Sekisui House : Value Report 2023

For the year ended January 31, 2023

Value Report 2023

- Our Engagement

Foreword to Value Report 2023

1

CONTENTS

"A company is made of its people. By acting with Love of Humanity, our employees will become a group who share a common destiny, and who share the same goals through the good times and the bad. If everyone participates in running the company, there will be no conflict between employees and management, and this will serve as the driver in growing the company. If Love of Humanity exists between ourselves and our partner contractors, builders, and suppliers, we will be able to prosper together, and the foundation of the company will be reinforced."

-From the Corporate Philosophy

• The Sekisui House Group is proud of the technical capabilities, construc- tion capabilities and customer base it has created since its founding. These core competencies empower our corporate activities.
• Since our founding, we have always been in synch with the times. To consistently address the needs of customers and society, we have devel- oped advanced technologies and human resources to support the Group.
• The Sekisui House Group's global vision, and our promise to stakehold- ers, is to "make home the happiest place in the world" as we move forward. We will make our vision a reality by improving corporate value as a sustain- able company and consistently providing happiness in the era of the 100- year lifespan.
• Through Value Report 2023-Our Engagement, we seek to tell our story from business, financial and non-financialperspectives and engage in dia- logue with stakeholders.
• We hope to reach the hearts of our stakeholders.

About the Cover Design

The three rings on the cover of this report symbolize the Sekisui House Group's mission-our three material issues. To evoke the kind of happy homes that the Sekisui House Group strives to provide, their texture has an organic warmth. The white shining from the center of the rings depicts our love of humanity. The expansion of these three rings will make the various "homes" they encompass the happiest places in the world.

Section 1

Section 2

Foreword to Value Report 2023 / Contents	.......	1
Editorial Policy / Communication Overview	....	2
Corporate Philosophy and Global Vision	...........	3
Business Portfolio		4
...............................................................
Keys to Understanding the				5
Sekisui House Group	........................................................

Long-Term Vision and

Material Issues

Message from the President		7
	.........................................
The Building of Sekisui House
-OurCorporate Story	11
Sekisui House's Material Issues	15
	..............................
Group Vision and Material Issues	16
Our Material Issues and the Value
We Provide	17
The Sekisui House Technology and
Mindset Behind Our Material Issues	18
Creation of High-Quality Housing	22
Stock and KPIs
...................................................................
Contributing to a Sustainable Society
and KPIs	26
Diversity and Inclusion and KPIs	32

Mechanisms and Catalysts for Creating Value

Value Creation Process	37
Sekisui House's Operating Environment,	38
Risks and Opportunities
..............................................
Management Resources
(Four Types of Capital)	39
The Sekisui House Group's
Human Capital Management	41
Business Models	50
...............................................................
Value Chain	51
Core Competencies	53
Stakeholder Engagement	54

Section 3

Section 4

Mid-Term Management Plan for Sustainable Growth

Evolution of Our Businesses and

Business Model Based on the

Residential Domain	57
Evolution of Our Mid-Term
Management Plans	58
Sixth Mid-Term Management Plan
(FY2023-FY2025)	59
Business Strategy	61
Built-to-Order Business
.................................................
Supplied Housing Business	64
Development Business	67
Message from the Officer in Charge of
the Overseas Business	70
Overseas Business	71
Financial and Capital Strategy	74
................................
Financial Analysis	78
ESG Strategy	82
Environmental Strategy	83
Improvement of Social Value	85
Human Resources Strategy	86
.........................................
Technology and R&D Strategy:
Sekisui House Technology	87
Digital Transformation (DX) Strategy	90

ESG Management

The Outside Members of the ESG
Promotion Committee Share Their Views	94
Stance and Initiatives to Promote
ESG Management (Sustainability)	97
Governance	99
..........................................................................

