Sekisui House : Section６ ESG Management—Sekisui House’s Initiatives for Sustainability

Section 1

Section 2

Section 3

Section 4

Section 5

Section 6

Section 7

SEKISUI HOUSE Value Report

94

Value Creation Story

Mechanisms and Catalysts

Strategies and Initiatives

Mid-Term Management Plan

ManageManagement Foundationndation

ESG Management

Data

CONTENTS

for Creating Value

for Sustainable Growth

6Section

ESG Management

-Sekisui House's Initiatives for Sustainability

95 Roundtable Discussion on ESG

98 Editorial Policy / ESG Management Promotion Structure

1. ESG Management at the Sekisui House Group
2. Our Participation in International Initiatives and Activities with Government and Industry Groups
3. Environment

128 Social

163 Governance

Section 1

Section 2

Section 3

Section 4

Section 5

Section 6

Section 7

SEKISUI HOUSE Value Report

95

Value Creation Story

Mechanisms and Catalysts

Strategies and Initiatives

Mid-Term Management Plan

ManageManagement Foundationndation

ESG Management

Data

CONTENTS

for Creating Value

for Sustainable Growth

Roundtable Discussion on ESG

Working to Improve Corporate Value and Business Value as a Leading Company in ESG Management

The Sekisui House Group established the ESG Management Promotion Headquarters in June 2020. For the
Group, ESG management is simply a way of putting its corporate philosophy into practice. By promoting it at
all Group companies, we will make clearer, both inside and outside the Group, our aim of becoming a leading
company in ESG management. In this roundtable discussion, the chairpersons of the three subcommittees
responsible for promoting ESG management (Environmental Subcommittee, Social Improvement	Toshiya Chikada	Miwa Yamada	Atsushi Yoshida
Subcommittee and Governance Subcommittee) exchanged opinions on the roles of each subcommittee, their	Chairperson of the Environmental Subcommittee	Chairperson of the Social Improvement	Chairperson of the Governance
initiatives and progress to date, and medium-to-long-term issues for ESG management.	(Executive Officer, Head of Environment Improving	Subcommittee	Subcommittee
Department, Global Warming Prevention Promotion	(Executive Officer, Head of Diversity and	(Executive Officer, Head of Investor
	Office Lead)	Inclusion Promotion Department)	Relations Department)

Q: What is Sekisui House's approach to ESG management?	promoting ESG management, it is very important to explain it in a way that is easily understandable, rather than simply
-ESG management is not merely one facet of what Sekisui House does;	disseminating our beliefs.
rather, what Sekisui House does is one facet of ESG management.	Q: What are some initiatives of the ESG Management Promotion Headquarters, and what are their
Yoshida: In 2020, Sekisui House set forth its global vision to make home the happiest place in the world. Considering	features?
-Initiatives of the ESG Management Promotion Headquarters encompass
ESG management to be key to realizing this vision, we established the ESG Management Promotion Headquarters. We
three interconnected themes: participation by all employees; forward-
are aware of the importance of instilling ESG management all the way down to the employee level, as one aspect of
thinking initiatives; and improvement of our external evaluation.
re-examining the fundamentals of ESG. This is why in promoting ESG management, our respective subcommittees
consider initiatives that have been broken down into three categories: senior management, office-level management,	Yoshida: For participation by all employees, the ESG Management Promotion Headquarters' first step was to conduct
and employee-level management.	dialogue on ESG among employees. The Group conducts business by setting target items to be addressed, coming up
Yamada: One line in Sekisui House's code of conduct states, "We will wish for the happiness of others, and make their
with creative ideas for achieving those targets, and getting all employees to work together toward them. To give greater
joy our own." To me, ESG management is just a matter of putting the corporate philosophy into practice. In other	impetus to these efforts, it is important for employees to act on their own volition and to make efforts to understand
words, the things that Sekisui House has been doing as a matter of course in its business operations already lead to ESG	each other. These things can be achieved by increasing opportunities for communication-that is, through ESG dialogue.
management. The Company has long stated that the happiness of its employees is the foundation of its management.	We conducted dialogue on how to make employees, customers and society happy. Everyone had opinions about what
Employee happiness sets in motion a cycle that leads to the happiness of customers and society, and ultimately to the	makes them happy and accepted what others had to say without taking a confrontational stance, which gave rise to
happiness of all stakeholders.	reinvigorated communication. I strongly sense that this initiative has been a breath of fresh air in the Group.
Chikada: To realize our global vision, we set the goal of being a leading company in ESG management, but it is too
Chikada: The establishment of the ESG Management Promotion Headquarters and the start of various new initiatives
easy to simply believe that putting our corporate philosophy into practice will result in achieving that goal. I therefore	that encompass all employees, such as ESG dialogue, have undoubtedly engendered a Group-wide sense that things
think it will be useful to concurrently align the entire Group under the stance that what Sekisui House does is one facet	are changing. Until ESG dialogue, there certainly had never been an opportunity for all employees to discuss happiness
of ESG management. Structuring the idea in that way makes it simpler and more understandable, and it can also be	during working hours. I have heard from people that they feel the change happening in the Group. In addition, our
used as a basis for judgment in various situations, so I think it will help employees understand ESG management. In	measures to spread ESG management have been successful, including moving the Group newsletter to the intranet to

