Corporate Governance Report

This document has been translated for reference purposes only from an original document submitted to the Tokyo Stock Exchange in Japanese. The original shall prevail in the event of any discrepancy between this translation and the Japanese original. Asahi Kasei Corporation assumes no responsibility for the translation or for any damage, direct or indirect, arising therefrom.

Corporate Governance Report

Last Update: November 5, 2021

Asahi Kasei Corporation

Hideki Kobori, President and Representative Director Contact: Corporate Communications Securities Code: 3407 https://www.asahi-kasei.com

The corporate governance of Asahi Kasei Corporation (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

The Group Vision of the Company is to provide new value to society and solve social issues by enabling "living in health and comfort" and "harmony with the natural environment" under the Group Mission of "contributing to life and living for people around the world." With this as a base, the Company aims to contribute to society, achieve sustainable growth, and enhance corporate value over the medium to long term by promoting innovation and creating synergy through integration of various businesses. The Company continues to pursue optimal corporate governance as a framework to make transparent, fair, timely, and decisive decision- making in accordance with changes in the business environment.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

The Company complies with all of the principles set forth in the Corporate Governance Code revised in June 2021, including details for the Prime Market.

[Disclosure Based on the Principles of the Corporate Governance Code]

[Principle 1-4] (Strategic Holdings and Standards for Exercise of Voting Rights Thereof) The Company has established the following policy for holding of shares (strategic holdings) for any purpose other than pure investment and for the exercise of voting rights thereof.

1. In order to achieve sustainable growth and enhance corporate value over the medium to long term, the Company holds shares the Company considers necessary as part of business strategies and management strategies including business alliance, financing, securement/enhancement of supply chains, and maintenance/enhancement of business relationships.
   Nevertheless, considering risks of share price fluctuation, costs of holding, capital efficiency, etc., for strategic holdings as a whole, reduction of strategic holdings is continuously advancing.
2. For each individual strategic holding, the Board of Directors assesses the meaning, effectiveness, and economic rationality of such holdings regularly on an annual basis, both qualitatively and quantitatively, from the perspective of achieving sustainable growth and improving medium to long term corporate value.
   For the regular assessment, the Board of Directors considers whether business merits such as benefits or synergies in transactions or alliances are being obtained over the medium to long term with the company whose shares are held through the shareholding, and whether there would be any demerit in the case of not holding the shares.

For the regular assessment, benefits gained through the strategic holdings in terms of business transactions, business strategy, and management strategy are quantified to the extent possible. Together with dividend income, a comprehensive regular assessment confirms whether the economic benefit exceeds the cost of capital.

In the case of a holding judged to no longer be compatible with its purpose or whose benefit is deemed to be outweighed by the associated costs and risks of holding based on such assessments, the Company acts to reduce the holding by sale, etc., in consideration of the condition of the company whose shares are held.

3. Voting rights to each proposal for strategic holdings are exercised in consideration of the sustainable growth as well as the medium to long term corporate value of both the Company and the investees.

[Principle 1-7] (Framework for Procedures for Related Party Transactions)

The Company, in accordance with the Companies Act as well as the Regulations for the Board of Directors of the Company, stipulates that conflict-of-interest transactions between the Company and its Directors require the approval of the Board of Directors, and that the status of such transactions shall be reported to the Board of Directors. The Company also checks on a regular basis whether there is any transaction between the Company/the Group and its Directors or a corporation its Directors effectively control, and details of such transaction (if any).

Should the Company have any transaction with a main shareholder, the Company maintains procedures to prevent any detriment to the Company, given the importance and nature of such a transaction.

[Supplementary Principle 2-4-1] (Ensuring Diversity in Appointment of Core Personnel)

The Asahi Kasei Group Human Resources Principles include "respect for diversity," and the Company aims to achieve growth and development through the aggregation of diverse personnel exerting their abilities to the fullest. Based on this, the Company's views, targets, and circumstances with respect to the appointment of women, non-Japanese, and mid-career hires to managerial positions, its personnel training policy for securing diversity, and policy and condition of enhancing workplace environments are described below.

Appointing women as core personnel:

Since the 1990s, gender diversity has been positioned as an important perspective, and the Company established an Equal Opportunity Promotion Group (now Diversity Promotion Group) in 1993. Since then, measures have been implemented to become a company where women can continue working and to expand the appointment of female employees in leadership positions.

