[As of September 30, 2024]
In order to step up the effectiveness of corporate governance, the Company thoroughly takes steps to exercise adequate risk management, maintain an internal control system and ensure compliance from the perspective of securing management soundness and fairness and continuously strives to earn greater trust and strengthen the self-cleansing power of the Company. At the same time, we will make clear our policy on and status of initiatives taken toward implementing each principle of the Japan's Corporate Governance Code to facilitate sufficient dialogue with stakeholders.
< Corporate Governance Code >
Tokyo Stock Exchange, Inc. incorporates the fundamental principles for corporate governance established in "Japan's Corporate Governance Code" into its listing rules to contribute to effective corporate governance in Japan.
A Prime or Standard Market-listed company is required to provide explanation for non-compliance with any principle of the Code, while a Growth Market-listed company is required to provide explanation for non-compliance with any General Principle of the Code.
[Information of Corporate Governance Code by Tokyo Stock Exchange]
If the organizational structure of a company is either Company with Kansayaku Board or Company with Supervisory Committee and independent directors do not compose a majority of the board, in order to strengthen the independence, objectivity and accountability of board functions on the matters of nomination (including succession plan) and remuneration of the senior management and directors, the company should seek appropriate involvement and advice from the committees, including from the perspective of gender and other diversity and skills, in the examination of such important matters as nominations and remuneration by establishing an independent nomination committee and remuneration committee under the board, to which such committees make significant contributions.
In particular, companies listed on the Prime Market should basically have the majority of the members of each committee be independent directors, and should disclose the mandates and roles of the committees, as well as the policy regarding the independence of the composition.
The number of Independent Outside Directors is currently five (5) among nine (9) Directors in total, and constitutes a majority in the Board of Directors. Each Independent Outside Director provides opinions and advice as appropriate at Board of Directors’ meetings and to individual Directors and properly conducts management and supervision, drawing on his/her strong expertise and ample experience, reflecting diverse perspectives in light of their gender and skills.
[Remuneration Committee]
In addition, in order to enhance the independence and objectivity in the functions of the Board of Directors as well as to strengthen accountability, in June 2021, the Company has established a Remuneration Committee chaired by an Independent Outside Director. The Committee is composed of three (3) or more Directors elected by a resolution of the Board of Directors, with the majority composed of Independent Outside Directors.
- Authority and roles
The Committee deliberates on a policy for determining remuneration, etc. in officer remuneration for Directors (excluding Audit and Supervisory Committee Members), to determine the basic remuneration and bonuses in officer remuneration for Directors (excluding Audit and Supervisory Committee Members), etc. - Independence
Since all Outside Directors currently fall under Independent Outside Directors, the Remuneration Committee is considered to fall under an “independent remuneration committee.”
[Nominating Committee]
The Company includes Executive Officers who do not concurrently serve as Director in the scope of evaluation by the Remuneration Committee. In addition, the opinions of Independent Outside Directors are reflected in the nomination of candidates for Directors through the discussion on such evaluation. Therefore, the Company has not established a Nominating Committee.
When establishing and disclosing business strategies and business plans, companies should articulate their earnings plans and apital policies, and present targets for profitability and capital efficiency after accurately identifying the company’s cost of capital. Also, companies should provide explanations that are clear and logical to shareholders with respect to the allocation of management resources, such as reviewing their business portfolio and investments in fixed assets, R&D, and human capital, and specific measures that will be taken in order to achieve their plans and targets.
In order to enhance corporate value over the medium to long term, the Company has announced its vision and medium-term management plan for management and business, basic policy for capital strategy, revenue and expenditure plans, and specific numerical targets concerning financial results as the “CRESCO Group Ambition 2030” and “Medium-Term Management Plan 2026.” Please refer to “Principle 1.3” for details on capital strategy and “Principle 2.1” for details on the “Medium-Term Management Plan 2026.”
In formulating our medium-term management plans, we ascertain the cost of capital for the Company, and include the status of the review of the business portfolio (by customer, organization, segment, etc.) for sustainable growth, allocation of management resources, and various investment plans (new businesses, M&A, facilities, human resources and their development, research and development, etc.), which are organized as issues to be addressed, specific strategies (basic and key strategies), and risk of businesses. At the general meeting of shareholders and at the financial results meeting, etc., the Company provides clear and specific explanations about published information using comprehensible words and logic. The materials used for these occasions are posted on the Company’s website to fully inform its shareholders, investors and other stakeholders and promote understanding.
[Actions to implement management that is conscious of cost of capital and stock price] [Update date: September 30, 2024]
The Company discloses its key performance indicators (KPIs) for revenue and capital efficiency (ROE exceeding the cost of equity) in the “Medium-Term Management Plan 2026,” formulated in April 2024, which sets the target of ROE of 15% or greater in the final fiscal year (fiscal year ending March 31, 2027) of the “Medium-Term Management Plan 2026.”
For a recent status report on the progress toward achieving this KPI target, please see the “Summary of Quarterly Financial Results Briefing for Fiscal Year Ended March 31, 2024 .(1,534KB)”
In formulating and announcing business strategies, etc., companies should clearly present the basic policy regarding the business portfolio decided by the board and the status of the review of such portfolio.
