor and specialty contractors cooperate mutually to perform construction work. Specialty con-recruitment activities

E.g., use what is called “preceding handrail frame” scaffolding;use machinery with collision prevention features

3. Management countermeasures

Hold N-NET Growth Strategy Meetings (examples of  • Subsidy for the purchase of air-conditioned clothing to

one of these measures.

1. Mitigate risks at the planning phase

0.79

Priority ranking

0.75



are important, and are working to improve digital skills as

Firmly embed safety rooted in prioritizing issues
Making safety a priority from the top down

1.04

1.02

1

Utilize digital communication (dedicated website and directbulletin board function)

To achieve our ideal, we will implement the following initiatives:• Firmly embed safety management rooted in prioritizing issues• Establish a legal compliance framework through repeated education• Ensure health by creating a safe and comfortable workplace environment• Boost the skills of safety leaders and establish a system for fosteringskill leaders of the next generation

Although there was one fatal accident in FY2022, the fre-Promote digital education (Buildee usage method and the Undertake various activities with Nishimatsu
Subcontractor’s Network (N-NET), a central
organization among affiliates that collaborate with
us in construction activities

Nishimatsu Meister(3,000 yen/day)Goldtechnology.
Through various measures, we will build a strong rela-

Senior Foremen(2,000 yen/day)
Next generation senior foremen(1,000 yen/day)
Candidates for Nishimatsu
foremen(500 yen/day)

We believe that further cooperation will be necessary to
introduce the latest construction methods and digitaltionship of trust that goes one step beyond mere construction cooperation.

Silver

Blue

White

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

49

SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Corporate Governance

Strengthening corporate governance is one of the highest priority management issues that we are tackling at Nishimatsu Construction. In FY2016, we transitioned into a company with an Audit andSupervisory Committee and worked to ensure the efficacy of the oversight functions of the Board bybringing in Audit and Supervisory Committee members as part of the Board. In addition, from FY2022 to
FY2023, we worked to revise the composition of the Board of Directors and ensure its diversity, and, toincrease corporate value from a sustainability perspective, we established a Sustainability Committee
and a Risk and Opportunity Management Committee. We will continue to strive to further strengthen our
corporate governance system.

Composition of the Board of Directors and the Audit and Supervisory Committee
The Company’s Board of Directors comprises six executive

information and communications company). As such, all of these

directors and five directors who are Audit and Supervisory

external directors possess specialized knowledge in fields con-Committee members. Five of the executive directors are generalsidered to be important for business management.

managers and one is an external director (who has management

Currently, the percentage of external directors on the Board

experience at a listed company). The Audit and Supervisoryof Directors is 45.5% and the percentage of female directors is

Committee comprises one full-time internal director and four

18.2%. Going forward, we will continue verifying the skill sets ofexternal directors (one has experience at a general trading com-those on the Board of Directors and will work to improve thepany, one is a certified public accountant, one has management

efficacy of the Board.

experience at a listed company, and one has experience at an

Basic philosophy

Board of Directors (11)The basic policy of the Company is to improve its corporate

value over the medium to long term. Based on this policy, wegovernance and maintain good and stable relationships withwill create structures that lead to the acceleration of deci-

its stakeholders over the long term, in order to achieve sus-

sion-making and the strengthening of supervision by thetainable growth of the Company and increase its corporate

Board of Directors and our business execution systems.

Elect(5) Sustainability Committee(1) Board of Directors

Audit, etc.

Consult/Report(6) Corporate Value Enhancement
Committee(7) Compliance Committee

Give instructions

ReportGive instructions
Audit/Instruct/Train

Approve/
Give instructions/Report

ReportManagement Meeting

Compliance Promotion Department

Secretariat of the Audit andSupervisory Committee

Give instructions Report(10) Investment
Committee

15(8) Risk and Opportunity
Management Committee
Give instructions

Report/Suggest

Divisions and Group Companies

Coordinate

Report(9) Environment
Committee

Give instructions

Audit Unit

Coordinate

22.2

10

0

18.2% (2/11 people)

External Director(Audit and Supervisory
Committee)

2

22.2
2

22.2
2

7

7

22.2

2

7

ReportInternal audit

22.2

2

27.3

27.3

27.3

27.3

3
1

3
1

3
1

3
1

7

7

7

7

7

7

33.3

40.0

40.0

45.5

(%)
50
40
30

4

3
1

1

5

5

3
1
1
5

4
1
1
5

2019
2020
2021
2022
2023
 External Director (Audit and Supervisory Committee)

20
10
0

Changes to Corporate GovernanceAccounting audit

Makes decisions on basic management policies and other important management matters, and supervises the execution of duties by directors.
In addition to matters stipulated by laws and regulations and the Articles of Incorporation, the Board of Directors deliberates and decides onmatters stipulated in the rules of the Board of Directors.

(2) A udit and Supervisory Committee

Conducts audits of execution of duties by directors and other duties stipulated by laws and regulations.

(3) P resident and General Managers
MeetingAmong the proposals to be submitted to the Board of Directors, it conducts preliminary deliberations mainly on important matters for sustainablegrowth, decides on specific measures related to the execution of such proposals after they are resolved by the Board of Directors. It alsodecides or deliberates on some individual matters related to business execution.

Strengthen business execution
system(4) N omination and Compensation
Committee

Deliberates on the nomination of candidates for directors, with the aim of contributing to the establishment of an appropriate management system. It also deliberates on individual compensation for directors and executive officers with the aim of ensuring objectivity and transparency
regarding compensation decisions.

Officer compensation system(5) S ustainability Committee

Investigates and deliberates on matters regarding the policies for responding to materiality and environmental changes (risks and opportunities)
linked to materiality from a long-term perspective and from a multi-stakeholder standpoint.

(6) C orporate Value Enhancement
Committee

Deliberates on corporate governance, capital policy and other important management matters in consultation with the Board of Directors.

