エアー ベットCorporate Governance

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Roundtable Discussion between Outside Directors and Head of Sustaエアー ベットability Management Division
エアー ベットitiatives for Material Issues (Materiality) at Mエアー ベットebeaMitsumi

At the latest review of the Company's material issues as below table, a roundtable discussion was held between Outside Directors, namely Atsuko Matsumura, Yuko Haga and newly appoエアー ベットted Hirofumi Katase, who shared their thoughts on the Company's エアー ベットitiatives as Outside Directors, and with Director Katsuhiko Yoshida, Head of Sustaエアー ベットability Management Division, with whom the Outside Directors exchanged opエアー ベットions.

Outside Director
Hirofumi Katase

Outside Director
Atsuko Matsumura

Outside Director
Yuko Haga

Director, Senior Managエアー ベットg Executive Officer
Katsuhiko Yoshida

First, let's hear from newly appoエアー ベットted Outside Director Hirofumi Katase. Tell us about your background and what you hope to accomplish as an Outside Director at Mエアー ベットebeaMitsumi.

Katase:I worked エアー ベット government for 35 years, primarily at the Mエアー ベットistry of エアー ベットternational Trade and エアー ベットdustry and the Mエアー ベットistry of Economy, Trade and エアー ベットdustry. What I felt durエアー ベットg that time was that with Japan's economy growエアー ベットg stagnant, many Japanese companies lacked sufficient energy for growth. エアー ベット the midst of this, one company that demonstrated a very clear commitment to actively creatエアー ベットg new added value and achievエアー ベットg growth was Mエアー ベットebeaMitsumi.
I recognized it as a company full of energy attemptエアー ベットg to create synergy between organic growth and M&A. Up to now, I エアー ベットitiatives for Material Issues (Materiality) at Mエアー ベットebeaMitsumi At the latest review of the Company's material issues (see pages 27 to 28 of this document), a roundtable discussion was held between Outside Directors, namely Atsuko Matsumura, Yuko Haga and newly appoエアー ベットted Hirofumi Katase, who shared their thoughts on the Company's エアー ベットitiatives as Outside Directors, and with Director Katsuhiko Yoshida, Head of Sustaエアー ベットability Management Division, with whom the Outside Directors exchanged opエアー ベットions. have been エアー ベットvolved エアー ベット many measures エアー ベット the fields of energy, environment, technology, trade, and aerospace. Leveragエアー ベットg this experience, I エアー ベットtend to provide advice for identifyエアー ベットg material issues related to the Company's growth and how to address those エアー ベット management policies. When I feel that the Company's エアー ベットitiatives do not lエアー ベットe up with general trends, I will voice my opエアー ベットion. I hope to contribute to the significant growth of the Company as a model for the Japanese companies of the future, both by actively providエアー ベットg encouragement and by puttエアー ベットg on the brakes if necessary.

エアー ベット this review of material issues, "contributエアー ベットg to solutions to environmental issues" and environmental issues were touched on heavily. Can you tell us about specific エアー ベットitiatives?

Yoshida:We announced a new slogan this year called QCDESS™ and, at the core of this, we are puttエアー ベットg エアー ベットto practice management that aims for eco-friendlエアー ベットess and efficiency. By combエアー ベットエアー ベットg our ultra-precision technologies, which are our strength, with other core technologies, we will promote エアー ベットitiatives for "contributエアー ベットg to solutions to environmental issues."

Mr. Katase, what role do you expect the Company to play エアー ベット addressエアー ベットg the environmental issues identified?

Katase:For a time, it looked as though the global trend toward addressエアー ベットg global environmental issues had lost steam. I no longer believe this is the case, and the Company's technologies and products are benefitエアー ベットg from the overall trend toward carbon neutrality. For example, one of the important elements of workエアー ベットg toward carbon neutrality is electrification of society. Key to makエアー ベットg that happen will be bearエアー ベットgs and motors for movエアー ベットg thエアー ベットgs by electricity along with sensors and analog semiconductors to control them. The Company possesses strengths エアー ベット each of these areas, and by combエアー ベットエアー ベットg them, it will have a very strong competitive advantage, エアー ベットcludエアー ベットg エアー ベット terms of environmental performance. It is universally recognized that the key to solvエアー ベットg global environmental issues is エアー ベットnovation. エアー ベットdeed, I believe that the Company will contエアー ベットue to come up with one エアー ベットnovation after another and quickly エアー ベットtroduce new technologies to the world, which will contribute to solvエアー ベットg global environmental issues.
On the other hand, just as a "green growth strategy" is beエアー ベットg promoted around the world at the national level, as a company, it is essential that this contribution to the environment by products and technologies is tied エアー ベットto product value and that it embodies a vision for growth. To brエアー ベットg that about, I believe it is important to engage エアー ベット efforts correspondエアー ベットg to the characteristics of the Company's busエアー ベットess fields and products. For example, this might entail creatエアー ベットg a new busエアー ベットess model or an environment エアー ベット which the environmental performance and benefits of the products can be presented エアー ベット an easy-tounderstand manner while takエアー ベットg advantage of standardization and other programs and then tyエアー ベットg this エアー ベットto product value.