Message from the Chairperson of the

Board of Directors......................................................... 100

Corporate Governance............................................... 101

Promoting Compliance............................................... 117

Strengthening Risk Management.......................... 121

Themes and KPIs for Initiatives That

Provide a Basis for Our Material Issues........... 125

Shareholder and Investor Engagement............. 126

Section 4

Section 5

Messages from the Audit and

Supervisory Board	127
Directors of the Board and Audit and
Supervisory Board Members	128
.....................................................................	133
Environment
Environmental Management	134
Contributing to a Decarbonized Society	136
Disclosure in Line with Task Force on
Climate-related Financial Disclosures
.....................................	142
(TCFD) Recommendations
Biodiversity Conservation	146
Disclosure in Line with the Taskforce on
Nature-related Financial Disclosures
(TNFD) Draft Recommended
Disclosures	152
..........	154
Initiatives to Realize a Circular Economy
Water Security	162
Environmental Data	166
Factory Site Report	175
Social	181
Respect for Human Rights	182
Developing Human Resources	187
Diversity and Inclusion	192
............................	199
Happiness Health Management
Occupational Health and Safety	201
Customer Initiatives	207
Coexisting with Local Communities	210
......................................	216
Supply Chain Management
Participation in International Initiatives
and Activities with Government and
Industry Groups	219
....	220
Independent Third-Party Assurance Report

Financial Data, Company Information and Share Information

Consolidated Financial Statements	222
11-Year Highlights (Consolidated)	226
Company Information	230
Share Information	231
External Recognition and Awards	232
......................

Editorial Policy / Communication Overview

Editorial Policy

2

Communication Overview

We produced this report with the primary purpose of helping readers understand our businesses and initiatives. This report lays out the corporate story of Sekisui House. It uses the process of determining material issues to help readers understand the corporate value and significance of the Sekisui House Group, and clearly expresses the Group's vision for itself through the value creation process. Since 2022, we have published the Value Report, which incorporates the content formerly published in the Integrated Report and the Sustainability Report. By including a broad array of ESG information, this report is intended to serve as a unified tool for all stakeholders, including institutional investors and shareholders, that explains Sekisui House's corporate value from business, financial and non-financial perspectives.

Section 4 describes the Sekisui House Group's approach to and initiatives for environment, social and corporate governance (ESG) issues. Within Section 4, information in each subsection is organized under the headings of Governance, Strategy, Risk Management, Metrics and Targets, and Initiatives and Other Related Information, based on the approach to ESG information disclosure presented by the International Sustainability Standards Board, which was created by the IFRS Foundation in November 2021.

Report Content and Topic Boundaries

In principle, this report encompasses Sekisui House, Ltd. and its 345 consolidated subsidiaries. Departures from this scope are indicated in the text.

• • Period covered: FY2022 (February 1, 2022 to January 31, 2023)1
• 1  Some activities undertaken in the fiscal years preceding and following FY2022 are also covered.
• • Date of publication: Published annually (previous report was issued in June 2022)

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. compliant with ISAE 3000 and ISAE 3410, the International Standards on Assurance Engagements issued by the International Auditing and Assurance Standards Board.

Note on Forward-Looking Statements

Forward-looking statements in this report, such as performance forecasts, are estimates made by the Company based on information available at the time this report was prepared and include potential risks, uncertainties and other factors. Please be aware that actual results may differ significantly from forecasts due to changes in various factors.

Navigating the Report (online version)

Each page has navigation buttons to facilitate movement between pages and to external resources.

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			Financial Information			Non-Financial Information
	• Briefings on earnings results and			• Briefings on ESG management
		management plans			• Meetings with stakeholders
Dialogue	• Meetings with analysts and
		investors
	• General Meeting of Shareholders
	• Securities Report (Japanese only)			• Corporate Governance Report
	• Business Report
Reports				• Value Report (integrated report)
					This unified disclosure explains
					corporate value by providing financial
					and non-financial information and a
					wide array of data.

