MS& Insurance : and Sustainability (27pages)

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

6

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.

7

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

8

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

9

HOME / Sustainability / MS&AD Insurance Group and Sustainability / MS&AD's Story of Value Creation and Business Models

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

The MS & AD Insurance Group's business model, "The Story of Value Creation," is centered on the insurance business, a highly public business that solves social issues and provides value to society. At the same time, we ourselves pursue the value of sales and profits.

As an insurance and financial service provider, our Group anticipate a wide range of risks, including accidents and disasters, and provides coverage in the event of an emergency based on our concept of sustainability. In addition, in order to lessen the occurrence of risks, we commit to solving social issues that cause risks. We will realize the creation of common value with society through our activities by identifying and communicating risks, preventing the emergence of risks and reducing their impact, and reducing economic burdens. This is our Group's business model.

Our Sustainability Approach

MS&AD's Story of Value Creation

Our Value Creation Approach

Our Aim: The Group which Supports a Resilient and Sustainable Society

In its medium-term management plan (2022 - 2025), the Group aims to be a "Group which supports a resilient and sustainable society" that will grow together with society by contributing to the resolution of social issues as a platform for risk solutions based on our story of value creation. To put our Group's management concept into practice, we will support the creation of a surroundings where customers can live and conduct business activities with peace of mind by addressing social issues and providing products and services based on our company's business model.

10

HOME / Sustainability / MS&AD Insurance Group and Sustainability / MS&AD's Story of Value Creation and Business Models

Identifying Materiality

Our group selects social issues that need to be resolved, taking into account common global goals and international guidelines and frameworks. It then evaluates the impact on stakeholder's decision-making and the impact on our Group's business, and identifies those that are of greater importance to both parties as our materialities.

[STEP 1] Analysis of social issues

In order to accurately grasp the issues that society needs to solve, we have identified social issues based on the SDGs (Sustainable Development Plans), ISO 26000, international guidelines, frameworks, reports, etc., which are common global goals.

Social issues are extracted from the following.

・Issues that must be addressed internationally (Global Risk Report, SDGs, etc.)

・Issues specified by international guidelines requiring companies to respond to and disclose information (ISO 26000, GRI Standard, SASB, DJSI, CDP, etc.) * ・Issues identified in reports published by domestic government agencies and national and international organizations (Relevant Ministries, Non-Life Insurance Associations, Swiss Re Sigma Report, etc.)

[STEP 2] Identification of priority issues

With regard to our group's business activities aimed at resolving social issues, we analyzed items that have a significant impact on stakeholder evaluations and decision-making, and items that have a significant impact on our group's long-term risks and opportunities. We identified three priority issues that are of high importance to both stakeholders and our company *.

*In evaluating our stakeholders, we use surveys of customers and agents, dialogues with shareholders, dialogues with investors and lenders, and employee engagement to investigate and analyze social issues that need to be resolved and expectations for our company.

11

HOME / Sustainability / MS&AD Insurance Group and Sustainability / MS&AD's Story of Value Creation and Business Models

12

HOME / Sustainability / MS&AD Insurance Group and Sustainability / MS&AD's Story of Value Creation and Business Models

[STEP 3] Main Initiatives for the Priority Issues

These three priority issues are recognized as our challenges for CSV (Creating Shared Value) in order to clarify our intention to address them as initiatives that create value for both society and the Group. Main initiatives are as follows. Furthermore, the goals that we aim to achieve through solving these issues are aligned with SDGs.

Priority Issues

[STEP 4] Board approval

Materiality assessment results and the Priority Sustainability Issues of the Medium-term Management Plan are signed off by Board of Directors, and are disclosed to stakeholders through information sharing meetings and to employees through briefing sessions.

Risks, Opportunities and Initiatives（PDF） PDF

13

HOME / Sustainability / MS&AD Insurance Group and Sustainability / MS&AD's Story of Value Creation and Business Models

Targets and Results

We have set Key Performance Indicators (KPI) targets to promote Sustainability initiatives.

Key Performance Indicators (KPI)

Impacts of CSV Initiatives

We estimate both the "impact on society" and the "economic impact on our Group" from CSV initiatives.

Impact

ESG Integration

The MS&AD Insurance Group has established its sustainability approach, which it upholds as a collection of strategies for ESG issues. In all of its corporate activities, including the development and provision of products and services and investments and loans, the Group takes sustainability into account, including factors such as environment, society, and corporate governance (ESG).

ESG Integration

Management Structure

Strategies and plans for sustainability-related initiatives are discussed at the Board of Directors meetings and quarterly Committee Meetings. The Sustainability Committee comprises of members that include presidents, officers in charge of planning and risk management, outside directors of the Company and the Group's domestic insurance companies, and discusses considerations for sustainability issue in all business activities. The details of the Sustainability Committee's discussions are reported to the Board of Directors and the Management Committee.

14

HOME / Sustainability / MS&AD Insurance Group and Sustainability / Targets (KPI) and Results

Targets (KPI) and Results

Key Performance Indicators (KPI) in the Medium-Term Management Plan to Promote Our Sustainability Initiatives

KPI

Materiality	Metrics	Group Targets	FY2022
Achievement
Planetary	GHG emissions reduction rate	FY2030 ▲50％
Health	（Scope 1＋2）	vs FY2019	▲26.8%
		FY2050 Net Zero
	GHG emissions reduction rate	FY2030 ▲50％
	（Scope 3）	vs FY2019
		Category :1、3、5、６、
		7、13	▲26.9%
		FY2050 Net Zero
		Category :All Categories
	Renewable energy usage rate	FY2030 60％	21.1% (*1)
		FY2050 100％
	Premium growth rate of products which contribute to decarbonization and circular economy	FY2025	17.9%
		Annual average of 18 %
Resilience	Rate of increase in the number of underwritten policies for products which help improve the resilience	FY2025	29.4%
	of society	Annual average of 20%
	Instances of support for the resolution of issues faced by regional companies	FY2025	12,349instances
	(Consulting services, training/seminars)	10,000 instances a year
Well-being	Number of policies in force for products which help solve health-related social issues	FY 2025 2.6 million	2.17million
	Number of policies in force for asset-building products to support longevity	FY 2025 0.1 million	0.05million
	Instances of support for action by companies to address human rights	1,000 instances a year	1,111instances
	(Consulting services, training/seminars)

(*1) Correction made on August, 2023 Before correction：24.1% After correction：21.1%

15