In 2016, the Company formulated a 5-year target of doubling the number of female domestic regular employees* in supervisory positions by the end of fiscal 2020 from the level at the end of fiscal 2014, and the target was generally achieved. The Company plans to continue expanding the appointment of female managers in leadership positions. Specifically, the Company has set targets by the end of fiscal 2025 to increase the number of female managers by 40% and to increase the total number of female section chief line managers and highly-skilled professionals by 20% compared to the numbers at the end of fiscal 2020. For further information, please refer to the Human Resources page on the Company's website: https://www.asahi-kasei.com/sustainability/social/human_resources/

Appointing non-Japanese as core personnel:

As the Asahi Kasei Group's ratio of overseas sales has risen, the proportion of overseas employees is nearly 40% (as of March 31, 2021). The Company's policy is to expand the appointment of non-Japanese and locally hired employees to key positions at overseas sites that support expanding overseas business operations. Specific plans regarding appointments, etc., are determined individually based on the business strategy of each business.

Currently, 4 of the 36 Executive Officers of Asahi Kasei Corp. are non-Japanese, and proactive appointment will be continued.

Appointing mid-career hires as core personnel:

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Currently, among domestic regular employees* of the Asahi Kasei Group, 12% of all managers are mid- career hires. Diversity of human resources is a strength of the Asahi Kasei Group, and as appointment of mid-career hires having diverse experience and backgrounds further reinforces this strength, this will be proactively advanced.

Personnel training policy for securing diversity, and policy and condition of enhancing workplace environments:

The Asahi Kasei Group Human Resources Principles include "respect for diversity," and the Company aims to achieve growth and development through the aggregation of diverse personnel exerting their abilities to the fullest.

Considering an active human organization of personnel having diverse values to be essential for the sustainable growth of business, the Company has established a Diversity Promotion Group as a department dedicated to advancing the engagement of diverse personnel and measures for work-life balance, with activities progressing group-wide. For further information, please refer to the Human Resources page on the Company's website: https://www.asahi-kasei.com/sustainability/social/human_resources/

• Regular employees of Asahi Kasei Corp., Asahi Kasei Microdevices Corp., Asahi Kasei Homes Corp., Asahi Kasei Construction Materials Corp., Asahi Kasei Pharma Corp., and Asahi Kasei Medical Co., Ltd.

[Principle 2-6] (Roles of Corporate Pension Funds as Asset Owners)

In order to increase the investment management expertise of the Company's corporate pension funds, ensuring that corporate pension funds perform their roles as asset owners, personnel from finance with specialist ability and knowledge on asset management are assigned as trustees of management execution and as fund managers, while management is performed utilizing advice from external pension fund consultants. Basic policies and guidelines for asset management of corporate pension funds are established and issued to institutions entrusted with management, and monitoring of the condition of management is performed by an Asset Management Committee.

[Principle 3-1] (Information Disclosure)

(1) Company Policy and Management Policy

Please see the company policy and the management policy on the website. (Company Policy) https://www.asahi-kasei.com/company/vision/

(Management Policy)

https://www.asahi-kasei.com/ir/library/initiative/

(2) Basic Views and Policy on Corporate Governance

The basic views of the company are explained in "1.1. Basic Views" of this Report. (Basic Policy)

1. Securing the Rights and Equal Treatment of Shareholders

While taking proper measures to secure shareholders' rights, the Company develops a proper environment for exercise of shareholders' rights including paying attention to foreign shareholders and minority shareholders and providing information necessary for the exercise of rights accurately and in a timely manner.

2. Proper Cooperation with Stakeholders other than Shareholders

The Group Vision of the Company is to provide new value to society and solve social issues by enabling "living in health and comfort" and "harmony with the natural environment" for people around the world, and the Company works to facilitate cooperation with its stakeholders.

3. Proper Information Disclosure and Securing of Transparency

The Company, in addition to disclosure required by laws and regulations, actively provides information to various stakeholders including financial information such as financial

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position and operating results, management strategy/issues, and non-financial information concerning risks and governance, etc.

4. Responsibilities of the Board of Directors

In order to achieve sustainable growth, enhance medium to long term corporate value, and increase earnings ability and capital efficiency, the Board of Directors of the Company presents the overall direction of its management strategy, develops an environment to support risk-taking by the management, and effectively oversees the business management of the Company from an independent and objective standpoint, based on the fiduciary responsibility and accountability to shareholders.

5. Dialog with Shareholders

The Company develops a system to have a constructive dialog with shareholders/investors and actively promotes such dialog.

1. Policy to Determine Directors' Remuneration

It is noted in "[Director Remuneration] Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" of this Report.

