Fuji Oil : Corporate Governance Report (864.58KB)

Corporate Governance Report

CORPORATE GOVERNANCE	FUJI OIL HOLDINGS INC.
Last Update:	June 29, 2023
	FUJI OIL HOLDINGS INC.

Mikio Sakai, President and Representative Director

Contact: Yoshiharu Okamoto, Chief of

Corporate Communication Group

Securities Code: 2607

https://www.fujioilholdings.com/en/

The corporate governance of FUJI OIL HOLDINGS INC. (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

Through the realization of effective corporate governance, the Company aims to prevent theoccurrence of situations that could harm the Company's corporate value, including legal violations, corruption, or scandals, as well as promote sustainable growth and increase our medium- to long-termcorporate value. We position corporate governance as a vital framework for meeting the expectations of our stakeholders, including shareholders, clients and business partners, Company executives and employees, and general society, and ensuring fair and rapid decision-making.

Moreover, the Company believes that strengthening the monitoring functions of the Board of Directors while flexibly and rationally making decisions and executing business is very important to meet the trust and expectations of our shareholders and other stakeholders. Therefore, we shifted from being a company with an Audit and Supervisory Board to being a company with an audit and supervisory committee with a resolution at our 94th Ordinary General Meeting of Shareholders. That will further enhance our corporate governance by strengthening the supervisory functions of the Board of Directors with Audit and Supervisory Committee members responsible for auditing the execution of duties by Directors serving as members of the Board of Directors. At the same time, we are delegating the authority to make important business execution decisions to Directors, and promoting the execution of growth strategies.

Reasons for Non-compliance with the Principles of the Corporate Governance Code ■ Supplemental Principle 2-4-1:Ensuring Diversity in the Promotion of Core Personnel

• Concept of Ensuring Diversity ＜Concept of Ensuring Diversity＞
  The Company believes that respecting and promoting diversity is a very important social responsibility for

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us as we are involved in business activities globally. We also think that diversity of personnel isindispensable to achieve sound business development and social contribution amid a greatly changing business environment.

We have not announced target achievement rates for the recruitment of women, foreigners and mid-careerpersonnel from the perspective of promoting and placing the right personnel in the rightplaces. Nevertheless, we are actively working on the promotion of women in particular to core positions by ensuring half of our new graduate recruits (excluding in production employees) are women in addition to providing women with fair opportunities.

For details on metrics concerning our ratio of female managers, please refer to our 95th Marketable Securities Report under Status of Employees (4) Metrics Related to Diversity. (https://www.fujioilholdings.com/ir/library/negotiable/)

As for foreigner personnel, our efforts towards globalization have resulted in overseas human resources constituting 70% of our 6,000 total employees.

For career-oriented personnel, we are aggressively engaged in hiring with the aim of securing the new global business management skills required for our business strategy and incorporating diverse new perspectives into our business management.

One of the basic policies of our Midterm Management Plan is to implement sustainability strategy that is linked to our business strategy. One of the sustainability strategies we outline is the utilization of human resources, which includes evaluating the placement of the management-level human capital necessary to realize our management plans.

For the CEO, we have built scheme for a CEO succession plan through which we will evaluate the necessary requirements of future CEOs, select candidates, and outline development plans.

For directors, we will use a skills matrix to evaluate individual expertise and experiences while giving weight to diversity and changes in our operating environment. Director candidates are evaluated by the Nomination and Compensation Advisory Committee and further discussed annually at the General Meeting of Shareholders.

For executive officers and human resources who will serve in management posts at major Group companies, we select and train personnel for growth opportunities and management experience to enhance their perspective and their ability to support Group business activities.

To foster the development of future leaders, current management engages in multifaceted discussions to develop human resources strategically based on the future outlook for the Group. We started human resource development meetings as a place for evaluating the development of future leaders. We select and encourage the development of candidates to create successors at each level. We also select trainees for overseas placement to promote the development of future overseas human resources.

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The Company has disclosed our thoughts and efforts relating to diversity on Integrated Report, Sustainability Report and our website.

-Integrated Report (Pages 80 to 83)

https://www.fujioilholdings.com/en/pdf/ir/library/integrated_report/fujioil_integrated_report2021_01_en.pdf -SustainabilityReport

https://www.fujioilholdings.com/en/sustainability/ -DiversityManagementhttps://www.fujioilholdings.com/en/sustainability/social/diversity/

• Personnel Training Policy, Internal Environment Development Policy and Other Situations to Ensure Diversity
  Please refer to our 95th Marketable Securities Report under Sustainability Approach and Initiatives (6) Human Capital and Diversity.
  https://www.fujioilholdings.com/ir/library/negotiable/

(Corporate Governance Code Standards Revised in June 2021)

Disclosure Based on the Principles of the Corporate Governance Code

■ Principle 3-1(ⅰ)：Corporate Philosophy / Mid-Term Management Plan / Corporate Governance

Policy

The Company established the Fuji Oil Management Philosophy as our corporate philosophy and

publish this Management Philosophy on our website. (https://www.fujioilholdings.com/en/about/constitution/)

On April 1, 2023, we outlined a new vision for the Fuji Oil Group Management Philosophy. This new vision indicates the direction we will take to overcome issues and achieve continuous growth in an operating environment that has seen dramatic change in recent years,

Our Midterm Management Plan is available via our website: (https://www.fujioilholdings.com/en/ir/policies_and_systems/interim_results/).