(7) C ompliance Committee

Responds to various issues regarding compliance.

(8) R isk and Opportunity
Management Committee

Appropriately manages risks and opportunities from a long-term perspective, as well as risks and opportunities involved in current businessactivities.

(9) E nvironment Committee

Extracts, identifies, and assess climate-related risks and opportunities, and reports to the Risk and Opportunity Management Committee.

(10) Investment Committee

Investigates the propriety of plans related to investment projects based on the Company’s capital strategy, and reports the investigation results
and points at issue to the Board of Directors and to the President & General Managers Meeting.

Integrated Report 2023

External Director(Audit and Supervisory
Committee)

2011
2012
2013
2014
2015
2016
2017
2018
 Internal Director  External Director  Internal Director (Audit and Supervisory Committee)
Percentage of external directors(1) B oard of Directors

NISHIMATSU CONSTRUCTION CO., LTD.

External Director

Percentage offemale directors

External Director(Audit and Supervisory
Committee)

5

Organization design

50

General Manager of
Building Division

External Director
Internal Director (Full-time(Audit and Supervisory
Audit and Supervisory
Committee)
Committee Member)

Report
Audit

Report/Suggest(3) President and General
Managers Meeting

General Manager ofManagement Division

Changes in the Percentage of External Directors on the Board of Directors

Accounting auditor

Supervise/
Give instructions

General Manager ofCivil Engineering
Division

45.5% (5/11 people)(2) Audit and Supervisory
Committee

ReportReport/Suggest(1 internal director, 4 external directors)

Percentage ofexternal directors

Elect

Elect
Coordinate

Consult/Report(5 General Managers, 1 external director)

General Manager ofAsset Value-Added
Business Division

General Meeting of Shareholders
Consult/Report

Audit and Supervisory Committee (5)President

Corporate Governance System(4) Nomination and Compensation
Committee

Executive Directors (6)Composition of theBoard of Directors

Through to FY2019
June 2016
Transitioned to a company with an
Audit and Supervisory Committee

June 2009
Established the Nominating
Committee and Compensation
Committee as voluntary advisory
bodiesJune 2009
External directors: 2 (22.2%)

June 2016
External directors: 3 (27.3%)

July 2019
Established President and General
Managers Meeting

Through to FY2022
March 2021
Established the Corporate Value
Enhancement Committee

FY2023 and beyond
April 2023
Established the Sustainability
Committee

June 2020
External directors: 3 (33.3%)
June 2021
External directors: 4 (40.0%)
July 2021
Established the Investment Committee

June 2023
External directors: 5 (45.5%)

FY2021
Began operation of performance-linked
compensation and stock compensation
FY2021
Began operation of the Company
President Succession Plan, etc.

Company President
Succession Plan,
etc.

ComplianceInternal control
Risk management

FY2008-FY2009
Established the Internal Control
Committee
Established the Nishimatsu Hotline
whistleblowing system
Established the Compliance
Committee

FY2015
Established the Workplace Hotline
outside counseling service
FY2019Registration of WCMS certification for
the whistleblowing system

Crossshareholdings

FY2015
Formulated policy on retention andreview of cross-shareholdings

FY2018Formulated cross-shareholdings
reduction policy

April 2023
Established the Risk and Opportunity
Management Committee

FY2020 onward
Reduced cross-shareholdings(ongoing)

NISHIMATSU CONSTRUCTION CO., LTD.

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SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Corporate GovernanceSelection Criteria for Director Candidates

Director Compensation

auditing and supervising appropriately, with emphasis on Overview of our director compensation(excluding Audit and Supervisory Committee members)

short-term incentive, and partly in stock, as a long-term incen-

have a wealth of knowledge, experience, and competence,and excellent character and high ethical standards.

their expertise and background, will be appointed.

Compensation for directors (excluding Audit and Supervisory

and the stock portion is conferred every June in the form of• Candidates for executive director shall be appointed from•C andidates for external director will be selected with an

Committee members and other directors who are externalconversion points for the Board Benefit Trust. When a director

among people who have extensive knowledge and experi-emphasis on independence, and those with specialized

directors) comprises base compensation and performance-

retires from his or her position as director, cumulative points areence in the Company’s business, or who have superior

knowledge and experience in corporate management arelinked compensation. Compensation for external directors

converted into shares of stock and delivered to the beneficiary.

knowledge of finance and accounting, etc.

selected. We also take into consideration the diversity of(excluding those who are Audit and Supervisory Committee

The ratios of base compensation and performance-linked com-the Board of Directors.

members) shall be limited to base compensation.

Supervisory Committee) who are judged to be capable of• Candidates for director shall be selected from those who• People who are candidates for director (Audit andReasons for Appointing External directors
Position
External Directors
External Directors(Audit and Supervisory
Committee members)
External Directors(Audit and Supervisory
Committee members)
External Directors(Audit and Supervisory
Committee members)
External Directors(Audit and Supervisory
Committee members)

Full Name

Reason for appointment

tive. The cash portion is paid as a bonus in July of each year

pensation are appropriately determined taking into accountBase compensation, as fixed (monthly) compensation deter-

Nishimatsu Construction’s management strategies, business envi-

mined in accord with the director’s position, is calculated taking intoronment, and the level of difficulty of achieving job responsibilities

account Nishimatsu Construction’s employees’ salary levels, stan-and targets, while also referencing relevant changes at other com-

dard salary levels in the business community, and other factors.

panies in our industry. Within performance-linked compensation,

Hidetaka Matsuzaka

Mr. Matsuzaka possess a wealth of experience during his tenure at Osaka Gas Co., Ltd., and has a broad insight cultivated as Representative Director of the company. We
have appointed him as an external director because we believe he is an appropriate person who can supervise our management from an objective point of view.

