ISEKI : value creation aims(What kind of value we create)

ISEKI Group's value creation aims

Message from our President

Introduction

ISEKI Group's value creation aims Business strategies for value creation Foundation for sustainable growth Financial and non-financial data Company profile / Stock information

ISEKI & CO., LTD.'s Purpose

Our aspiration to be farmers' closest supporter is a source of pride and an enduring commitment

The history of ISEKI Group began when our founder Kunisaburo Iseki established Iseki Farm Implement Trading Co. in Aratama-cho, Matsuyama City, Ehime Prefecture, and started manufacturing fully-automated rice hullers. Having inherited the Company's founding spirit of "freeing farmers from exhausting labor" in an unbroken line since then, in 2025, we will mark the 100th anniversary of the Company's founding.

Comparing Japan's rice farming in 1960 with that of today, the energy required to produce one unit of rice has decreased to around one-seventh of what it was. It was ISEKI Group that drove the mechanization and modernization that made this possible, leveraging its technological capabilities in product development. Even today, the Group's continued high ranking in terms of the number of patents acquired per specialty field is testament to its long-inherited aspiration to be farmers' closest supporter.

As an integrated manufacturer with this product development DNA that specializes in agricultural machinery, the social issue that the Group needs to seek solutions for first and foremost is the worldwide problem of food security that emerged following the COVID-19 pandemic and the invasion of Ukraine. The world's population reached 8 billion in 2022, and is expected to reach approximately 10 billion around 2050. Considering that just over ten percent of the world's population

are suffering hunger, boosting food production is a pressing issue. However, the land area under cultivation cannot be increased due to issues such as the associated environmental burden and reduced availability of farmland caused by industrialization and desertification. Thus, improved agricultural productivity is essential. In Japan, as in other countries, food security, including the stability of food supplies and food self-sufficiency, is a key issue. On the other hand, the riding lawn mowers and compact tractors that we supply primarily to the European market are utilized for landscaping, such as maintenance of parks and fields, road cleaning, and snow clearing. Through such uses, they help to make villages and towns comfortable, thereby contributing to an improved quality of life for citizens. ISEKI Group has a long history in the European

As we approach the 100th anniversary of our foundation,
we will pursue business management
that balances economic purpose
with social purpose
and drive through henkaku (Change)
targeting a "new ISEKI"
Shiro Tomiyasu ISEKI & CO., LTD.
Representative Director, President & Executive Officer	"Toward the next 100 years..."

Corporate Philosophy

Corporate Philosophy

We strive to contribute to the creation of the prosperous and sustainable society through "providing innovative products and higher quality of services to the customers"

[Long-term vision]

To be a "Solution Provider for Agriculture & Landscape"

Founding spirit

To free farmers from exhausting labor

Long-term vision

To be a "Solution Provider for Agriculture & Landscape"

- Supporting a farming industry full of dreams and beautiful landscapes and creating a future of sustainable agriculture and landscape -

	Farming		SDGs to be realized by ISEKI Group through its business
	Agricultural
Food production	machinery	Environmental	Toward the realization of a sustainable society
		preservation	Supporting the enhancement of resilience in agriculture
Food		Landscape	Landscaping for comfortable villages and towns
	Environmental preservation for a recycling-oriented society
Survival	Farmers	Foundation
for living
	People
	and
	society

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ISEKI Group's value creation aims

Message from our President

Introduction

ISEKI Group's value creation aims Business strategies for value creation Foundation for sustainable growth Financial and non-financial data Company profile / Stock information

market, where recognition of the ISEKI brand is high. In recent years, we have addressed the issue of growing environmental awareness by developing and supplying more electrification products. All these fields associated with improvements in agricultural productivity and quality of life are areas in which the Group's strengths can be leveraged.

In light of this, in February 2021 we redefined ISEKI Group's Purpose, taking into account the strengths we had accumulated and the social issues we needed to seek solutions for. In conjunction with this, we decided on the Corporate Philosophy "We strive to contribute to the creation of the prosperous and sustainable society through 'providing innovative products and higher quality of services to the customers.'" We also set the long-term vision of becoming a "solution provider for agriculture and landscape."

