Messages From Outside Directors and Outside Audit & Supervisory Board Members

Needless to say, for a company to enhance its value over the medium to long term it is critical that it has an effective Board of Directors. In order for it to be able to accurately identify risks and seize opportunities in these uncertain times, the company is working to improve the diversity of the Board. The percentage of female executives stands at 30.0%, which is second in the wholesale sector among companies listed on the Prime Market (as of July 31, 2022), and lively and multifaceted discussions take place at every Board meeting.
In addition, while the Executive Sustainability Committee and the Corporate Sustainability Division were established in fiscal 2022 in order to enhance sustainable management, the group can only do so much on its own. I contributed in my own small way to bringing stakeholders into the mix by joining other members in giving lectures at meetings with business partners on the topic of environmental and energy issues. I look forward not only to group-wide efforts to help achieve a sustainable society, but also to working more closely with a wide range of stakeholders based on the Corporate Philosophy, which encompasses Our Corporate Spirit of integrity, fairness, and harmony.
Japan Pulp & Paper has a 178-year history as a leading paper distribution company. However, the company has not rested on past accomplishments and continues to create new value. I will participate in Board meetings with a strong awareness of the need to further refine the group’s organizational capabilities for creating new value, the ability to make proposals utilizing its expertise and network, and the technological strengths for realizing a circular business model. I will continue to participate in Board discussions in support of efforts toward realizing the corporate slogan of ”Paper, and beyond.”

It has been a year since I was elected as an outside director in 2022. One thing I have found very beneficial is the pre-briefings that take place prior to Board meetings. In addition to thorough explanations, receiving reports from the Audit & Supervisory Board and the Executive Management Committee gives me the chance to review the necessary information before attending Board meetings. We are able to have lively discussions at Board meetings due to the efforts of the Secretariat of the Board of Directors. This also contributes to improving the effectiveness of the Board of Directors and, in turn, the effectiveness of governance. Going forward, it will be important to link these efforts to group governance and establish a more well-coordinated governance system.
As evidenced by the early achievement of the quantitative targets of Medium-term Business Plan 2023, the group is creating value through a wide range of businesses based on a stable management foundation. For nearly half a century, the group has also contributed to the realization of a circular economy through its recycling business, including wastepaper recycling. I want to make sure this value creation and other unique group initiatives are conveyed to society and receive the recognition they deserve.
In order to further enhance corporate value in the future, the company needs to create a vibrant work environment that unlocks the potential of employees and generates innovation. I will fulfill my duties as an outside director and contribute to these efforts.

I was elected as an outside director at the General Meeting of Shareholders held in June 2023. I began my career working at a bank in 1985, and have continued to be involved in a wide variety of banking businesses. I would like to use my experience to supervise and provide advice on the overall management of the group from the standpoint of an outside director.
Looking at the current business environment and performance trends, sustainable growth and value creation will be determined by how the group mitigates risk and firmly seizes business opportunities. One of the most common risks associated with the paper industry is that demand for paper will decline as digital technology progresses, limiting the potential for growth. However, I believe that the group has unlimited potential to create high-value-added products if it firmly seizes business opportunities by utilizing its ability to make proposals, its organizational capabilities, and its technological strengths—all three of which are group strengths. In other words, further enhancing group governance and achieving group synergy will lead to the continued realization of the corporate slogan, “Paper and beyond.”
While taking advantage of paper’s inherent qualities such as its ability to convey a message or its uses for wrapping and wiping, as well as its flexibility and other features, the group will pursue the unlimited potential of the paper business. This will include strengthening the group’s unique circular business model and expanding business in peripheral areas through M&A. In this way, the group will be able to provide new value to society.
Human capital is the most important form of capital for achieving the group’s goal of becoming the world’s leading paper distribution group, so it is important to develop executive candidates, including talent from outside of Japan, for the next generation of management.
I look forward to further strengthening human capital management, including the development of the human resource management system.