■ Supplemental Principle 5-2-1: Business Portfolio

The Company is promoting product development and business strategies which accurately capture the trends sought by the market in the expansion and conversion of business that responds to mid- to long-term changes in the business environment. We are reviewing our business portfolio in

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anticipation of future changes in the business environment and optimizing our production basesoverall in a timely manner. Moreover, we have been determining the allocation of management resources for investment and other areas by verifying whether that would create cash flows which exceed the profitability set in the Group according to investment profit standards.

Under the Mid-Term Management Plan, Reborn 2024, for the three-year period between FY2022 and FY2024, we will combine our Group's technology with the products of various business divisions to pioneer new markets and customers by approaching new markets. And we will create new value and realize highly profitable business portfolio by shifting our portfolio from a focus on commodity products to high value-added solutions. We will concentrate allocation of management resources into growth and strategy areas and redistribute management resources to prioritize industrial chocolate business in the North and South America and the plant-based oils business. This will increase Group revenue and promote stable growth.

■ Principle 5-2: Capital efficiency-conscious management

The company has decided to introduce ROIC as a management indicator to measure capital efficiency in each business and have set a company-wide ROIC target of 5% for FY2024. In each business, we will improve ROIC by implementing pricing policies, recovering operating income through increased sales volume and other measures, and improving productivity, we will continue to build a business portfolio with high capital efficiency.

-Investors Meeting for Business Results of 4Q/FY2022 https://www.fujioilholdings.com/en/pdf/ir/library/hosoku/230511_presentation.pdf

■ Principle 3-1(ⅱ)：Basic Stance and Basic Policy on Corporate Governance

The Company established the Fuji Oil Holdings Corporate Governance Guidelines as principles and guidelines to be referenced in relation to corporate governance and these guidelines on our website. (https://www.fujioilholdings.com/pdf/en/ir/policies_and_systems/governance/guidelines.pdf)

■ Supplemental Principle 3-1-3: Sustainability Efforts

; Sustainability Efforts

The Company Group has embraced a Vision in the Fuji Oil Group Management Philosophy: "Together with our stakeholders, we will co-create a sustainable future for food, based on plant-based ingredients that are both delicious and healthy" and is promoting sustainability management.

All employees in the Group will promptly grasp social issues in the value chain (environmental issues, human rights, and physical and mental health, etc.) and then strive to provide solutions to meet the expectations of all our shareholders and to create social value. That will allow us to aim to realize a sustainable food future and improve the corporate value of the Group.

The Company established the ESG Committee (the name changed to the Sustainability Committee

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from2022) in 2015 as an advisory body of our Board of Directors in Fuji Oil Holdings and is operating it with the purpose to strengthen sustainability management.

Chaired by an internal director in charge of ESG, the committee receives advice from external experts, identifies the Group's ESG materiality, applies a multi-stakeholder perspective to discussing and supervising initiative targets and strategies, and provides reports to the Board of Directors. The Committee also serves an advisory and monitoring functions by receiving progress and performance reports on each initiative theme from managers in charge of promotion.

The Subcommittee on Group Significant Risks, which operates under the ESG Committee, works to mitigate the risk of damage to corporate value by identifying major Group-wide risks and evaluating the appropriateness of countermeasures.

-SustainabilitySitehttps://www.fujioilholdings.com/en/sustainability/ -ESGData Bookhttps://www.fujioilholdings.com/pdf/en/sustainability/download/esg2021.pdf -GRIStandard Comparison Charthttps://www.fujioilholdings.com/pdf/en/sustainability/download/gri2021.pdf

The Group announced our endorsement of the Task Force on Climate-related Financial Disclosures (TCFD) in May 2019. We are disclosing information in regard to four items - governance, strategies, risk management, and indicators and targets - based on the recommendations of the TCFD.

-Risk Management System https://www.fujioilholdings.com/en/sustainability/governance/risk/

; Investment in Intellectual Property

We have provided high value-added products utilizing the research results and technological capabilities we have accumulated over many years by using palm, cocoa, soybean and other plant-based raw materials as our basic raw materials since our foundation. We have built the results we have refined based on our core technologies into a patent portfolio to ensure the market superiority and pricing power of differentiated products. We have the leading share in Japan of important patents (based on number of patent citations) that can affect market superiority and pricing power in vegetable oils and fats business, industrial chocolate-related business, plant-basedfood-related business. Furthermore, we are also located near the top when it comes to human resource investment (≈ number of new inventors: number of inventors who have made a new patent application) to generate important patents in the future compared to our competitors both in and outside of Japan.

Moving forward, we will collaborate with our overseas sites to formulate and implement intellectual property strategies on a business-specific basis in order to enhance our global market superiority and pricing power.

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