Materiality
(Priority Issues to Be Addressed)

Based on our Sustainability Management Policy, we promote sustainability management that enhances both social and economic value.
We will embody our management principle of “Serving the Prosperity of the Community” through efforts to resolve the materiality we have identified as priority issues to be addressed.

Identification Process

Because the concept of sustainability is both broad in scope and open to wide interpretation, rather than narrowing the issues from the start, we started by gathering the thoughts of all employees so that many ideas would emerge.
On the other hand, since it is difficult for initiatives to comprehensively cover a large number of issues, we considered it necessary to define priority issues and proceeded with the process described on the right, with final identification of six items by the Board of Directors.

Future vision considered by all 4,000 employees
— Aggregation of everyone’s ideas

Issues extracted with reference to the Management Principle, international norms,
stakeholder interests, issues set by external evaluation organizations, etc.

Items placed on a matrix and evaluated based on
“importance to stakeholders” and “importance to Kyoto FG”

Discussions at the Sustainability Management Council*

Six items identified by the Board of Directors

• *
  Composition: Directors, Executive Officers with a title responsible for each division of the headquarters,
  Executive Officers, and General Managers of each division of the headquarters

In the process of identification, 753 issues were extracted based on the ideas compiled through a “future vision considered by all 4,000 employees,” in which all employees participated in considering what they want the Company to become, and by considering international standards and guidelines, the demands of ESG evaluation organizations, and consistency with the Group’s assessment of the business environment, corporate philosophy, and growth strategy.

Since materiality is basically a concept that emerges from the relationship between a company and society, the extracted issues were organized into ESG categories and rated on a four-point scale based on the two axes of “importance to Kyoto FG” and “importance to stakeholders,” and then created a matrix of the results which was used to select the issues with the highest priority.

The material issues selected through the matrix evaluation were discussed at the Sustainability Management Council, which complements and reinforces the functions of the Board of Directors, and consolidated into six categories, after which the materiality items were identified by the Board of Directors.

We have identified the various social issues existing in society generally and evaluated their importance to our Group and the various stakeholders surrounding our Group, and have identified the following six items.

Environmental preservation

Falling birthrate and aging population

Diversity, equity, and inclusion (DEI)

Well-being

Growth of the local economy

Secure future for the community

Based on the opportunities and risks in the identified materiality, we will effectively deploy various measures that will lead to the resolution of issues while appropriately capturing changes in the internal and external environments. In addition, we will practice a PDCA cycle that achieves both the creation of social value and the enhancement of corporate value by setting KPIs that correspond to each materiality and tracking the progress of sustainability metrics aimed at contributing to social impact.