Farming safeguards food and land and provides the foundation to realize prosperity for people and society. We regard it as our Purpose to become such a corporate group-one that supports farming and farmers, and provides solutions to associated issues (please refer to "Long-term vision" in the bottom figure on P14). We also believe that these business activities on the part of ISEKI Group can contribute to solving the challenges

of the SDGs. ISEKI Group identified certain materiality (priority issues) that it will address for the achievement of its aspirations and long-term vision, and linked these to specific SDGs as the basis for pursuing related activities Particular SDGs to which we believe we can contribute through improved agricultural productivity are Goal 1, "No poverty" and Goal 2, "Zero hunger." We also believe we can contribute to Goal 11, "Sustainable cities and communities" through improvement of quality of life.

ISEKI Group will use the knowledge and experience we have cultivated over the years to fulfill social responsibilities and contribute to solving the challenges of the SDGs with the aim of remaining an essential company.

Review of the fiscal year ended December 31, 2022

During FY2022, we were buffeted by

a dramatically changed business environment

In the fiscal year ended December 31, 2022, sales declined in the Japanese domestic market, which accounts for almost 70% of the Group's net sales. This reflected deterioration in purchasing sentiment among farmers as a result of falling rice prices combined with soaring prices for agricultural materials such as fertilizers and pesticides. Moreover, the effects of the COVID-19 pandemic and the invasion of Ukraine led to supply chain disruption including lockdowns affecting overseas factories and delayed procurement of semiconductors. This prevented us from adequately procuring key components previously sourced overseas, and as a result, we were unable to supply enough of the large agricultural machinery that is the main focus of the Group's business.

Meanwhile, in overseas markets we again achieved the highest net sales on record, almost reaching our target for 2025, the final fiscal year of our Mid-term Management Plan. Key contributors to this result were strong

performances by landscaping machinery in Europe and by compact tractors in North America, along with continuing depreciation of the yen. As a result, sales in Japan and overseas combined were in line with the Plan.

In terms of earnings, we were impacted by further escalation in raw material prices, and despite our efforts to absorb the additional costs by raising the prices we charge, in the domestic market the benefits remained limited, and as a result operating income declined. However, our calculations show that, supposing raw material prices had not soared, our operating margin would have exceeded the 3% targeted for FY2022 under the Mid-term Management Plan. We therefore believe that the benefits of measures implemented under the Plan have started to emerge to some extent. Meanwhile, operating cash flow for the year was negative, primarily due to increased inventories following a delay in receiving stock as a result of delayed parts procurement at an OEM partner in North America, as well as the impact of consolidation of ISEKI Germany.

It was a year in which we were buffeted by a dramatically changed business environment, leaving us with issues to address in terms of the Group's resilience going forward.

Priorities in the fiscal year ending December 31, 2023

We will speed up henkaku (Change) to achieve our Mid-term Management Plan goals

Indicating a path toward a 5% operating margin

ISEKI Group's results forecasts for the fiscal year ending December 31, 2023 are as follows: 176.5 billion yen in net sales (a 5.9% increase year on year), 4.5 billion yen in operating income (a 27.3% increase year on year), 4.0 billion yen in ordinary income (a 6.3% increase year on year), 2.6 billion yen in profit attributable to owners of parent (a 36.9% decrease year on year). In addition, we set the target of restoring our operating margin to 2.5% in the fiscal year ending December 31, 2023 to establish a path toward achieving the 5% operating margin set as the Mid-term Management Plan's numerical target for the fiscal year ending December 31, 2025.

ISEKI Group's Mid-term Management Plan comprises two basic strategies. The first is provision of the best solutions. The second is enhancement of corporate value by strengthening profits and reinforcing corporate governance; that is to say, a transformation into a company with a lean and streamlined business structure that can constantly generate profit without being affected by the fluctuation in sales.

Addressing structural changes in Japan's agricultural industry (Provision of the best solutions)

The Strategy for Sustainable Food Systems, MIDORI, implemented by the Ministry of Agriculture, Forestry and Fisheries, is now well underway and structural changes in Japan's agricultural industry are progressing in line with the strategy's keywords of environmental preservation and smart agriculture. ISEKI Group too is stepping up its initiatives to expedite these structural changes. One of our killer products in this regard is the Aigamo-Robo weeding robot. The robot makes it possible to control the

growth of weeds in rice paddies without using chemical pesticides. We formed a capital and business alliance with Yukimai Design Co., Ltd., the robot's developer, and after conducting demonstration experiments on the product in more than 200 locations and adjusting its design, full-scale sales were launched in 2023.

