MS& Insurance : Sustainability Report 2023 (248pages)

SUSTAINABILITY REPORT 2023S&AD

MS&AD

INDEX Sustainability Report 2023

CEO Message

P.2

CSuO Message

ESG Information

P.148

ESG Data / Reference Material

P.4

MS&AD Insurance Group and Sustainability P.6

・Our Sustainability Approach

Governance

・Outline of the Group

P.153

P.180

・MS&AD's Story of Value Creation and Business Models ・Targets (KPI) and Results

・ESG integration and sustainability approach ・Communication with Stakeholders

・Initiatives

Priority Issues

P.33

Our Value Creation Approach

・Products and services that contribute to achieving P.39 Sustainable Development Goals (SDGs)

・Impact of CSV Initiatives ・Sustainability Contest

・Action on Climate Change

・Improvement of Sustainability of Natural Capital ・Measures to Address New Risks Occurring in Line

with Social Changes

・Loss Prevention/Mitigation through the Utilization of Data and AI

・Creation of a Resilient and Inclusive Society (Regional Revitalization)

・Adaptation to a Society of Healthy Longevity

・Implementing Activities and Dialog that Respect Human Rights

・Improvement of Employee Engagement ・Quality that Earns the Trust of Society

・Corporate Governance ・Compliance

・ERM and Risk Management

・Information Management

・Transaction Responsibilities ・Information Disclosure

・The Medium-Term Management Plan

Third-Party Assurance

P.239

Editorial Policy

P.244

HOME / Sustainability / CEO Message

CEO Message

The MS&AD Insurance Group (hereinafter "Group") pledges in its Corporate Philosophy (Mission) "to contribute to the development of a vibrant society and help secure a sound future for the planet by enabling safety and peace of mind through the global insurance and financial services business." The Group, in collaboration with its stakeholders, has been making steady progress toward realization of a "resilient and sustainable society" through its contributions to resolution of social issues and the Creating Shared Value (CSV) initiative.

In the Medium-term Management Plan, (FY2022-2025), we state our aim to be a corporate group that will grow together with society as a Platform Provider of Risk Solutions and will support the achievement of a resilient and sustainable society. To realize the Group's vision, we have established three basics: "Value (Creation of value)," "Transformation (Business reforms)" and "Synergy (Demonstration of Group synergy)."

With regard to "Sustainability," we have positioned this as the fundamentals that support basic strategies. The Group has been promoting initiatives, focusing on realization of three materialities "Planetary Health (Symbiosis with global

environment)," "Resilience (Safe and secure society)," and "Well-being (Happiness of diverse people)," which are highly important for both the Group and our stakeholders.

In relation to "Planetary Health (Symbiosis with global environment)," we have been carrying out initiatives centering on "Net-zero Carbon Emissions (Decarbonization/action on climate change)" and "Nature Positive (Enhancement of sustainability of natural capital)," which are closely interrelated. Our Group has set a goal of reducing its greenhouse gas emissions to net zero by FY2050 and implementing initiatives to reduce its environmental impact. As a specific initiative, through the MS&AD Green Earth Project, the Group's unique environmental management system, we are actively promoting initiatives to reduce the environmental impact of our business activities, including efforts to reduce greenhouse gas emissions. Furthermore, through insurance and consulting services, we will continue to support the development of a sustainable society by providing countermeasures against the impact of extreme weather events caused by climate change on business activities and developing products and services that contribute to the transition to a net-zero society. The Taskforce on Nature-related Financial Disclosures (TNFD) was established in June 2021 to create an information disclosure framework and guide global financial flows toward positive outcomes for nature. We also lead as the convener of the TNFD Japan Council. By providing solutions and products that help improve the sustainability of natural capital, the Group will build a sustainable relationship between natural capital and business activities and contribute to living in a global environment.