Materiality	Major opportunities/risks		Time axis	Reason for identification as materiality	Ideal vision	Our initiatives	Targets (KPIs)
							Target year	Details / Numerical targets
Environmental preservation	Opportunity	Increased need for new financing and consulting services associated with the transition to a decarbonized society	Short-term Medium-term Long-term	Environmental issues are a global challenge and can have a serious impact on the regional economy as well. As a regional financial group, protecting the region’s natural resources and supporting sustainable economic activities are essential for enhancing the region’s appeal and passing on a rich environment to future generations. We have identified this as a materiality in order to fulfill our responsibility as a company that grows together with the region.	As a regional financial group, promoting economic activities that consider the community’s environment	Provision of sustainable finance Initiatives for environmental issues Our own decarbonization efforts	FY2030	Sustainable finance investment and lending ¥2 trillion (executed cumulative) Our own GHG emissions (Scopes 1 and 2) 2,760t-CO₂ (80% reduction compared to FY2013)
	Risk	Property damage and casualties due to large-scale natural disasters, worsening corporate performance due to stricter regulations, and loss of public confidence due to lack of response
Falling birthrate and aging population	Opportunity	Expanding need for asset formation and management in preparation for the arrival of the era of 100-year lives, and expanding need for consulting to address issues	Short-term Medium-term	We have identified this as a materiality because, while the decline in the labor workforce may lead to business closures and deteriorating profitability for corporate clients, and ultimately to the decline of regional industries, we also expect to generate new revenue opportunities by offering detailed consulting and providing value that is tailored to our customers’ life stages.	Providing value to customers through high consulting capabilities, as well as realizing the strengthening of our earnings base in response to labor shortages through the utilization of digital technology, etc.	IT & DX promotion Use of the Business Portal Site and app Strengthening consulting capabilities	FY2028	IT/DX investment ¥15.0 billion (FY2026–28 cumulative total) Reduction in administrative work through promotion of digitalization and administrative reform 200,000 hours/year Data scientists 50 CFP/FP Level 1 holders 1,000
	Risk	Weak corporate performance and regional economy due to labor shortages, and economic contraction due to declining consumption in the region
Diversity, equity, and inclusion (DEI)	Opportunity	Creative corporate activities based on diverse values	Long-term	The leveraging of diverse human resources will enhance the organization’s competitiveness and innovation, enabling sustainable growth. Therefore, DEI is an essential element for the organization’s soundness and growth, and we have identified it as a materiality.	Maintaining a workplace environment where employees with diverse backgrounds respect each other and everyone can play an active role	Promotion of women’s empowerment Development of specialist human resources Promotion of active participation of senior human resources Support for active participation of people with disabilities	FY2028	Ratio of female managers 25.0% Development of specialized human resources (expert and specialist human resources) 2,000
	Risk	Decline in business performance due to loss of human resources and motivation, and difficulty in hiring
Well-being	Opportunity	Improved business performance due to increased employee vitality and motivation	Long-term	We have identified this as a materiality because employee health and well-being are factors that enhance the productivity and creativity of the overall organization, and are essential elements for our sustainable development.	Realizing a flexible and well-supported workplace environment so that individuals can demonstrate their abilities to the maximum extent	Improvement of work-life balance Initiatives to improve engagement Maintaining and improving a workplace environment that ensures psychological safety	FY2028	Human capital investment ¥7.0 billion (FY2026–28 cumulative total) Average number of days of childcare leave used by males 14.0 days Engagement score 4.30 or higher Presenteeism 12.0%
	Risk	Decline in business performance due to loss of human resources and motivation
Growth of the local economy	Opportunity	Expanded business opportunities and strengthened cooperation with the community	Short-term Medium-term Long-term	We have identified this as a materiality because we believe that it is important to strengthen the foundation for sustainable growth together with the region by offering a wide range of solutions not restricted to the financial services domain and by collaborating with local communities to address challenges faced by the region, with the aim of securing new revenues and further developing the regional economy.	Working with local businesses and contributing to the promotion of industry as a financial institution that guides the sustainable prosperity of the community	Support for start-ups and growth Deepening of real estate business Succession of local industries to the next generation Optimization of personnel allocation	FY2028	Growth investment with a focus on venture investments ¥100 billion or more (Cumulative total 2H FY2024–FY2028) Private real estate fund formation amount (cumulative) ¥50.0 billion Strategic staff reallocation 380 people
	Risk	Decline in business performance due to stagnation in the local economy caused by population decline and industrial decline
Secure future for the community	Opportunity	Improved business performance through enhanced governance and security to improve credibility	Short-term Medium-term Long-term	Unstable conditions in the local community could cause a decrease in lending opportunities and sluggish performance for us. We have identified this as a materiality because contributing to the future security of the local community is an essential element for our sustainable growth.	Promoting the construction of sustainable infrastructure and contributing to regional stability and development by cooperating with local stakeholders	Advancement of cybersecurity measures Efficient and effective prevention of financial crime utilizing AI Restructuring the overseas business structure Advancement of Group governance Customer-first operations	FY2028	Number of Financial Cybersecurity Level 3 certification holders 2,000 Acquisition of knowledge related to financial compliance (Financial Compliance Officer Level 2) 2,000
	Risk	Weak business performance through decline in regional vitality caused by social unrest and uncertainty about the future