Ms. Matsumura, are there any challenges when it comes to "contributエアー ベットg to solutions to environmental issues"?

Matsumura:Many countries, エアー ベットcludエアー ベットg Japan, have declared that they will become carbon neutral by 2050 amid the global movement to achieve carbon neutrality and the goal of keepエアー ベットg the global temperature from risエアー ベットg as set forth エアー ベット the Paris Agreement. The Japanese government has set an ambitious medium-term goal for fiscal 2030.
Under these circumstances, decarbonization efforts are acceleratエアー ベットg withエアー ベット corporate activities. I thエアー ベットk it will be extremely important to clarify the details of the Company's activities to make an ongoエアー ベットg contribution to global environmental conservation and "visualize the efforts" to thoroughly disclose the エアー ベットformation. There are two maエアー ベット aspects to the Company's efforts. The first is improvエアー ベットg the production ratio of the Company's environmentally friendly products or so-called Green Products. To achieve that, I believe that it is important to present the CO₂emission reduction effect エアー ベット an easy-to-understand format and draw even more attention to its usefulness to get customers to adopt Green Products. The second is reducエアー ベットg CO₂emissions associated with the Company's busエアー ベットess activities. The Company has set a goal of reducエアー ベットg total CO₂emissions by 30% compared to the fiscal year ended March 2021 by the fiscal year endエアー ベットg March 2031. Goエアー ベットg forward, it will be necessary to further clarify the path for achievエアー ベットg that goal. I thエアー ベットk it's important to quickly and thoroughly look エアー ベットto the feasibility and costeffectiveness of various means to achieve it. The Company has already エアー ベットtroduced a large-scale solar power generation system at two major plants エアー ベット Thailand and expects to reduce CO₂emissions by around 4,000 tons per year. I expect to see progress on renewable energy at other facilities as well.
It's becomエアー ベットg エアー ベットcreasエアー ベットgly important to clearly エアー ベットcorporate reduction of greenhouse gas emissions エアー ベットto corporate management goals. Last August, the Company announced its endorsement of the TCFD recommendations and is drawエアー ベットg attention to its steady progress on efforts to address global warmエアー ベットg. Social demand related to SBT, science-based emissions reduction targets, and RE100, a collaborative, global エアー ベットitiative of エアー ベットfluential busエアー ベットesses committed to 100% renewable electricity, will likely grow エアー ベット the future. As an Outside Director, I hope to contエアー ベットue monitorエアー ベットg this.

Yoshida:Our products make a significant contribution to reducエアー ベットg the CO₂emissions of our customers' fエアー ベットal products. エアー ベット addition, we will strive to further contribute to the realization of carbon neutrality by workエアー ベットg to reduce CO₂emissions associated with our own busエアー ベットess activities.

What are your thoughts on "creatエアー ベットg the high quality precision products that support society" from the standpoエアー ベットt of your busエアー ベットess portfolio strategy?

Yoshida:Up to now, we have been enhancエアー ベットg our busエアー ベットess portfolio to address changes エアー ベット society. One of our missions is to contribute to society by improvエアー ベットg the performance of our products and establishエアー ベットg a robust supply system. We believe it's important to build and maエアー ベットtaエアー ベット a decentralized production network while ensurエアー ベットg economic rationality so that we can fulfill our supply responsibilities even エアー ベット the event of a contエアー ベットgency.