In addition to making steady progress on collaboration with local governments and private-sector companies to disseminate and promote environmentally sound smart agriculture, we are continuing to focus on developing products and deploying sales strategies catering to the increase in large-scale farming and the transition to smart farming.

In large-sized agricultural machinery, we will seek to expand sales with a focus on the "All Japan series" of products for large-scale producers. In smart agricultural machinery, we made progress with deployment of our GPS-enabledstraight-travel assist function, launching a new product in the mid-sized tractor class in 2022.

In 2023, our 10-row rice transplanter and "JAPAN"-brand combine harvester, both equipped with the same straight- travel assist function, started full-scale operation. Looking ahead, we will continue striving to expand sales of smart agricultural machinery and expedite further releases

of products catering to structural changes in Japan's agricultural industry.

Meanwhile, we are providing services, including information and know-how, by continuing to expand our large-scale maintenance facilities and improve our educational programs and other offerings catering to the needs of large-scale farmers. In addition, we are expanding our concept of services, hastening the use of data obtained from smart agricultural machinery in new sales services, as well as in products, to drive forward the evolution of an agricultural business model based on total ICT solutions.

Measures for Europe, North America, and Asia (Provision of the best solutions)

ISEKI Group operates its overseas business in three regions. The first is North America, where we supply compact tractors, primarily of 40HP or less, for private users. The second region is Europe, where we supply tractors and lawn mowers for landscaping. The third region is Asia, where we supply agricultural machinery for rice farming, drawing on our technological development cultivated in Japan. Overseas sales have increased steadily as a result of implementing measures in the Mid-term Management Plan and currently account for over 30% of total sales. We will continue targeting further growth, seeking the best solutions for each region.

Demand in the North American compact tractor market increased significantly in recent years due to lifestyle changes spurred primarily by city dwellers' increasing tendency to move out to the suburbs during the COVID-19 pandemic. Currently, however, changes in national monetary policies and other factors have led to an ongoing correction phase. We will forge even closer collaboration with our business partner AGCO Corporation and seek to expand market share by implementing product strategies aligned with the characteristics of each region and improving sales and services.

In Europe, demand for tractors and lawn mowers for use by individual consumers started expanding in 2021, and is still growing robustly. At the same time, sales are strong in the market targeting professional users, where ISEKI Group commands a strong presence. We already commenced

limited sales of electric riding lawn mowers and will use this as a first step in accelerating the roll-out of electric products, enhancing our lineup of environmentally-friendly offerings. In addition, we established the capacity to strengthen our sales channels in Europe by making local distributor ISEKI Germany into a consolidated subsidiary.

In Asia, meanwhile, we strengthened the sales channels of IST Farm Machinery Co., Ltd. (IST), our consolidated subsidiary in Thailand. In the Thai market, we had already started selling low-priced compact tractors manufactured in India, and we began expanding sales of these, including tractors for farming field crops other than rice, transitioning to a full-scale growth phase for these products.

| Consolidated net sales

Japan

Overseas

(Billion yen, %)

			158.1	166.6	176.5
155.9	149.8	149.3
21.3%	21.5%	22.4%	25.8%	32.4%	31.2%

Dec. 2018 Dec. 2019 Dec. 2020 Dec. 2021 Dec. 2022 Dec. 2023 (Forecast)

Establishment of an optimal production system (Enhancement of corporate value by strengthening profits and reinforcing corporate governance)

With regard to ISEKI Group's key challenge of improving profitability, we are doing so by pursuing the priority measure of establishing an optimal production system at our production sites in Japan and overseas. Our Japan- based production sites in particular are dedicated to specific products, presenting issues with regard to duplication of human resources and equipment, and standardization of production processes. We will seek to improve productivity by reorganizing this structure to make effective use of equipment and the optimal placement of Group personnel with the overall aim of reforming the structure of our business and improving management efficiency.

