三井住友トラスト・ホールディングス（8309） – 2021-2022 Sustainability Report- 1

Sustainability Report2021/2022Reason for Existence (“Purpose”)Creating new value with the power of trusts and let prosperous future for our clients and society bloomManagement Principles (“Mission”)(I) Swiftly provide comprehensive solutions to our clients by fully utilizing the significant expertise and comprehensive capabilities.(II) Adhere to the principles of sound management based on a high degree of self-discipline with the background of fiduciary spirit and establish strong credibility from society. (III) Strive to fulfill all shareholder expectations by creating distinct values through fusing the various functions featuring the trust bank group.(IV) Offer a workplace where the diversity and creativity of its employees are more fully utilized to add value to the organization and where employees can have pride and be highly motivated in fulfilling their missions.Ideal Model (“Vision”)—Towards “The Trust Bank”—Based on the fiduciary spirit and with significant expertise and comprehensive capabilities, the Sumitomo Mitsui Trust Group will create dis-tinct values by leveraging a new business model, combining its banking, asset management and administration, and real estate businesses, and will move onto the global stage as a leading trust bank group which boasts the largest and highest status in Japan.Codes of Conduct (“Value”)In order to pursue the Management Principles of the Sumitomo Mitsui Trust Group, the executives and employees commit themselves to comply with the six Codes of Conduct described below.Completely Client-oriented —Truthfulness and LoyaltyWe will adhere to the highest degree of “Truthfulness and Loyalty” as well as credibility and sureness, and will carry out all our responsibilities for client satisfaction and comfort as our top priority.Contribution to Society—Dedication and DevelopmentWe will remain dedicated in all our efforts, with “Frontier Spirit,” and continue to contribute to society.Realization of Organizational Capability—Trust and CreativityWe will realize our organizational capabilities with full of mutual trust and creativity through improvement by mutual learning and continuous per-sonal transformation of various people who share the enthusiasm for trust.Establishment of Individuality—Self-help and Self-disciplineWith a spirit of self-help and self-discipline as well as a sense of ownership, we will carry out our responsibilities.Strict Compliance with Applicable Laws and RegulationsWe will strictly comply with all applicable laws, rules and regulations, and will ensure that all our corporate activities meet the highest standards of social norms.Resolute Stance against Antisocial ForcesWe will continue to take a resolute stance against antisocial forces, which may threaten public order and the security of civil society.Basic Policy on the Social Responsibility of Sumitomo Mitsui Trust Group(Sustainability Policy)At Sumitomo Mitsui Trust Group, based on our Reason for Existence (“Purpose”), our Management Principles (“Mission”), our Ideal Model (“Vision”) and our Codes of Conduct (“Value”), we respect dialogue with all stakeholders, such as clients, shareholders, investors, employees, business part-ners, local communities, NPOs, government authorities and international institutions, and play an active role in building a sustainable society.1. Contribute to Solving Social and Environmental Problems through Business• We work to solve social and environmental problems from a global perspective through our core businesses.• We integrate the diverse functions that are unique to a trust bank group and develop new business models and innovative products and services to help solve social and environmental problems.2. Serve Clients with Sincerity• We strive to provide in-depth explanations and proposals so that clients can fully understand the details of our products and services. In addition, we make efforts to quickly meet the demands of clients and link their feedback to business improve-ments and product and service enhancement.• We strive to undertake meticulous management of client information.• We engage in educational and awareness-raising activities by cooperating with educational institutions, government authorities, NPOs, etc., to enable clients to take the lead in rationally selecting financial products and building sound assets.3. Earn the Trust of Societyto societal norms.• We strictly adhere to all laws, regulations and rules, and conduct our activities in a sincere and fair manner that conforms • We build sound and proper relationships with stakeholders, and fulfill our responsibilities as a member of society, engag-ing in fair competition and appropriate disclosure of corporate information, etc.• We maintain a resolute stance against antisocial forces which threaten public order and safety, and work to prevent improp-er use of financial functions by organized crime.0014. Address Environmental Issues• We aim to build a low-carbon society, a natural symbiosis society which fosters biodiversity, and a circulatory society, and will work to solve problems which obstruct these aims through our core businesses by cooperating with various stakeholders.• We work on energy and resource conservation to reduce the environmental burden caused by our own activities.5. Respect the Individualwork-life balance.• We respect individual rights and diverse values, rejecting unjustifiable acts of discrimination in all our activities.• We create a safe and pleasant workplace environment, respect employees’ diverse ways of working, and strive to achieve • We work to develop the skills of employees and strive to build sound minds and bodies.6. Participate in and Contribute to the Community• We aim to revitalize the community and build a rich living environment in cooperation with various partners in all commu-nities where we engage in corporate activities, through our business activities and social contribution such as educational and cultural activities.Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Management Commitment002Continuing to solve numerous social issues as a provider of trust schemes that facilitates a safe and secure society.Two years have passed since the COVID-19 pandemic spread to all corners of the globe and even now it continues to wreak havoc with still no end in sight. I pay my respects to those who have lost their lives to COVID-19 and offer my deepest condolences to their families. I also express my heartfelt sympathy to those currently afflicted, to their families, as well as to the many people whose livelihoods and businesses have been deeply affect-ed by the pandemic.One of the SuMi TRUST Group’s key measures is to strengthen sustainability in man-agement and society and we are therefore working to enhance the creation of value in the Group. We have published this Sustainability Report so that readers can gain an under-standing of some of the aspects of our approach. As with last year, this year’s Sustainability Report again employs the common metrics for measuring stakeholder capitalism that were announced at the conclusion of the World Economic Forum (Davos Summit) in January 2020 and provides an overview of the Group’s initiatives from four perspectives: Principles of Governance, Planet (Environment), People (Society), and Prosperity (Economy). It also serves as the second report and self-assessment concerning the Principles for Responsible Banking (PRB) as required of signatories to the PRB, and fulfils our disclosure require-ments regarding our progress towards achieving sustainability targets.Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022As the fight against COVID-19 continues to rage, interest in climate change and various other social issues are escalating rapidly on a global scale. People’s values are chang-ing drastically and the carbon neutrality movement, in particular, will most likely gain increased momentum going forward.At the COP26 summit held in the UK in November 2021, an agreement that further builds on the objectives of the Paris Agreement was reached in the form of the Glasgow Climate Pact. The pact aims to have every countries in the world work together in fighting climate change and pursue efforts to limit the global average temperature increase to 1.5˚C above pre-industrial levels. Even before the agreement was reached at the COP26 summit, in October 2021 we announced the Carbon Neutral Commitment for the SuMi TRUST Group with the aim of reducing greenhouse gas emissions from our own business activities and in investment and loan portfolios overall to net zero. An enormous amount of capital is required to achieve the goal of carbon neutrality. We see this as an opportuni-ty for the SuMi TRUST Group to actively invest in hydrogen, storage batteries, renewable energy, and fields that contribute to the reduction of greenhouse gases, as well as sectors related to the building of new infrastructure. Alongside the Group’s new investments, we hope to tackle climate change and other social issues head-on and lead the way in creating a virtuous circulation of funds, assets, and capital in Japan by providing a mech-anism that facilitates the circulation of funds for investors and individuals or households confronted with a challenging asset management environment.Another aspect of climate change is that it is triggering large-scale natural disasters and so the longing for a more secure, safer, and sustainable society is growing increas-ingly stronger. Ever since our establishment and over the course of our long history, the Group has continued to contribute to the development of Japan by solving various social challenges as demanded by the changing times based on strong relationships of trust with our clients. We think an environment of shifting values and growing uncertainties in society is the opportune time for the Group to come into its own as a purveyor of trust schemes that can help deliver a safe and secure society.Guided by the Group’s “Purpose” to create new value with the power of trusts and let prosperous future for our clients and society bloom, we intend to further enhance our ability to adapt to change and do everything in our power to hand over a more prosper-ous society to the next generation.I look forward to the continued warm support of all our stakeholders.003February 2022Sumitomo Mitsui Trust Holdings, Inc.Director, PresidentSumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Editorial PolicyThis report focuses on the ESG (Environmental, Social and Governance) initiatives of the SuMi TRUST Group, which strives for the balanced creation of both social value and economic value. The Group has been publishing integrated reports with investors as the primary reader since 2017, and this report pro-vides comprehensive disclosure to investors and non-investor stakeholders seeking more detailed ESG information.This report was prepared based on the Common Metrics presented in the white paper “Measuring Stakeholder Capitalism-Toward Common Metrics and Consistent Reporting of Sustainable Value Creation,” which was com-piled by the four major global accounting firms based on recommendations from the World Economic Forum’s International Business Council. In addition, at the end of the report, there is a comparison table with these common metrics, the US non-financial disclosure standard SASB (Sustainability Accounting Standards Board) and financial sector accounting metrics, and the GRI (Global Reporting Initiative) international non-financial disclosure standards, as well as annual disclosure information as mandated by the Principles for Responsible Banking to which the Group be-came a signatory in September 2019.Scope of This ReportSumitomo Mitsui Trust Group (comprised of Sumitomo Mitsui Trust Holdings, Inc., Sumitomo Mitsui Trust Bank, Limited, and other group companies)Target ReadersAll stakeholders, including customers, shareholders and inves-tors, employees, business partners, local communities, NPOs, governments, international institutions, etc.Period Covered by This ReportOctober 1, 2020 to September 30, 2021* This report also includes the most recent information on activities before fiscal year 2020 as well as after October 2021.Sustainability Information Disclosure OutlineIn addition to this report and the Integrated Report, the Group discloses a variety of information on sustainability. First, there are separately published ver-sions spun off from this report, which are the TCFD (Task Force on Climate-related Financial Disclosures) Report (formerly the “Climate Change Report”), the Natural Capital Report, and the ESG Real Estate (formerly the “Environmentally Friendly Property Report”). In addition, SuMi TRUST Bank publishes two types of digest reports for seniors (“Considering the Problems of Dementia” and “Senior-Generation Housing”) every other year, and publishes the 004SuMi TRUST With You Social Contribution Report every quarter. Meanwhile, asset management business Sumitomo Mitsui Trust Asset Management pub-lishes the Stewardship Report and Nikko AM publishes the Sustainability Report annually to disclose details of their respective ESG investment initiatives. Our website carries extensive information on the Sustainability activities that Sumitomo Mitsui Trust Group does not cover in this report.[Integrated Report][Sustainability Report][Stewardship Report][Booklets with Featured Themes][Digest Report for Seniors]FinancialNon-financialenvironment and living creatures.Sustainability in Sumitomo Mitsui Trust Grouphttps://www.smth.jp/en/csr/index.htmlSpecifically, the website provides more detailed information on our ini-The quarterly journal “SuMi TRUST With You” reports on the “With You” tiatives related to issues such as successful aging and support for the social contribution activities of SuMi TRUST Bank (four issues per year).Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Contents002 Management Commitment004 Editorial Policy008 SuMi TRUST Bank — President’s Message006 The SuMi TRUST Group’s Reason for Existence (“Purpose”)009 Sumitomo Mitsui Trust Asset Management — President’s Message Nikko Asset Management — President’s Message010Principles of GovernanceSustainability as a Management Strategy064PlanetEnvironmental Considerations011 The Group’s Approach to Principles of Governance065 The Group’s Approach to Environmental Issues012 Corporate Governance014 Sustainability Promotion System028 Compliance and Fair Business Conduct035 Initiatives to Enhance and Sophisticate Operational Quality036 Ensuring Appropriate Tallying Operations of Voting Rights Exercise Forms at the Shareholders’ General Meetings and Promotion of Electronic Voting037 Risk Management and Materiality Management046 Responding to the COVID-19 Pandemic048 Considering the Environmental and Social Impacts of Corporate Clients066 Actions for Adapting and Mitigating Climate Change074 Natural Capital (Biodiversity Issues)080 ESG in Real Estate092 Environmental Burden Reduction Measures005100PeopleSocial Considerations134ProsperityEconomic Considerations101 The Group’s Approach to Social Issues102 Human Capital119 Respecting Human Rights123 Addressing Issues of a Super-Aged Society135 The Group’s Approach to Prosperity (Economic Considerations)136 Creation of Employment and Wealth138 