The Company’s Board of Directors formulates medium-term management plans, which include a basic policy regarding the business portfolio, after reviewing the business portfolio, in light of financial results and future social and economic conditions, and allocating capital cost and management resources.
The decided medium-term management plan is presented at the general meeting of shareholders and financial results meetings, among others, to explain strategies related to management and business, numerical targets for net sales, operating profit, ROE, and other indicators, as well as specific measures to achieve these targets, in order to secure the understanding of stakeholders.
When companieshold shares of other listed companies as cross-shareholdings, they should disclose their policy with respect to doing so,including their policies regarding the reduction of cross-shareholdings. In addition, the board should annually assess whether or not to hold each individual cross-shareholding, specifically examining whether the purpose is appropriate and whether the benefits and risks from each holding cover the company's cost of capital. The results of this assessment should be disclosed.
Companies should establish and disclose specific standards with respect to the voting rights as to their cross-shareholdings, and vote in accordance with the standards.
[Policy on cross-shareholdings]
The Company does not hold cross-shareholdings.
However, in the case of listed stocks of customers or business partners for which cross-shareholdings are expected to result in sustainable growth for both the CRESCO Group and the cross-shareholding counterparties, because such holdings will likely “maintain and develop the relationship with such parties as strategic partners in business activities including a business alliance and joint R&D,” the Company may hold such shares. The Board of Directors shall make a decision based on comprehensive consideration of the situation.
[Verification of cross-shareholdings]
The Board of Directors regularly reviews the appropriateness of holding stocks, taking into account their strategic merits based on the nature and amount of transactions, and scrutinizing their future outlook, whether the returns and risks are commensurate with the cost of capital from a medium- to long-term perspective, etc. Note that the details of this review are not disclosed.
When it is determined that there is no significance or rationale for holding such stocks, the Company shall initiate negotiations to sell the positions, while taking into account the impact on the market, and other factors.
[Policy on exercise of voting rights]
With regard to the voting rights associated with cross-shareholdings, the basic approach is to exercise them after investigating carefully each individual proposal and evaluating its reasonableness by taking into account the business direction, business strategy, business plans of the cross-shareholding counterparty, as well as social conditions.
In particular, in the event that doubts arise from the following perspectives, we make a decision on whether to approve or reject based on dialogue with the cross-shareholding counterparty:
- Whether the content of each proposal would lead to an increase in the corporate value of the said crossshareholding counterparty over the medium to long term
- Whether it would impair the corporate value of the Company or any of the Group companies
When a company engages in transactions with its directors or major shareholders (i.e., related party transactions), in order to ensure that such transactions do not harm the interests of the company or the common interests of its shareholders and prevent any concerns with respect to such harm, the board should establish appropriate procedures beforehand in proportion to the importance and characteristics of the transaction. In addition to their use by the board in approving and monitoring such transactions, these procedures should be disclosed.
The Board of Directors of the Company recognizes that any related party transaction must be conducted in a manner that is not detrimental to the common interests of the Company and its shareholders and must not raise concerns.
The Regulations for the Board of Directors stipulate that any transaction by a Director of the Company involving competition or conflict of interest, and any transaction with a major shareholder must obtain prior approval by a resolution of the Board of Directors. Whether the transaction is fair or not is determined based on market trends and prices, and appropriate approval is obtained in accordance with internal regulations.
Companies should present their policies and voluntary and measurable goals for ensuring diversity in the promotion to core human resources, such as the promotion of women, foreign nationals and midcareer hires to middle managerial positions, as well as disclosing their status.
In addition, in light of the importance of human resource strategies for increasing corporate value over the mid-to long-term, companies should present its policies for human resource development and internal environment development to ensure diversity, as well as the status of their implementation.
[Views on ensuring diversity]
Please refer to “Principle 2.4.”
[Voluntary and measurable targets for ensuring diversity and their status]
Our target figures are as follows.
For the latest numbers, such as the numbers and percentages of relevant employees, please refer to the Company’s website.
- Promotion of female employees to core positions
The Company has set a target to raise the percentage of women among managers to 14% by March 2027. - Promotion of employees with foreign nationality to core positions
While promoting globalization, the Company is hiring employees with foreign nationality.
Among the 120 new graduates to be hired as part of the Company’s recruitment target for 2025, the Company aims to hire five (5) employees with an educational background in universities outside Japan and/or with foreign nationality.
The Company has set a target to raise the number of employees with foreign nationality among managers above the current situation by FY 2024. - Mid-career hires for core positions
The Company secures a certain number of mid-career hires every year based on expectations for them to be immediately productive.
In addition, the Company has set a target to raise the number of mid-career hires (full-time employee only) hired as managers above the current situation by FY 2024.
[Policies for human resource development and internal environment improvement to ensure diversity, and the status of their implementation]
- Human resource development policy
The Company is engaged in a variety of initiatives centered on the three pillars of strengthening specialty, supporting career development and enhancing fundamental capabilities based on enjoying growth, the culture of improving each other and the mindset of autonomy and embracing challenge. The Company aims to be “a model company for human resource development where every person shines and realizes careers leveraging their specialties” while embracing the challenge of learning and enjoying growth.
