Message from the COO

As we embark on the long journey of business structure reforms, Management Philosophy of ''Truly inspired'' plays an important role as a compass. The starting point for structural reform is to thoroughly share this vision with employees, including what we want to achieve in 2030 and 2050.
At our company, we hold an online townhall meeting once every six months as a place for direct dialogue between the president and other management and employees. It has now become an annual event, with approximately 3,000 employees participating each time and engaging in lively exchanges. The more management emphasizes the need for structural reform, the more employees often feel anxious than hopeful. Your thoughts and true intentions cannot be conveyed just by providing written information or one-way information. We will continue to steadily engage in direct, two-way communication in order to gain empathy and empathy from our employees.
In addition, the president and vice presidents spent six months visiting Complex across the country and exchanging opinions based on Medium-term Management Plan announced last November. In this way, we seize every opportunity to think and dialogue with our employees about ''Why do we exist?'' and ''Where are we headed?'' As a result of these efforts, recognition of Management Philosophy has reached 99.6% and empathy level has reached 77%.

In order to create new value, we must bring together the power of people with different backgrounds, knowledge, and experiences. To achieve this, we need to create an environment where everyone, including women, LGBTQ+ employees, foreign employees, and people with disabilities, can demonstrate their full potential without feeling disadvantaged as minorities.
Over the past year, our company has worked intensively to promote the advancement of women. We have set the female hiring ratio, female executive ratio, and male childcare leave taking rate as KPIs, and have linked them to executive compensation from 2023. Last year, we asked a wide range of employees for their understanding through public comments, and the rate of men taking childcare leave increased from 59% the previous year to 84%. In addition, from the perspective of equity, we examine whether women, who are in the minority in each workplace, are able to speak out without hesitation and demonstrate their full potential in life events such as marriage, pregnancy, childbirth, and childcare. Aware of the issue of whether we are providing sufficient support to women who are struggling with career development, we have begun providing in-house mentoring for female employees by executives and department managers. At the same time, we also engaged in cross-company cross-mentoring with Tokio Marine & Nichido Fire Insurance Co., Ltd. This year again, the D&I Promotion Committee, which is an advisory committee to the president and of which I serve as the chairperson, is encouraging all employees to ''From D&I to DE&I'', ''Let's reexamine the current workplace environment'', and ''What should executives look like in the future?'' We made recommendations such as ''Let's think about this,'' and gathered a wide range of opinions through public comments. More than 80% of employees agree with the committee's recommendations, but the committee is committed to listening to minority opinions and engaging in careful dialogue.
In recognition of our series of initiatives, we were selected as a Nadeshiko Brand for the first time in March of this year.

In order for each employee to fully demonstrate their abilities and individuality, it is first necessary to have employees think about what kind of life career they want to pursue and what kind of experience and skills they need to achieve that goal. there is.
In September of this year, we conducted a questionnaire survey targeting senior employees over the age of 50 (1,674 respondents). This survey also confirmed that people who have a clear life and career plan have higher work engagement and, as a result, higher loyalty to their company than those who do not. To help employees think about their own life and career, we have created a website called "My Career," where you can view the progress of our executives, department managers, deputy managers, and section managers on the web. We have held events such as ''Job Festivals,'' where employees can directly hear from the people in charge of each division and Complex about what they are doing. Additionally, in the past year, we have provided approximately 300 career consultations to employees who are concerned about their career plans.
However, in this survey, only 15% of seniors with a wealth of life experience had a clear life and career plan. We recognize that there are major challenges remaining here.