Providing Value to Clients150 Helping Invigorate Communities and Society196 Trust Future Forum197 The Sumitomo Foundation198 Comparative Table of Common Metrics for Sustainable Value Creation PRB Initiatives203 212 SASB Index214 Comparative table of GRI Guidelines231 Financial Highlights232 Basic Information About the SuMi TRUST GroupSumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022The SuMi TRUST Group’s Reason for Existence (“Purpose”)The SuMi TRUST Group’s reason for existence, or “Purpose,” is to create new value with the power of trusts and let prosperous future for our clients and society bloom. We have also placed at the core of management the notion of balancing the creation of both social value and economic value. This “Purpose” reflects our awareness of the Group’s mission to take responsibility for the next generation and contribute to the building of a society that is even more capable of coping with change and to also achieve sustained growth ourselves by actively helping to solve issues in society as the “Best Partner” most trusted by our clients based on the Group’s client-oriented philosophy that remains unchanged since our founding.The SuMi TRUST Group’s reason for existence, or “Purpose”Our ideal visionCreating new value with the power of trusts and let prosperous future for our clients and society bloomRoles expected by societyAchieving our “Purpose” with the power of trustsAbility conversion functionAsset conversion functionTime conversion functionLeveraging our high level of expertise to manage and administer assetsBy taking advantage of our extensive exper-tise in managing and administering the valu-able assets entrusted to us, our trusts deliver high added value to our clients.Flexible alteration of asset composition and quantityBy converting assets held in trust to trust beneficiary rights, even assets that essential-ly are indivisible, or property of substantial value, can be divided into smaller units for circulation, thus facilitating the smooth circu-lations of funds, assets, and capital.Multiple beneficiary rights in smaller unitsTranscending time to ensure client wishes are fulfilled in the futureIn order to assist our clients to realize and enjoy a prosperous future, our trusts have a function to manage and safeguard assets for extended period of time. Under certain scenarios, trust assets and the accompany-ing wishes of clients can be passed on to the next generation.NowFutureContributionsBenefitsReal estateSecurities¥10 billion¥5 billion¥10 billionVarious types of assetsVarious assets of substantial value¥10,000/unitInvestorsParentsFinancial AssetsChildren and grandchildrenFinancial AssetsManagement and administrationManagement and administration006AssetsIncomeClientsThe “power of trusts” mentioned in our “Purpose” is a wide-ranging concept—it refers to the numerous functions of our trust schemes, our significant expertise and comprehensive capabilities, and even the basic principle of fiduciary duty. The SuMi TRUST Group has long addressed the issues of clients and society by flexibly exercising these trust func-tions. Climate change and the transformation of social structures, such as Japan’s declining birthrate and ageing pop-ulation, are growing increasingly sophisticated and complex. We think these times represent a business opportunity, which is why we intend to leverage the power of trusts to create new value (opportunities and markets) and contribute to a more prosperous and happy future for everyone. In other words, the development of a sustainable society and improvements in well-being for all people.COLUMNSeeking to realize our “Purpose”SuMi TRUST Bank has handed out information about the Group’s “Purpose” and the president has used online channels to di-rectly communicate information about the Medium-Term Management Plan and “Purpose” to all employees (roughly 12,000). The directors, officers, branch managers, and general managers instill an awareness of the purpose among employees by linking it to the ideal image of each business or workplace. Furthermore, each branch and department recognize and share with their work colleagues the positive impacts and social values directly or indirectly generated by their operations and connects them to the day-to-day actions that originate from the Group’s “Purpose.” In this way, the “Purpose” of the SuMi TRUST Group not only links the Group with society, but it also serves as a bridge between each and everyone of us and the Group and society. Achieving our “Purpose” by providing value and being of service as a member of society is our inspiration, pride, and motivation. Even in these ever-changing times, guided by our “Purpose”—the origin of the Group’s best efforts in keeping with our fiduciary spirit—we will aim to bring about a prosperous future for our clients and society and achieve a virtuous cycle of growth for the Group and for each and every one of us.Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022New value created through businessBusinesses that harness the power of trusts to solve social issuesValue provided to stakeholders (three economic agents)The SuMi TRUST Group draws on its wide array of trust functions to deliver high value-added products and services to clients based on the keyword of “cycle” to address the social issues that confront individuals, corporations, and investors.Addressing social issues through the creation of new valueIndividualsAsset formation of individualsCorporationsSustained growth of the Japanese economy and corporationsInvestorsVirtuous circulations in capital markets Progression of Japan’s super-aged society Addressing climate change risks Shift from savings to investments Self-help efforts in preparing for retirement Enhancing corporate governance Supply of funds aimed at decarbonization Diversification of work styles• Providing support and consulting services to address asset management issues in Japan’s super-aged society, such as dementia and the elderly who live alone• Supporting the asset formation efforts of the working generation and contributing to growth in personal financial assets• Implementing sustainable finance initiatives to facilitate the transition to a society with net-zero carbon emissions• Taking on work and offering consulting ser-vices related to sustainability, such as im-proving the disclosure of governance and ESG information• Supporting ways to address both financial • Harnessing our characteristics to strengthen our investment product capabilities and pro-viding a wide range of investment manage-ment opportunities• Providing efficient and high value-added services for a broad range of investment pro-cesses and supporting the development of investment chainsand non-financial issuesThree strategic areas for creating new valueWith a view to the kind of society and vision for the Group we hope to realize by 2030, we identified the following three strategic areas for value creation to encourage a virtuous cycle: (1) age of more centenarians; (2) carbon neutrality; and (3) regional ecosystems and global investment chains.As issues in society grow increasingly sophisticated and complex, it will be much harder to solve longstanding social issues solely with our inherent managerial resources and client base. We will therefore look to team up with various stakeholders, build platforms, and generate new markets and opportunities. And to attain these goals we will need to strengthen our human capital and manufactured capital.Age of 100-year lifeCarbon neutralityRegional ecosystems and global investment chains007Blooming of a prosperous futureHighly Relevant SDGsPlanetEnvironmental ConsiderationsPeopleSocial