- Development of IT professionals
The Company believes “qualities,” “human competence,” “technological competence” and “occupational competence” are the four skills important for employees to fully demonstrate their capability. Increasing these four skills enables greater results to be produced.
Human resource development in the Company involves refining “human competence” and “technological competence” on top of intrinsic “qualities,” and enhancing “occupational competence” that connect these skills to results to develop IT professionals active in the market.
- DX human resource development
As one of the ways to strengthen its specialty, the Company is developing DX human resources capable of leading the business into the next generation with digital technology and business design skills (able to share business with customers) to continue providing value to customers as a group of engineers from the perspective of DX of the IT services business.
Furthermore, from the perspective of DX of internal operations, the Company is developing DX human resources able to promote DX initiatives by utilizing knowledge and technology related to digital technology and data utilization for the realization of DX of the Company itself (improving efficiency of internal operations and internal business reforms). The Company implements programs such as those listed below as basic education for DX human resources, developing not only engineers, but also indirect divisions.
[DX Foundations]
In order to promote digital transformation, employees learn essential knowledge as CRESCO employees on DX, approaches/processes, methods and digital technology, etc.
- Basic lectures on DX literacy: Learning basic knowledge on digital transformation (DX)
- Design thinking training: Understanding DX and learning the processes and mindset for value creation based on design thinking
- Agile: Learning agile as a means of development essential for DX
- Seminars on CRESCO’s latest technology trends: Learning about trends and examples of the latest technologies handled by CRESCO
- Level 1 certification in key technologies: Learning basic knowledge and receiving certification on key technologies (cloud, AI, robotics and agile)
- Next-generation human resource development
The Company believes developing human resources who can create and lead the future is vital for sustained development of the Company. The “Next-generation Management Development Program” was started in 2022, and around 30 people are selected every year to establish a career path based on their own strengths and weaknesses while drawing up a “vision for the future” using a backcasting (approach), and learning the mindset and approaches of management to unearth and develop talented human resources.
- Career development support
The Company creates a cycle supporting individual growth in which individuals engage in autonomous and voluntary career development and continue to create new value through sustained growth, leading to growth of the Company and thereby contributing to society. The Company supports employees through talent management, the utilization of career design sheets, career consulting contacts and CRESCO Academia (in-house college) to enable each individual to engage in shaping their own career based on the belief that the growth of the Company is only made possible by the growth of individuals.
- Internal environment improvement policy
The CRESCO Group believes it can create new value by respecting individuals with diverse attributes, expertise, experience and values, and each person fully demonstrating their skills. For this reason, the Company is engaged in a variety of initiatives to establish environments enabling participation by diverse human resources, and also create workplaces in which people acknowledge and encourage each other.
- Utilization of human resources
The Company has established a coach system and a mentor system to enable new graduates to become accustomed to the workplace and steadily grow. More senior personnel in the workplace play the role of coach, and provide coaching on the technology, knowledge and mindset required in the course of business through one year of on-the-job training. Employees from other divisions are assigned for two years as mentors, who provide advice from a position separated from direct operations. The mentor system also applies to mid-career hires to assist them becoming quickly accustomed to the workplace.
Assignments are made to be optimal and contribute to increasing motivation by implementing strategic assignments that match the skills and aptitude of employees with management strategy, and an internal recruiting/ free-agent system enabling employees to request to transfer to their desired division.
- Personnel system
For further growth of the Company’s employees and the Company, the personnel system is based on the concepts of “pursuing specialty,” “merit-based compensation” and “realization of a workplace enabling active participation by diverse human resources” separates job duties and responsibilities into seven grades and 16 job types enabling the pursuit of individual specialties and strengths, and following a multi-track career path. The system provides well-balanced compensation according to job duties and responsibilities as well as producing results, encouraging them to demonstrate their “merit” at a higher level.
Investment is actively made in human resources by implementing increases in base pay for two consecutive years based on market trends in compensation.
- Health and productivity management
To realize a workplace in which employees can work healthily and at ease for something rewarding, the Company has formulated its “Declaration on Health and Productivity Management” and is working to maintain and promote good health. The establishment of the Health and Productivity Management Promotion System, training to improve health literacy, walking events, and the introduction of health promotion allowances have led to improvements in the non-smoker rate, high stress rate, and more. In March 2024, the Company was recognized as a “White 500” company (2024 recognized organization), under the “Certified Health & Productivity Management Outstanding Organizations Recognition Program.”
For the latest information on the Company’s systems and specific initiatives related to health and productivity management, please refer to the Company’s website (in Japanese).
< Declaration on Health and Productivity Management >
In our corporate philosophy, the CRESCO Charter, the Company states first and foremost that “CRESCO is a people-centered, merit-based company,” and it believes that physically and mentally healthy employees working at the center of corporate activities demonstrating their merit to the maximum extent will lead to the growth of its customers and the society, and ultimately to the growth of the Company.
Based on this belief, we are committed to promoting initiatives for health maintenance and promotion, in order to realize a workplace in which employees can work healthily and at ease for something rewarding. We also value the health of not only our employees but also their families, Group companies, and the business partners with whom we work. We will share our experience and knowhow with everyone involved and contribute to the promotion of health and productivity management throughout society.