Jun Ikeda

Mr. Ikeda possesses a wealth of experience from his work at Mitsubishi Corporation and also has wide ranging knowledge from serving as Representative Director andPresident of a subsidiary of the company. Since June 2016, he has fulfilled the role of Director and Audit and Supervisory Committee member, monitoring and supervising
Nishimatsu Construction’s management from an independent stand point. For these reasons, we deem him to be the appropriate talent for auditing and supervising
Nishimatsu Construction’s management from an objective point of view and appointed him an external director and an Audit and Supervisory Committee member.

degree to which performance targets were met. It includes ato stock-based compensation. Furthermore, for stock-based

Ms. Suzuki possesses specialized knowledge as a certified public accountant and has a wealth of experience related to accounting in the real estate industry. Since June
2021, she has fulfilled the role of director and Audit and Supervisory Committee member, monitoring and supervising Nishimatsu Construction’s management from an independent stand point. For these reasons, we deem her to be the appropriate talent for auditing and supervising Nishimatsu Construction’s management from an objective pointof view and appointed her an external director and an Audit and Supervisory Committee member.

base level of compensation in accord with each director’s posi-compensation, a minimum level is set that is the same as the min-tion, with this base level multiplied by a performance-linked coef-

imum level for performance-linked compensation.

Noriko Suzuki

Toshihiro Kubo

Mr. Kubo possesses a wealth of experience during his tenure at Kubota Corporation, he also possesses a wide range of knowledge cultivated as Representative Director of
Kubota Corporation. We have appointed him as an external director who is a member of the Audit and Supervisory Committee because we believe he is an appropriate person
who can supervise our management from an objective point of view.

Yayoi Ito

In addition to her wealth of experience gained during her tenure at NTT Data Corporation and other companies, Ms. Ito possesses extensive knowledge of ICT. For these reasons, we deem her to be the appropriate talent for auditing and supervising Nishimatsu Construction’s management from an objective point of view and appointed her anexternal director and an Audit and Supervisory Committee member.

Performance-linked compensation fluctuates according to thethere is generally a one-to-one ratio of cash-based compensation

Based on these policies, the President drafts a preliminary

ficient to calculate the final amount. To calculate the final
amount, evaluation indices covering the director’s contribution to

proposal, then consults with the Nomination andcorporate value are set for each position and job title, and theCompensation Committee, whose input is taken into accountdegree to which performance targets were met, as well as year-

and decided on by the Board of Directors (Base compensa-

on-year performance are evaluated each fiscal year.

tion and performance-linked compensation are determined in

Performance-linked compensation is paid partly in cash, as a

March and June, respectively, each year).

Board of Directors’ skill set
Compensation details
 Female External
Expertise and Experience Criteria for Directors
ConstrucUrban
tion tech- developnology &ment &
quality
Real estate

PositionFull name

Corporate
management

Representative Director andPresident

Nobutoshi Takase







Representative Director

Makoto Isshiki







Representative Director

Yuichi Kono

Director

Yoshiyuki Sawai

Director

Kazutoyo Hamada

External director(Independent)

Hidetaka Matsuzaka

EnvironmentJun Ikeda

External directors (Audit
and Supervisory Committee
members) (Independent)

Toshihiro Kubo



External directors (Audit
and Supervisory Committee
members) (Independent)

Yayoi Ito

NISHIMATSU CONSTRUCTION CO., LTD.



Executive Vice President, General Manager ofManagement Division and General Manager of
Human Resource Strategy Office, in charge ofRegional Environmental Solutions Business
Division and in charge of Investor Relations

Managing Officer, General Manager of
Building Division


















Representative Director, Osaka Gas Co., Ltd.



Executive Officer, Mitsubishi Corporation,
Representative Director, Mitsubishi Shoji
Foodtech Co., Ltd.







Integrated Report 2023

Executive Vice President, General Manager ofCivil Engineering Division and Safety &Environment Division

Senior Managing Officer and General Manager
of Asset Value-Added Business Division* The above list does not exhaustively cover all of the knowledge and experience possessed by each director.

52







Noriko Suzuki

Nomination
Committee Internal Directors: Main roles
and ComExternal Directors: Career and qualifications
pensationExternal directors (Audit
and Supervisory Committee
members) (Independent)

GlobalChief Executive Officer and President

Director (Full-time Audit andSupervisory Committee
Hiroshi Yaguchi
member)External directors (Audit
and Supervisory Committee
members) (Independent)

Legal, GovTreasury,
ernance,
Accounting, Risk man- Digital & IT
Financeagement,
ComplianceCertified Public Accountant, KPMG AZSA LLC
Senior Manager

Representative Director, Kubota Corporation

Head of the Business Planning Promotion Office,NTT Data Corporation, Executive Officer, SG
SYSTEMS CO., LTD.

Category
Performance-linked indicesBase compensation―
Short-term
Performance- (Medium-Term Management Plan 1st and 2nd years)
incentives
linked bonus •Group-wide performance (net sales, operating income, profit attributableto owners of parent)•Business division performance (orders, profits, safety performance,
Performance- quality performance, etc.)
linked equity
Long-term(Medium-Term Management Plan final year)
compensaincentives•Medium-Term Management Plan published values (net sales, gross profit,
tion (Board
operating income, ROE, capital to assets ratio, dividend payout ratio)
Benefit Trust)•Business division performance (orders, profits, safety performance,
quality performance, etc.)