Section 1

Section 2

Section 3

Section 4

Section 5

Section 6

Section 7

SEKISUI HOUSE Value Report

96

Value Creation Story

Mechanisms and Catalysts

Strategies and Initiatives

Mid-Term Management Plan

ManageManagement Foundationndation

ESG Management

Data

CONTENTS

for Creating Value

for Sustainable Growth

Roundtable Discussion on ESG

share Company-wide efforts on a daily basis and encouraging employees to freely express their ideas in Sekisui House's unique SHIP Collective Communication and Innovation Awards Program. I believe that this has given rise to the feeling that everyone is involved in the ESG management of the Group.

Yamada: In terms of forward-thinking initiatives, Sekisui House has always generated results effectively based on consideration of the essence of what must be done. In 2005, the Company began to actively hire female sales representatives as a management strategy. At that time,

a front-line workplace environment that made women feel comfortable had not yet been adequately established. However, management felt strongly that the Company would not grow without the active participation of women and has since led the improvement of support for work-life balance and the workplace environment, and continuing support tailored to the issues faced in each job type. As a result, we have fostered a corporate culture of respect for diversity, which has since led to more forward-thinking initiatives than at other companies. I regard 2005 as our first step toward diversity. The second step was in 2014 when not just women, but a greater range of diverse human resources started playing more active roles, and the third step was in 2018 when we started encouraging all eligible male employees to take childcare leave.

Chikada: The starting point of Sekisui House's initiatives for the environment was the Environmental Future Plan we announced in 1999. I think the plan's fundamental approach of considering the future of people, communities and the Earth in its environmental vision and working to get closer to realizing that vision through our business activities has led to our forward-thinking initiatives. Today, there are many difficult environmental problems, and I think we should emphasize this approach in addressing them.

Yamada: As for improving external evaluation, such evaluation is underpinned by social demands, and the parameters of social demands change with the times. Anticipating such change generates forward-thinking initiatives, and the participation of all employees is essential for their successful implementation. Because of this linkage, the three themes set by the ESG Management Promotion Department are always interrelated. To me, participation by all employees is the most important. I want each employee to view ESG management as their own issue, and to deal with, understand, and talk about it on their own terms. It is not easy to see how one's work is part of ESG management. That is why it is important to engage in ongoing dialogue.

Yoshida: In considering how employees address ESG personally, and how that will connect to the Company, I now think we should further deepen understanding and promote adoption, starting from their awareness and ultimately leading to actions based on their own ideas.

Chikada: Our global vision and management messaging about becoming a leading company in ESG management have taken root among employees. Lately, I sense that employees' understanding of ESG management has deepened considerably since we started. I think most people in the Group feel that ESG management is being conducted not just by the ESG Management Promotion Headquarters alone, but by the entire organization.

Q. What initiatives is each ESG subcommittee currently focusing on, and what are the features of these initiatives?

-We will further accelerate efforts to date, clearly indicate the priority themes of the three ESG subcommittees, and take new steps.

Chikada: The Environmental Subcommittee is conducting various initiatives with a long-term view to achieve carbon zero by 2050. We are particularly emphasizing reducing Sekisui House Group's CO2 emissions at the stage of product use (during occupancy), which accounts for most of the Group's emissions. In other words, we are focused on promoting net zero energy houses (ZEH). ZEH contributes significantly not only to decarbonization but also to residents' comfort and the Company's business, making it a representative example of the ESG management many of our employees are already involved in. It is an easily understood example of ESG management, and it involves the entire Group. Since 2021, we have been focusing on decarbonization of suppliers. CO2 emitted during the manufacturing of materials and components also accounts for a significant proportion of emissions. We have told our suppliers about this and have held study sessions to generate opportunities for them to work with us to decarbonize. As a result, the number of suppliers who have now obtained SBT* accreditation has increased. The initiative to decarbonize suppliers is also

leading to other positive impacts. For example, since our suppliers do business with other builders, it is contributing to the decarbonization not just of Sekisui House, but the housing industry as a whole. Moreover, in 2021 we were able to quantitatively evaluate the contribution to urban biodiversity from our Gohon no Ki (five trees) Project. This project, which promotes the use of indigenous species in