- Work-Style reform
For work “time,” the Company allows employees to freely choose work times based on a “full flex time system” without core time. Based on this, focus is also placed on the realization of a healthy working environment, and overtime work remains at a low level and the percentage annual paid leave taken exceeds 80%.
The Company allows each employee to make the optimal choice of work “place” by promoting “hybrid work” combining teleworking and attending the office in person and enabling teleworking full-time for reasons that meet certain conditions, such as caregiving or nursing care for family members.
The Company provides support for improving the productivity of diverse human resources and the achievement of work-life balance by increasing the flexibility of work “place” and “time.”
For the information on the Company’s specific initiatives related to work-style reform, please refer to the Company’s website (in Japanese).
- Diversity & inclusion
Acceptance of diversity is essential for a company to build a competitive advantage amid a changing market environment and technological structure. The CRESCO Group’s basic approach is to respect individual differences, and perform evaluation according to individual results, capabilities and contributions without consideration for attributes such as gender, age and nationality that are unrelated to job duties. In this context, in addition to focusing on increasing the percentage of managerial positions held by women as a means of supporting active participation by women, the Company is actively hiring foreign nationals and people with disabilities to enable them to actively participate.
In April 2021, the Company introduced the partnership system as part of its LGBT initiatives. Furthermore, the Company supports balancing work and childcare regardless of gender, such as endorsing the “100% Men’s Childcare Leave Declaration” in April 2022.
For the information on the Company’s systems and specific initiatives related to diversity and inclusion, please refer to the Company’s website (in Japanese).
- Engagement
We have been conducting engagement surveys since 2021 with the aim of building a win-win relationship between the Company and its employees by aligning their visions. We visualize the results of the engagement survey (the relationship between the Company and its employees) and engage our employees in dialogue.
Because the management of corporate pension funds impacts stable asset formation for employees and companies' own financial standing, companies should take and disclose measures to improve human resources and operational practices, such as the recruitment or assignment of qualified persons, in order to increase the investment management expertise of corporate pension funds (including stewardship activities such as monitoring the asset managers of corporate pension funds), thus making sure that corporate pension funds perform their roles as asset owners. Companies should ensure that conflicts of interest which could arise between pension fund beneficiaries and companies are appropriately managed.
The Company has established a defined contributions pension plan for its employees and outsources the management of the plan to an investment institution with expertise and extensive experience.
To support stable asset formation for employees, seminars are held periodically with invited speakers to deepen employees’ understanding of how assets under management are selected and a matching contribution plan, and continuous education is provided for those insured.
In addition to making information disclosure in compliance with relevant laws and regulations, companies should disclose and proactively provide the information listed below (along with the disclosures specified by the principles of the Code) in order to enhance transparency and fairness in decision-making and ensure effective corporate governance:
- Company objectives (e.g., business principles), business strategies and business plans;
- Basic views and guidelines on corporate governance based on each of the principles of the Code;
- Board policies and procedures in determining the remuneration of the senior management and directors;
- Board policies and procedures in the appointment/dismissal of the senior management and the nomination of directors and kansayaku candidates; and
- Explanations with respect to the individual appointments/dismissals and nominations based on iv).
The Company makes disclosures appropriately in accordance with relevant laws and regulations and discloses and proactively provides the information listed below from the perspective of ensuring transparency and fairness in decision-making of the Company and achieving effective corporate governance.
- For our corporate philosophy, management strategy and management plan, please refer to “Principle 2.1.”
- Our basic views and policies on corporate governance are described in “I-1. Basic Views” of the Corporate Governance Report.
- [Policy for Determining Remuneration]
The Company has established the “basic policy on determining remuneration of Directors, etc.” The basic policy is set by Board of Directors’ resolution, but consultations are conducted with the Remuneration Committee as appropriate.
Please refer to “Supplementary Principle 4.2.1” for the policy for determining the details of remuneration for each Director.
< The basic policy on determining remuneration of Directors, etc. >
Remuneration for Directors (excluding Directors serving on the Audit and Supervisory Committee) is divided into basic remuneration, bonuses, and restricted shares remuneration, and the basic policy is to determine remuneration within the scope of remuneration resolved at the general meeting of shareholders based on the Articles of Incorporation, internal regulations and similar items, and a Board of Directors’ resolution.
[Procedures]
In June 2021, the Company established the Remuneration Committee chaired by an Independent Outside Director. The Remuneration Committee is composed of three (3) or more Directors elected by a resolution of the Board of Directors, with the majority composed of Independent Outside Directors.
- A policy for determining remuneration, etc. for Directors (excluding Audit and Supervisory Committee Members) will be referred to the Remuneration Committee chaired by an Independent Outside Director. In addition, the basic remuneration and bonuses in remuneration, etc. for individual Directors (excluding Audit and Supervisory Committee Members) are determined upon deliberation by the Remuneration Committee. Fairness and objectivity in decision processes are thus respected.
- Remuneration, etc. for Directors (excluding Audit and Supervisory Committee Members) consists of the basic remuneration, bonuses, and the shares remuneration (excluding Independent Outside Directors and Directors serving on the Audit and Supervisory Committee) and is determined within the scope of remuneration resolved at the general meeting of shareholders.