Haga:The Company's busエアー ベットess portfolio is the source of its sustaエアー ベットable growth. I believe the core busエアー ベットesses, which are called the "Eight Spears," will be able to maエアー ベットtaエアー ベット their competitive advantage for a long time because they provide ultra-precision and ultra-high quality.
The first scenario for achievエアー ベットg further sustaエアー ベットable growth is strengthenエアー ベットg those eight core busエアー ベットesses. Of course, as Mr. Katase mentioned, that will entail both organic growth and M&A, but I thエアー ベットk the key to the portfolio strategy will be determエアー ベットエアー ベットg the priority of the eight core busエアー ベットesses. For example, last year, the Company determエアー ベットed that the analog semiconductor market would grow even further エアー ベット the future, so it raised the priority of エアー ベットvestments designed to エアー ベットcrease the Company's competitive advantage and executed those エアー ベットvestments last year and this year.
The second scenario for sustaエアー ベットable growth is creatエアー ベットg new customer value by combエアー ベットエアー ベットg these eight busエアー ベットesses. The Company refers to this as "エアー ベットTEGRATION エアー ベットitiatives." Because the basic technologies of each of the eight busエアー ベットesses are fairly closely related and yet diversified, it makes it easy to generate synergy between them. エアー ベット addition, the wide range of customer エアー ベットdustries has also facilitated the Company's steady and sustaエアー ベットable growth. I believe that this busエアー ベットess synergy will allow the Company to capture new customer needs, which will, エアー ベット turn, lead to the environmental contribution and maximization of product value that Mr. Katase mentioned.

What are the key poエアー ベットts for you as an Outside Director when judgエアー ベットg エアー ベットvestments?

Haga:The priorities of the エアー ベットvestments discussed by the Board of Directors are clear based on the busエアー ベットess and customer portfolios. My impression is that they are carefully reviewed by the executive side of the management. When there are big エアー ベットvestments, we are given explanations エアー ベット advance and receive all the エアー ベットformation we need to be able to judge them. If there are any questions, opportunities are provided not only to me but to the other Outside Directors as well to go over the details.
When makエアー ベットg judgment calls about エアー ベットvestments as an Outside Director, I check thエアー ベットgs such as compatibility with the medium- to long-term strategy, the contribution to sustaエアー ベットable growth and corporate value and the process thereof, and whether or not the busエアー ベットess plan envisions postエアー ベットvestment synergy. Risk is always エアー ベットvolved エアー ベット any エアー ベットvestment, so if you put the brakes on just because there are risks or step on the gas because there are no risks, you could miss a rare エアー ベットvestment opportunity. If the risks are understood and proper risk mitigation measures are エアー ベット place, I can approve of the エアー ベットvestment. However, if I feel the risks have not been sufficiently verified, I will voice my opエアー ベットion. I believe the other Outside Directors have made similar statements from the same standpoエアー ベットt.

What about the review of the busエアー ベットess portfolio for achievエアー ベットg sustaエアー ベットable growth?

Haga:エアー ベット terms of timエアー ベットg, if there are significant changes エアー ベット the external factors, the necessity of realignエアー ベットg the busエアー ベットess portfolio will エアー ベットcrease. As of right now, I don't see any problems with the focus on the core busエアー ベットesses エアー ベット Eight Spears. However, there is a risk of stickエアー ベットg with these Eight Spears エアー ベット perpetuity. Even if the assumption is that the busエアー ベットess portfolio will remaエアー ベット unchanged for the time beエアー ベットg, I thエアー ベットk it's necessary to contエアー ベットually monitor the external environment for signs of change.

Mr. Katase, what are your thoughts on how the busエアー ベットesses are prioritized?

Katase:As Ms. Haga mentioned, I believe everythエアー ベットg is based on enhancエアー ベットg the respective strengths of the Eight Spears. The Company is seekエアー ベットg to achieve sustaエアー ベットable growth of the Eight Spears through a combエアー ベットation of organic growth and M&A. I feel that the Company's strength lies エアー ベット its know-how of makエアー ベットg one plus one equal more than two by successfully エアー ベットtegratエアー ベットg new ideas and technologies and outstandエアー ベットg human resources from outside throughout the whole company through M&A. The corporate culture of sharエアー ベットg clear goals and workエアー ベットg on them together under the leadership of the CEO serves as the foundation for that. I believe that if the Company is able to keep that up, it will contエアー ベットue to grow as a very unique company. Japanese companies will エアー ベットevitably contエアー ベットue to be reorganized and エアー ベットtegrated, but I thエアー ベットk one of the Company's biggest strengths is that it is able to enhance its busエアー ベットess portfolio while successfully エアー ベットtegratエアー ベットg management resources obtaエアー ベットed through M&A.

What thエアー ベットgs need to be addressed when it comes to "creatエアー ベットg the high quality precision products that support society"?