We are already contributing to the establishment of an optimal production system by taking steps to shift production of certain models manufactured at our Matsuyama production site to PT. ISEKI INDONESIA. Since PT. ISEKI INDONESIA first started manufacturing tractors for the North American market in 2014, its production volumes have increased continuously as a result of expansion in the overseas business and an enhanced lineup of models for the ASEAN and European markets. In March 2023, we completed the addition of a new factory building that we had undertaken as an initiative to continue increasing production volumes by further expanding the overseas business and shifting more of our production. We will use this initiative as a first step in accelerating our establishment of an optimal production system on a global basis and improving profitability.

Thus, we are steadily implementing the measures detailed in our Mid-term Management Plan, but we are still only partway toward achieving our target of a 5% operating margin. We are seeking to establish a path toward

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ISEKI Group's value creation aims

Message from our President

Introduction

ISEKI Group's value creation aims Business strategies for value creation Foundation for sustainable growth Financial and non-financial data Company profile / Stock information

| Mid-term Management Plan progress and projections		5.0%
	Mid-term Management Plan		Results
				Speed up henkaku (Change)
		2.6%			2.5%		by accelerating and fully
		2.1%		exploiting the Mid-term
					Management Plan's priority
1.4%
					measures to achieve
							an operating margin of 5%
2020	2021	2022	2023	2024	2025
					(Forecast)

the Nomination and Compensation Committee.

The purpose of this revision was to make compensation's link to business results and share value more explicit. The revision is intended to increase Directors' focus on helping to improve business results and enhance corporate value over the medium to long term by ensuring that they have the same interests in the risks and benefits of share price fluctuations as shareholders. Other initiatives we are actively pursuing include evaluations of the effectiveness of the Board of Directors to revitalize the Board and improve its functions. Meanwhile, we will strive to improve the Price Book-value Ratio (PBR) by taking steps to enhance corporate value including (1) improving profitability,

(2) improving asset and capital efficiency, (3) providing

shareholder returns, and (4) conducting appropriate

investor relations activities, including better communication

security, improved food self-sufficiency, and other food- related issues. Agriculture supports food supply, including addressing the need for increased food production to cater to future population growth. As such, agriculture, and the landscaping business, which supports people's daily lives, are being recognized anew as essential businesses. I believe that ISEKI Group, which facilitates the agriculture and landscaping businesses, can grow while continuing to fulfill its social role by contributing to these businesses through activities that support customers.

Moreover, for the Group to sustain its development over the next 100 years and continue providing innovative products and higher quality of services to customers, we must operate our business in such a way that a diverse range of stakeholders, including shareholders, suppliers, and employees, can feel confident about joining forces

an operating margin of 5% by accelerating and fully exploiting the Mid-term Management Plan's priority measures in order to speed up henkaku (Change).

Furthermore, we will create operating cash flow of 60 billion yen cumulative over the five years of the Mid- term Management Plan by taking steps to optimize our inventories, which increased due to supply chain disruption, and to steadily trim down property, plant and equipment and improve management efficiency. Using this cash,

we will strive to reform the structure of our business and reduce interest-bearing debt, aiming to achieve ROE of 8%.

Aiming for sustainable growth

We set up the ESG Committee, establishing

a framework that enables the management team to strengthen their involvement

In August 2022, we set up the ESG Committee as

a consultative body of the Board of Directors regarding the enhancement of ISEKI Group's ESG initiatives. The Committee is comprised of Directors and Corporate Officers, and is chaired by an Independent Outside Director. In principle, Committee meetings are held each month, and the Committee seeks to find solutions for the Group's materiality by examining and deliberating ESG-related initiatives for the Group as a whole from the perspective of risks and growth opportunities. Such initiatives include responses to climate change, respect for human rights, and employee health. The results of deliberations at Committee meetings are recommended to the Board of Directors, which in turn deliberates and determines important matters. This has established a framework enabling the management team to strengthen their involvement. Eight working groups (WGs) have also been set up, and these are actively pursuing related activities. Through such initiatives, we are driving our ESG-related activities forward.

