Outside Directors & CAO Roundtable

Two Outside Directors who chair advisory committees held a discussion with Chief Administrative Officer (CAO) Kobayashi on ITOCHU’s initiatives, which aims to be the best company in Japan.

Makiko Nakamori
Outside Director

Fumihiko Kobayashi
Member of the Board, Executive Vice President, CAO*

* Chief Administrative Officer

Kunio Ishizuka
Outside Director

Roles Expected of ITOCHU’s Outside Directors

Kobayashi:Enhancing corporate governance is a never-ending challenge for corporate management. The roles expected of Outside Directors are continually evolving. Recently, you both attended a small meeting with investors and analysts. Could you first share your impressions of that meeting?

Ishizuka:I believe that the primary role of Outside Directors is supporting sustainable growth. During the meeting, various topics were discussed, such as the advancement of women in the workplace, succession plans, and Group company management. Compared to when I was involved in corporate management as the head of the company, I feel there is now a much stronger emphasis on understanding market trends and meeting the needs of investors. It is no longer sufficient for Outside Directors to simply provide advice at Board of Directors’ meetings. I have come to realize that we also bear the responsibility of monitoring whether appropriate management decisions are being made, and whether proper information disclosure is being carried out.

Nakamori:Engaging in direct conversations with investors and analysts allowed me to sense firsthand where their interests lie in ITOCHU’s management. Their reactions came across clearly. What pleasantly surprised me was that there was no significant gap in understanding between the investors and analysts and us regarding the Company’s strengths and future challenges. I feel this indicates that ITOCHU consistently and transparently communicates both internally and externally, presenting the Company’s situation exactly as it is.

Kobayashi:I was also impressed by how deeply both of you have engaged with the Company’s management and provided opinions from an external perspective. In terms of transparency, we make no distinction between Inside and Outside Directors; we disclose information without concealment and ensure frequent interactions, resulting in unbiased information. This approach allows Outside Directors to fully commit to their roles, and their comments align seamlessly with those of Inside Directors.

Ishizuka:There was a case where a proposal deliberated by the Board of Directors was ultimately rejected based on the opinions of Outside Directors. I believe that having a proposal rejected at a Board of Directors’ meeting is extremely rare, even in my own experience as a corporate executive. This demonstrates that there is a foundation of trust that allows Outside Directors to express their candid opinions, and it indicates that our Board of Directors holds healthy discussions, and that the oversight and supervisory functions of Outside Directors are effectively working.

Nakamori:There is actually a follow-up story to this. After the Board of Directors’ meeting, we traveled to Australia for a site visit of an overseas business, and it so happened that I met an employee in charge of this proposal on the front lines. Typically, as Outside Directors, we form our opinions on proposals at Board of Directors’ meetings by reading materials and listening to briefings. However, hearing directly from the frontline employees conveyed their passion and dedication toward the business, providing a much more vivid understanding of the project. It made me strongly feel the presence of the employees behind the written documents. In this sense, the site visit was truly meaningful. I believe this experience can also be leveraged in discussions at Board of Directors’ meetings going forward.

Kobayashi:I am glad to hear that you find value not only in visiting the business operations but also in communicating with the employees working there at the front lines. ITOCHU often operates with fewer personnel on the front lines compared to other general trading companies, no matter where we are in the world. Each highly productive employee working in that kind of environment is the true source of the Company’s corporate value.

Ishizuka:Talking with frontline employees makes me realize just how diverse ITOCHU’s human resources are. By getting to know the people, I can gain a deeper understanding of the Company and its businesses. Therefore, activities on the front lines are essential to support sustainable growth and strengthen oversight and supervisory functions. The site visits themselves were scheduled quite tightly, and I experienced firsthand the “earn, cut, prevent” principles.

I hope that our initiatives for women’s advancement will gradually permeate the Company’s culture and collectively create a significant impact, much like how drops of water gather to form a large stream.

Outside Director

Makiko Nakamori

Ms. Nakamori possesses a high level of expertise in finance and accounting as a Certified Public Accountant in Japan, and has a wealth of experience as a corporate manager. She assumed her position as a member of the Board of Directors at ITOCHU in June 2019. She often provides insightful advice based on her specialized knowledge and unique experience in the fields of internal control, compliance, and DX. As of FYE 2025, she serves as chair of the Women’s Advancement Committee, and a member of the Governance, Nomination and Remuneration Committee.