Website

Investor Relations

ESG Management

Guidelines referenced

• • The International Integrated Reporting Framework, IFRS Foundation
• • "Guidance for Collaborative Value Creation," Ministry of Economy, Trade and Industry
• • "Environmental Reporting Guidelines 2018," Ministry of the Environment
• • ISO 26000 (Guidance on Social Responsibility), International Organization for Standardization
• • GRI Standards
• • SASB Standards , Sustainability Accounting Standards Board (SASB), IFRS Foundation
• • "Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures," Task Force on Climate-related Financial Disclosures (TCFD)
• • TNFD beta framework (v.0.4), Taskforce on Nature-related Financial Disclosures (TNFD)

Value Report 2023				Contents	Long-Term Vision and	Mechanisms and
SEKISUI HOUSE				Material Issues	Catalysts for Creating Value

Corporate Philosophy and Global Vision

	Our stance		Love of Humanity…. Our philosophy
	Truth & Trust
			With an awareness that each and every
			human being is precious and irreplaceable,
			we will wish for the happiness of others,
			make their joy our own, and act with
			integrity and in the spirit of service.
	Our philosophy
	Love of
	Humanity
Our goal		The meaning of our business
Deliver the highest		Create enriching homes
quality and technology		and environments

Mid-Term Management Plan for	ESG Management	Financial Data, Company	3
Sustainable Growth	G: Governance E: Environment S: Social	Information and Share Information

The Sekisui House Global Vision

Make home the happiest place in the world

Value Report 2023				Contents	Long-Term Vision and	Mechanisms and	Mid-Term Management Plan for	ESG Management	Financial Data, Company	4
SEKISUI HOUSE				Material Issues	Catalysts for Creating Value	Sustainable Growth	G: Governance E: Environment S: Social	Information and Share Information

Business Portfolio

The Sekisui House Group divides its operations into four areas: the built-to-order busi- ness, supplied housing business, development business and overseas business. The built-­to-­order business creates high-­value-added,high-quality housing stock on land owned by the customer. The supplied housing business works to increase the asset value of housing

Overseas business

17.8%

¥521.1 billion

Other
2.8%
	Built-to-order business
¥80.7 billion		36.8%
Exterior business, etc.		¥1,077.3 billion

stock through remodeling and supports the management of rental housing through sub- leasing. The development business starts from land acquisition and other investments to create high-quality communities. The overseas business provides housing markets in other countries with the quality and advanced technologies we have cultivated in Japan.

Overseas business

Net sales: ¥521.1 billion

Sales of detached houses; preparation, development and sales of residential land; development of condominiums for sale, rental condominiums, and other properties in overseas markets

Business regions

United States, Australia, Singapore, United Kingdom and China

Custom detached houses

Overseas business	12.0%
17.8%
		FY2022	Rental housing
Urban		14.5%
	Net Sales
redevelopment
4.6%	¥2,928.8 billion
Condominiums
3.1%			Architectural/
Houses for sale			Civil engineering

Custom detached houses

Net sales: ¥352.4 billion

Contracting of custom detached house design and construction

Rental housing

Net sales: ¥426.1 billion

Contracting of design and construction of rental housing, commercial buildings and other properties

Architectural/Civil engineering

Net sales: ¥298.7 billion

Development business

8.1%

10.2%

Construction of reinforced concrete rental housing and commercial buildings; contracting of civil engineering works design and construction

15.9%

¥464.4 billion

Houses for sale		Condominiums		Urban redevelopment
Net sales: ¥238.2 billion	Net sales: ¥90.8 billion	Net sales: ¥135.3 billion
Sales of houses and residen-	Sales of condominiums	Development of office build-
tial land; design and contract-		ings and commercial facilities;
ing of construction of houses		management and operation
on residential land for sale		of real estate owned

Real estate	Remodeling
management fees
5.7%
21.1%

Supplied housing business

26.8%

¥785.1 billion

Remodeling

Net sales: ¥165.9 billion

Remodeling and renovation of houses, etc.

Real estate management fees Net sales: ¥619.2 billion

Subleasing, management, operation and brokerage of real estate, etc.