ConsiderationsProsperityEconomic ConsiderationsProsperity and happiness for all = improvements in well-beingSumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022SuMi TRUST BankPresident’s MessageKazuya OyamaPresidentSumitomo Mitsui Trust Bank, Limited008Two years have passed since the COVID-19 pandemic spread to all corners of the globe. I would like to express my heartfelt sympathy to those afflicted by COVID-19, as well as their families, and my deepest gratitude to the healthcare professionals and others still fighting the pandemic.In the past year we turned our attention to stopping the spread of infections and firmly adopted ways of doing business that eliminated restrictions of time and place. During that time we were amazed at the sheer power of digital technology that enabled us to forge ahead with new working styles and patterns of behavior. In addition, a movement that aspires towards stable prosperity in society clearly emerged with governments and corporations setting them-selves lofty targets for tackling climate change and other universal social issues.This trend represents a major opportunity to us, especially because the idea of “balanced creation of both social and economic value” is at the very core of our management approach. A society with net-zero carbon emissions—one of the most important challenges in the future world—requires immeasurable money but the public sector alone does not have the resources to cover such costs. That is why the injection of private capital is required and there is currently an international movement that aims to entrust financial institutions with the responsibility of covering such costs for the entire industrial sector. It should also be noted that the cumulative decarbonization efforts of individual companies have their limits. It is vital that funds are directed to certain areas in view of the entire value chain where the biggest impact can be realized and continuously monitored. This is the very essence of “impact finance”—an initiative currently in the global spotlight. In this field we have not only expanded the breadth of operations with loans, equity investments, real asset investments, and venture capital, but we have employed experts with doctorate or master’s de-grees in such fields as hydrogen and battery technology, chemicals, and electric power to develop a business model unsurpassed by any of our rivals by combining scientific knowledge with impact analysis.Going forward, we will assume the mantle of creating positive impacts and make substantial contributions towards decarbonization whilst also building a virtuous circulation of funds, assets, and capital by connecting the demand for capital in the business community with global ESG money.In April 2020 the SuMi TRUST Group’s “Purpose” was defined. On the occasion of my appointment as president of SuMi TRUST Bank, I took the opportunity to hold discussions with some 12,000 employees by way of 26 online meet-ings in total with the objective of personally communicating my expectations and intentions regarding this “Purpose.”When commencing those sessions, my initial expectation was to envisage and execute together with employees an ideal future vision the Bank ought to create, but the frank opinions of everyone also yielded up many other issues, not just ideals, particularly concerning the near term. In this sense, these meetings turned out to be extremely worthwhile.I am sure that teamwork wins the day. By sharing the “Purpose” with our diverse workforce, I believe we can come up with solutions together. Being responsible for the future and ensuring that our generation deals with challenges now rather than burdening future generations is how we will resolutely and squarely tackle financial and social chal-lenges up ahead.Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Sumitomo Mitsui Trust Asset ManagementNikko Asset ManagementPresident’s MessagePresident’s MessageYoshio HishidaRepresentative Director and PresidentSumitomo Mitsui Trust Asset Management Co., Ltd.Junichi SayatoChairman, President & CEONikko Asset Management Co., Ltd.I offer my heartfelt sympathy to those afflicted by COVID-19, as well as their families, and to the many people whose live-lihoods and business activities have been deeply affected by the pandemic.Currently in many parts of the world, people are reconsid-ering the significance of companies and work. The discus-sion around achieving a carbon-neutral society by 2050 is also not entirely unrelated to this movement. More so than in the past, I believe the first step in rethinking, even in the slightest, one’s relationship with a company and society is the start of a much larger groundswell. At the same time, as a responsible institutional investor, I believe it is our mission to utilize our asset management services and help people achieve the goals and ideal images they envision for the fu-ture. To that end too, I think our stewardship activities—i.e., contributing to improvements in corporate value through dialogue with investee companies and promoting activities in ESG fields—are extremely important.In January 2021 we established ESG criteria for director appointment proposals in our guidelines for the exercise of voting rights for Japanese equity investments. In July, we joined the Net Zero Asset Managers Initiative, a global initia-tive comprising asset managers committed to supporting the goal of net-zero greenhouse gas emissions at investee com-panies by 2050. Then in November we were the only Japanese asset management firm to endorse and sign the Financial Sector Commitment Letter on Eliminating Commodity-Driven Deforestation announced at the 26th Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26).Through our participation in these kinds of global initiatives we seek to express our opinion as a Japanese asset manager. At the same time, we will aim to contribute to a higher level of sustainability on a global scale by actively incorporating progressive ESG activities from abroad into our global ESG perspectives when engaging with Japanese companies.009In 2021 a whole host of social challenges surfaced world-wide, including the spread of the COVID-19 pandemic, cli-mate change, economic disparity, and human rights. It was a year during which the awareness of sustainability was called into question once again.As an asset management company, the mission of Nikko Asset Management (Nikko AM) is to always act in the best interests of its clients. For that reason, our corporate philos-ophy hinges upon fiduciary and ESG principles. We incorpo-rate ESG principles into every investment decision-making process and endeavor to fulfil our fiduciary duties.We have long supported sustained value creation at cor-porations through active engagement with investee compa-nies. In 2021 we further strengthened our approach to fight-ing climate change by joining the Net Zero Asset Managers Initiative, a project that aims to reduce greenhouse gas emissions to net zero by 2050.2021 was also a year in which we made progress with our own sustainability initiatives. In environment- and climate-related fields, we updated our environmental policy and set a target of reducing the Nikko AM Group’s greenhouse gas emissions per employee by 40% by the year 2030 compared to our 2019 level. Also, in the area of diversity, we set a group target for women in management positions to reach 30% by 2030. We consider diversity to be a source of innovation and believe that achieving a gender balance at the decision-making level is absolutely essential.For a corporation, strategies are vital, but corporate culture is even more important. We believe that the entrenchment of sustainability concepts into Nikko AM’s corporate culture is not only necessary to fulfill our social responsibilities, but will also lead to sustainable corporate management.Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Principles of Governance—Sustainability as a Management StrategyGovernance is foundational for a company in setting purpose and provides over-sight for a company’s activities that contribute to a prosperous, sustainable so-ciety. Without good governance, companies lack the supportive context within which to make progress on the other three pillars: Planet, People, and Prosperity.From the World Economic Forum White Paper “Measuring Stakeholder Capitalism”010011 The Group’s Approach to Principles of Governance012 Corporate Governance014 Sustainability Promotion System028 Compliance and Fair Business Conduct035 Initiatives to Enhance and Sophisticate Operational Quality036 Ensuring Appropriate Tallying Operations of Voting Rights Exercise Forms at the Shareholders’ General Meetings and Promotion of Electronic Voting037 Risk Management and Materiality Management046 Responding to the COVID-19 Pandemic048 Considering the Environmental and Social Impacts of Corporate ClientsThe Group’s Approach to Principles of GovernanceIn order to adhere to the principles of sound management, based on a high degree of self-discipline with the background of fiduciary spirit, and to establish strong credibility with society, SuMi TRUST Holdings commits itself to enhancing its corporate governance system in line with the basic philosophy indicated below, with the objective of supporting sustainable growth and medium- to long-term enhancement of the enterprise value of the SuMi TRUST Group. In addition, the SuMi TRUST Group has defined its reason for existence (“Purpose”) and identified high priority issues (materiality) such as the declining birthrate and aging population, climate change, and digitalization. At the same time, the Group has made solving social issues its mission, while recognizing it as an opportunity for the Group’s own growth, and placed the “balanced creation of both social value and economic value” at the core of its management. The Board of Directors sets out and discloses the SuMi TRUST Group’s Reason for Existence (“Purpose”), Management Principles (“Mission”), Ideal Model (“Vision”), and Codes of Conduct (“Value”) as the anchor for all of our activities, which is shared by all of the directors, officers, and employees of the Group.Basic Philosophy• SuMi TRUST Holdings shall respect shareholder rights, and endeavor to develop an environment in which shareholders can exercise their rights appropriately and effectively, and to secure the effectively equal treatment of shareholders.• By recognizing the importance of its social responsibilities and pub-lic mission, SuMi TRUST Holdings shall endeavor to appropriately cooperate with its stakeholders, including shareholders, clients, em-ployees, business partners, and local communities, and to establish a corporate culture and climate in which it conducts sound business operations based on a high degree of self-discipline.• In order to establish a basis for constructive dialogue with its stake-holders, SuMi TRUST Holdings shall separately set out its Disclosure Policy, and endeavor to appropriately disclose corporate informa-tion, including non-financial information, and ensure the transparen-cy of its corporate management.• As the financial holding company that assumes the corporate manage-ment function of the SuMi TRUST Group, SuMi TRUST Holdings ad-opted the institutional design of a “company with Three Committees,” and, by separating the execution and supervision of business, shall endeavor to ensure the Board of Directors’ role of effective supervision.• SuMi TRUST Holdings shall engage in constructive dialogue with its stakeholders in order to contribute to sustainable growth, as well as the medium- to long-term enhancement of the enterprise value of SuMi TRUST Holdings.Risk/OpportunityKey StakeholdersRiskClients, communities, NPOsMain ResponsesMinimizing negative impacts through business (e.g., investments and loans in line with sector policies and ESG guidelines, and engagement that takes into account how borrowers and investees impact society and the environment)011Governance and Management Framework MaterialityMaterialityRisk/OpportunityKey StakeholdersCorporate governanceRisk/OpportunityAll stakeholdersMain ResponsesSustainable improvement of the management framework that balances the creation of both social value and economic value and enables us to realize our Purpose (please see Integrated Report for details)Response to risks, including event risks such as natural disasters (identi-fying risks and formulating clear policies, establishing a comprehensive management system, and developing a risk-response culture through employee training)Response to cyber attacks (ransomware, DDoS attacks, information theft), prevention of system development delays and cost increasesShareholders, investors, employees, governmentsClients, governmentsClientsAppropriate management of risks inherent in financial products (includ-ing proper sales to customers)Clients, employees, governments, international organizationsFostering a corporate culture that does not deviate from corporate ethics and codes of conduct, elimination of transactions with antisocial forces, crime prevention (money laundering, terrorist financing, special frauds such as bank transfer scams, etc.)MaterialityRisk/OpportunityKey StakeholdersMain Risks(For detailed guidelines, please refer to our Annual Report -Financial Data Section)Preserving financial capitalShareholders, investors, governmentsDeterioration in creditworthiness of certain large creditors, unfavorable real estate market conditions, and decline in value of cross-shareholdingsAcquiring sustained earningsDecrease in gross business profit in the loan and deposit businessShareholders, investors, governmentsRelated MaterialityImpact MaterialityMaterialityConsidering impacts on society and the business environment of companies to whom we extend investments and loansRisk management and resilienceSystems maintenance and combatting cyber attacksSafety of financial productsComplianceFinancial MaterialityHighly Relevant SDGsRiskRiskRiskRiskRiskRiskSumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Principles of GovernancePlanetPeopleProsperityCorporate GovernancePerspectives Regarding the Corporate Governance SystemSuMi TRUST Holdings is a financial holding company with subsidiaries such as SuMi TRUST Bank, Sumitomo Mitsui Trust Asset Management, and Nikko Asset Management, and aims to be our clients’ “Best Partner,” by providing “Total Solutions” that combine our banking business, asset management and administration business, and real estate business, based on a fiduciary spirit, and by making full Corporate Governance Systemuse of our significant expertise and creativity. To fulfill our principles and meet the expectations of stakeholders, SuMi TRUST Holdings endeavors to ensure the soundness and reliability of its business model and the transparency of the management of the SuMi TRUST Group, and will work to further enhance the Group’s corporate governance.Supervisory bodyBoard of DirectorsSupervision of the execution of duties of directors and executive officersStatutory committeeVoluntary committeeGeneral Meeting of ShareholdersNominating Committee*1Compensation Committee*1Audit Committee*1Election and dismissal of directorsDetermination of compensation fordirectors and executive officersAudit of execution of duties ofdirectors and executive