For "Safe and secure society (Resilience)," in addition to accident prevention and mitigation, we are promoting initiatives to address new risks with the aim that our activities will lead to regional revitalization (building resilient and inclusive local communities). We are also seeking to contribute to the stable development of society through providing products/services that respond to new risks associated with progress in innovation and changes in industrial structure. For example, the Group provides solutions to prepare for risks through consulting by MS&AD InterRisk Research & Consulting, which has advanced research and study functions and practical consulting capabilities. In addition, to support preparing for automobile accidents, natural catastrophes, large-scale earthquakes, and infectious diseases, such as the novel coronavirus, we will visualize risks through data analysis and AI and provide problem-solving tools, thereby contributing to realizing a safe and secure society. Furthermore, to build such a society, we will conduct joint research with government agencies and universities on accident prevention and mitigation, and provide new services as a result of our research.

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HOME / Sustainability / CEO Message

In order to address the issue "Happiness of diverse people (Well-being)," we have been promoting initiatives, centering on "Adaptation to a society of healthy longevity," "Respect for human rights" and "Improvement of employee engagement." For "Society of healthy longevity," we are committed to promoting good health so that people can remain active throughout their entire lives, providing the means to build assets that support a fulfilling "second life," and helping to develop business activities that lay the foundations for a super-aging society.

Regarding "Promotion of respect for human rights," we will promote initiatives by introducing human rights due diligence, covering the Group and its business partners. For "Improvement of employee engagement," we are focusing on re-skilling, recurrent training, securing professional human resources, and promoting their active engagement. We are also implementing digital human resource development programs. In addition, we are implementing global human resources development programs to create a system for improving our international awareness and global business skills. We are also providing more opportunities for self-directed career development through expanded use of the open recruitment system (post- challenge program) and utilization of free agent programs whereby employees can promote themselves to departments of their choice.

In addition to these initiatives, to create an environment in which diverse employees can genuinely demonstrate their abilities and to create innovations and enhance corporate value, we have incorporated the perspective of "equity" into "Diversity & Inclusion (D&I)," and we are promoting it as "DE&I." For the career development of women, we will expand opportunities for women to play an active role and develop the pipeline to achieve the Group's target by the end of FY2030.

Recently, in addition to the increasing severity of natural disasters due to expansion of the pandemic and to global warming, several risks such as those of a geopolitical nature have emerged. In these uncertain times, we are committed to demonstrating our true potential as a "risk solutions platform provider" and fulfill our mission as an insurance and financial group that supports society.

October 2023

President & CEO

Noriyuki Hara

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HOME / Sustainability / CSuO Message

CSuO Message

Increasingly diverse and complex social issues

In recent years, various risks have clearly emerged to disrupt society's safety and security, such as the spread of infectious diseases, geopolitical risks, intensifying natural disasters, and advances in digital technology. In addition, the COVID-19 pandemic triggered changes in people's sense of values and lifestyles, and the expectations and needs of customers and other stakeholders have become more diverse. Furthermore, global issues such as climate change and political and geopolitical factors are involved, whereas social issues are becoming increasingly complex.

MS&AD provides products and services to solve social issues through three approaches, starting with identifying such risks before anyone else and informing customers and society and adding functions to prevent risks and to reduce the impact of risks.

MS&AD's important social issues and partnerships

MS&AD has identified three social issues that are important to both our stakeholders and the Company: symbiosis with the global environment (Planetary Health), a safe and secure society (Resilience), and happiness of diverse people (Well-being).

Although the three might appear to be separate issues, they are deeply interconnected and need to be approached holistically.

The SDGs Wedding Cake Model proposed by the Stockholm Resilience Center is a model that illustrates how the 17 SDGs are made up of three layers, which are closely related to each other. At the top of cake sits "Let's achieve our goals through partnerships," which indicates that partnerships are essential to solving increasingly complex social issues.

Translated into key social issues for MS&AD, the happiness of diverse people is made possible by a safe and secure society, which in turn has as its base symbiosis with the global environment, or the natural environment necessary for people to live in.

For example, MS&AD is working with local governments, researchers, and local NPOs on the MS&AD Green Earth Project to restore and preserve the natural environment, in which employees and their families participate. By restoring natural capital and increasing biodiversity, the project aims to reduce damage from floods, which are becoming more frequent and severe, and to contribute to regional development by creating a safe and secure society. It is a nature-based solution put into practice, which solves problems by utilizing the blessings of nature.

