2023 Integrated Report Third Party Opinion

This report, which is an integrated report, is a voluntary disclosure medium, and its quality depends largely on the enthusiasm of the publisher. Since 2017, we have been writing third-party opinions for our company, and every year we exchange opinions and propose improvements in the process. The president and other executives attend the exchange of opinions, and we receive a polite "response to the improvement proposal" for improvement proposals. As exemplified by this process, we are committed to continuously improving the quality of our reports.
This report is the result of such enthusiasm. This is the first report after reviewing the "Sixth Period Medium-Term Business Plan" to achieve "revival and growth," and readers will be very interested in the necessity of the review and the new strategy. In order to meet these expectations, the CEO has detailed the positioning, background, and direction of the review. In addition, to flesh them out, the COO commits to initiatives to improve profits and expand the business, and the CTO and SCM are committed to the initiatives of structural reform. In addition, in the Member of the Board(Outside Director) discussion, various issues for the enhancement of corporate value in this Medium-Term Business Plan are clarified and prescriptions are presented. In this way, it can be conveyed that the report was created with a strong awareness that it was a report issued at an important turning point.
There are also a number of areas for continuous improvement. A typical example is the description of the materiality identification process. Since the identification and reporting of materiality is at the heart of corporate disclosure, the appropriateness of the identification process is an important concern. According to the GRI Standards, "The process for determining material items should be documented, including the methods adopted by the organization, the decisions made, the assumptions, the subjective judgments, the sources analyzed, and the underlying information collected." For the first time, we have disclosed our materiality activities since 2018 and identified the 2023 initiatives (specific process) for review. These convey that materiality has been identified through an appropriate process. Furthermore, in order to attract more sympathy for materiality, we believe that it is necessary to present a specific selection process based on more preconditions and the logic of subjective judgment in narrowing down the items and organizing sub-materiality.
Medium-Term Business Plan has presented many strategies for improving corporate value, but information disclosure should also be positioned as one of the important strategies. We are now in an era where the evaluation of corporate value changes depending on whether or not we actively disclose information. Therefore, I believe that information disclosure should not be reactive in response to external requests, but rather proactive in reaching out to investors and stakeholders. As one of them, we should actively disclose ESG information (both positive and negative) that is linked to the enhancement of corporate value.
Among ESG information, there is a growing interest in information on human capital. We believe that this is due to the fact that human capital is a core element for the sustainability of society and companies, and many investors are now increasingly demanding explanations regarding human capital, and at the same time, companies have become more aware that "human capital is the most important position in a company" (CHRO Ebuchi). Based on the same recognition in this report, a dialogue between the CEO and CHRO was published, and a new "Human Resources Division Committee" was established in Sustainability Committee. These are highly appreciated, but in the future, I would like to see the logic and figures shown how investment in human capital and initiatives are linked to the enhancement of corporate value, as indicated by the "Guidelines for Visualizing Human Capital."

J-OIL MILLS report