officers*1 A majority of committee members are independent external directorsRisk Committee*2Conflicts of Interest Committee*2Advice on risk governanceEnhancement of the conflict ofinterest management framework: Chairman Chairperson (Board of Directors) (Each Committee): External: Internal/Non-executive: Internal/Executive: Female Directors*2 A majority of committee members are independent external directors or external experts012Executive bodySuperviseExecutive CommitteeRepresentative Executive OfficersExecutive Officers, etc.Individual CommitteesBoard of DirectorsThe Board of Directors ensures the fairness and transparency of the SuMi TRUST Group’s corporate management as its cen-tral role, by setting out the basic management policy of the SuMi TRUST Group and supervising the overall management of the Group. In light of the importance of environmental and social issues related to sustainability, the Board of Directors prescribes a basic policy on the social responsibility that is to be implemented by each Group company (the “Sustainability Policy”). Under this Sustainability Policy, the Board of Directors enhances awareness among its officers and employees, and promotes positive efforts to resolve these issues while taking its stakeholders into consideration, with the aim of supporting the sustainable growth of society and increasing the enter-prise value of the SuMi TRUST Group.In light of the importance of the functions of external di-rectors in corporate governance, as a general rule, at least one-third of the directors on the Board of Directors are inde-pendent external directors. The Board of Directors establish-es and discloses Independence Standards of Independent Directors. In determining candidates for directors, based on the reason for existence (“Purpose”) of the SuMi TRUST Group, we strive to secure a diverse and well-balanced com-position of the Board that ensures appropriate supervision of a wide range of business areas in which we have dealings as a financial group specialized in trust banking. Accordingly, we select members from among those who have a high level of insight and a wealth of experience in corporate manage-ment, finance, accounting, legal affairs, risk management, and compliance, as well as in creation areas, including skills specific to the trust business, sustainability, digitalization, and IT, which lead to the creation of new value, to address our high priority issues (materiality*). In addition, by assign-ing highly specialized experts to the statutory and voluntary committees established as supervisory bodies, we intend to strengthen the supervisory function and build a diverse and balanced formation as a whole to sustainably increase the Group’s enterprise value.*For more information on materiality, please refer to pages 20-21.Composition of the Board of DirectorsOnly on one occasion was one director absent.ChairmanExternal directors (7 directors)Internal directors (8 directors)Percentage of external directors 47%Non-executive directors (11 directors)Executive directors (4 directors)Percentage of non-executive directors73% All seven external directors have been registered as independent officers with the relevant securities exchange. Breakdown of 15 directors: 13 men, 2 women 18 Board of Directors meetings were convened during the period July 1, 2020 through June 30, 2021.Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Skill Matrix for Board Members ( : External, : Internal (non-executive), : Internal (executive), : Female directors)Corporate managementFinance/Accounting——Area of expertise and experienceLegal affairs/Risk management/ComplianceValue creationNameNameArea of expertise and experienceCorporate managementFinance/AccountingLegal affairs/Risk management/Compliance—Value creationToru TakakuraJiro AraumiNobuaki YamaguchiKazuya OyamaTetsuo OhkuboMasaru HashimotoKuniyuki ShudoKouji TanakaInternal directors——Isao MatsushitaShinichi SaitoHiroko KawamotoNobuaki KatoMasanori YanagiKaoru Kashima—External directorsMitsuhiro Aso———————To further improve the effectiveness of our corporate governance, we regularly hold external directors’ meetings, which are only attended by external directors. By having external directors exchange information and share their views, we help foster trusting relationships and strengthen the supervisory function of the Board of Directors.CommitteesIn addition to the Nominating Committee, Compensation Committee, and Audit Committee, which are required under the Companies Act, we have established the Risk Committee and Conflicts of Interest Committee as advisory bodies to the Board of Directors. As a financial group specialized in trust banking, the Conflicts of Interest Committee possess-es supervisory functions unlike at any other financial group. Also, every year each committee conducts a self-evaluation in an effort to improve its autonomous management.013 : Member (external), : Member (internal/non-executive), : Member (internal/executive), : Female Directors)Nominating CompensationAuditRiskConflicts of InterestMembers of Committees ( : Chairperson, External DirectorsExpertsIsao MatsushitaShinichi SaitoHiroko KawamotoMitsuhiro AsoNobuaki KatohMasanori YanagiKaoru KashimaHideki Kanda*Kenji FujiiTakeshi SuzukiMikio ArakiHaruyuki ToyamaInternal DirectorsAkiko HosokawaTetsuo OhkuboMasaru HashimotoKuniyuki ShudoKouji TanakaYasuyuki Suzuki* Mr. Hideki Kanda is an external director of SuMi TRUST Bank.Executive OfficerEvaluation of the Board of DirectorsSuMi TRUST Holdings conducts an annual evaluation of the Board of Directors and examines and implements improvement measures for the issues identified, thereby leveraging the PDCA cycle and improving the effectiveness of the Board of Directors.* For more information on corporate governance, including the evaluation of the effectiveness of the Board of Directors, succession plan, and compensation system for directors and executive officers, please refer to pages 96-103 of the 2021 Integrated Report.Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Principles of GovernancePlanetPeopleProsperitySustainability Promotion SystemThe SuMi TRUST Group defines its reason for existence (“Purpose”) as “Creating new value with the power of trusts and let prosperous future for our clients and society bloom,” and places the “balanced creation of both social value and economic value” at the core of its management. As a result, sustainability has literally become a part of our daily conversation and is being emphasized in every aspect of our business. Our sustainability promotion system can be described as a framework for promoting the integration of sustainability into our existing business strategy.1. Sustainability Promotion SystemAt SuMi TRUST Holdings, the Board of Directors sets the Sustainability Policy, and based on this policy, the Executive Committee, which is the executive body, deliberates and de-cides on various measures to promote sustainability, and the Board of Directors supervises the execution of these measures.In the Executive Committee, the Sustainability Management Department serves as the secretariat for the Sustainability Promotion Committee, which is held to discuss initiatives related to important sustainability issues. The Executive Committee makes decisions on the sustainability initiatives of each Group company after thorough discussions, while taking into account the balanced creation of both social val-ue and economic value.• Establishes the Basic Policy on the Social Responsibility of the Sumitomo Mitsui Trust Group (Sustainability Policy).