Promoting the Advancement of Women, Succession Planning, and Driving Further Growth

Kobayashi:Both of you also serve as the chairs of two advisory committees. Requesting Outside Directors to serve as chairs is in line with global trends and reflects ITOCHU’s desire to ensure openness, objectivity, and effectiveness in discussions. To begin with, Ms. Nakamori, how do you perceive the activities of the Women’s Advancement Committee?

Nakamori:The Women’s Advancement Committee was launched in 2021, and I have been serving as its chair since FYE 2024. I believe the most important aspect of our discussions in the committee is enhancing the labor productivity of all employees, including women. I recognize that the immediate challenge is the appointment of female officers. However, given the demographic reality that there are very few female employees in their 40s or 50s, which is the prime age for executive roles, the key lies in how we can promote women to these positions from this limited pool. As a first step, we have internally appointed five female Executive Officers in FYE 2025.(→ Women’s Advancement Committee)

Kobayashi:The appointment of these female Executive Officers is positioned as affirmative action for women, who have previously had limited experience in key roles and diverse job rotations. The Company has from the past promoted work-style reforms to create a ”challenging but rewarding” company, with the primary aim of improving the labor productivity of all employees, regardless of gender. As we have advanced these initiatives, we realized that they also contribute to promoting the advancement of women. However, as Ms. Nakamori pointed out, the pool of potential female executives is currently very small. While there is the option of selecting candidates from outside the Company, it was argued that without developing our internal training processes, such efforts would not be sustainable. Therefore, we decided that we must promote from within. Moreover, instead of appointing just one or two individuals, we decided to appoint five, to create a significant impact. This is not about giving them special roles; becoming an executive means they will receive vastly different quality and quantity of information. By digesting this information themselves, we expect their understanding and perspectives on management to evolve, thereby fostering their growth.(→ Promoting the Advancement of Female Employees)

Nakamori:I believe that both individual motivation and how one is perceived internally will change significantly. When initiatives like the Morning-Focused Working System and other work-style reform measures were introduced, I heard that most people were skeptical, thinking they would not take hold. However, after 10 years, it has become well-established within the Company, with its effectiveness in improving labor productivity being verified. It has now garnered attention as a pioneering effort from society. The same can be said for promoting women’s advancement. It may take time, but I hope that our current initiatives will not just remain isolated efforts but will become interconnected, much like how drops of water gather to form a large stream, permeating and becoming part of the Company’s culture. Simultaneously, I believe it is a major challenge for the Company to outline the path toward this ideal while maintaining the swift pace of our current management.

Kobayashi:Mr. Ishizuka, you chair the Governance, Nomination and Remuneration Committee. Recently, there has been increasing interest in succession planning, but from an internal standpoint, it is somewhat difficult to talk about this matter. Could you please share your thoughts on this as the chair?

Ishizuka:I am aware of the heightened interest in succession planning. The stance of the Governance, Nomination and Remuneration Committee, as an advisory body, is that it will receive and deliberate proposals on succession plans for the Chairman & CEO. Given our exceptionally favorable current management situation, we believe there is no need to risk changing the management structure during this strong period, and thus, there is no immediate necessity for a CEO transition. However, to ensure that we are well-prepared for any future discussions on succession, the four outside officers of this committee actively engage with management personnel who are potential CEO candidates through regular activities, such as interviews with officers, Division Company Presidents, and Group company Presidents. This close interaction between Outside Directors and the management talent pool itself contributes to the preparedness of the Governance, Nomination and Remuneration Committee. Through these interactions, I have realized that the Company has many excellent personnel who could be future management candidates. The fact that one of our key performance indicators, the ratio of Group companies reporting profits, stands at an impressive 92%, for instance, reflects the presence of many competent management talents.(→ Succession Plan)[PDF]

Kobayashi:I believe it is unique to Mr. Ishizuka to connect the high ratio of Group companies reporting profits to the quality of our management talent pool. Group management is crucial for our future development. We dispatch hundreds of personnel, including secondees, to executive positions at Group companies, promoting the Company’s philosophy through their influence. However, especially in the major Group companies, the deployed leaders are often big names who have achieved significant results within ITOCHU. To ensure optimal overall management, we have established the Group CEO Office, with our CEO acting as the control tower. There will likely be room to expand this role going forward. From your perspectives, are there any other challenges that ITOCHU needs to address to achieve further growth?