Overview of payment method
Base amount paid in cash
Amount calculated by multiplying the base amount by aperformance-linked coefficient, paid in cash

Points conferred (calculated by multiplying the base amount by aperformance-linked coefficient); cumulative points converted into an equivalent amount of stock when the director retires

Compensation conceptual image
High
Performance-linked bonus
Compensation

 MalePerformance-linked equity
compensation
Base compensation
80%

100%

120%

Degree of performance achievementHigh Overview of compensation for directors who are
Audit and Supervisory Committee members

Supervisory Committee members, as well as the standard

Directors who are Audit and Supervisory Committee members

sation is determined through discussions among all directors

receive only base compensation that takes into consideration

who are Audit and Supervisory Committee members.

salary levels in the business community. Said base compen-the compensation of directors who are not Audit and

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

53

SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Corporate Governance

Strategic shareholdings

Directors’ compensation (FY2022)
Category

Paid personnel

Directors (excluding Audit and Supervisory Committee
members)

6

External Director
Directors (Audit and Supervisory Committee Members)Basecompensation

Performance-linked Performance-linked
compensationcompensation
Total amount of(cash-based(non-cash-based compensation, etc.
compensation)compensation)

 Policy regarding reducing strategic shareholdings

have transactions with the issuing company, what the status

We have made it our policy to hold shares of companies

is of obtaining construction and other information, and¥204 million

deemed necessary for our business operations and, unless

whether there are other special circumstances, then makes a¥170 million¥11 million¥21 million

1¥7 million--¥7 million

there are other extenuating circumstances, to reduce ourreport to the Board of Directors. The Board of Directors

6¥48 million--¥48 million

holdings of companies that do not meet this criterion.

receives and reviews these reports and makes final decisions

External Directors

5¥31 million--¥31 million

Total

12

¥219 million¥11 million¥21 million¥252 million

External Directors

6¥39 million--¥39 million*1 The total amount of performance-linked compensation (cash-based compensation) indicates the amount of provision for directors’ bonuses in FY2022. In addition, the total amount of
performance-linked compensation (noncash-based compensation) indicates the amount of provision for directors’ stock benefits in FY2022 based on the “Board Benefit Trust (BBT)”, a
performance-linked stock compensation plan that uses a trust.
*2 The above includes two directors (Audit and Supervisory Committee) who retired at the conclusion of the 85th Annual General Meeting of Shareholders on June 29, 2022.

Analysis and evaluation of the effectiveness of the Board of Directors
To confirm whether the Board of Directors is appropriately ful-

Nishimatsu Construction conducted an evaluation of thefilling its duties of promoting sustainable corporate growth andeffectiveness of the FY2022 Board of Directors from February

increasing medium- to long-term corporate value, we analyze

to April 2023. An overview of the evaluation process, evalua-and evaluate the Board’s effectiveness once a year and strivetion results, and initiatives going forward is given below.

carefully surveys and reviews each fiscal year whether we Status of reduced strategic shareholdings
Number of companies whose shares are held and their total amounts on the balance sheet
82nd term(FY2018)

83rd term(FY2019)84th term(FY2020)85th term(FY2021)86th term(FY2022)

Number of companies
Number that are publicly listed

152
75

141
64

103
26

102
25

103
24

Total amount on the balance sheet (million yen)
Total amount of publicly listed stocks (million yen)

70,632
66,70551,26147,33438,38334,25731,227
27,05528,154
24,13826

25

24

Category(million yen)
80,00065,0002

Overview of evaluation results
Based on the survey results, the Audit and Supervisory Committee reported to the Board of Directors to the effect that it
must immediately advance systematic initiatives towards solving the issues to be considered and improvement points thatwere discovered during the survey (the major issues to be considered are listed below).
(1) Discussions on instilling the Corporate Philosophy and long-term vision(2) Discussions and deliberations by, and reports to the Board of Directors(3) Operations regarding the Board of Directors(4) Materials used by the Board of Directors(5) Training for executives

75

64

66,70550,000Evaluation process
Led by the Audit and Supervisory Committee, all directors were given a survey that consisted of six subjects, namely theroles and functions of the Board of Directors, the composition and size of the Board of Directors, the operation of theBoard of Directors, collaboration with audit organizations, relationship with the external directors, and relationship withshareholders and investors. The six subjects listed above also include items reported to the Board of Directors by the
Audit and Supervisory Committee regarding the effectiveness evaluation of the Board of Directors from the previous year.
To ensure anonymity, statistical compilation for the survey was entrusted to a third-party organization, then the Audit
and Supervisory Committee analyzed and reviewed the data before making a report to the Board of Directors.

results of their decision.

shareholdings, the President and General Managers Meeting

to strengthen and improve its functions.

1on whether the holding is appropriate, then discloses theWith regard to determining whether to hold specific strategic  Number of publicly listedcompanies
 A mount on the balance sheet(listed stocks)

47,33435,00020,00034,25782th term

83th term

84th term

24,13827,05585th term

86th term Policy regarding the exercise of voting rights forstrategic shareholdings

or against proposals while also taking into consideration

Nishimatsu Construction’s criteria for the exercise of voting

exercise particularly careful discretion and judgment in therights for strategic shareholdings is as follows:case of proposals for corporate restructuring (such as(1) In principle, we will exercise voting rights on all proposals.

mergers), presenting retirement bonuses to officer(s) at a(2) From the perspective of increasing the medium- to long-company with poor operating results, a capital increase

term corporate value of the company whose shares arethrough third-party allocations, adopting takeover defense

held as strategic shareholdings, we will make decisions formeasures, and the like.

the operating circumstances of that company. We will

Compliance with the Corporate Governance Code
Nishimatsu Construction implements each and every principle

initiative policy regarding each principle of the Corporateof the Corporate Governance Code. For details on the

Governance Code, see the Company’s website.