• Stipulates (in the Basic Policy on Corporate Governance) that one of its main roles is to address the problems of climate change and other environmental and social issues linked to sustainability and determines the policy direction the Group should take.• Hears the findings of the Risk Committee and engages in exhaustive discussions to decide on mainly the issues (materiality) that have a serious impact on balanced creation of both social value and economic value, as well as operational frameworks.Board of DirectorsOversight014Executive Committee• Hears the findings of the Business Risk Management Committee and engages in exhaustive discussions to establish policies regarding items of materiality for submission to the Board of Directors.ation of both social value and economic value.• Engages in exhaustive discussions to decide on all initiatives for Group companies, taking into account the perspective of balanced cre-• For initiatives on key sustainability issues, the Committee establishes medium-term policies in line with the Medium-Term Management Plan, as well as policies for each fiscal year, and manages operations that reflect the PDCA cycle (convenes meetings as the Sustainability Promotion Committee).Group companies(advances social problem-solving business)ClosecollaborationChief Sustainability OfficerSustainability Management Department(addresses key sustainability issues)(Dedicated sustainability organizations in each Group company)SuMi TRUST BankSustainability Management DepartmentESG Strategy and Solution DepartmentReal Estate Business Planning Department (ESG Planning Team)Real Estate Business Solution Department (Environmentally Friendly Property Promotion Team)Other departments (appointment of personnel in charge)All branch offices (sustainability promotion managers and personnel in charge)Sumitomo Mitsui Trust Asset Management (Stewardship Development Department)Nikko Asset Management (Corporate Sustainability Department)Sumitomo Mitsui Trust Panasonic Finance (ESG Promotion Section, Planning Department)Other subsidiaries (appointment of personnel in charge)Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Roles of Sustainability Promotion CommitteeThe Sustainability Promotion Committee is responsible for the following functions. We started holding Sustainability Promotion Committee meetings more frequently starting in FY2021. Particularly in the area of climate change, since making the Carbon Neutral Commitment in October 2021, we have been reporting the progress of the Climate Change Adaptation and Mitigation PT on a monthly basis.• Promoting materiality managementManagement• Tackling climate change issues• Devising and promoting plans for sustainability work (manages the progress of social problem-solving businesses at Group companies)• Conducting strategic information disclosure by issuing Sustainability Reports and other publications• Earning the trust of investors and other stakeholders and working to improve their assessment of the Group• Developing innovative financial products and services that help solve key sustainability issues®• Strategically providing value to the community through “With You” activities*• Ensure employees understand strategies by distributing the Group’s employee integrated report to all directors, officers, and employees• Facilitate the swift acquisition of practical knowledge by promoting in-house activities, such as participation in the challenge of helping achieve the SDGs, the SDG declarations formulated by each branch, and the “With You” activities• Encouraging dialogue with, and ascertaining the needs of, various stakeholders, including shareholders, investors, NPOs and NGOs in DialogueJapan and overseas, international organizations, government agencies, and universities• Utilizing internal engagement to absorb the needs of stakeholders into the Group and improve initiatives*This is the name for the community-based sustainability activities developed by the branch offices of SuMi TRUST Bank in order to forge strong relationships of trust with local communities.Business developmentEmployee educationInternal Engagement in FY2021Internal engagement (see page 21) is one of the important roles under the jurisdiction of the Sustainability Promotion Committee that is designed to reflect the voices of stakeholders in management. In FY2021, the following themes were selected for engagement.015ThemeRelated MaterialityPoints raised by investors and assessment organizationsBolstering human resources and developing workplace environmentsEnhancement of information disclosure on human resource skill improvementsCorporate governanceCorporate governanceInformation security/ Cyber attack responseHuman rightsHuman capitalSystems maintenance and combatting cyber attacks• Bolstering human resources and developing workplace environments• Considering impacts on society and the business environment of companies to whom we extend investments and loansClimate change/ Policy on investments and loans• Climate change• Considering impacts on society and the business environment of companies to whom we extend investments and loansRisk managementRisk management and resiliencePolicy on political involvementComplianceTax governanceComplianceMessage from Chief Sustainability OfficerIndependence, diversity, and expertise of the Board of DirectorsEnhancement of executive compensation disclosureStrengthening management involvement and going beyond legal complianceCarrying out comprehensive initiatives by globally addressing human rights issues and expanding supply chain responsesCarbon neutrality of investment and loan portfoliosEnhancement of policies for specific sectorsMaking early progress in disclosing information in line with TCFDResponding to the rapidly expanding scope of risk from a global perspectiveTaking a proactive approach to disclosure with an emphasis on transparency as a financial institutionClarifying tax policy and commitment to tax complianceEnhancement of management systems and information disclosureComplianceComplianceEnhancement of whistleblowing programsWith the entire world being simultaneously struck by the unthinkable COVID-19 pandemic, I feel that there is a rapidly growing awareness that sustainability issues such as climate change are a crisis common to all humanity. The finance world has an important role to play in working together with governments and the business community to change the social system in a sustainable direc-tion. We are determined to meet society’s expectations by accelerating the creation of positive impacts to solve problems, while also making use of scientific knowledge.Fellow Officer, Chief Sustainability OfficerTsukasa KanaiSumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Principles of GovernancePlanetPeopleProsperitySustainability Promotion SystemEstablishing Climate Change GovernanceSuMi TRUST Holdings understands that climate change is a source of risk and opportunity that can have a significant im-pact on financial markets, and has established a governance system for supervision and execution centered on the Board of Directors. The Board of Directors, which is a superviso-ry body, has established the Risk Committee as an adviso-ry body to ensure the execution of our climate change re-sponse, and to conduct flexible and in-depth deliberations on climate change to ensure appropriate supervision.The Executive Committee, which is an executive body, has established the Business Risk Management Committee as an advisory body, as well as the Climate Change Adaptation and Mitigation Project Team to formulate strategies and re-spond promptly to climate change in each business as well as across all Group companies.Key Initiatives in fiscal year 2020-2021Meeting