- The share remuneration is determined by a resolution of the general meeting of shareholders and a resolution of the Board of Directors.
- The remuneration for Directors serving on the Audit and Supervisory Committee is determined through consultation among Directors serving on the Audit and Supervisory Committee.
- The Company’s Board of Directors deliberates the selection and dismissal of senior management and the nomination of candidates for Directors and Audit & Supervisory Board Members.
[Policy and procedure followed when nominating candidates for senior management]
In appointing senior management, the Board of Directors seeks to appoint human resources in a way that takes diversity into account, and based on the corporate philosophy and vision of the Company, candidates are selected fundamentally on the assumption that they can be expected to contribute to the further development of the CRESCO Group. Candidates are selected based on the evaluation items and nominated after deliberation by the Board of Directors.
For election of Directors, please refer to “Supplementary Principle 4.3.1.”
< Evaluation items >
- Experience
- Leadership, and the ability to form an accurate understanding of the issues faced by the departments that they supervise
- Personality
- The ability and insight required to resolve problems in cooperation with relevant parties both inside and outside of the Company
- The understanding to thoroughly comply with laws and regulations, and corporate ethics
[Policy and procedure in dismissal of senior management]
Also, in cases where the individual’s abilities, insights, etc., deviate from those given in the reasoning behind the nomination of the candidate, after the opportunity for a hearing is provided, the situation shall be deliberated by the Board of Directors, and the individual shall be relieved of their duties.
For dismissal of Directors, please refer to “Supplementary Principle 4.3.1.”
< Criteria for dismissing >
- When there has been an infringement of laws and regulations, or of the Articles of Incorporation, during the course of his/her duties
- When a mental or physical disability has been suffered
- When the individual is clearly unfit for his/her duties
- When other due cause exists
- The Company’s Board of Directors publishes information regarding the selection and dismissal of Directors.
[Election]
The reasons for nomination, career summary, important concurrent positions, skills matrix, etc., consisting the materials on which the nomination of a Director is based are disclosed in the notice of the general meeting of shareholders and on the Company website.
[Relief/dismissal]
The reason for a Director being relieved or dismissed shall be disclosed employing appropriate methods such as timely disclosure and the like.
Companies should appropriately disclose their initiatives on sustainability when disclosing their management strategies. They should also provide information on investments in human capital and intellectual properties in an understandable and specific manner, while being conscious of the consistency with their own management strategies and issues.
In particular, companies listed on the Prime Market should collect and analyze the necessary data on the impact of climate change-related risks and earning opportunities on their business activities and profits, and enhance the quality and quantity of disclosure based on the TCFD recommendations, which are an internationally well-established disclosure framework, or an equivalent framework.
[Basic Policy on sustainability]
Recognizing that sustainability is an important management issue, the Company has formulated the basic policy on sustainability based on our understanding of corporate social responsibility and the issues surrounding sustainability from the perspectives of E (environment), S (social), and G (governance), elements of “socially responsible investment (SRI)” as advocated by the United Nations. For the details of the policy, please refer to “Principle 2.3.”
The Company recognizes that responses to sustainability issues are important risks for businesses.
[Initiatives on sustainability]
Our medium-term management plans (formulated in three parts for FY 2021–FY 2023, FY 2024–FY 2026, and FY 2027–FY 2030) are designed to achieve the “CRESCO Group Ambition 2030,” the Company’s long-term vision for the next 10 years, with an awareness of sustainability, and we are taking the following measures to the extent feasible in our daily business activities toward this end.
< Examples of measures >
- Environment
・Reducing environmental load (implementing power conservation measures, promoting paperless processing, encouraging recycling, promoting teleworking, etc.)
・Promoting green purchasing in procurement and selection processes of products and services - Social
・Providing physical and monetary support at the time of a disaster and continued support to social welfare organizations
・Building a culture that respects each diverse employee in a workplace (diversity, work-life balance, etc.)
・Creating a workplace in which women are empowered - Governance
・Conducting sound business activities through implementing compliance management
Taking the opportunity of the “Medium-Term Management Plan 2026,” which began in FY 2024, we interviewed Outside Directors, assessed the appropriateness by the management team, and held discussions at the Board of Directors, and have identified the following material issues to be prioritized by the Group from the viewpoints of “importance to the Group” and “importance to stakeholders.”
< The Group’s material issues >
- Realizing a sustainable society through DX and innovation
- Contributing to the global environment through IT
- Establishing a safe digital society
- Creating opportunities for diverse human resources to have job satisfaction and success
- Maintain value provision through strategic governance checks and improvements
[TCFD scenario analysis]
Climate change presents a material risk to the realization of a rich lifestyle and culture by current and future generations. The CRESCO Group recognizes the necessity to respond to climate change to contribute to the realization of a sustainable society.
At present, the Company has not endorsed the TCFD (Task Force on Climate-Related Financial Disclosures) due to internal systems not being established. In accordance with the TCFD recommendations, however, we conducted an analysis based on the status quo (4°C) scenario and the transition (under 2°C) scenario, filtering the world presented in each of the two scenarios by climate change driver and extracting items within medium- and long-term risks and opportunities up to 2050.