Environmental initiatives

ISEKI Group practices environmental management, treating realization of a decarbonized and recycling-oriented society as a materiality. In 2022, we formulated a new Environmental Vision and reviewed the Basic Environmental Policy and mid- to long- term environmental targets.

In terms of specific initiatives, we are enhancing our lineup of environmentally-friendly products and services, such

as proposals for environmentally sound smart agriculture and electrification products. In addition, we are replacing

equipment at the Matsuyama production site (our "mother factory") with a view to switching energy sources from heavy oil to liquified natural gas (LNG). We also announced our endorsement of the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations and started disclosing information in line with these recommendations. Going forward, we will continue contributing to solutions for climate change issues and reduction of agriculture's burden on the environment.

Initiatives related to human capital and diversity

Active participation in the workplace by women is an indicator of diversity and inclusion. Our local subsidiaries overseas have female employees serving as Directors, and at our Thai subsidiary IST, women account for more than half of departmental general managers. We are using these women as role models to introduce the same practices in Japan and create the necessary conditions for establishing a corporate culture in which women can participate actively. In addition, ISEKI Group participates in the NOGYOJOSHI (female farmers) project by the Ministry of Agriculture, Forestry and Fisheries. Through such activities, we are exploring the potential for spurring female farmers into action.

Meanwhile, we are pursuing optimal placement of personnel by transferring individuals among Group companies, thereby concentrating resources on our priorities. For instance, in Asia, which is an engine of our overseas growth, as well as a region where we can leverage the know-how cultivated in Japan, we are seeking to accelerate growth by assigning executives currently working in Japan-based sales. Meanwhile, we are working to further enhance our employee education programs relating to diversified recruitment and digital transformation (DX), among other topics.

At the meeting of the Board of Directors held on February 28, 2023, ISEKI Group passed resolutions approving a policy for human resources development and a policy for workplace environment creation. ISEKI Group will continue to maximize its human resource capability by focusing on enhancement of employee engagement and human resource transformation.

Initiatives to reinforce corporate governance

ISEKI has established the Nomination and Compensation Committee, comprised of two Representative Directors and three Outside Directors, as a consultative body of the Board of Directors regarding compensation of Directors and Corporate Officers. In 2022, we revised the Directors' compensation system on the recommendation of

of our growth strategies.

Toward the next 100 years...

Pursuing an economic role alongside a social role

ISEKI Group, Japan's only integrated manufacturer specializing in agricultural machinery, has always founded its business on an aspiration to be farmers' closest supporter. This aspiration is rooted in an abiding commitment to acting first and foremost for the benefit of customers. This is our greatest strength, and I believe it is precisely because we are fulfilling this social role that we have been able to continue operating our business for almost 100 years.

Recent developments such as COVID-19 and the invasion of Ukraine have triggered growing interest in food

with us. In other words, it is essential to generate adequate profits and fulfill an economic role as well.

These two roles do not need to be prioritized one above the other; I believe they can balance and complement each other as they progress. However, ISEKI has become accustomed to lagging behind somewhat in terms of pursuing its economic role. Now, therefore, we are driving through henkaku (Change) so that in 2025, when we mark the 100th anniversary of the Company's founding, ISEKI operates in such a way that it fulfills its economic role in addition to the social role it has contributed to over the years. In order to achieve this, I consider it my own personal responsibility to involve the entire Group in a concerted effort to drive forward the aforementioned transformation into a company with a lean and streamlined business structure. I hope we can continue to rely on your support as we endeavor to forge a "new ISEKI."

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Introduction

ISEKI Group's value creation aims Business strategies for value creation Foundation for sustainable growth Financial and non-financial data Company profile / Stock information

ISEKI Group's value creation aims

Value Creation Process

ISEKI Group engages in business activities that are founded on its corporate philosophy and governance and that leverage the capital supporting the Group as well as its unique strengths. In doing so, we provide customers with products and services that meet a variety of needs, thereby creating social and economic value. By addressing social changes and issues and reflecting them in the Mid-term Management Plans and materiality, and continuing this cycle of value creation, we strive to solve social issues and contribute to the "creation of a prosperous society," while achieving sustainable growth and enhancing corporate value of the Group.