• Science-BasedTargets: Targets accredited by SBTi, the Science-Based Targets initiative

Section 1

Section 2

Section 3

Section 4

Section 5

Section 6

Section 7

SEKISUI HOUSE Value Report

97

Value Creation Story

Mechanisms and Catalysts

Strategies and Initiatives

Mid-Term Management Plan

ManageManagement Foundationndation

ESG Management

Data

CONTENTS

for Creating Value

for Sustainable Growth

Roundtable Discussion on ESG

landscaping and greening, has been ongoing since 2001. The cooperation of our customers is vital in seeing this project to fruition. There are limits to what we can accomplish on our own in our environmental initiatives, so this approach of working with our stakeholders is extremely important to us.

Yamada: The initiatives of the Social Improvement Subcommittee are wide-ranging. We mainly deal with Company-wide issues that should be addressed cross- departmentally. To achieve health, connectedness and learning, which are factors for realizing the happiness

targeted in our global vision, I want our initiatives to center on promoting employees' physical and mental health, establishing connections with people inside and outside the Company, building networks, and creating various opportunities for learning. We are focusing on "happiness health management. " However, rather than leaving it to the Company to decide on measures, we launched the Happiness Health Project, another unique Sekisui House initiative in which employees take the lead in promoting health management based on happiness. In addition, our initiatives for human rights due diligence are ongoing, and encompass the supply chain as well as the Company. Promoting initiatives that consider the human rights of all stakeholders is a key topic for Sekisui House because it leads to sustainable growth for the Group and contributes to society. From the perspective of diversity, we are focusing on initiatives such as encouraging all eligible male employees to take one month or more of childcare leave, a program we introduced in September 2018, and promoting understanding of LGBTQ and other sexual minorities. I am confident that understanding and experiencing various viewpoints will help internalize diversity and free Sekisui House employees from unconscious bias. Yoshida: We positioned 2018 as our first year of governance reform, which we are conducting on three levels: senior management, office management and employees. I think our initiatives to date have elevated our senior management to Japan's top echelon in terms of governance. The Governance Subcommittee is now working to strengthen Group governance. Measures such as the establishment of Sekisui House Real Estate Holdings and Sekiwa Construction Business Headquarters have served to align approaches to governance. Going forward, we aim to achieve a global level of governance by strengthening Group governance and seeking the ideal form for the Board of Directors through reference to feedback collected in our shareholder relations activities. We are also promoting training programs that enhance integrity and a pool of talent to develop human resources for the coming era, with the understanding that they are crucial for corporate governance to function.

Q. What are some of your future tasks as the chairperson of your subcommittee?

-We will promote initiatives that lead to sustainable corporate growth, with the aim of the participation of all employees in ESG management.

Chikada: In the Environmental Subcommittee, we are promoting the three areas of decarbonization, biodiversity conservation and resource recycling, all of which are important issues that need to be addressed from a global perspective. The level of demand from society is rising at a tremendous speed and I honestly feel that these are difficult times. I believe it is important for all of us to keep thinking about what Sekisui House can and should do to make home the happiest place in the world.

Yamada: Sekisui House's task and its ultimate goal is to become a happier place for its employees to work. Our employees work hard to offer happiness to our customers and society, but there must be a win-win relationship for all three. I think it is important for the Social Improvement Subcommittee to provide support through system and workplace improvements and corporate culture reforms. Also, rather than providing the same opportunities to all, I think it is important for the Group to provide opportunities suited to each individual, so everyone has a chance to play an active role. A workplace where employees feel at ease will stimulate communication, leading to innovation and a Company that grows spontaneously.

Yoshida: ESG management makes the sustainability of corporate management and business growth clear to long-term investors. I am proud to say that our governance reforms so far have considerably enhanced effectiveness. However, contemporary demands are changing day by day, requiring further reform. To continue conducting reform, the Governance Subcommittee will work to foster an organizational culture of innovation and communication.

