Alignment of People Strategy with Management Strategy

NSG Group addresses “Human Capital” as one of the material issues (materiality) based on Our Vision, the management principles set out in 2018 to achieve sustainable growth of the Group and contribute to a sustainable society in the medium to long term. People are the “capital” and are essential to the business, both to sustain our business and to achieve growth. NSG Group believes that a strong corporate culture, an effective human resources system, and a work environment that provides opportunities for employees to develop and grow are essential. In short, this is the goal of “Human Capital Investment” and the role of the CHRO and the HR teams around the world is to enhance the effectiveness and efficiency of this investment and to continue to drive the growth required to meet our business objectives.

NSG Group has developed a people strategy to underpin the medium-term plan. The strategy has four key aspirations:

• Talent Acquisition
  to improve our ability to attract talent.
• Diversity, Equity & Inclusion
  to build an inclusive environment and create a source of competitive advantage.
• HR Digital
  to build an ecosystem that puts our people first, provides accurate people analytics to make faster decisions, and frees up time for everyone.
• Value Proposition for Our Employees
  answering why join, why stay and why perform.

These are our longer-term aspirations, and we also have several shorter-term goals, including:

• Strengthening the senior management team.
• Providing development and reskilling opportunities for all our employees.
• Promoting diversity, equity and inclusion as a source of competitive advantage.
• Building strong relationships with the communities in which we operate.

All underpinned by interactive and effective communication. All of which will be discussed further below.

Human Rights, Well-being

Among the six Core Values that form the basis of our work and conduct, “Respecting Others and Unleashing Their Potential” is the first value to which we are committed. The NSG Group has always valued and lived by the Sumitomo philosophy of “People are our most important asset” since its establishment in 1918.

The second Core Value is to “exemplify trust and integrity". "NSG Group's Code of Ethics", which embodies these values, defines safety, respect for human rights, taking personal responsibility for actions, and open and inclusive communication as behaviors expected of all employees. The NSG Group Code of Ethics explicitly recognizes internationally proclaimed human rights. Our Equal Opportunities and Diversity Policy prohibits discrimination based on, but not limited to, personal background, race, color, creed, nationality, age, marital/partnership status, pregnancy and maternity, gender, gender reassignment, sexual orientation, religion, or other beliefs, ethnic or national origins, disability, union membership, political affiliation, or any other status protected by law. We have also placed a strong emphasis on health and safety as a top priority for NSG Group employees. Personal information about health must be handled sensitively and with particular attention to privacy, which necessitates different ways of handling the matter not only culturally but legally between countries and regions. For the time being, HR-related actions concerning health are limited to Japan so far. Further details will be provided in a separate section.

Respect for these human rights and wellbeing is the premise of the HR strategy, on which the shorter-term goals have been formulated:

Strengthening the senior management team

Our Leadership Behavior Charter serves as our guiding principle. We have observed a notable shift in the behavior of our leaders who have embraced the Charter. Our next step is to integrate the behaviors into all our leadership programs and ensure that communications are aligned with the Charter.

It is crucial to develop realistic succession plans for senior management members in conjunction with development plans. The plan is reviewed annually by the Nomination Committee, chaired by an Independent External Director, to access potential enhancements. This includes promoting candidates’ readiness, developing potential, clarifying concerns and gaps.

Providing development and reskilling opportunities for all our employees

In 2018, we introduced talent management as part of our wider talent strategy, which supports the Group’s Vision and Values. We successfully migrated key global talent records and data to a Group-wide talent management system, while simultaneously providing all managers with comprehensive training on talent development processes. In 2019, we introduced our NSG Behavioral Competency model with the objective of enhancing the depth of performance review discussions for employees. As a result of these initiatives, employees now have greater transparency regarding their performance reviews. Talent data is now shared by management across countries, regions, and business units.

By 2025, our objective is to integrate talent management practices into the workplace and to develop leaders at all management levels who can implement the medium-term plan. Additionally, we will provide employees with reskilling training in areas such as digitalization, marketing, and new business development. By continually offering training, we have been facilitating the transition of our Group programs from traditional face-to-face learning events to a more diverse range of blended learning solutions, including virtual classrooms, action learning sets, and coaching.

In terms of hierarchical talent development, our primary objective is to accelerate the regional talent pool, which includes individuals below the level of global talent. Regular global talent meetings will be held with the objective of strengthening the identification and development of talent who will evolve into future global leaders.

Promoting Diversity, Equity & Inclusion (DEI) as a source of competitive advantage

In order to achieve our goals, it is essential that we foster an inclusive culture. We have made significant progress, including exceeding the target we set for female managers. Our Diversity, Equity and Inclusion Committee is active and promotes initiatives in every country in which we operate. This work is essential to attract and retain world-class talent.

For the new medium-term plan, our senior leaders met to discuss our metrics and designed and agreed upon a set of stretch targets. Nevertheless, inclusion is not solely a matter of metrics. We will continue to prioritize the aspects that are important to our current and prospective employees.

Building strong relationships with the communities in which we operate

In light of the experience gained from the Covid-19 pandemic, we have adopted a flexible approach to learning and interaction. It is crucial for individuals to interact in person, though we acknowledge the potential challenges this can present and encourage flexibility when feasible.

We hosted a series of community events at our various sites worldwide. A commitment to being a good neighbor strengthens the bonds between our internal and external stakeholders.

All underpinned by interactive and effective communication.

Open and transparent communications are essential for fostering an inclusive and high-performing organization. We have made significant progress in enhancing communications across the Group through various channels including Your Voice employee surveys, town hall meetings, updates to our intranet, and written and verbal updates.

It is essential to facilitate a dialog between employees and their managers around performance and development in order to establish a performance culture. In 2024, a new performance management approach was implemented. The approach was developed in accordance with external best practice, feedback from employees and managers and the strategic goals of the Group.

The Your Voice survey continues to provide invaluable insights into our people strategy. The 2023 survey revealed a notable increase in several key areas which highlights the effectiveness of our listening strategy. We will continue to monitor our progress via Let’s Talk sessions and by administering the survey again in 2025.

We believe that by implementing these measures, we can continue to build an inclusive organization where every employee feels valued and can perform at their best.