At MC, the effectiveness of the Board of Directors is evaluated by Independent Directors and Independent Audit & Supervisory Board Members. Last year, Mr. Nakao and I took the lead in formulating the questions and analyzing and evaluating the responses. Looking back on the effectiveness evaluation process, I think that businesses such as MC’s are unique to Japan. In addition, as Japan has moved from a period of rapid economic growth to a period of maturity, and from now on towards an era of uncertainty in which it will be difficult to predict how things will change, I believe that MC is currently in the most susceptible position to the various influences of the times. In light of this, we devised a series of processes to evaluate the effectiveness of MC’s Board of Directors and devised our own approach to objectivity and neutrality.

In addition to its large size, MC has a very diverse range of business areas. Because of this, to ensure that the supervisory function is properly executed, a considerable number of opportunities are provided for information gathering. I think this is a major characteristic of MC’s governance. In addition to dialogues with the Group CEO of each Business Group, opportunities are provided for dialogues with each COO, and there are also opportunities to hear the opinions of employees of various levels, including on-site inspections and dialogues with the MC Staff Union. I think that having Independent Members of the Board take the lead in verifying whether the Board is functioning adequately through information obtained through such dialogue is effective as a method of evaluating the effectiveness of the Board of Directors.

During the effectiveness evaluation, we also asked the Group CEO of each Business Group for their input. I think this was a very valuable initiative, as it proved to be extremely helpful in understanding the actual situation on the business execution side. The previous fiscal year was the final year of Midterm Corporate Strategy 2021 as well as the year of the nomination of a new President, and we were able to have intensive discussions on these topics through the effectiveness evaluation process.

The fiscal year ended March 31, 2022 was the final year of Midterm Corporate Strategy 2021, and we were able to close the year with outstanding financial results. One of the reasons for these outstanding financial results is the significant impact of external environmental factors. We can also say that not only did we achieve strong overall financial results, but also each Business Group achieved the unprecedented figures, which reflect each of their respective improved capabilities as well as their firm commitment to optimizing their business portfolios under the overall policies of the previous corporate strategy. These policies have been carried over to the new midterm corporate strategy, and I expect further improvement without becoming complacent with these favorable results.

Looking back on Midterm Corporate Strategy 2021, MC was able to achieve the targets in a numerical sense. Although external environmental factors such as high resource prices played a role, I believe that MC’s approach of reorganizing its portfolio in a balanced and flexible manner without concern for immediate market conditions has generally worked well. Going forward, I feel that the time has come for us to consider the company’s resilience, including how to respond flexibly to the external environment, in light of intensifying tensions between the US and China, the situation with Russia and Ukraine, and other setbacks in globalization that will occur in the future.

I understand that former President Kakiuchi’s goal was for each Business Group to continue to generate a certain level of profit without being affected by market conditions and to create new value by eliminating barriers between the Business Groups. It is noteworthy that in the fiscal year ended March 31, 2022, MC also made solid gains in areas other than natural resources. As we will continue to drive in this direction, I have the impression that the review of Midterm Corporate Strategy 2021 is leading seamlessly to Midterm Corporate Strategy 2024.

Today, the business environment is changing extremely quickly, and the degree of change is also increasing. New technologies are influencing the speed and magnitude of this change, which is also contributing to the advancement of DX. In the past, MC’s style has been to be an important player in large-scale business areas such as natural resources. People who are active in new and growing fields of technology, such as IT, are young and vibrant and are different types of business people from those that have been traditionally valued in Japan, so there may be a culture gap for people in a traditional large company like MC to communicate with them. However, despite its long tradition, MC is a company with a very high capacity for self-change. I believe that discussion and action will be important in terms of how we can incorporate new elements through dialogue with a diverse range of people.

When I speak with younger employees at MC, I find that they are not only talented, but also that many have an awareness of what they can do and what kind of value they can create within a rapidly changing world, rather than simply being satisfied with being part of a large company with a long history. As Midterm Corporate Strategy 2024 calls for further advancement of EX and DX, I would like to see MC’s employees tackling the EX and DX initiatives while taking advantage of the fact that we have the fortune of facing a major turning point like this, one that may only occur once every 100 years, and having an active exchange of opinions between employees, regardless of their level of experience in the company.

Growing a company in times of rapid change requires not only the ability to weather change while minimizing damage, but a range of other abilities as well. It is essential for us to always keep in mind that even if things are going well now, it is impossible to predict what will happen next. We need to hone our ability to foresee situations, to be flexible in our organizations, to aim for a higher level, and to be able to motivate and encourage others while being strict with ourselves.

MC is a complex and challenging business entity that incorporates new elements in a wide range of business fields and seeks to create businesses that are aligned with the times. I believe the most important requirement for the top management of MC is the ability to gather the knowledge of the many, and then to make decisions and execute them based on that knowledge. I believe this is a crucial factor in ensuring the stable growth of MC. Gathering the knowledge of many people requires a certain element of psychological safety. I think it is important that the company provides a foundation for communication that allows everyone to speak up and that top management has the ability to embrace any and all opinions.

It is preferable that the leader himself/herself has had the experience of facing several difficult problems earlier in their careers and solving or overcoming some or all of them. Such experience will bring a certain gentleness in dealing with people when they are faced with various challenges and difficult problems. Having the ability to accept, rather than just be kind, naturally makes it easier to be more self-disciplined and persuasive when making decisions after listening to people’s opinions. That power of persuasion does not come from harshness alone.

As you both mentioned, harshness alone is not enough to attract people to follow you. The larger the organization, the more essential it is to gather information from the frontlines, on a daily basis, in order to make the right decisions. President Nakanishi does not just interact with top management, he also actively engages with staff at various levels, including young and mid-level employees, and I feel that he has a good understanding of the importance of the frontlines.

With regard to EX, it is difficult to predict how far industrial and scientific technologies will evolve, and even if we can predict, to some extent, 10 years into the future, it is difficult to foresee 20 or 30 years into the future. Under such circumstances, I believe that one of MC’s roles is to create business models that are able to respond to anything that may happen 30 years from now, and to search for better solutions to contribute to society. To this end, it is important to deepen our learning and hone our skills in EX-related fields, and to use this knowledge and information to collaborate outside the company. I believe that we, as Independent Members of the Board, have an important role in checking on the progress of these efforts. In addition, young people are essential for the company to keep up with the next generation of technology and change. I hope that the younger generation will be conscious that it is out of the principle of competition that good things are born, and I encourage them to work for change to achieve sustainable growth.