	Section 1		Section 2		Section 3		Section 4
	Value Creation Story		Mechanisms and Catalysts		Strategies and Initiatives		Mid-Term Management Plan
CONTENTS		for Creating Value		for Sustainable Growth

Editorial Policy

Editorial Policy

Section 6 describes the Sekisui House Group's approach to and initiatives for environment, social, and corporate governance (ESG). Information in each section is organized under the headings of Governance, Strategy, Risk Management, Indicators and Targets, and Initiatives and Other Related Information, keeping in mind the approach to ESG information disclosure presented by the International Sustainability Standards Board created by the IFRS Foundation in November 2021. In addition, in order to ensure the completeness of the information reported in this section, we refer to the disclosure requirements of the GRI Standards and the criteria for Home Builders, as defined in the Sustainable Industry Classification System (SICS) of the US Sustainability Accounting Standards Board (SASB). Furthermore, various information on climate change is disclosed based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

The following publications were used as reference for identifying and compiling the information presented in this report. Environmental report: The Environmental Reporting Guidelines 2018, published by the Ministry of the Environment CSR report: Guidance on Social Responsibility ISO 26000

Moreover, this report complies with the GRI Core Standards, by including the general disclosures (those whose publication is required to ensure compliance with the Core Standards) as well as the material disclosures required

under the standards.

GRI Content Index / SASB Index / Recommended disclosures from the TCFD

Report Content and Topic Boundaries

In principle, this report encompasses Sekisui House, Ltd. and its 335 consolidated subsidiaries. Any instances of departure from this scope are indicated as such in the text.

Section 5	Section 6	Section 7		SEKISUI HOUSE Value Report	98
ManageManagement Foundationndation	ESG Management	Data

ESG Management Promotion Structure

ESG Promotion Committee

In June 2020, the Sekisui House Group established the ESG Management Promotion Division (the current Division of Finance and ESG), and established the ESG Management Promotion Headquarters to administer the planning, drafting, and implementation of the Group's basic ESG management policies. This organizational reform represents a statement of our determination to be recognized as a leading company in ESG management, in both name and reality. It will not only promote Group-wide initiatives related to ESG management, but also provide support and coordination, information collection and analysis, and unified information dissemination both inside and outside the Company.

• The ESG Promotion Committee is a consultative body to the Board of Directors with two outside members who have specialized knowledge. The committee enhances its effectiveness by meeting once every three months to discuss ESG issues and relevant management initiatives. The details of discussions at the ESG Promotion Committee are reported to the Board of Directors for deliberation.
• In addition, we further promote ESG management in cooperation with Group companies in Japan and overseas based on discussions at the ESG Promotion Committee.
• • Chairperson: Officer in charge of ESG division
  • Outside committee members: 2
    Katsuhiko Kokubu (Dean and Professor, Graduate School of Business Administration, Kobe University) Hidemi Tomita (Representative Director, LRQA Sustainability K.K.)
  • Internal committee members:
    Head of the ESG Management Promotion Headquarters, and the respective chairpersons and vice chairpersons of the three ESG subcommittees (Environmental Subcommittee, Social Improvement Subcommittee and Governance Subcommittee)

Main Agenda of the ESG Promotion Committee for FY2021

Schedule	Main agenda

Period covered: FY2021 (February 1, 2021 to January 31, 2022)

• Report before the issuance of the Integrated Report and

• Initiatives to improve external evaluations

Note: Some activities undertaken in FY2022 are also covered in this section.

Date of publication: Published annually. (Previous report was issued in June 2021)

Third-Party Assurance

To enhance the credibility of the information in this report related to our environmental and social performance indicators, we received third-party sustainability report assurance from KPMG AZSA Sustainability Co., Ltd. that this information complies with ISAE 3000 and ISAE 3410, the International Standards on Assurance Engagements issued by the International Auditing and Assurance Standards Board.

4th		May 26
session
	2021
5th	July 13
session
6th		October 5
session
7th	2022 January 12
session

the Sustainability Report 2021• Reform of the Sekisui House Matching Program, a joint donation system

• Initiatives for Governance Reform

• Health management initiatives

• Creating a framework for an emergent organization

• Supply chain decarbonization initiatives

• Report on the implementation of a Well-Being Survey for employees

• Creating a platform for the participation of all employees	• Policy for creating information disclosure report 2022
• Report on the progress of the Happiness Health Project	• How to incorporate sustainability into management
	strategies
• Systematization of dialogue participated in by all employees	• Report on compliance with the revised Corporate
• Report on verification of the biodiversity effectiveness	Governance Code
of the Gohon no ki Project	• Human rights due diligence initiatives and roadmap
• Report on the progress of the Happiness Health Project