One particular aspect of the governance structure that I would like to emphasize is that management has a system in place for taking immediate corrective action on any issues that may impact the group. Internal controls and corporate governance, as well as other elements that are a part of the inner workings of corporate management leadership, are appropriate, and internal audits are functioning well. In terms of group governance, while the current level is adequate for a company listed on the Prime Market, I believe it is necessary for the company to further strengthen and enhance its efforts as it looks to expand the scope of its operations in the future.
The Board of Directors carefully considers the M&As and investment projects that are frequently on the agenda, and spends a great deal of time evaluating and discussing the post-investment status of each project. The Board can confirm that the company is making good progress and achieving results, especially with regard to M&As outside of Japan. However, due to the physical distance between Japan and some of these countries overseas, the key to management and IT control lies in the head office taking the lead, while also considering the three lines of defense. As mentioned before, the number of group companies, both in Japan and overseas, has increased through M&As, and the business is becoming more diverse. I would like to promote further fluidity and diversification of management personnel, such as by training people who can be entrusted with the management of subsidiaries and appointing talent from outside of Japan to management positions in Japan and other countries.
Finally, I would like to express my expectations for the group. The Japan Wholesaling segment, which is the group’s original business, has the ability to generate stable cash flow. It also has considerable strengths and potential through the networks and know-how it has developed over its long history. I look forward to seeing these valuable management resources utilized to create new value as well as in cross-industry initiatives or even activities that go beyond the industry.

I was elected as an Audit & Supervisory Board member in June 2023. I will utilize my practical experience as an attorney-at-law and my deep insight into legal and compliance matters to strengthen audit functions and the governance system.
Based on its position as a leading company in the paper wholesaling industry, Japan Pulp & Paper is taking on the challenge of creating new businesses and expanding the potential of paper. Paper is attracting attention as a material with a lot of potential, and it is increasingly being considered as an alternative to plastic. Moreover, paper has great potential in terms of reducing environmental impact. As a leading company in the industry, Japan Pulp & Paper can propose solutions to diverse issues. I look forward to seeing the group continue to propose solutions and provide value in helping to achieve the 17 SDGs and resolving issues that companies face in reducing their environmental impact.
Since there is no concrete goal line when it comes to corporate governance, it is important to both resolve governance issues that arise and update systems to ensure they are fair and equitable from a social perspective. The potential of paper is expanding, and that is steadily being reflected in business results. Under these circumstances, problems are more likely to arise if the company becomes complacent. Therefore, I would like to fulfill my duties from the standpoint of an outside Audit & Supervisory Board member. As a global company, I expect Japan Pulp & Paper to enhance its corporate value by transforming its governance structure to meet global standards for fairness and honesty, and by emphasizing dialogue and communication with all stakeholders.

I was newly elected as an Audit & Supervisory Board member at the General Meeting of Shareholders held in June 2023. I hope to utilize my experience as a certified public tax accountant with knowledge of corporate taxation, accounting, and other related fields to enhance audit functions.
Since I have only been an Audit & Supervisory Board member for a short period of time, I would like to talk about my impressions of the company from an outsider’s perspective. Although Japan Pulp & Paper has a history of 178 years, it has always taken on new challenges to enhance corporate value. Indicators such as the capital-to-asset ratio, cash ratio, debt, ROE, and the net D/E ratio show that it has a good balance of assets, liabilities, and capital. This indicates that it has been promoting management while remaining conscious of expanding its financial base.
In Medium-term Business Plan 2023, the final year targets for some indicators have already been achieved, and I see this as good progress in terms of earnings. Going forward, from the perspective of further enhancing sustainable management, I expect the company to continue to promote initiatives that lead to increased corporate value, particularly when it comes to addressing climate change-related risks and expanding human capital management. In addition, from the perspective of realizing a sustainable society, I hope to see the establishment of a system for increasing employee satisfaction, and efforts to increase employee engagement by helping them realize that their work contributes to the enhancement of corporate value. I would also like to utilize my experience to contribute to enhancing corporate value and to the establishment of a highly transparent management system.