	Changes and challenges in Japan	Changes and challenges in the world	Environmental issues	Other trends
Social changes		• Decrease in number and aging of farmers		• Population growth, growing needs for food production increase	• Climate change		• Rapid technological innovation
and issues		• Increase in size of farm business		• Food security (stable production and supply)	• Natural disaster		• Spread of infection
	• Accelerated digitalization		• Decline in number of farmers due to economic development	• Energy and resource issues		• Lifestyle change
		• Improved productivity		• Improved productivity	• Reduction of environmental burden		• Geopolitical risks

ISEKI Group's capital

Business activities of ISEKI Group

Value provision

Human capital

Diverse human resources that enable ISEKI Group growth

• number of employees (consolidated): 5,454

Center for Human Development for experts specializing in the fields of development, production, sales,

and services (IETC/ITTC/IGTC)

Intellectual capital

Patents held as well as high-level technological capabilities and intellectual properties

• Number of patent application registrations per specialty field in Japan: No.2
• Patent allowance rate (in all industries) in Japan: No.1
• Number of invention awards received in Japan: 232

Manufacturing capital (sites)

Production and sales sites in Japan and overseas

• Global production bases: 5
• Large-scalemaintenance facilities in Japan: 54 Dream Agricultural Research Institute

Social and relationship capital (network)

Collaboration with partners, municipalities, research institutions, and universities in Japan and overseas

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and services in response to diverse needs

Social value

Value creation with stakeholders

•Provision of products and services contributing to solving social issues

•Contribution to the formation of circular society in the global environment

•Mutual sustainable growth and improvement of corporate value with suppliers

•communitiesRevitalization and development of local

•Creation of diverse human resources and provision of rewarding workplaces

•Stable dividend payment

Economic value

Enterprise value of ISEKI Group

Creation of

an affluent society

Contribution to SDGs achievement

Solution Provider for

Agriculture and Landscape

• Japan: number of collaborations with national and local
  governments and private-sector companies: 9
• Overseas: number of overseas strategic partners: 2
• Development: number of joint development with research
  institutions and universities: 13 themes

Natural capital

Initiatives aimed at reduction of environmental burden Promotion of environmentally sound smart agriculture

• EMS certification acquisition rate: 95%

Financial capital

Source of business activities and growth investments

• Cash and deposits: 10.7 billion yen
• Interest-bearingdebt: 68.1 billion yen
• Net assets: 72.3 billion yen

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Management Philosophy and Corporate Governance

Provision of products

•Improvement of corporate value through sustainable growth

•Accumulation of technology and expertise

•Establishment and reinforcement of trust with stakeholders

•Improvement of corporate brand

•Investment for growth

2025 targets for the Mid-term Management Plan

Consolidated operating margin: 5%

Cash flows from operating activities: five-year cumulative total of 60.0 billion yen

Realization of ISEKI Group

long-term vision

(2030)

Mid- to long-term environmental targets

Reduction of group-wide

CO² emissions

46% reduction by FY2030

(Compared with 2014)

Solving social issues and enhancing corporate value

through creation of social and economic value

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ISEKI Report 2023 20

ISEKI Group's value creation aims

Materiality

Materiality refers to the important issues that ISEKI Group will address as a priority for the achievement of ISEKI Group's aspirations and long-term vision. We have revised our materiality by aligning them with risks and opportunities identified through SWOT analysis, etc., as well as our visions and management

Materiality

Vision (2030)

Related SDGs

Risks and

Risks

Response to changes in policies of individual governments

Competition with other companies, changes in economic

Common

Develop products and generate business that contribute to the

conditions and the environment of agriculture

Climate change, reduction of environmental burden, natural

creation of the prosperous and sustainable society

disasters, infectious diseases, etc.

Lagging behind Chinese and other competitors in the European

and U.S. zero-emission (EV) product markets

businessthroughcreationValue

agriculturalImprovedofImprovement productivitylifeofquality

Contribute to the realization of sustainable agriculture

Decline in the number of farms in Japan, advancing age of

Japan

through the dissemination and promotion of agriculture

farmers, and slowdown of demand due to an increase in

that uses smart agricultural machinery and data

contracting of farm work

Contribute to the improvement of productivity

through the mechanization of agriculture by providing

Asia

agricultural machinery to suit individual countries and

regions, leveraging the rice-growing technologies

Lowering of prices, rise of Indian, South Korean, and Chinese

developed in Japan

competitors

Support the enhancement of private lives including

North

Chinese and other manufacturers leading the competition of EV

hobby gardening and farming through provision of

America

products

small-sized tractors, etc.