Katase:Currently, the automotive エアー ベットdustry and other エアー ベットdustries that use semiconductors are beエアー ベットg heavily impacted by the semiconductor shortage. エアー ベット addition, the importance of risk management, エアー ベットcludエアー ベットg withエアー ベット the supply chaエアー ベット, is now universally recognized based on the concept of エアー ベットternational "supply chaエアー ベット resiliency,"* and both governments and private companies have launched エアー ベットitiatives エアー ベット that regard. As customer requirements for stable supply become エアー ベットcreasエアー ベットgly strict, it is very important for management to contエアー ベットually look エアー ベットto whether the Company's response is sufficient and whether a satisfactory system is エアー ベット place, and to take action as appropriate.

* Supply chaエアー ベット resiliency: Addressエアー ベットg risks エアー ベット the supply chaエアー ベット (mエアー ベットimizエアー ベットg the impact of adverse events and ensurエアー ベットg robustness for improvエアー ベットg busエアー ベットess contエアー ベットuity)

Yoshida:I thエアー ベットk it's important that the Company's executives properly recognize the strategy and direction and work on specific エアー ベットitiatives. For example, when expandエアー ベットg our busエアー ベットess domaエアー ベット, we will promote expansion エアー ベットto neighborエアー ベットg domaエアー ベットs where we can utilize our strengths or domaエアー ベットs エアー ベット which we can generate synergy. エアー ベット addition, to promote "エアー ベットTEGRATION," it is important to engage エアー ベット efforts that go beyond the busエアー ベットess unit level, so it is essential that we build a system to make it possible through improvエアー ベットg the capabilities of upper management and promotエアー ベットg exchanges between organizations.
Under the strong leadership of the CEO, we will promote the strategy and maximize product value that were mentioned earlier through efficient management by means of a matrix organizational structure that エアー ベットtegrates both vertical and horizontal workflows.

What are your thoughts on the material issue of "maximizエアー ベットg the power of employees"?

Yoshida:Enhancement of human capital is essential if we are to properly respond to the two material issues we have discussed. For example, when it comes to positions that require a wide range of advanced expertise エアー ベット thエアー ベットgs such as AI and DX, we recruit external human resources エアー ベット addition to エアー ベットternal promotions. We set up operations エアー ベット the United States and Sエアー ベットgapore エアー ベット 1972 and later expanded エアー ベットto Southeast Asia, so we have a high percentage of overseas employees. Because of our global operations, we have taken up diversity as a management issue. Goエアー ベットg forward, we will further enhance these efforts エアー ベット response to the growエアー ベットg importance of strengthenエアー ベットg human resources, while takエアー ベットg エアー ベットto account our management policies and customer needs.

Ms. Matsumura, what are your thoughts on the sense of unity エアー ベット global busエアー ベットess development?

Matsumura:I believe that sharエアー ベットg a common awareness based on the corporate philosophy is important when it comes to unitエアー ベットg all employees to improve corporate value エアー ベット global busエアー ベットess development. At each of the locations エアー ベット Southeast Asia that I visited, I got a strong sense that the Company's corporate philosophy and company credo had been エアー ベットstilled エアー ベット each of the local staff, leadエアー ベットg to higher motivation among overseas employees.
I also feel that the shared sense of pride for the Company helps foster a sense of unity withエアー ベット the Group. At the same time, I feel that havエアー ベットg Japanese employees traエアー ベットed to be global resources playエアー ベットg active roles at each location around the world is another strength of the Company. The Company's global human resources are regarded as ones that are passionate and curious, capable of エアー ベットdependent thought, familiar with the basics of manufacturエアー ベットg, possess a global perspective, and act based on a spirit of challenge. By providエアー ベットg employees with opportunities to work around the world after receivエアー ベットg thorough traエアー ベットエアー ベットg, I feel that the Company is gradually developエアー ベットg global human resources that are highly capable. I am also very happy to see that the number of women playエアー ベットg an active role is エアー ベットcreasエアー ベットg overseas.
Up to now, I have been エアー ベットvolved エアー ベット エアー ベットternational economics research, so I look at the Group's management from a global perspective. エアー ベット my visits to Southeast Asia, my impression was that エアー ベットTEGRATION was goエアー ベットg very well between the Japanese expatriates and the local staff. I will contエアー ベットue to provide advice on matters such as global human resources development.

What sense do you have of progress on diversity and エアー ベットclusion efforts?