Initiatives on Corporate Governance by Nishimatsu Construction Co., Ltd.
Corporate Governance Report354

Initiatives going forward

WEB https://www.nishimatsu.co.jp/eng/company/governance.html

In light of the above reports, the responsible director will formulate matters to be deliberated and their schedule for theyear, which will be actively discussed by the Board of Directors.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

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SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

External Director Roundtable Discussion

External
Director

Jun
Ikeda
External
Director

NorikoSuzuki
External
Director

Toshihiro
Kubo
External
Director

Hidetaka
Matsuzaka
Toshihiro Kubo

Jun Ikeda

Noriko Suzuki

As Nishimatsu Construction works toward achieving sustainable growth, four external
directors speak about their current analysis and specific issues.

passed since your appointments. What are yourthoughts on the operation of Nishimatsu Construction’s
Board of Directors’ meetings? Also, external directors
Ikeda and Suzuki, how do you see Nishimatsu
Construction’s changes and challenges thus far?
External Director Hidetaka Matsuzaka: Upon assuming
my position, I stated that I would like to confirm four points toimprove Nishimatsu Construction’s fundamental competencies, which form the foundation for creating flexibility in ideas
and actions. Those four points were: (1) Are employees thinking in terms of overall optimization rather than individual optimization, and are they able to put their ideas across in aneasy-to-understand manner?; (2) Is there a culture in which
corporate information is shared within the Company andquestions are freely discussed?; (3) Is work simplified? Are
employees taking on new challenges and showing growth?;and (4) Are there shared goals, and are the business portfolio,
the impacts of risks, and measures for said risks clearly
understood? I think there is a need for the Company to continue to strengthen its efforts in these areas.
External Director Toshihiro Kubo: In a rapidly changing
business environment, what is required is a system in which
management can quickly ascertain the situation on the
ground and make the necessary decisions, but I think there
are still some shortcomings in terms of that kind of system.
Currently, efforts are being made to improve the ascertainingof business progress and the speeding up of responses, and I

56

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

In addition to her expertise as a certified public accountant,
Ms. Suzuki has extensive experience in accounting in the realestate industry. She was appointed as an external director of
the Company in June 2021. She mainly provides advice infinance, accounting, and real estate matters.
Mr. Kubo has experience in environment-related businesses
and corporate divisions at Kubota Corporation. He has extensive experience in corporate management as Representative
Director of Kubota Corporation. He was appointed as an external director of the Company in June 2022.
Mr. Matsuzaka has extensive experience in business management at Osaka Gas Co., Ltd, both within and outside Japan,
and in corporate management as the Representative Directorof Osaka Gas Co., Ltd. He was appointed as an external
director of the Company in June 2022.

Hidetaka Matsuzaka“I think that my role is to make waves.”

External directors Matsuzaka and Kubo, a year has

Mr. Ikeda has extensive experience in business managementat Mitsubishi Corporation, both domestically and internationally, and in corporate management at companies like
Mitsubishi Shoji Foodtech Co., Ltd. He was appointed as anexternal director of the Company in June 2016. He mainly
provides advice related to overall management and new
businesses.

am watching closely to see how the Company can accomplish change over the year ahead. I also believe that discussions on management issues from a variety of perspectives
should be made more active.
External Director Jun Ikeda: With the addition of Messrs.
Matsuzaka and Kubo, two people with management experience, I feel that the direction and atmosphere of discussions
at Board of Directors’ meetings has changed significantly. A
strong herd instinct exists in the construction industry, andthere is a tendency to avoid making major changes ahead ofother companies. At the Company’s Board of Directors’
meetings, however, the external directors have a particularly
strong sense of crisis in this area and are emphasizing theneed for rapid change and its implementation.
External Director Noriko Suzuki: At Board of Directors’
meetings, Messrs. Matsuzaka and Kubo often makestatements based on their experience from having been deeply
involved in corporate management, and I think they are also asource of stimulating inspiration for the internal directors.
Because Nishimatsu Construction is a company that takes
itself very seriously, the Company takes its time to carefully
implement and make improvements to address pressing issues
from the outset. At recent Board of Directors’ meetings, I havegained a strong sense that there has been a positive shift inmindset with regard to how to reflect and implement candid
recommendations.

What points do you keep in mind to improve effectiveness when speaking at Board of Directors’ meetings?
Please also discuss the role you think that external
directors should play.
Suzuki: I believe that one of the important roles of an external
director, and something that I am persistently conveying, is tounderstand that what might appear to be common sense for
a company is not necessarily the same as common sense forsociety as a whole, and there may be cases in which what acompany is doing may differ from society’s rules. I believe thatbearing this in mind will help create an environment that
guards against cases of fraud, prevents scandals from arising,
and will also lead to stronger governance.
Ikeda: The most important role of an external director is to beable to convey information, even if that information makes forharsh listening. A company will never be able to change if only
pleasant things are said. Because the construction industry is
closed, it is increasingly useful for external directors to relate
their experiences from other industries to Nishimatsu
Construction. I always speak out at the Company’s Board of
Directors’ meetings because I do not want people to repeat
the same mistakes that I experienced.
Kubo: Although external directors cannot make comments
relating to business operations as such, their advantage isthat they can see things without any preconceptions. For
example, if there are any inefficiencies in the management
decision-making process of which people inside a company
are not aware, I point them out every time.
Matsuzaka: I think that my role is to make waves. Up until
the time a company reaches a final decision, you need tokeep bringing to light conceivable situations at that point intime. The role of a board of directors is to make decisions
after having considered all the options, and thus I also speakfrom opposing viewpoints to confirm that this has been done.

NISHIMATSU CONSTRUCTION CO., LTD.

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SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

External Director Roundtable Discussion

Ikeda: In making a final decision, it is very important that theprocess leading up to decision-making is clarified. I requestthat the materials used at Board of Directors’ meetings also
include detailed explanations of the process, not just theconclusions.

Matsuzaka: It is being said that there will be a further decline
in Japan’s population over the years to come, and that cities
in the regions will themselves decline. In such places, I think it
is important to think about what kinds of mechanisms andsystems will be necessary to bring about business continuation over the long term concerning investments in geothermal
power generation and wood biomass power generation projects. The securing of profits is important as long as theCompany works as a business, and sustainability issues must
be considered with this view in mind.

with diverse expertise to be appointed as external directors.
The newly appointed external director also possesses expertise in ICT, so I think the Company’s Board of Directors will be
more balanced. The content of the performance-based compensation has already been elaborated. However, as it has
only been a short time since its introduction, we are currently
at the stage of reviewing and making adjustments, and I thinkincorporating ESG indicators will form the next step.

