Launch of a New Governance Consulting Business

「Going forward, the Group will strengthen and expand its corporate governance-related consulting services by leveraging its strengths and deep knowledge of institutional investors' needs. These services include support for board effectiveness evaluations in response to the Corporate Governance Code, ESG disclosure consulting in response to growing interest in ESG, and the placement of independent outside officers. Through this, the Group aims to further establish and promote SR consulting in Japan's equity market.」

「In addition to equity consulting related to the TSE's market segment review scheduled for next spring, ESG consulting related to climate change is steadily increasing as institutional shareholders worldwide accelerate their focus on ESG.」

「In June this year, the Financial Services Agency revised the Corporate Governance Code, and companies seeking to move from the TSE First Section to the Prime Market are scheduled to be subject to new standards of conduct. Demand for a wide range of consulting services to address new standards of conduct covering governance design, general meetings of shareholders, dialogue with institutional investors, ESG disclosure, and diversity is expected to rise rapidly, in view of the market capitalization record date at the end of June this year for the reorganization of the TSE market segments.」

「Demand related to ESG is steadily increasing in SR consulting. Proposals for comprehensive ESG consulting covering "E" and "S", in addition to "G" services such as governance consulting, outside director placement, and board evaluations, have proven effective, resulting in steady growth in engagements.」

「In the second half of the fiscal year, demand for SR advisory services is expected to pick up again as activists become more active in calling extraordinary general meetings and voting guidelines for the next fiscal year are tightened. Demand for ESG-related consulting is also rising rapidly. In addition to the "G" in which we specialize, we will provide highly competitive consulting that integrates SR and ESG, covering "E" and "S" as well, while making optimal use of our AI database.」

「Against this backdrop, listed companies are becoming rapidly more aware of the need to prepare for capital risks. Our SR advisory business has achieved a significant expansion in the range of engagements from existing and new clients through a broad range of consulting services drawing on our proprietary expertise, including our core services of identifying shareholders and investigating voting rights, engagement-related services with institutional shareholders, activist defense, corporate governance improvements, capital policies aimed at optimizing shareholder returns, board effectiveness evaluations conducted as an independent third party, and the placement of independent outside directors.」

「In governance consulting, engagements for the placement of outside directors and other personnel increased, supported by institutional shareholders' tightening of their criteria for determining the independence of outside directors and the movement toward a higher proportion of outside directors and greater diversity on boards. In addition, institutional shareholders are increasingly calling for the use of independent third parties to assess board effectiveness. Ensuring fairness in assessments of board effectiveness is also becoming one of the measures used to address activist investors, contributing to growth in engagements for the Group's board evaluation services.」

「In consulting related to the Corporate Governance Code, the use of independent third parties for board evaluations and training is steadily increasing. The Group's board evaluation services, which draw on the most advanced expertise in Europe and the United States, have been highly valued for their track record among large-cap companies, resulting in growing engagements. Engagements for the placement of outside directors and other personnel also increased steadily.」

「In governance consulting, independent outside director placement services increased substantially, supported by the movement toward greater board diversity and the expanding role of outside directors. Demand for third-party evaluations of board effectiveness also increased further, based on the company's track record to date.」

「In governance consulting, demand for independent outside director placement services increased, supported by institutional investors' tightening of their independence criteria for outside directors and the movement toward greater board diversity. Institutional investors, as well as companies, are showing strong interest in responding to the Corporate Governance Code revised in June. Demand is expected to increase for governance consulting that takes institutional investors into account as companies address new challenges.」

「In governance consulting, as board effectiveness evaluations have passed their third year at many companies, investors have increasingly sought rigorous evaluations conducted with the involvement of independent third parties. Such evaluations are also attracting attention as a means of investigating corporate misconduct or preventing it from occurring. In addition, the company has already developed new services, including assessments of the value of cross-shareholdings, in response to the revisions to the Corporate Governance Code made in June 2018. Strong demand for the Group's governance consulting services is expected to continue.」

「In corporate governance consulting, the company's track record and results in evaluating the effectiveness of boards at major companies have become widely recognized by client companies. As the Group's strengths in board evaluations have become more firmly established, engagements have expanded further. Demand for the placement of outside directors is also increasing ahead of the next fiscal year.」

「The company is also further strengthening its governance consulting services. Engagements to conduct board effectiveness evaluations as an independent third party, now entering their third year, are steadily increasing, while demand is also growing for consulting services related to the introduction of share-based executive compensation and the introduction of outside directors.」

「Our seminar on board effectiveness evaluations, the issue of greatest corporate interest in responding to the Corporate Governance Code, and equity-based executive compensation schemes, including Restricted Stock and Performance Share, was fully booked. In addition, as part of our service introducing candidates for independent outside director positions, for which demand is rising rapidly, we launched the search site "ID (Independent Director)-Search" and received considerable response.」

「In addition to board effectiveness evaluations, the introduction of new equity-based executive compensation schemes, including Restricted Stock and Performance Share, and our independent outside director introduction service, our group's proprietary consulting offerings have been well aligned with customer needs, and engagements from both existing and new customers have been increasing steadily.」

「The board evaluation service launched last year is steadily building a track record not only with leading companies representing Japan but also with other companies. We have also fully launched our executive compensation consulting service for compensation schemes using restricted stock, which has attracted growing interest from companies. In addition, including our introduction service for independent outside directors, for which corporate demand remains strong, we are confident that these corporate governance-related consulting services will grow into a core pillar of our group's operations.」

「The board evaluation service launched recently is building a track record, primarily with leading companies representing Japan, and is growing into a recurring business expected to be conducted annually because of its impact and effectiveness. In addition, as companies prepare to introduce equity compensation schemes such as restricted stock, an area of focus in corporate governance reform, we have launched a new executive compensation consulting service to meet this need.」

「These corporate governance-related consulting services are a new business for our group. To launch them promptly, we formed a project team and concentrated our experience and know-how, enabling us to develop professional talent and operate efficiently.」