< Identifying risks and opportunities >
- Transition risks
① Expansion of low-carbon cloud services
・Failure to develop and provide environmentally friendly services will reduce demand for our services
・Impact: medium
② Support for GHG reduction
・ Loss of reputation from investors and increased financing costs
・Loss of reputation with customers and reduced demand
・ Impact: medium
- Physical risks
① Intensification of natural disasters
・ More disasters hold back IT investment
・ Impact: medium
- Opportunities
① Spread of renewable energy
・ Increase in demand for the construction of energy management systems
・ Impact: medium
② Development of low-carbon market services
・ Growth in demand through the provision of low-carbon cloud services in collaboration with data center operators
・ Impact: medium
③ Growing customer demand for IT
・ Growth in demand for IT regardless of industry with expansion in the EV market, greater efficiency in the logistics industry, and stronger decarbonization initiatives
・ Impact: medium
④ Stronger mitigation measures against climate change
・ Increase in stock price as stakeholders value efforts to decarbonize
・ Impact: medium
< Analysis results >
- Risks
The impact of climate change-related risks on the Group was found to be “medium” or “minor” in the majority of cases, with none having a “major” impact. Due to the nature of the Group’s business, which is primarily the provision of IT services and digital solutions, the financial impact of climate change risk is limited, and the Group does not consider it necessary to take any immediate action to mitigate said risk. - Opportunities
Similarly, no climate change-related opportunities were identified as having a “major” impact. We have identified several items with the potential to increase sales by meeting the climate change-related needs of our customers, and we believe that the CRESCO Group can grow through its contribution to reducing environmental load.
Going forward, we will continue to collect information related to climate change, and if significant changes in the situation are anticipated, we will again conduct scenario analysis to re-identify risks and opportunities, and if necessary, formulate and promote countermeasures.
[Initiatives to address climate change]
The CRESCO Group is engaged in initiatives to address climate change to the greatest extent possible. In particular, we are conducting the following activities to reduce environmental load and improve the efficiency of business activities. Going forward, the Company will continue striving to reduce CO2 emissions to contribute to “net zero greenhouse gas emissions by 2050.”
- Global environmental conservation activities through IT
The CRESCO Group operates an IT services business (system development) and a digital solutions business (cloud, AI, robotics, IoT, etc.) for customers in a variety of industries and business categories. Through its business activities, the Company strives to realize the reduction of environmental load by introducing and updating customers’ information systems, thereby contributing to the reduction of the environmental load of society.
- Daily activities to reduce environmental load
Due to the rise in the average temperature caused by climate change having an enormous impact on the environment and society, execution of “activities to reduce environmental load” is recognized as being important. Because the greatest negative impact (on CO2 reductions and environment) of the CRESCO Group’s operations is found with power consumption and paper consumption due to photocopying and other activities, the Group is working day-to-day to save power and electricity and promote paperless operations. These efforts also lead to more efficient energy use and cost reduction in system development.
|
Electricity |
Introducing power-saving equipment, leveraging cloud, turning off lights in unused areas, setting air conditioning equipment in an energy-saving mode, setting PC monitors in a power-saving mode, conducting cool/warm biz campaigns |
|
Paper |
Promoting paperless processing, monitoring the volume of copies, adopting an electronic format for settlement documents and ledgers, digitization of internal procedures (workflows) |
|
Waste |
Implementing green procurement to the extent possible, waste recycling (segregation and disposal in accordance with the waste segregation policy) |
|
Work |
Promoting teleworking (reducing transport opportunities), encouraging web conferencing (reducing environmental load associated with holding meetings) |
- Greenhouse gas emissions
In the building where the Company’s head office is located, efforts are being made to reduce environmental load through initiatives to reduce greenhouse gases by purchasing renewable energy (electric power).
The Company’s CO2 emissions by Scope in the fiscal year ended March 31, 2023 and the fiscal year ended March 31, 2024 are as follows.
[Scope 1: Direct greenhouse gas emissions by a business operator (fuel combustion and industrial processes)]
・ FY 2022: 0
・ FY 2023: 0
[Scope 2: Indirect emissions associated with the use of electricity, heat or steam supplied by other companies]
・ FY 2022:194.97 (Increased year on year due to an increase in power usage resulting from an increase in regional location floor space)
・ FY 2023: 486.51
[Scope 3: Other indirect emissions related to business]
・ FY 2022: 3,510.88
・ FY 2023: 3,380.15
[Investments in Human Capital]
The source of the Company’s competitiveness is “human resources.” Therefore, based on the recognition that human resources are an important asset, the Company will formulate a human resource strategy tied to management strategy, effectively link the acquisition of talented and diverse human resources, autonomous human resource development and strategic assignment, with the aim of realizing the Company’s management vision.
To maximize the performance of individuals and teams, the Company strives to promote health and productivity management, work-style reform and diversity & inclusion centered on the personnel system based on the concepts of “pursuing specialty,” “multi-track career paths” and “merit-based compensation” to build an appealing workplace environment, while strengthening engagement between employees and the Company and also visualizing, analyzing and improving human resource data will create a virtuous cycle, to attain the sustained enhancement of corporate value. For details of our initiatives with regard to human capital, please refer to the Company’s website (in Japanese).