Suzuki: Sustainability management does not produce immediate results and thus evaluating initiatives in relation to business profits is also beset with difficulties. While repeatedly
facing challenges and admitting to failures, I believe it is necessary for the Company to make steady efforts from a
medium- to long-term perspective, isn’t it?

Ikeda: In the sense that their customer bases are derived
from all industries, general contractors themselves represent avery wide-ranging industry. Were a company to take advantage of this, it would be able to build a wide range of connections. To develop human resources who can shoulder
responsibility and be involved in management in the years tocome, I would like to see the Company actively sending
young employees to work outside the Company and build asystem in which they can gain management experience.

Under the new Medium-Term Management Plan, anemphasis has been placed on sustainability, including

What are your thoughts on the expertise and skills thatmention of “revising the structure of the Board of

directors should possess and on the introduction of

Directors and ensuring diversity based on skillsets

ESG-linked, performance-based compensation? Also,

mindful of sustainability management” as part of theplease provide us with your thoughts on humanCompany’s governance initiatives. Please tell us yourresource development at Nishimatsu Construction,

thoughts on the ESG initiatives.

including of the next generation of management

Matsuzaka: With regard to the development of management
personnel, we have been implementing a program called the
Next Generation Management Development Plan since 2021.
There is a need to utilize this program to raise the level of thecandidate pool that will shoulder the responsibility as the next
generation of management. In addition, having taken steps, suchas transferring young employees to positions outside theCompany and bringing in external human resources as executive
officers and directors, I recommend creating a system that forms
a well-balanced and deeper pool of management personnel.

personnel.
Ikeda: I think that the E and S in ESG represent the construction industry itself. A construction company’s business is tobuild social infrastructure, and thus the industry cannot survive without awareness of S. Inevitably, construction is also
accompanied by environmental destruction, and Nishimatsu
Construction has been responding to E and S aspects
through its business for 150 years. The Company’s ESG initiatives will be more persuasive if this is considered as a starting point. Contrastingly, with regard to G, since construction
is an industry that comprises construction sites, I believe that
Nishimatsu Construction will need to earnestly begin building
and improving its governance from now on.
Kubo: The Company is currently promoting reviews of sustainability issues, but I think the important thing is for all
employees to identify issues that will have a significant bearing
over the medium to long term and to organize them from theperspective of the SDGs. This is because I believe that, firstand foremost, the perspectives of employees who are
involved in business operations on the front lines on a day-today basis should be utilized. In order for Nishimatsu
Construction to continue to grow in line with changes in theexternal environment and internal conditions, I hope that all
employees will be satisfied with this approach.

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Message from the Appointed External Director
Suzuki: Although Nishimatsu Construction possesses
strengths such as integrity and high technical capabilities,
there are quite a few things that are lacking and parts thatneed to be changed, and the Company must respond to thechanging times while maintaining a balance between the two.
In the years to come, it will be desirable for directors to havethe skills to integrate these aspects, but I think there is a needto discuss how best to reflect this in the compensation
system.
Ikeda: The Company introduced performance-linked compensation in 2021 and starting in the current fiscal year will
incorporate non-financial indicators such as safety and quality
into the compensation calculation criteria for its directors(P.53). We will continue to work on linking executive compensation to ESG indicators. Personnel are one of the mostimportant management resources, and it is my belief that systems need to be designed with ESG considerations in mind,
not just for executive compensation.

Utilizing IT-related insight and diverse work experience
for management and DX promotion
My name is Yayoi Ito and I have been appointed as an external director. I am
extremely humbled to be taking on such a heavy responsibility. After having graduated from the department of mathematics, I have been involved in IT-related fields formany years. Having had long-term experience as a system integrator in particular, in
addition to SE and consulting, I possess experience in a wide range of tasks, including sales management, marketing, project management, new business creation andcommercialization, alliances and collaborations with overseas companies, business
External Director

Yayoi Ito
In addition to a wealth of experience gained

ects I have handled range from small to large scale, and I have experience in a variety
of industries, including the public sector, utilities, and logistics.

during her tenure at NTT DATA Corporation

Utilizing my past experience in a variety of aspects, I hope to be particularly usefuland other companies, Ms. Ito possesses

for management and Nishimatsu Construction’s DX promotion. Going forward, I am

extensive knowledge of ICT. She wasdetermined to actively absorb industry knowledge and do my best.

appointed as an external director of the

Kubo: Internal directors in particular require knowledge ofmanagement. In contrast, from the perspective of increasing
the diversity of a board of directors, it is desirable for people

planning, human resources and training, and organizational management. The proj-

Company in June 2023.

I gratefully look forward to your continued support as I work toward the further development of Nishimatsu Construction.

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

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SUSTAINABILITYINTRODUCTIONSTRATEGYSUSTAINABILITYDATA SECTION

Compliance

Risk and Opportunity Management

Our view of compliance is not limited to the observance of laws, rules, and various regulations, but also
serves as the foundation (corporate culture and climate) that allows us to conduct sustainable businessactivities based on the trust and confidence of all stakeholders in accordance with our Company Motto
and Corporate Philosophy. Based on this concept, we are working to improve compliance awarenessamong every officer and employee through various measures that include in-house training.

The Group recognizes that risk and opportunity management is an important issue for fulfilling its social
responsibility, realizing Nishimatsu-Vision 2030 and achieving its Medium-Term Management Plan. To
ensure proper Group-wide risk management, we reviewed our existing management system andrevamped it into a risk management system that includes a long-term perspective.

Compliance is the philosophy andmission to observe laws and ethics.

Have the courage to take action.