We would like to move to a higher stage of ''embodying Management Philosophy Management Philosophy and determining whether Management Philosophy is used as a guideline in daily work. We are currently working as a company to tackle simultaneous equations for which there is currently no solution in sight: balancing the stable supply of energy and materials that support today's lives with the preservation of the global environment in the future. When business activities are broken down into the tasks of each employee, there are bound to be countless simultaneous equations. We would like to produce as many employees as possible who take on challenges without fear of failure, transcending traditional frameworks and their departments when they believe there is value and significance for the company and society. Therefore, currently,
(a) Promote a 30% productivity improvement project to create mental and time space to take on new challenges.
(b) Full-fledged rollout of in-house side job system to promote cross-departmental activities
(c) Reviewing the personnel system to support challenges
We are working on this. The Idemitsu Engagement Index measures the results of our activities, and is explained in detail on the next page. I will discuss the personnel system in the next section, including other perspectives.

The tangible assets that we own in Japan, such as Refineries / Complexes, and service station networks, have the potential to serve as social infrastructure that supports carbon neutrality. The power of software to realize these values and provide for society is important, and strengthening the human resources to promote projects is a particular issue. In order to tackle carbon neutrality, for which it is difficult to find the optimal approach, it is essential to co-create and collaborate with a variety of domestic and international stakeholders.To this end, we must build and promote business while incorporating diverse values. We must discover and develop as many talented human resources as possible. Based on this awareness of issues, we newly established the Idemitsu Engagement Index (Idemitsu EI) last year.
Idemitsu EI is

①High sense of ownership
②Pride of belonging to our company
③Realization of personal growth
④Willingness to contribute to the organization
⑤Embodiment of Management Philosophy
⑥Challenge change beyond organizational boundaries

It is composed of six elements.
Items ① to ③ measure whether employees are growing autonomously and proactively in the field of our company while being proud of belonging to our company. On the other hand, items ④ to ⑥ measure whether or not they are taking on challenges in new areas beyond the organization in addition to their current work. ① to ③ are the sources of the group's unifying force, and as described below, we have long reached a level that can be considered our strengths.However, in developing human resources who can promote co-creation and collaboration with diverse stakeholders, We recognize that improving ④ to ⑥ is an urgent issue. In particular, regarding Management Philosophy that forms the basis of these activities, Idemitsu EI demands extremely high standards to ensure that it is put into practice as a guideline in daily business operations.

Idemitsu EI trends in 2022 and 2023

Idemitsu EI improved by 2pt to 67% in FY2022 and 69% in FY2023.

''①High sense of ownership,'' ''②Pride in belonging to our company,'' and ''③Achieving personal growth'' continue to be our company's strengths, and have further improved since last year. We believe that this is the result of our efforts over the past year, including a national caravan based on Medium-term Management Plan which strengthened dialogue between management and employees, and provided opportunities for employees to think about their careers.
On the other hand, ''④Willingness to contribute to the organization,'' ''⑤Embodying Management Philosophy,'' and ''⑥Challenge to change beyond organizational boundaries'' have improved but remain at low levels.
While overtime and holiday working hours remained at a certain level, the rate of employees taking paid leave and childcare leave increased significantly. Post-merger DTK activities^* and decluttering activities in each department improved productivity by approximately 13%, but this did not necessarily lead to high-value-added work or new business ideas, and I believe that this is due to the lack of incentives and the fact that they are faced with a situation where they are unable to secure the mental and time space to take on new challenges.
This is the key to steadily developing human resources who can review existing operations and improve productivity, co-create and collaborate in new fields with companies with diverse values and ideas, and promote business structure reforms This is our human resources strategy.
In order to achieve the Idemitsu EI score of 75%, which is a level target that can be considered a strength, bold efforts and promotion are necessary, and this is linked to the remuneration system as a commitment from top management. We believe that by creating a foundation that allows our employees to drive business structure reforms, we will be able to accelerate the creation of new business fields and our efforts to become carbon neutral.

*DTK (Let's do this) activities: Project activities in which all employees participate with the aim of reforming work flows and work styles. The activity period is from 2019 to 2021.

●Transition to a business structure that is unaffected by market fluctuations + growth strategy toward the carbon neutral era

By implementing human resource strategies aimed at resolving these issues, we will work to further increase the value of human capital.