systems, etc.ActivitiesBoard of Directorsment theme• Held focused deliberations on climate change (including Carbon Neutral Commitment) as a manage-Supervisory bodyRisk Committee• Set climate change as a key issue for focused deliberations in fiscal year 2021, periodically checked the status of the Group’s efforts and conducted deliberations on climate change issues by including external members with expert knowledgeAdvisory to the Board of DirectorsExecutive CommitteeCommitment to external• Reviewed the climate change adaptation system• Discussed and resolved to join the NZBA and externally announcing the 2050 Carbon Neutral Executive body• Provided monthly reports on the progress of the Climate Change Adaptation and Mitigation PT• Reviewed the climate change adaptation system and provided advice and listened to opinions about joining the NZBA and externally announcing the 2050 Carbon Neutral Commitment to externalAdvisory to the Executive Committee• Held monthly discussions on the progress of the Climate Change Adaptation and Mitigation PTExecutive bodyBusiness Risk Management CommitteeClimate Change Adaptation and Mitigation PT Steering Committee016Establishment of Climate Change Adaptation and Mitigation Project TeamIn 2019, we established the TCFD Project Team (TCFD PT) to strengthen our risk management and information disclo-sure related to climate change. In October 2021, however, we restructured and further enhanced this team, and es-tablished the Climate Change Adaptation and Mitigation Project Team with the aim of specifically implementing our Carbon Neutral Commitment. This team covers the entire SuMi TRUST Group and consists of each of our corporate management departments and each business under SuMi TRUST Bank, as well as Sumitomo Mitsui Trust Asset Management, Nikko Asset Management, the Europe, Middle East and Africa Division, and the Americas Division.In addition, SuMi TRUST Bank has issued about 80 per-sonnel appointments (mainly for concurrent positions) in line with this, and has literally launched a company-wide re-sponse to climate change issues.SuMi TRUST HoldingsSuMi TRUST BankAmericas DivisionEurope, Middle East and Africa DivisionCooperation with each working group (WG)Cooperation with each WG on fundamental data development and model developmentIR DepartmentFinancial Planning DepartmentGeneral Secretariat(Corporate Planning Department/Sustainability Management Department)Board of DirectorsReportExecutive CommitteeBanking Account WG (Corporate Business Planning Department)Trust Account WG (Fiduciary Business Planning Department)In-house WG (Corporate Administration Department)Asset Management WG (Affiliates Management Department)Credit Risk CommitteeFiduciary Business CommitteeRisk Management WG (Risk Management Department)Sumitomo Mitsui Trust Asset ManagementNikko Asset Management*Departments in parentheses are those in charge of the secretariat.Sumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Sustainability Management Department and Technology-based Finance (TBF) TeamOne of the important functions of the Sustainability Management Department is the research and development of new sustainability-related businesses. With this in mind, we launched a Technology-based Finance (TBF) team in April 2021.Solving the challenges presented by the Sustainable Development Goals (SDGs) and the Paris Agreement will re-quire vast amounts of funding, and innovative technologies will be key. Going forward, we need to understand the latest technologies, deepen our dialogue with our clients, and ap-proach finance from a scientific perspective. This is why we established the TBF team to support the social implementa-tion of technology from a financial perspective.We have teamed up with researchers and experts who have doctoral degrees in science and engineering in the fields of hydrogen, storage batteries, organic chemistry, and inorganic chemistry, with the aim of realizing a carbon-free society that is in harmony with nature. By incorporating the knowledge of our team members into the impact evaluation process and implementing innovative technologies in soci-ety, we will accelerate initiatives to promote positive impact and control negative impact, thereby contributing to solving social issues. The TBF team’s activities represent a new chal-lenge for us and for the financial community. By applying existing technologies, developing new technologies, or a combination of the two, we aim to build a social system that will solve environmental and social problems.Technology Based Finance (TBF) InitiativesFinance for Social ImplementationSustainability Management Department Technology-based Finance (TBF) Team017Team ManagementHigh-level integration with financeEnergy system EngineeringEnergy device EngineeringMaterials EngineeringSystem Integration EngineeringEnvironment Engineering• Promote the introduction of innovative technologies that have proven potential for social implementation through basic and empirical research• Analyze reasons that prevent social implementation and provide solutions, • Utilize expertise in cleantech (innovative technologies centered on the • Coordinate collaboration among client companies and research institutes including financial optionsby leveraging expertiseenergy and power sectors)• Monitor the ongoing occurrence of positive impactSupporting the promotion of innovationImpact managementProof of conceptLaboratory stageDemonstration testSocial implementationPromotion/DeploymentContinuous operationExamples of businesses led by the TBF team in FY2021 (see pages 68-69 for details)1. Promotion of impact evaluation advisory business for venture capital firms including Real Tech Holdings2. Start of an experimental pilot program to commercialize an innovative hydrogen value chain3. Impact evaluation based on collaboration agreement with Odawara City, Bank of Yokohama, and Hamagin Research Institute on local production and local consumption of energy, etc.4. Promotion of various operations based on the collaboration agreement on ESG regional finance, etc. concluded with the Hokkaido Regional Environment Office of the Ministry of the Environment5. Participation in the Center for Co-creation of a Resource Recycling Society Using Renewable Polysaccharide Plant-Based Plastics6. Providing a variety of decarbonization-related solution services to regional financial institutions and local governments throughout JapanSumitomo Mitsui Trust Holdings, Inc.Sustainability Report 2021/2022Principles of GovernancePlanetPeopleProsperityUnique capacity from combination of deep knowledge as specialist (each member)Creative ideas through discussion (team)Sustainability Promotion System2. Value Creation ProcessOur ideal visionThe SuMi TRUST Group’s reason for existence, or “Purpose”Creating new value with the power of trusts and let prosperous future for our clients and society bloomRoles expected by societyEnvironment surroundng the Groupi6 types of capitalwe rely onCapital pertaining tothe economy (wealth)Financial CapitalManufactured CapitalCapital pertaining tosociety (people)Human CapitalIntellectual CapitalSocial andRelationship CapitalCapital pertaining tothe environment (earth)Natural CapitalSocial issue-solving business((1) creation of positive impacts)(4) Accumulation of all sorts of capital throughbusiness operations (circulation within our businesses)Full utilization ofvarious trust functionsas a trust specialistExpansion inbusiness domainsbased on the Group’sinherent situationIdentification ofsocial issues to beaddressed firstIndividuals: Asset administration suited for Japan’s aging society Asset formation of individuals Corporations: Sustainabl