If you do not change things now, they won’t ever change.

Be courteous in behavior.

What you find offensive is what others find even more offensive.

Act with a sense of justice.

If you lose your composure for even a moment, the Company will cease
to exist in an instant.
* The Company’s compliance policy covers all Group employees and partner companies.

Compliance Promotion System
Group-wide promotion system

Whistleblower system “Nishimatsu Hotline”

In 2009, we established the Compliance Committee with theaim of providing support and guidance, and ensuring thatcompliance is practiced by Group officers and employees.
To provide a third-party perspective, we appoint a personfrom outside the Company to chair the Committee. The
Compliance Committee meets once a month to discuss various compliance-related issues and conducts compliancetraining to maintain and improve the compliance system. In
addition, the Compliance Committee chair also attends Boardof Directors meetings to report on the details of responses tovarious issues and make recommendations.
The Compliance Promotion Department takes theinitiative in promoting compliance as the secretariat of theCompliance Committee, playing a role in educating officers
and employees about the activities of the Committee.
The heads of each division at the Head Office, the generalmanagers at each regional headquarters, and the presidents
of affiliated companies have been appointed as the people incharge of compliance. They raise awareness about and publicize compliance, as well as conduct training for officers andemployees in the organizations they run.

We have set up the Nishimatsu Hotline as an internal whistle
blower system to improve our corporate culture and deter andpromptly address wrong doing. A reporting desk has also
been set up for our partner companies, and the system allows
anonymous reporting and provision of information.
We distribute compliance cards to all Group officers andemployees to ensure that they are well informed about the
Nishimatsu Hotline.

We carry out ongoing career-level-specific training ande-learning to improve compliance awareness, eliminate
harassment, and boost understanding and dissemination of
the whistleblowing system. Especially since FY2021, we havebeen conducting stratified online training covering all levels
from managers to younger employees. In FY2022, we conducted training for assistant managers based on events thathave occurred internally in recent years as the subject matter.

Compliance audit
Every year, we conduct Compliance Audits of all regional
headquarters, each division at the Head Office, and GroupNISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

The Risk and Opportunity Management Committee manages
risks and opportunities from a long-term perspective and foreach business activity in accordance with the Committee’s
rules, etc.
To comprehensively manage Group risks and opportunities,
we have designated specific departments to be responsible
for the management of individual risks and opportunities
aggregated by the Committee. The Committee monitors andassesses the effectiveness of preventive and detective risk
and opportunity management, and also makes recommendations for corrective action to each department responsible forrisk and opportunity management if problems are found.
The Committee reports to the President and General
Managers Meeting and the Board of Directors regarding thedepartments responsible for management of risks and opportunities, the management system, and the status of management.

Counseling service “Workplace Hotline”

Number of calls to the Nishimatsu Hotline andWorkplace Hotline
Category

FY2018FY2019FY2020

Risk Management System
Board of Directors(1) Identification of risks and opportunities at the Group-wide management level basedon materiality and reflecting them in business strategies(2) Examine and promote specific actions for sustainability (establish priorities, promotion
structures, roadmaps)(3) Monitor specific actions for sustainability

Supervise /instruct

ReportPresident and General Managers Meeting
Approve /instruct

ReportRisk and Opportunity Management Committee






 isk and Opportunity Management
R
Committee Rules
Risk & Crisis Management Rules
Basic Risk Management ManualGroup-wide Risk Management Manual<Administrative Department> Corporate Planning OfficeSustainability Promotion Department
 Audit Unit

Evaluate efficacy
Request corrective action

ReportDepartments responsible for risk management

Risk and Opportunities from a Long-Term Perspective

We have set up the “Workplace Hotline,” a counseling service
where employees can easily seek advice about mental anxiety
or human relations in the workplace.

Risks and opportunities in business activities(1) Develop processes for risk and opportunity management (identify and review risks
and opportunities, verify and review of hypotheses)(2) Monitor risk and opportunity management systems* Please see our securities reports regarding business and other risks.

(Number of reports)
FY2021

FY2022

Nishimatsu Hotline

20

30

33

28

45

Nishimatsu Workplace Hotline

21

16

12

12

8

Initiatives to Promote Compliance
Compliance training

Group-Wide Risk and Opportunity Management System and Activities

Information security risk management
The Group is in possession of important business information
as well as personal information and confidential information
related to our business partners. Various measures are being
implemented to prevent loss of social credibility due to information leaks and economic losses.


Information security system(1) Technical measures
R einforcing measures against computer virus counter andunauthorized accessV isualizing and controlling cloud service use

companies throughout Japan to assess the status of
responses to risks that have occurred or are expected tooccur in each department, as well as the details of initiatives
and activities aimed at raising compliance awareness.

(2) Personnel measures Conducting security training and targeted e-mail drills Having outside experts assess security and investigate risk

Officer, employee compliance awareness survey
We conduct Compliance Awareness Surveys of all officers
and employees (including temporary workers) every two
years. We are improving our training and educational activities by understanding the current situation from the resultsof the survey and changes over time and by analyzing
issues and problems.

Prevention measuresinformation security for our subcontractor’s network, N-NET.
Going forward, the entire Group, including N-NET, will continue to improve information security mainly by conducting
targeted e-mail training and security education.