[Investments in Intellectual Property]
Investments in intellectual property to strengthen digital solution business and to enhance technologies are indispensable for the Company to realize “CRESCO Group Ambition 2030,” its long-term vision for the next ten years. We strive to secure intellectual property rights through technological research, system development, and customer proposal activities. The Company promotes the registration of trademarks such as service names, as well as “joint R&D” among companies and “industry-academia collaboration” with research institutions including universities to strengthen its “intellectual property” through patent applications for these results. Our latest initiatives are disclosed as appropriate on the Company’s website (in Japanese).
The board should clearly specify its own decisions as well as both the scope and content of the matters delegated to the management, and disclose a brief summary thereof.
The Company’s Board of Directors deliberates matters stipulated in laws and regulations, as well as all matters for resolution as defined in the Regulations for the Board of Directors (important matters of corporate management, including the Company’s management policy, business plan and capital strategy) and makes decisions on these matters as well as approves important matters of each of the Group companies and supervises the status of business execution of each company.
Matters to be resolved by the Board of Directors and the scope of delegation of authority to Directors are set forth in the Regulations for the Board of Directors and other internal regulations and notices, and the establishment, revision or abolition of internal regulations, policies, etc. are determined by the Board of Directors.
The decision to execute business operations is delegated to the Board of Managing Directors and the Management Committees based on the “Executive Officer Regulations,” “Regulations for Management of Organization and Duties,” “Notification on Organization,” and “Notification on Segregation of Duties” established by the Board of Directors.
< Board of Managing Directors >
In order to ensure that duties of Directors are executed efficiently and appropriately, the Company has in place a Board of Managing Directors, which is composed of all Full-time Directors with executive authority over operations above Managing Executive Officer and Full-time Audit and Supervisory Committee Members. Chaired by the President and Executive Officer, the Committee meets at least once a month. The Board of Managing Directors decides on matters to be addressed in the monthly report (including tables) and at meetings of the Board of Directors, and states opinions and conducts discussions required for execution of business operations based on matters resolved by the Board of Directors.
< Management Committees >
Based on matters resolved by the Board of Directors and matters decided by the Board of Managing Directors, Management Committees has been established as bodies to allow the discussion of matters related to the execution of business operations, consisting of all Full-time Directors with executive authority over operations and all Executive Officers. In addition to safeguarding the prompt execution of business, the members will receive reports regarding the state of execution of duties, thus fulfilling a supervisory function. The Management Committees will meet at least once a month and will be chaired by the President and Executive Officer. Moreover, all members have the right to convene meetings, enabling them to engage in business activities as necessary and with agility.
Boards should establish and disclose independence standards aimed at securing effective independence of independent directors, taking into consideration the independence criteria set by securities exchanges. The board should endeavor to select independent director candidates who are expected to contribute to frank, active and constructive discussions at board meetings.
The Company’s Board of Directors does not currently stipulate independence criteria for selecting Outside Directors. However, in addition to the independence requirements set forth under the Companies Act, the Company focuses on the following criteria: each candidate must satisfy the requirements for independent directors as stipulated by the Tokyo Stock Exchange, have abundant experience and high-level expertise in corporate management, etc., and not impose a risk of any conflict of interest with general shareholders.
The Company also considers the following points to ensure that appointed individuals carry out objective and strict supervision over the business execution status.
- Invite Independent Directors from outside the Group.
- Do not depend on a certain firm, etc.
- No direct interests exist between the Group and related persons of the Group and the candidates for Independent Directors.
- The candidates possess expertise on characteristics of the industry and professional knowledge.
If the organizational structure of a company is either Company with Kansayaku Board or Company with Supervisory Committee and independent directors do not compose a majority of the board, in order to strengthen the independence, objectivity and accountability of board functions on the matters of nomination (including succession plan) and remuneration of the senior management and directors, the company should seek appropriate involvement and advice from the committees, including from the perspective of gender and other diversity and skills, in the examination of such important matters as nominations and remuneration by establishing an independent nomination committee and remuneration committee under the board, to which such committees make significant contributions.
In particular, companies listed on the Prime Market should basically have the majority of the members of each committee be independent directors, and should disclose the mandates and roles of the committees, as well as the policy regarding the independence of the composition.
Please refer to “Reasons for Non-compliance with the Principles of the Japan's Corporate Governance Code” above.
The board should identify the skills, etc. that it should have in light of its managing strategies, and have a view on the appropriate balance between knowledge, experience and skills of the board as a whole, and also on diversity and appropriate board size. Consistent with its view, the board should establish policies and procedures for nominating directors and disclose them along with the combination of skills, etc. that each director possesses in an appropriate form according to the business environment and business characteristics, etc., such as what is known as a "skills matrix.” When doing so, independent director(s) with management experience in other companies should be included.
The Company’s Board of Directors works to comprehensively taking into account factors in appointing Directors such as an appropriate balance of knowledge, experience and skills of the members to cover each function and business unit of the Company, management experience in other corporations with regard to Independent Outside Directors, and aptitude of the members to ensure accurate, speedy decision-making, while also giving considerations to diversity.