Europe

Contribute to the development of pleasant communities

by safeguarding beautiful landscapes and environments

Tightening of environment-related regulations and standards

Realization of

Decline in demand due to changing market needs

Decline in competitiveness due to delays in responding to GHG

a decarbonized

Contribute to the realization of a decarbonized and recycling-

emission reduction solutions

and recycling-

oriented society through business activities that take the

oriented

environment into consideration

Suspension of product and service provision systems due to

society

natural disasters such as typhoons and floods

Increase in costs due to introduction of carbon tax and rising

energy prices

Enhancement

Serious defects in products and services

of brand

Make our presence felt by solving social issues, leading to

Dependence on specific suppliers, soaring raw material prices,

value

development of the relationships of trust with stakeholders and

base

difficulty in procurement, and supply chain disruptions

(building of

mitigation and prevention of risks

Reputational risk

trust)

management

of employee

resources with a spirit of challenge to bring about change

An impact of property and personal damage on our business

Shortage of labor power, outflow of human resources

Secure core human resources to execute business strategies

Rigid organization and culture due to homogeneity and bias of

Enhancement

Maximize each individual's abilities and develop human

human resources

resilient

engagement

Provide employees with secure and safe workplaces, and create

Reputational risk and damages due to industrial accidents

rewarding workplaces

overtime work, etc.)

Human rights violations due to labor issues (harassment,

of a

Enhancement

Building

Respond to changes in the business environment swiftly and

Risks in general

of corporate

accurately, and maintain fair management

value by

• Risk of legal violation

reinforcing

• Risks related to information security

corporate

Strive to disclose necessary information promptly and accurately,

• Risks derived from international business and other risks

governance

and create a transparent company

Improvementof financialperformance

Transformation

Fluctuations in production caused by changes in economic

early because financial covenants are triggered

to a lean and

Build a management structure and foundation that can respond

conditions and the environment

streamlined

to changes in the environment and strive to achieve sustainable

Stock market trends, price decline in land and other fixed assets

business

growth and enhance corporate value

Exchange rate fluctuations

A hike in interest rate, rise of an obligation to pay back loans

structure

Introduction

ISEKI Group's value creation aims Business strategies for value creation Foundation for sustainable growth Financial and non-financial data Company profile / Stock information

strategies, after review with external sustainability expert organizations. We have set KPIs, and formulated and implemented a plan for specific initiatives for each materiality item. The ESG Committee manages the progress and reports to the Board of Directors.