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HOME / Sustainability / CSuO Message

Achieving CSV in employees' daily work

MS&AD has continually made sustainability and CSV (Creating Shared Value with society) the pillars of its strategy since fiscal 2018, incorporating CSV into the organization's annual plans, promoting initiatives, and reviewing the results. The cycle has been shared throughout the Group and is now deeply woven into the sense of values of all Group employees. In the annual Sustainability Contest held as a part of the review process, approximately 2,000 initiatives have been reported to date, making tangible contributions to solving social issues.

We believe steadily running this cycle and advancing it through partnerships with stakeholders is the only path to the resilient and sustainable society that the Group aims for and will bring about the well-being of every employee.

October 2023

Naomi Motojima

Managing Executive Officer

Group Chief Sustainability Officer (CSuO)

Activities in the Kuma River basin, Kumamoto Prefecture. Learning from the damage caused by the torrential rains in 2020, this project will work to reduce flood damage by conserving wetlands upstream to improve biodiversity while enhancing rainwater storage

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HOME / Sustainability / MS&AD Insurance Group and Sustainability

MS&AD Insurance Group and Sustainability

Our Sustainability Approach	MS&AD's Story of Value Creation and
Business Models

Targets（KPI） and Results	ESG Integration and Sustainability
Approach

Communication with Stakeholders	Initiatives

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HOME / Sustainability / MS&AD Insurance Group and Sustainability / Our Sustainability Approach

Our Sustainability Approach

The MS&AD Insurance Group has set Mission, Vision, and Values in order to clarify how the Group should be. Furthermore, we have accelerated initiatives based on our sustainability approach to achieve our mission.

Our Mission

To contribute to the development of a vibrant society and help secure a sound future for the planet, by enabling safety and peace of mind through the global insurance and financial services business

Our Vision

To create a world-leading insurance and financial services group that consistently pursues sustainable growth and enhances corporate value Our Values

Customer focus, integrity, teamwork, innovation, professionalism

Perspective of Sustainability of the MS&AD Insurance Group

The MS&AD Insurance Group will create shared value and aim toward a resilient and sustainable society through corporate activities that implement "Story of Value Creation," in order to realize our Corporate Philosophy (Mission).

We will consistently strive for supreme quality that lives up to the trust and expectations upon us, and together with our stakeholders, continue to contribute to the creation of society where everyone can pursue a stable life and take on dynamic business activities, while preserving the sustainability of the global environment and society.

(Basic Policies on Corporate Governance, Chapter 2 Section 2)

Business Activities with Consideration for Sustainability

The MS&AD Insurance Group, as insurance and financial services group which provides safety and peace of mind conduct business activities with consideration for sustainability.

We aim to enhance corporate value by contributing to solutions for sustainability issues (also known as environmental, social and governance (ESG) issues) with profound understanding through stakeholder engagement.

Our underwriting considers issues and risks that would have a negative impact on society and the global environment. In addition, we provide products and services that respond to the demand of society.

Our investments consider ESG factors in pursuit of long-term returns and contribution to solutions for sustainability issues.

"Action on Climate Change", "Improving Sustainability of Natural Capital" and "Respect for Human Rights" that require urgent actions are the Group's priorities.

We will disclose our initiatives, in line with global disclosure standards.

【Action on Climate Change】

We contribute to climate change mitigation and adaptation as climate change may bring material impacts on our lives and ecosystems and pose substantial risks to the insurance industry.

The establishment and implementation of innovative technologies to reduce greenhouse gas emissions, as well as next-generation energy (renewable energy, hydrogen, etc.) and the carbon recycle, are essential to achieving the goals of the Paris Agreement. We

will promote engagement with our business partners and other stakeholders, and actively work to provide new risk solutions and make investments to support the transition to a net-zero society.

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HOME / Sustainability / MS&AD Insurance Group and Sustainability / Our Sustainability Approach

We will not newly provide insurance for, nor make investments in coal-fired power plants or thermal coal mines*1.