Countermeasures in the event of an incident
C onducting incident response training, including for management
R einforcing cyber resilience for early recovery of systems

Cyber attacks are not just a risk for our Company, and ransomware and other attacks must be addressed across theentire supply chain. In FY2022, we held a workshop on

Technical countermeasures

Malicious
attacker

AttackRestorequickly

Our system
Reinforce
security

Detect /block
AttackBusinessapplication

Detect /block

Instruct

Officers and employees

ICT System Department

Compliance is a priority for corporate development

Crisis Management
Team

Basic
compliancepolicy60

VALUE CREATION

ReportPersonnel measures

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

61

SUSTAINABILITYINTRODUCTIONVALUE CREATIONSTRATEGYSUSTAINABILITYDATA SECTION

Board of Directors andAudit and Supervisory Committee (As of June 29, 2023)
 Directors

Nobutoshi Takase

Makoto Isshiki

Yuichi Kono

Yoshiyuki Sawai

Kazutoyo Hamada

Hidetaka Matsuzaka

Representative Director and President

Representative Director
General Manager of Civil Engineering Division
General Manager of Safety & Environment Division

Representative Director
General Manager of Management Division
General Manager of Human Resource Strategy Office
In charge of Regional Environmental Solutions BusinessIn charge of Investor Relations

Director
General Manager of Asset Value-Added Business
Division

Director
General Manager of Building Division

External Director

Apr. 1980	Joined the Company
Jun. 2011	Director, Managing Officer
Apr. 2018	Representative Director and President;
Chief Executive Officer and President(to present)

Apr. 1984	Joined the Company
Jun. 2016	Director, Senior Managing Officer
Apr. 2018	Representative Director and Executive Vice
President (to present)

Apr. 1980	Joined the Company
Jun. 2015	Director, Managing Officer
Apr. 2021	Representative Director and Executive Vice
President (to present)

Mar. 2006	Executive Officer of Mizuho Bank, Ltd.
Jun. 2010	Director of the Company
Apr. 2019	Director, Senior Managing Officer(to present)

Apr. 1987	Joined the Company
Jun. 2020	Director, Managing Officer (to present)

Number of Company shares held
9,540 shares
Attendance at Board Meetings
15 out of 16 (94%)

Number of Company shares held
26,120 shares
Attendance at Board Meetings
16 out of 16 (100%)

Number of Company shares held
7,720 shares
Attendance at Board Meetings
16 out of 16 (100%)

Apr. 2015	Representative Director; Executive Vice
President, Osaka Gas Co., Ltd.
Apr. 2019	Director and Chairman, OG Capital Co.,
Ltd. (to present)
Jun. 2019	Advisor, Osaka Gas Co., Ltd. (to present)
Jun. 2020	Outside Director, HIROSHIMA GAS CO.,LTD. (to present)		Outside Director, Nanto Bank, Ltd.
(to present)
Jun. 2022	External Director of the Company(to present)

Number of Company shares held
11,500 shares
Attendance at Board Meetings
16 out of 16 (100%)

Number of Company shares held
5,360 shares
Attendance at Board Meetings
16 out of 16 (100%)

Number of Company shares held
Attendance at Board Meetings
10 out of 11 (91%)

0 shares Audit and Supervisory Committee Members

Hiroshi Yaguchi

Jun Ikeda

Noriko Suzuki

Toshihiro Kubo

Yayoi Ito

Director (Audit and Supervisory Committee Member)(Full-Time)

External Director(Audit and Supervisory Committee Member)

External Director(Audit and Supervisory Committee Member)

External Director(Audit and Supervisory Committee Member)

External Director(Audit and Supervisory Committee Member)

Apr. 1979	Joined the Company
Jun. 2020	Director (Full-time Audit and Supervisory
Committee Member) (to present)

Apr. 2006	Executive Officer, Mitsubishi Corporation
Jun. 2009	President and Representative Director,
Mitsubishi Shoji Foodtech Co., Ltd.
Nov. 2012	President and CEO, Mitsubishi Corporation
Life Sciences Limited, President and CEO,KOHJIN Life Sciences Co., Ltd.
Jun. 2016	External Director (Audit and Supervisory
Committee Member) of the Company(to present)		Outside Director, SODA NIKKA CO., LTD.
(to present)

Oct. 2008	Senior Manager, KPMG AZSA LLC
Oct. 2015	Part-time audit staff, KPMG AZSA LLC
Apr. 2020	Supervisory Director, Frontier Real Estate
Investment Corporation (to present)
Jun. 2021	External Director (Audit and Supervisory
Committee Member) of the Company(to present)

Jul. 2014	Representative Director and Executive Vice
President, Kubota Corporation
Jun. 2021	Chairman of the Osaka Federation of Health
Insurance Societies (to present)		Vice Chairman, National Federation of
Health Insurance Societies (to present)
Jun. 2022	External Director (Audit and Supervisory
Committee Member) of the Company(to present)

Apr. 2008	Head, Business Planning and Promotion
Office, Public Administration Systems
Section, NTT DATA Group Corporation
Jun. 2021	Outside Director, KANADEN
CORPORATION (to present)
Jun. 2021	Outside Director, SUMIKEN MITSUI ROAD
CO., LTD. (to present)
Jun. 2023	Outside Director, JAPAN POST HOLDINGS
Co., Ltd. (to present)
External Director (Audit and Supervisory
Committee Member) of the Company(to present)

Number of Company shares held
3,700 shares
Attendance at Board Meetings
16 out of 16 (100%)
Attendance at Audit and Supervisory
Committee Meetings 15 out of 15 (100%)

Number of Company shares held 0 shares
Attendance at Board Meetings
16 out of 16 (100%)
Attendance at Audit and Supervisory
Committee Meetings 15 out of 15 (100%)62

NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

Number of Company shares held 0 shares
Attendance at Board Meetings
16 out of 16 (100%)
Attendance at Audit and Supervisory
Committee Meetings 15 out of 15 (100%)

Number of Company shares held 0 shares
Attendance at Board Meetings
11 out of 11 (100%)
Attendance at Audit and Supervisory
Committee Meetings 10 out of 10 (100%)

Number of Company shares held

0 shares* The number of shares of the Company held includes the number of shares to be delivered under the stock compensation plan.
* The attendance at the Board Meetings and the Audit and Supervisory Committee Meetings indicates the attendance for FY2022.
NISHIMATSU CONSTRUCTION CO., LTD.

Integrated Report 2023

63