The Company’s Board of Directors has identified the skills and other attributes that each Director should possess in light of the Company’s management strategy, and has prepared a skills matrix that lists their knowledge, experience, abilities, expertise, etc. This matrix, together with policies and procedures for the election of Directors, is disclosed in the Corporate Governance Report and on the Company’s website.
Outside directors, outside kansayaku, and other directors and kansayaku should devote sufficient time and effort required to appropriately fulfill their respective roles and responsibilities. Therefore, where directors and kansayaku also serve as directors, kansayaku or the management at other companies, such positions should be limited to a reasonable number and disclosed each year.
The Company recognizes that its Directors including Independent Outside Directors and Directors serving on the Audit and Supervisory Committee must devote the time and effort required to properly fulfill their roles and responsibilities to the duties of Directors and Audit and Supervisory Committee Members, and that the number of Directors who concurrently serve as officers of other listed companies should be limited to a reasonable range.
Currently, all Directors, excluding Independent Outside Directors, do not concurrently serve as outside directors of other listed firms, thereby allowing them to concentrate on business operations as Directors of the Company.
The important concurrent positions of Directors including Independent Outside Directors and Directors serving on the Audit and Supervisory Committee are disclosed in the Business Report and the Reference Documents for the General Meeting of Shareholders.
Each year the board should analyze and evaluate its effectiveness as a whole, taking into consideration the relevant matters, including the self-evaluations of each director. A summary of the results should be disclosed.
The Company conducts an annual evaluation of the effectiveness of the Board of Directors with the objective of ensuring and improving its effectiveness.
[Evaluation method]
At the end of each fiscal year, the effectiveness of the Board of Directors is evaluated based on the result of the analysis and evaluation of all Directors performed by the Directors using a Director’s Business Execution Confirmation Sheet and other documents.
[Summary of evaluation results]
For the fiscal year ended March 31, 2024, a positive evaluation was given by and large regarding the composition and operation of the Board of Directors. The effectiveness of the Board of Directors as a whole is thus judged to be ensured.
Companies should disclose their training policy for directors and kansayaku.
It is the policy of the Company to continue to provide training opportunities necessary for Directors and Directors serving on the Audit and Supervisory Committee to fulfill their roles and duties properly.
[Upon assumption of office]
Deepen understanding of the line of business, business environment, management strategies, and the CRESCO Group.
[After assumption of office]
Acquire broad knowledge necessary for them to make important management decisions for the Company, new knowledge that corresponds to the changing times, and knowledge required for the execution of business operations.
Opportunities are provided to participate, at the expense of the Company, in external seminars and other programs.
Companies should, positively and to the extent reasonable, respond to the requests from shareholders to engage in dialogue (management meetings) so as to support sustainable growth and increase corporate value over the mid- to long-term. The board should establish, approve and disclose policies concerning the measures and organizational structures aimed at promoting constructive dialogue with shareholders.
Please refer to “Principle 5” for the Company’s approach to dialogue with shareholders and investors.
[Policy for Constructive Dialogue with Shareholders]
Constructive dialogue (face-to-face interviews) with shareholders, investors and other market participants build relationships of mutual trust, and is positioned as an important element contributing to the sustained growth and improvement of medium- to long-term corporate value of the Company.
As a general rule, the Company promptly responds to any request for dialogue (face-to-face interviews) to the extent reasonable after sufficiently considering its purpose.
The Company endeavors to create opportunities for constructive dialogue (face-to-face interviews) through proactive approaches to institutional investors (especially shareholders).
Please refer to “Supplementary Principle 5.1.2” for our policy of encouraging dialogue.
[Department in Charge of and System for IR/SR Activities]
The Company maintains a department in charge of IR, which has the primary responsibility for facilitating dialogue with shareholders and investors. The Company has a system in place where the department in charge of public relations coordinates on a day-to-day basis with other departments and group companies and also coordinates with the departments in charge of legal affairs and management strategies which serve as the secretariat for the Board of Directors, the Board of Managing Directors, the Audit and Supervisory Committee as well as for the “Internal Control Committee” and other committees in an effort to widely come in contact with management information across the organization and to carry out information collection/compilation and the preparation of materials, etc., that are necessary for dialogue (face-to face interviews).
Please refer to “Supplementary Principle 5.1.1” for information on Company personnel engaging in dialogue.
[Information Management]
In order to prevent leakage during dialogue (face-to-face interviews) of information that may impact the stock price while preparing for the announcement of financial results, the Company defines the two-week period retrospective of the day of the announcement of financial results in each quarter as the “Quiet Period” during which it refrains from conducting dialogue. When pursuing dialogue (face-to-face interviews) with shareholders regardless of in a financial results meeting or any other meeting, the Company ensures fairness among shareholders (fair disclosure) in handling important unreleased facts by managing information in compliance not only with the Financial Instruments and Exchange Act and other relevant laws and regulations but also with its Regulations for Insider Trading Prevention, which is a set of internal regulations established with the purpose of preventing insider trading.
Any information delivered externally by the Company is managed centrally by the department in charge of IR.
