Message from the Auditors

The role and responsibility of Audit & Supervisory Board members is to live up to the trust shareholders have placed in them by auditing and supervising the execution of directors’ duties. In this way, we help establish a sound corporate governance system. As a full-time Audit & Supervisory Board member, I attend important meetings such as meetings of the Executive Management Committee and the Executive Sustainability Committee, gather information on various issues, and, when necessary, have discussions with executives of the group. The content of the discussions is shared not only with other Audit & Supervisory Board members but also with outside directors.
One area of focus is group governance. Japan Pulp & Paper has been actively pursuing M&As to expand its business. In recent years, the number of group companies (both in and outside of Japan) has increased, and we are promoting efforts to strengthen group company audits to ensure proper management oversight. For example, each year we visit group companies in and outside of Japan to conduct interviews and observe whether or not governance is functioning appropriately. Through collaboration with the Internal Audit Office and auditing firms as well as at subsidiary auditor liaison meetings, we work to standardize auditing processes and checklists. We also hold study sessions on financial and operational audits and exchange information.
Japan Pulp & Paper’s business model and strengths have been cultivated over its long history, but there is now growing momentum to transform these elements and take on new challenges. I can sense that the company is in the process of change. In the midst of these changes, I am committed to supporting the company’s transformation based on the belief that it is the responsibility of an Audit & Supervisory Board member to help establish a system for achieving sound and sustainable growth, creating medium-to-long-term corporate value, and living up to the trust placed in us by society.

Compared with eight years ago when I became an outside Audit & Supervisory Board member, the company’s business has expanded, its strengths have grown, and the portfolio has significantly changed. I feel the company is transitioning to the next growth stage. This shift is reflected in the recently announced OVOL Medium-term Business Plan 2026, which clearly states the company’s ambition to realize its long-term vision as detailed in OVOL Vision 2030. The plan also sets out specific, ambitious frameworks and strategies, reflecting a significant change in the company’s stance. I feel that its financial strategy, approach to shareholder returns, and capital policy are more market-conscious than ever before. Going forward, it will be essential to ensure that the growth strategy is fully understood by investors and stakeholders. I expect the company to expand its efforts to communicate its initiatives to the market and engage in IR activities and dialogue that earn a positive evaluation.
As the company continues to accelerate its business expansion, I believe it is necessary to establish an integrated management system that is in line with global business operations. Specifically, from the perspective of appropriate financial reporting and corporate governance, I believe it is time to consider unifying IT controls, financial reporting, and auditing functions at the global level. The company’s financial reporting system and internal audit departments have always been maintained at an appropriate level as a prime market-listed company, and I hold that in high regard. The company needs to further enhance its management foundation by creating a system that enables efficient and accurate collection of financial and non-financial data from both group companies in and outside of Japan. I will continue to offer suggestions and oversee efforts in this area.

Since I took up the position of outside Audit & Supervisory Board member in 2023, I have been surprised by how extensive the company’s activities are, and how it continues to grow despite a shrinking paper industry. The company is currently promoting OVOL Medium-term Business Plan 2026. In formulating this plan, I was conscious of the need to maintain an external perspective. On the other hand, I believe that the independent position of an Audit & Supervisory Board member is meaningful in itself. Having an additional step in the management process enables better and more accurate monitoring.
The company’s auditing system is well-established, but it is also a fact that there was an issue related to compliance with the Antimonopoly Law.
The company took this matter very seriously and has reflected deeply on it. I believe that executives and employees of the group have a strong awareness and are committed to continuous improvement going forward. Another characteristic of the company is its system for making constant improvements through a process of information sharing with the Audit & Supervisory Board and discussions at Board of Directors meetings. A major challenge going forward will be strengthening global governance as the business continues to expand globally. I believe the group must always monitor risks and maintain a system for ensuring effective governance throughout the entire group. I will continue to conduct audits that support the company’s growth in the right direction.

Since assuming the role of outside Audit & Supervisory Board member in June last year, I have been able to gain an understanding of the company’s revenue structure and financial position. Even before my appointment, I viewed the company as one that has steadily grown and been able to increase its corporate value. Upon reviewing the company as an outside Audit & Supervisory Board member, I gained a deeper understanding of how well the company’s management foundation is established. Regarding governance, the company has successfully balanced an open corporate culture with supervisory functions. This became evident in the process of formulating OVOL Medium-term Business Plan 2026, where the background, objectives, and specific policies were thoroughly explained and discussed by the Board of Directors and Audit & Supervisory Board.
If I had to point out an issue, it would be that the company needs to further enhance the disclosure and dissemination of non-financial information, such as initiatives related to sustainable management and human capital management. I hope it can establish a system for accurately communicating the group’s initiatives to stakeholders, fostering good relationships, and co-creating new value. As the group continues to expand in line with business growth, some of its group companies are small and medium-sized so it must strengthen group governance in areas such as enhancing the level of governance and accounting procedures as well as global tax planning. The company has a strong management foundation, led by the president, capable executives, and the right people in the right positions. I will continue to make suggestions to ensure that governance is enhanced at all group companies, while further strengthening communication.