We will not newly provide insurance for oil and gas extraction and coal-mining projects*3 by companies whose primary business is coal*2. We will not newly provide insurance for, nor make investments in oil sands mining and oil and gas extraction projects in the Arctic*3.

We have established medium- and long-term targets for the green house gas emissions reduction from our business processes andour business partners and the renewable energy usage ratio, and are working to reduce green house gas emissions.

• Greenhouse gas Emission Reduction >

	Scope	FY2030	FY2050
	Scope 1 , 2	-50% (Base year: FY2019)
	Categories 1, 3, 5, ６, 7,	-50% (Base year: FY2019)
	13
			Net
Scope		We, through engagement with clients, share challenges they have in reducing GHG emissions. We work	Zero
3		together with them towards reduction of GHG emissions with solution proposals.
	Underwriting/Investments	-37% (Base year: FY2019)
		(Key Japanese domestic corporate clients)

Scope 1 is for direct emissions from our group, such as gasoline from company-owned vehicles.

Scope 2 is for indirect emissions from the use of electricity and gas.

Scope 3 is for indirect emissions by our group's operations other than those in Scope 2.

FY2030

FY2050

60%

100%

【Improving Sustainability of Natural Capital】

Natural capital is the foundation that supports our society and economy. As its conservation and sustainable use is essential to the economic development and prosperity of society, we take initiatives to conserve biodiversity and improve sustainability of natural capital.

We will carefully determine whether or not to provide insurance or make investments in the following businesses that may have negative impacts on the environment and local communities, while taking into account the businesses' consideration for the environment and society.

－New construction of coal-fired power plants and coal mines, oil-fired power plants and oil fields, oil sand mining, and gas fields －New construction of hydroelectric power plants

－New agriculture, forestry and fisheries projects involving large-scale development in unexplored areas

－Projects that could destroy natural and cultural heritage sites protected under the UNESCO Convention for the Protection of World Heritage Sites and wetlands protected under the Ramsar Convention

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HOME / Sustainability / MS&AD Insurance Group and Sustainability / Our Sustainability Approach

【Respect for Human Rights】

As respecting human rights is the foundation of a safe society where one can enjoy peaceful lives, we conduct our business activities with respect for human rights.

We will not provide insurance for, nor make investments in cluster munitions that may kill large numbers of people at once and biological and chemical weapons, and anti-personnel mines that may cause indiscriminate mass killing.

We will carefully determine whether or not to provide insurance or make investments in the businesses which may violate human rights of indigenous people or local communities, while taking into account the businesses' consideration for the environment and society.

The Board of Directors and the Sustainability Committee hold discussions on the policies, plans, and the progress initiatives for the aforementioned Business Activities with Consideration for Sustainability. We keep the highly transparent disclosure and engage in dialogue with stakeholders. Revision and /or modification may be applied when necessary.

MS&AD Insurance Group participates in the following initiatives.

Paris Pledge for Action

United Nations Global Compact (UNGC)

United Nations Environment Programme - Finance Initiative (UNEP FI) 〔Principles for Sustainable Insurance (PSI),Natural Capital Finance Alliance (NCFA)〕

Principles for Responsible Investment (PRI)

Task Force on Climate-related Financial Disclosures(TCFD)

Taskforce on Nature-related Financial Disclosures (TNFD)

Partnership for Carbon Accounting Financials (PCAF)

Japan Climate Initiative (JCI)

Principles for Finance Action towards a Sustainable Society (Principles for Financial Action for the 21st Century) Japan Business Initiative for Biodiversity (JBIB) etc.

*1：Existing coal fired power plants and thermal coal mines with technologies and techniques aiming to achieve the goals of the Paris Agreement might be handled after careful consideration.

*2：Companies that derive at least 25% of their revenues from coal-fired power generation, thermal coal mines or companies that generate at least 25% of their energy from coal.

*3：Projects and companies planning to decarbonize to achieve the goals of the Paris Agreement are exempted.

MS&AD's Story of Value Creation and Business Models

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