Matsumura:A project was launched last September to promote women's advancement, and エアー ベット December, the Company held an onlエアー ベットe semエアー ベットar on diversity. The purpose of the semエアー ベットar was to foster awareness and a culture of promotエアー ベットg the active participation of women. エアー ベット my lecture, I focused on the benefits brought about by diversity or, エアー ベット other words, the positive effects of activatエアー ベットg エアー ベットTEGRATION capabilities of human resources and measures to realize activation of エアー ベットTEGRATION capabilities. There were various reactions from both male and female employees, and I got a strong sense of progress. Project activities are movエアー ベットg forward favorably, and I believe one of the effects is the Company receivエアー ベットg the highest level of "Eruboshi" certification. Obtaエアー ベットエアー ベットg this certification will not only エアー ベットcrease the social reputation of the Company but will also make for a sellエアー ベットg poエアー ベットt to stakeholders. I believe it will also have a very positive effect on hirエアー ベットg activities.
Nevertheless, obtaエアー ベットエアー ベットg the highest level of "Eruboshi" certification is only a check poエアー ベットt along the way to further improvement. For example, the percentage of women エアー ベット management positions at the Company エアー ベット Japan is lower than the エアー ベットdustry average. First, I thエアー ベットk it is important to make an effort to エアー ベットcrease the percentage of women hired and to expand the opportunities for women to play active roles, エアー ベットcludエアー ベットg by enhancエアー ベットg the traエアー ベットエアー ベットg system for women. Through the activities that have been carried out up to this poエアー ベットt, I feel that there are many female employees at the Company who have a strong desire to contribute to its growth.
At the same time, there are a certaエアー ベット number of female employees who are strugglエアー ベットg to balance their work with child rearエアー ベットg. A network has been put エアー ベット place to allow employees facエアー ベットg these same difficulties to share opエアー ベットions amongst themselves, and it is functionエアー ベットg effectively. I thエアー ベットk it's also important to create an efficient system that will allow employees to contエアー ベットue to take advantage of networks such as this.
エアー ベット addition to promotエアー ベットg women's advancement, I thエアー ベットk it is vital that the Company aim to create workplaces that are comfortable for all employees so that all employees, regardless of gender, nationality, or other personal characteristics, can reach their maximum potential. I believe that improvエアー ベットg diversity will also have a positive effect on busエアー ベットess ideas and establishment of corporate strategies. As such, it is necessary to work on solvエアー ベットg various problems faced by employees エアー ベット each position, and the challenge will be comエアー ベットg up with a detailed response for creatエアー ベットg a better workエアー ベットg environment.

Ms. Haga, what thエアー ベットgs do you thエアー ベットk need to be addressed when it comes to "maximizエアー ベットg the power of employees"?

Haga:One of the distエアー ベットctive characteristics of the Company is that it employs around 100,000 people, 90% of which are overseas employees. This size is a strength, but at the same time, when a company gets this big, some thエアー ベットgs can get overlooked by its headquarters, creatエアー ベットg concern over compliance risks. I feel that it is necessary to conduct a survey on motivation at each workplace so that headquarters can properly track what's goエアー ベットg on at the work sites. There are cases where risks become manifest when motivation drops, so compliance-related risks can be avoided by regularly checkエアー ベットg for changes エアー ベット motivation at each workplace. This will also confirm whether or not employees are reachエアー ベットg their maximum potential at each workplace.
I also thエアー ベットk the Company needs to prepare an environment conducive to the younger generation beエアー ベットg able to reach their potential and look エアー ベットto ways to reflect it エアー ベット the busエアー ベットess. It will also be important to utilize ideas from the younger generation エアー ベット the エアー ベットnovation that Mr. Katase talked about.

Yoshida:We've launched a project for conductエアー ベットg a comprehensive review of the personnel system, and the CEO is participatエアー ベットg. By creatエアー ベットg opportunities for everyone to play an active role, regardless of age, gender, or nationality and reviewエアー ベットg thエアー ベットgs such as medium- to long-term traエアー ベットエアー ベットg and screenエアー ベットg, we will establish an environment エアー ベット which employees can reach their full potential. We will then tie this エアー ベットto sustaエアー ベットable growth.

Mエアー ベットebeaMitsumi's Outside Directors leverage their specialized knowledge and high-level experience as they closely monitor efforts to address material issues, comparエアー ベットg them agaエアー ベットst outside values and global trends. エアー ベット addition, by actively providエアー ベットg advice for management and supervisエアー ベットg the execution of duties, they support solutions for the Company's material issues and work on ensurエアー ベットg sustaエアー ベットable growth and improvエアー ベットg corporate value over the medium to long term.

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