Materiality

Material Issues Identified
Initiatives within the Dentsu Group

Material Issues Identified

Reflecting its sustainability policy, the DENTSU SOKEN Group is helping to attain a sustainable society. The Company's medium-term management plan," DENTSU SOKEN X (Cross) Innovation 2024," includes "promotion of sustainability" as one of its priority measures. Based on the SDGs, international guidelines, the DENTSU SOKEN Group's business strategy, and Dentsu Group initiatives, the DENTSU SOKEN Group has identified three key themes-involving people, technology, and governance-as well as 11 related material issues in September 2022. Being of particular importance to the DENTSU SOKEN Group and its stakeholders, the Group believes the themes and issues should be prioritized, and will address the issues effectively.

Key Performance Indicators and Targets

Material Issue	Key Performance Indicators	Target	Planned Due Date	Scope of Target	KPI- and target-related initiatives and data
Strengthening of human capital	Employee count	Consolidated headcount of over 4,200 employees	2024	Consolidated	Personnel data
Promotion of Diversity, Equity and Inclusion(DE&I)	Percentage of female managers	8%	2026	Non-consolidated	Promotion of active workplace participation from women
Promotion of Diversity, Equity and Inclusion(DE&I)	Percentage of female hires	20% or more (average over the last three fiscal years)	Every year	Non-consolidated	Promotion of active workplace participation from women
Facilitation of workstyle transformation	Percentage of employees receiving regular health checkups	100%	Every year	Non-consolidated	Creating comfortable work environments
Facilitation of workstyle transformation	Engagement score	Improve scores obtained from survey conducted by Great Place to Work^R Institute Japan	Every year	Non-consolidated	Creating comfortable work environments
Contribution to the resolution of social and environmental issues	Technological investment	Cumulative three-year investment of \17.0 bn	2024	Consolidated	Examples of R&D, demonstrative experiments, etc.（Japanese version only）
Strengthening of corporate governance	Evaluation of Board of director effectiveness	Ensure and improve effectiveness	Every year	Consolidated	Strengthening of corporate governance
Enforcing of ethical compliance and respect for human rights	Serious violations of laws and regulations	0	Every year	Consolidated	Ethics and compliance initiatives Respect for human rights
	Percentage of employees receiving (e-learning-based) training related to ethics and compliance (including harassment training)	100%	Every year	Domestic group	Ethics and compliance initiatives Respect for human rights
Undertaking of quality improvement	Review board implementation rate	100% (proposals valued at \100 mn or more)	Every year	Non-consolidated	Quality improvement initiatives
Enhancement of information security management	Annual number of Company-wide security education, training sessions	Six (one session held every two months)	Every year	Non-consolidated	Information security initiatives
Enhancement of information security management	Number of serious leaks of client project-related information, personal information	0	Every year	Domestic group	Information security initiatives

Notes:

1.

The Company does not establish KPIs for its “Creation of new businesses through open innovation,” “Demonstration of our technological implementation capabilities,” and “Application of appropriate risk management practices.” However, it will publicly disclose results generated through activities associated with these material issues on an annual basis.
2.

Non-consolidated: only applies to Information Services International-Dentsu, Ltd.; domestic group: includes all DENTSU SOKEN Group companies in Japan; consolidated: includes all DENTSU SOKEN Group companies outside Japan

The actual result tied to Material Issues and related major initiatives and topics are as follows.

FY23 Results(237KB)

Identifying Material Issues

Step One Identify Issue Elements

We have identified 40 characteristic elements of material issues by referencing and analyzing SDG-related and other initiatives; international guidelines such as the GRI Standard and the SASB Standard; and requirements of ESG assessment organizations such as the FTSE and MSCI.

Step Two Rate the Importance of Elements

We evaluated the importance of the issues identified in step one from the perspective of the DENTSU SOKEN Group and from that of its stakeholders. For the DENTSU SOKEN Group perspective, we evaluated opportunities and risks in terms of the impact we expected the society and environment to have on the Group, as well as the impact we expect the DENTSU SOKEN Group will have on the society and environment.

Step Three Categorize and Validate Details

We reviewed and categorized details associated with elements of the material issues identified as highly important in step two.They are relevant to our corporate philosophy, long-term management vision (Vision 2030), and medium-term management plan (DENTSU SOKEN X Innovation 2024), as well as to Dentsu Group initiatives. At the same time, we closely examined and considered various KPIs and targets. We also sought the opinions of outside experts to confirm that our findings were valid.

Step Four Identify Material Issues

With the approval of the DENTSU SOKEN Group’s Sustainability Promotion Council, we have identified three key themes and 11related material issues that must be prioritized in its business operations.

Material Issues Matrix

External Expert Opinion

In order to identify the material issues facing the Company Group, we consulted external experts with a wide range of knowledge and expertise. Based on their feedback, we identified three key themes and 11 related material issues.

Feedback from Mika Takaoka

Professor, College of Business, Rikkyo University

ISID’s process for identifying material issues is commendable, because it incorporates the perspectives of the Company and its stakeholders. ISID is responding to contemporary requirements by bolstering its human capital?which |believe is a key source of its competitive strength?through recruitment and human resource development, as it remains aware of the need to optimize its work environments. |expect ISID to become increasingly able to convey, internally and externally, information about human rights, an issue currently attracting worldwide attention.

Feedback from Hidemi Tomita

Managing Director, LRQA Sustainability K.K.

Generally, I feel that ISID has presented and categorized its material issues well. Social and environmental issues need to be addressed on a global scale. ISID is striving to provide solutions for the issues, while maintaining an awareness of their broader implications in the context of technology, and is facing the issues with a wealth of knowledge and technological ai . , implementation capabilities. I am curious to see what improvements ISID will generate as it addresses the material issues.

Notes:

On January 1, 2024, Information Services International-Dentsu, Ltd. (ISID) changed its Company name to DENTSU SOKEN INC. Please be aware that the Company name, service names, and other information were current at time of publication.

Initiatives within the Dentsu Group

DENTSU SOKEN is represented on the Dentsu Group’s CSR Committee, which formulates and assesses members’ sustainability strategies with a focus on the year 2030.

By considering risk awareness and opportunities for resolving issues, based on the World Economic Forum’s annual Global Risks Report, the committee assesses the impact of the Group’s activities on society.

See below for information on Dentsu Group initiatives and Integrated Reports.