1. Basic Thinking Regarding Corporate Governance
We recognize corporate governance, both in its implementation and continued reinforcement, as critical in becoming a necessary component of society, lastingly and sustainably improving our corporate value, and enhancing our health and transparency based on our corporate philosophy, management policy, corporate slogan, vision and mission.
How should we live each day? How should we participate in society? And through this participation, what fruits can we bear for society that translate into the happiness we each pursue? To answer these questions, our management style seeks to provide a foundation upon which employees can earnestly build toward individual self-realization while aiding and encouraging one another.
IDEAL to REAL
Ideals are the very best of what can be made real, and what we seek to be is a company that brings ideals into reality to create a new future. Whether the ideal city, ideal residence, or ideal living environment, we use real estate development to give form to our customers’ wishes. From residence to retail, asset management to operational management, we propose and develop spaces where people naturally gather, want to go home to, and take pride in. From ideal to real – real estate.
To Be A Life Developer
To develop not only the buildings but also the lives of those who live in them, thinking of their happiness – this is the kind of life developer we seek to be. Through solutions proposed by cross-departmental teams made up of the best and brightest, we create richness unprecedented in the real estate industry, connecting people with people and communities with the future.
To Develop “New Norm Neighborhoods”
To create community-rooted value and continue to add to it over time, building ‘small-town communities’ that are not rural but neighborhoods that residents nevertheless take pride in, love and care for.
To create not just buildings but lifestyles, not just towns but interactions, that get more attractive the longer people live there – these are the kinds of places we want to spread across Japan.
2. Corporate Governance Structure
We have an audit committee, so the board of directors and this committee manage, supervise, and audit the execution of business.
(1) Board of Directors
The board of directors consists of eight members: three executive directors, two non-executive directors, and three directors who are also members of the audit committee. In order to improve management supervisory functions, the five directors who are non-executive directors or directors that are also members of the audit committee are all outside directors, of which four are independent outside directors. The president and representative director serves as the board chair.
- In principle, the board meets at least once a month, improving management supervision by adequately discussing and deliberating upon important matters.
- In order to ensure speed and mobility in business execution, the Articles of Incorporation delegate decision-making authority regarding important business execution to the executive directors. The scope of this delegation is strictly managed in accordance with standards such as a monetary amount stipulated by the board of directors and the status of the delegated business is reported to the board of directors without delay.
(2) Audit Committee
The audit committee consists of three members, all outside directors to enhance management supervision and its independence. Two are independent directors and one is the full-time auditor.
- In principle, the committee meets once a month, and members of management such as accounting auditors, internal auditors, and executive directors attend at the request of committee members to report on manners in a timely and appropriate manner.
- Members of the audit committee regularly exchange opinions with the president and, if necessary, interview members of management such as the executive directors to understand the status of business execution and issues in each segment.
- Members such as the full-time auditor attend important, regularly-held meetings such as management committee meetings, led by executive directors, and head office meetings, attended by executive directors and the members of management of each segment, to share the status of management and progress on business plans.
- The committee reviews important documents such as circulars for approval and collaborates with accounting auditors and the internal auditing department to audit the legality and validity of the directors' performance of duties. In addition, it strengthens governance by selecting one full-time audit committee member and making that person the chief audit committee member.
(3) Nomination and Remuneration Advisory Committee
The Nomination and Remuneration Advisory Committee deliberates and determines the nomination and remuneration of directors as an advisory body of the board of directors.
The committee shall be composed of members, of which at least more than half shall be outside directors, and thus strengthen the independence and transparency concerning nominations and remuneration.
3. Reasons for the Current Corporate Governance Structure
4. Activities Related to IR
It is posted on our website and included in securities reports.
We hold regular meetings twice a year, once in late February after the announcement of financial results and once in late August after the closing of the second quarter. They are about one hour, in which a representative explains business, results, strategy, etc., followed by a participant question-and-answer time. Target participants are around 30 analysts and fund managers in Japan and abroad.
We arrange briefing sessions on each quarter’s results as requested and conduct individual IR activities by means of overseas IR briefings and web conferencing.
In the past year, due to the impact of the spread of COVID-19, individual IR activities were conducted via web conferencing.
Financial information such as results, other regularly disclosed documents, securities reports, company explanations, corporate governance reports, convocation notices of ordinary meetings of shareholders, medium-term management plans, project guides, and videos and slides of semi-annual financial results briefings are posted on the website (partially in Japanese only). Our PR department also takes IR-related questions online. In addition, in order to improve disclosure and provision of information to overseas investors and others, the English versions of our quarterly financial highlights (summaries), convocation notices, presentation materials, major press releases and business details are posted on our IR website (English site) for overseas investors.
The department in charge of IR is the management department within the management division, the officer in charge of IR is the person in charge of information handling, and the person in charge of IR affairs is the head of the management department within the management division.
We have created an IR site for overseas investors, on which we publish the English versions of our quarterly financial highlights (summaries), convocation notices, and results presentation materials.
5. Efforts Concerning Respect for Stakeholder Position
As stated in our management philosophy, we constantly aim for management that makes a lasting and necessary contribution to society. Through the following activities based on this management philosophy, we will improve the value of every stakeholder.
2. Based on the Employee Rulebook, we train personnel to facilitate sustainable improvement of corporate value.
3. Based on the Compliance Code of Conduct, we respond to all stakeholders fairly, impartially, and honestly.
4. We regularly disclose management information including non-financial information, improve corporate value, and make proactive returns to shareholders.
As part of our ESG activities, we are engaged in a variety of initiatives, including the following:
In the GRESB real estate assessment conducted in 2020, we obtained “3 Stars” and “Green Star” ratings in the Development Benchmark category.
In the ESG/SDG-related assessment created by Sumitomo Mitsui Banking Corporation and the Japan Research Institute, ES-CON JAPAN obtained an “A*” rating, which is the third-best rank out of seven, indicating that we are implementing favorable ESG and SDG initiatives and information disclosure, and raised funds through an assessment-based loan.
In July 2020, the tonarie Yamato-Takada and tonarie Toga-Mikita community-based commercial facilities developed by ES-CON JAPAN and currently owned by ESCON JAPAN REIT Investment Corporation obtained DBJ Green Building Certification from Development Bank of Japan, Inc.
In May 2020, we acquired certification from EcoAction21, a Japan-specific environmental management system (EMS) developed by the Ministry of the Environment.
Le Jade Okurayama, a condominium property completed in November 2020, was selected as a ZEH-M support project. Going forward, we will continue to pursue eco-friendly condominium development initiatives.
At tonarie Seiwadai, which is operated by our Group, all tenants take dementia training classes, and the facility has been certified as a dementia support business establishment by the Hanshinkita District Office.
The Corporate Ethics and Conduct Charter and Compliance Code of Conduct stipulate efforts toward transparency and openness to stakeholders.
We strive for a work environment that empowers women, including appointing women to serve as our new outside directors and executive officers. We also actively employ senior citizens, seeking to transcend sex and generation in forming a workforce that improves corporate value.
6. Diagram of Corporate Governance Structure