1. Policy and Procedures to Appoint/Dismiss Members of Senior Management and to Nominate Candidates for Directors and Audit & Supervisory Board Members
   In order to further improve the objectivity and transparency of procedures for the appointment and dismissal of members of senior management and for the appointment of candidates for Directors and Audit & Supervisory Board Members, the Company has established a Nomination Advisory Committee which consists of a majority of Outside Directors to provide advice. In addition to examining the makeup and size of the Board of Directors and policies for nomination of Directors/Audit & Supervisory Board Members, the Nomination Advisory Committee provides advice to the Board of Directors based on appropriate examination of the state of execution of duties of Directors in office considering the assessment of the Remuneration Advisory Committee.
   In selecting candidates for Directors, the Company chooses persons with deep insight and excellent skills suitable for Directors. For inside Directors, the Company chooses those with expertise, experience and skills in the required field as candidates. Meanwhile, for Outside Directors, the Company chooses as candidates corporate executives, academic experts, and former civil servants with abundant experience, expecting objective oversight of management based on their deep insight.
   In selecting candidates for Audit & Supervisory Board Member, the Company chooses persons with insight and skills suited for Audit & Supervisory Board Member, and appointment requires the approval of the Audit & Supervisory Board. In addition, the Company makes sure that at least one Audit & Supervisory Board Member is familiar with finance and accounting.
2. Explanation for Nomination of Candidates for Directors and Audit & Supervisory Board Members
   The Company will post reasons for selection of all candidates for Directors/Audit & Supervisory Board Members in the Notice of general shareholders meeting.
   (Notice of general shareholders meeting) https://www.asahi-kasei.com/ir/stock_information/meeting/index.html

[Supplementary Principle 3-1-3] (Disclosures related to sustainability, etc.)

The Company's efforts regarding sustainability, and investment in human capital and intellectual property, are disclosed in the Company's website, the Asahi Kasei Report, Intellectual Property Report, etc.

The impacts of risks and opportunities arising from climate change on the Company's business activities are disclosed in accordance with the TCFD framework in the Company's website, the Asahi Kasei Report, etc.

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The Company is also advancing IP landscaping company-wide, for positioning of the Asahi Kasei Group's intellectual property and intangible assets, and for studying new business models, to be used in management decisions. These activities will also be proactively disclosed.

(The Company's sustainability website) https://www.asahi-kasei.com/sustainability/https://www.asahi-kasei.com/sustainability/environment/climate_change/https://www.asahi-kasei.com/sustainability/social/human_resources/ (The Asahi Kasei Report) https://www.asahi-kasei.com/ir/library/asahikasei_report/ (Intellectual Property Report) https://www.asahi-kasei.com/r_and_d/intellectual_asset_report/

Furthermore, the Company's Board of Directors has established the following Sustainability Policy.

The Asahi Kasei Group is contributing to life and living for people around the world. We strive for two mutually reinforcing aspects of sustainability: "contributing to sustainable society" and "sustainable growth of corporate value." By creating value for "contributing to sustainable society", we seek to gain high earnings that lead to "sustainable growth of corporate value" which enables us to make further contributions in a virtuous cycle. In order to achieve this, we pursue the optimal corporate governance while practicing the following.

Value creation through contribution to sustainable society

•Resolving issues for People and the Earth through our high value-added businesses (Care for People, Care for Earth)

•Leveraging our strengths of diversity and capability to change for the creation of value (Connect, Communication, Challenge)

Responsible business activities

•Complying with laws/regulations and respecting international standards regarding business activities (Compliance)

•Prioritizing ESH (environment, safety, and health), human rights, and quality assurance throughout all of our activities

•Performing appropriate information disclosure and dialogue with our stakeholders Empowerment of personnel

•Respecting diversity and inclusion

•Encouraging each employee's growth, performance, and challenging spirit

[Supplementary Principle 4-1-1] (Overview of Extent of Delegation to Management)

The Company has established detailed standards for decision-making in the Decision-making and Approval Authority Regulations of the Group with regard to matters concerning the management plan, investments and loans, financing and fund management, the organization and rules, research and development, and production technology, and delegates authority to the Management Council and core operating companies. At the same time, it establishes matters to be resolved by the Board of Directors as required by laws and regulations as well as matters concerning the Company and the Group based on the importance and nature thereof in matters to be resolved by the Board of Directors.

[Principle 4-9] (Independence Standards and Qualification for Outside Directors/Audit & Supervisory Board Members)

In determining that Outside Directors and Outside Audit & Supervisory Board Members are independent, the Company ensures that they do not correspond to any of the following and that they are capable of performing their duties from a fair and neutral standpoint.

1. A person who currently executes or has executed businesses of the Group (Executive Directors, Executive Officers, employees, etc.) over the last 10 years
2. A company or a person who executes the businesses thereof whose major business partner is the Group (an entity with more than 2% of its annual consolidated net sales coming from the Group)
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