Nakamori:I believe that enhancing Group management will become increasingly important for the future of ITOCHU. In this regard, I think there is still room for improvement, particularly in the offensive aspects. When I was appointed as a director at ITOCHU, I clearly remember being impressed by the thoroughness of our risk management, and how our defensive measures for Group companies are quite advanced. However, in terms of offensive measures such as earnings, much of the responsibility is left to the management capabilities of individual companies within the Group. There are still areas that need more attention and improvement. By having the headquarters take the lead in strengthening the management foundation, we can create opportunities for further profit growth. To achieve this, it is necessary to promote horizontal collaboration and establish mechanisms that generate synergies among Division Companies, including through digital transformation initiatives, which have been ongoing challenges.

Ishizuka:As the world continues to experience changes that were unimaginable just a decade ago, such as climate change and geopolitical risks, I sometimes wonder what ITOCHU’s businesses will be like going forward. While individual capabilities are a significant advantage for the Company, the nature of business and our partners are evolving. It may become necessary to discuss whether we should continue the Division Company system. At the very least, I am certain that we could achieve greater growth by leveraging our comprehensive capabilities even more effectively.

The close interaction between Outside Directors and the management talent pool itself contributes to the preparation for succession planning.

Outside Director

Kunio Ishizuka

Mr. Ishizuka has extensive knowledge of corporate management and the retail industry, which was earned through his experience as President and Chairman of Isetan Mitsukoshi Holdings Ltd. and as a Vice Chair of Nippon Keidanren (Japan Business Federation). He assumed his position as a member of the Board of Directors at ITOCHU in June 2021. As of FYE 2025, he serves as chair of the Governance, Nomination and Remuneration Committee.

Enhancing Corporate Brand Value

Kobayashi:In “The Brand-new Deal” Management Policy announced in April 2024, we have outlined not only quantitative growth but also the enhancement of corporate brand value through the refinement of qualitative factors as a basic policy. I believe this is quite unique to ITOCHU.(→ Management Policy)[PDF]

Ishizuka:In line with the idea of “I am One with Infinite Missions” in the Guideline of Conduct, I think each employee represents the brand. Building a brand is a tremendous task that takes a lot of time, yet it can easily crumble when things go wrong. On the other hand, when each individual engages in business, the brand that the Company has built over time distinguishes us from others and demonstrates its strength. In this sense, from my own experience, I strongly resonate with the policy of enhancing corporate brand value, as it directly contributes to the sustainability of corporate value.

Nakamori:I believe ITOCHU’s brand is shining bright right now. In everyday conversations, when I mention ITOCHU, I often receive responses such as, “ITOCHU is amazing.” I believe the positive feedback we have received reflects not only an appreciation of our strong earnings but also the uniqueness of our branding. Our modern corporate image, which resonates across generations, seamlessly integrates with our more than 160-year-old philosophy of “I am One with Infinite Missions.” This blend creates a distinctive brand image that is difficult to replicate. The unwavering commitment to our corporate beliefs, which permeates our corporate culture, may indeed be what defines our brand.

Kobayashi:Since its founding, “Sampo-yoshi” has been continuously passed down as an unwavering ideal and serves as the Company’s unique brand and signpost. The Company’s original business was linen trading by the merchants of Ohmi, and they have a history of selling products on credit. Without trust, business cannot prosper. Therefore, we aim to continue to enhance our corporate brand value by instilling “Sampo-yoshi,” our corporate culture based on trust and credibility, into the public consciousness. Ultimately, our goal is to become the best company in Japan. Recently, I received a letter from an elementary school student who went to the Company’s childcare center for employees, I-Kids. He wrote about how much he enjoyed going to I-Kids with his mother every morning, playing with friends, and going home with her in the evening. He said, “Thank you for creating I-Kids and for implementing work-style reforms.” While it may seem like an exaggeration, knowing that the Company’s initiatives can contribute to the happiness of one family is incredibly rewarding. By creating a company where employees are happy, we aim to become a challenging but rewarding workplace and ultimately the best company in Japan.

I intend to make ITOCHU the best company in Japan by enhancing corporate brand value through “Sampo-yoshi.”

Member of the Board, Executive Vice President, CAO

Fumihiko Kobayashi