opportunities	KPI	Focused themes	Status of
Opportunities	(strategies)	activities
New demand and needs	Expansion of advanced technological
Generation of business and creation of new value through innovation	intellectual properties	Responses to changing demand and needs	P43-46,
Increase in demand for electrification products	Increase in the proportion of research	Generation of business and creation of new value through
P51-53
Dissemination of electric products in the landscaping business and personal	and development investment in priority	innovation
hobby market	strategic fields
Larger scale of Japanese agriculture, diversification of crops	Dissemination of large-sized agricultural	Strengthening of initiatives for large-scale farmers
Develop measures to ensure the stability of food supplies
machinery and smart agricultural	Strengthening of DX and smart strategies	P35-38
Dissemination of smart agriculture (data-driven and environmentally sound agriculture)
machinery	Acceleration of revenue-expenditure structural reform
Partnerships with entities in other industries through DX
Progress in mechanization of agriculture in ASEAN, India, and other regions where rice		Build foundations for ASEAN business based on IST
is the main crop	A wider spread of our products in the	Bring high-performance,large-scale agricultural machinery
Dissemination of smart agriculture (data-driven and environmentally sound agriculture)	to market	P39, 42
in East Asia, etc.	Asian region	Enhancement of service systems
Expansion of price competitive products manufactured by TAFE into the ASEAN market		Build a new business model through collaboration with TAFE
		Support for AGCO brand strategy development	P39, 40
New demand for electrification products, etc.		Bring machinery with reduced cost and economical
Expansion of sales of tractors and lawn	specifications to market
Contribute to the SDGs goals such as "Sustainable cities and communities" by
mowers for North America and Europe	Reconstruct sales network with a view to consolidation
increasing sales of our products
	Expand products such as electrification products	P39, 41
		Streamline procurement of consumer products and implements
Increase in demand for products and services that accommodate changes in
the agricultural environment
• Conservation of energy and labor	Eco-product sales ratio
• Reduction of greenhouse gas emissions	Land area organically farmed (rice)	Response to climate change
• Reduction of fertilizer and agrochemicals		P54-57,
	Preservation of biodiversity
• Expansion of organic farming, etc.		P61-62
	Resource circulation in production
Cost reduction through the introduction of facilities with high environmental	Reduction of CO2 emissions
efficiency
Minimization of resource consumption	Reduction and reuse of production
resources
Production activities with low environmental burden by curbing waste generation
Capturing customers and fans with secure, safe, and cost-effective products	Enhancement of customer satisfaction	Enhancement of customer satisfaction and quality assurance	P63-64
and services	Promotion of CSR procurement	Strengthening supply chain management	P65
Building trust with suppliers
Strengthening relationships with
Stabilization of business through a sense of presence in the region,
local communities through ongoing	Co-existence with local communities	P66
enhancement of brand value, and co-existence
communication activities
Improvement of ability to generate innovations through retention and	Promotion of diversity & inclusion (D&I)	Utilization and development of diverse human resources
development of women, experts, and foreign nationals	and enhancement of education
Improvement of motivation and productivity			P47-50
Improving engagement survey scores	Promotion of health & productivity management
Securing health and safety of employees
Stabilization of business activities		Strengthening governance systems
Zero material legal violations and	Strengthening internal control and ensuring compliance	P67-80
Transformation through prompt management decision and appropriate risk	Prevention of risks from becoming obvious and minimization
scandals
taking	of losses through risk management, prompt management
		decision, and appropriate risk taking
Promotion of awareness and understanding through information disclosure	Engagement opportunities	Information disclosure and constructive dialogue	P60
Systematic checking of disclosure information through the
Establishment of trust through constructive dialogue
	Information Disclosure Working Group and ESG Committee
Building of an optimal production system capable of responding to changes	Improvement of operating margin	Structural reform
Enhanced management efficiency
Improvement of management efficiency and sophistication of business
management		Improvement of financial structure	P23-25
Capital investment in line with growth strategies	Improvement of asset efficiency
Creation of cash flows
Diversification of procurement methods

Materiality identification process

In identifying materiality, materiality was examined from both aspects of the realization of corporate philosophy and long-term vision of ISEKI Group and social issues (social demands and expectations). Based on the suggestions from the dialogue with external sustainability expert organizations, senior management discussed and identified materiality to be addressed by the Group.

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Identification of issues

Issues were identified based on social issues and various guidelines (ISO26000, GRI, SDGs, etc.).

Issues were identified by identifying risks and opportunities through SWOT analysis.

The process identified issues to be addressed as a priority for the creation of social and economic value through business activities and issues to be addressed from the perspective of risks and opportunities in business activities, such as environmental changes, impediments to business activities, and burden on the global environment.

Raw	Procurement	Development	Sales	Use	Disposal
and	and	and	of	of
materials
distribution	production	services	products	products

Issues identified from the perspective of opportunities and risks in business activities

Evaluation of materiality

Evaluate the importance of the issues identified from the perspective of impact on society and impact on ISEKI Group.

Maximum
Impact on society
Great	Impact on ISEKI Group	Maximum

Evaluation of reasonableness

Issues and the reasonableness of the results of the evaluation of importance are discussed at the ESG Committee and reviewed by external sustainability expert organizations.

Identification of materiality

The materiality to be addressed by ISEKI Group are identified through deliberation and resolution at the ESG Committee and the Board of Directors.

The ESG Committee and the Materiality Working Group deliberate once a year whether or not a review of materiality is necessary.

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