Dentsu Group (4324) ESG Update summary

ESG strategy and integration

• Executive remuneration is partially linked to ESG indicators, aligning non-financial and financial goals and enhancing disclosure, with recognition from DJSI, MSCI, FTSE4Good, FTSE Blossom Japan, and EcoVadis Bronze.

• The 2030 sustainability strategy centers on people, planet, and innovation, with headline goals, action plans, and KPIs for each material issue, reviewed quarterly by the Group Sustainability Committee.

• Environmental initiatives include KPIs to enable one billion people to make sustainable choices by 2030, scenario analysis under TCFD, nature-related assessments under TNFD, and a net zero GHG target (Scope 1-3) by 2040 with a 46.2% reduction by 2030.

• Industry collaboration is emphasized through decarbonization initiatives in marketing, partnerships with AdGreen, JCLP, and Ad Net Zero, and sustainability communication guides.

• Employee sustainability education is prioritized, with global training programs and region-specific initiatives to embed sustainability across the organization.

Human capital and culture

• Human capital strategy focuses on people growth, winning as one team, service excellence, leadership development, and cross-regional assignments, with programs like Dentsu Leadership Connect and Dentsu Next Twenty.

• Diversity, equity, and inclusion are promoted, with high female recruitment, parental leave uptake, flexible work, and multiple awards for DEI and work environment.

• HR systems are being integrated to enhance talent visibility and mobility, with expanded AI and data analytics capabilities and a unified operating model.

• Medium-term goals include identifying 100 next-gen global leaders, energizing organizations, and equipping business with advanced people data and insights.

• Engagement scores declined slightly due to transition challenges, with management focusing on clearer communication and culture integration post-acquisitions.

Governance and board oversight

• Governance reforms include separating board chair and CEO roles, increasing independent directors, establishing three statutory committees chaired by independents, and a new Finance Committee for detailed financial analysis.

• Board discussions have deepened post-reform, with clear delegation to executives and robust oversight on strategy, risk, and human capital.

• The board views excelling in ESG as core to long-term value and supports management with diverse perspectives.

• Of 17 mindset and behavior reform initiatives in Japan, 9 are completed and all are scheduled for completion by end-2024, focusing on culture, risk management, and fair business processes.

• Reflections on past performance highlight the need for stronger internal controls, M&A integration, and ongoing review of governance and financial discipline.