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Eiji Hayashida Representative Director,President and CEO JFE Holdings, Inc.

Mobilizing the world’s most innovative address materiality issues for creation of technologies and diverse workforce to sustainable societies

Pursuing JFE’s Sustainable Growth and Contributing to Society’s Sustainable Development

Amid a rapidly changing business environment, JFE has strived to achieve sustainable growth and enhance its corporate value by committing to the vision “contributing to society with the world’s most innovative technology,” and by leveraging its technological advantages, diverse workforce and comprehensive strengths across a broad scope of business.

In FY2015 we set out our Fifth Medium-term Business Plan to guide business operations for the ensuing three years. Although we might attain our ordinary income and ROE targets slightly behind schedule, we are steadfastly implementing the plan to achieve these goals. Meanwhile, we have positioned environmental protection as a key issue based on the environmental philosophy and strategies established upon our foundation. We continue to conduct our business in harmony with the environment, by leveraging the world’s most innovative technologies in a broad-based effort to help protect the global environment and make societies more affluent.

In the previous fiscal year, our core steel business faced a difficult climate due to the impact of steel oversupply in China, sluggish demand for energy and rising prices for raw materials. Nevertheless, we continued to upgrade our operations with state-ofthe- art technologies as well as nurture our workforce to enhance our corporate value and grow sustainably over the medium to long term. Renovating a 40-yearold coke oven and refurbishing a power plant to utilize by-product gas made it possible to significantly cut energy costs to strengthen our competitiveness, reduce our CO2 emissions and utilize by-product gas more efficiently. These efforts largely contributed to enhancing our corporate value as well as protecting the environment.

Our engineering business contributed to the establishment of a recycling society through its core businesses, including the construction of environmental infrastructure such as a waste-toenergy plant and water treatment plant, and renewable energy business such as biomass power generation. Our trading business contributed to sustainability through increased use of energy-saving transportation, global resource recycling and biomass-fuel supply.

Harmonizing business competitiveness and environmental protection is a material issue that companies must address to ensure business continuity. We believe that maintaining this balance will support the sustainable growth of not only JFE but society as well.

Material CSR Issues

Environmental protection for sustainable development is an increasing concern of the international community, as expressed in the Paris Agreement to mitigate climate change. In September 2015, the United Nations adopted the 17 Sustainable Development Goals covering a range of issues, including the environment, poverty, hunger, energy and peace. These goals reflect the broad issues faced by global society and global companies including JFE.

Such issues are evolving and growing more complex. During this reporting period, we launched an initiative to identify and inform JFE’s material CSR issues and ascertain what most impacts our stakeholders and how we can mitigate risks and create opportunities. Concurrently, we began identifying how to maximize our corporate-resource allocation to bolster our value to society.

First, we prioritized materiality in five areas: providing quality products (customer satisfaction), protecting the global environment, ensuring occupational safety and health, recruiting and nurturing diverse human resources and thoroughly enforcing compliance. Of course, everything is underpinned by corporate governance and respect for and awareness of human rights. In addition, I wish to emphasize that undertaking this process reflects our passions for sustainable growth, corporate value enhancement and social contribution.

Securing and Developing Diverse Human Resources

We established our Basic Policy on Human Resource Management in April 2015 to guide our personnel management activities, and our Health Declaration in September 2016 to ensure the health of employees and their families. Related activities are now carried out in accordance with these guides. For example, we are broadening our diversity by hiring more female employees and introducing ways for women to play more active roles in the workplace. In March 2017, JFE was recognized as an excellent listed company for its encouragement of successful participation by women in the workplace, for which the company received its third Nadeshiko Brand designation for the first time in two years.

We are implementing our Workstyle Reform program through a number of initiatives under the strong leadership of management. The aim is to create workplaces where each employee can take pride in their work, realize job satisfaction, achieve high productivity and create value. Going forward, we will continue to advance these efforts Group-wide to further strengthen our diverse workforce.

Enhancing Corporate Governance

The introduction of our Basic Policy on Corporate Governance in FY2015 established our Nomination and Remuneration committees, both comprised of a majority of Outside Directors and Outside Audit & Supervisory Board Members. We also began analyzing and evaluating the effectiveness of our board of directors in FY2015. As a result, upon the recommendation of the Nomination Committee we decided to enhance the compositions of our board of directors and audit & supervisory board in FY2017, ultimately to strengthen our management structure as well as our fairness, objectivity and transparency.

Maintaining Public Trust

Under a corporate vision of contributing to society with the world’s most innovative technology, JFE is addressing materiality issues through CSR initiatives, aiming to contribute to the company’s sustainable growth and corporate value as well as to strengthen sustainability in global society.

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