Outside Director MessageMessage from Outside Directors

Mitsubishi Estate provides substantial opportunities for information to be conveyed to outside directors. The Company offers business briefings on the status of each business it operates as well as site tours of properties it has developed or is operating. It also invites appointed outside directors to attend lectures on its business even before they have formally taken up the position. I began serving as an outside director in June 2023. The executive team provides very extensive information, so I have absolutely no sense of discomfort that the Company might be withholding information. Moreover, if and when anything may be lacking, they look into it immediately, and I receive an answer straightaway. The Company also actively creates occasions for discussion. Since fiscal 2025, the Company has taken action on a feedback item from the evaluation of the effectiveness of the Board of Directors by holding an additional forum right after each Board meeting where the directors can freely exchange views, not only on the Company's individual businesses, but also on themes that each director is interested in, such as global affairs and market trends. This system facilitates truly substantive interaction, which is very helpful in the process of management supervision.

Over the past three years, the Company's governance reforms have progressed with astonishing speed. I think these gains have been achieved precisely due to the shared internal sense of crisis that capital markets may not value Mitsubishi Estate in line with its true worth, a concern which drove much conversation. To achieve further reform, it is important to continue working to increase the diversity of the directors. Diversity of backgrounds ensures diversity of ideas. Sharing opinions from multiple perspectives based on our respective experiences allows new insights to emerge, while also ensuring that risks come to light organically via the interaction. This dynamic energy, moving from conversation to conclusions, is the very thing also most required for effective risk management.

In June 2026, long-serving outside directors Masaaki Shirakawa and Tetsuo Narukawa retired, and we welcomed Hajime Watanabe and Yuri Okina as new members. Given the very nature of the Board of Directors, I believe that generational change is naturally needed. As I mentioned earlier, the Company provides outside directors with very extensive information, so I do not have any concerns about the continuity of governance functions or their effectiveness. The appointment of Yuri Okina has also increased the percentage of women on the Board. Demands from the market related to enhancing the diversity of the Board of Directors, increasing its independence, and ensuring transparency, have been increasing year after year. Mitsubishi Estate is intensely aware of the importance of these demands, and the Company intends to continue pushing forward with governance reforms.

The Long-Term Management Plan 2030 has positioned strategies to increase social value and strategies to increase shareholder value as the two strategic drivers, and I believe this is consistent with the fundamentals of the Company's management strategy. In particular, the Company carefully discussed and deliberated repeatedly on the sustainability initiatives which form part of the strategies to increase social value, giving full consideration to economic conditions as well as the interests of shareholders and investors. I believe the resulting positioning is substantive and grounded in a long-term perspective. In order to further integrate and pursue this approach based on two strategic drivers, in fiscal 2025, the Company set more concrete medium- to long-term targets relating to the social value each business will create. In fiscal 2026, the business groups also began managing progress on these targets on a single-year basis as part of their annual plans. The Board of Directors must not only look at the figures to evaluate whether these targets are achieved or not but also identify issues and continue to perform monitoring when targets are not met.

As the Company moves into the second half of the Long-Term Management Plan 2030, the Board has moved into the stage of monitoring progress with an even stronger awareness of the 2030 goals. The assessment is that progress has been smooth so far. What we need to be careful about is what happens from now on. The business environment is changing by the minute, be it developments in the Trump administration, geopolitical risks, or even such things as inflation. Amid such dramatically changing conditions, the Company may face very difficult situations, as is commonly the case in management. This could include the need to make high-risk but urgent decisions to step forward, or at times being forced to switch our strategy. As a Board of Directors, we need to appropriately oversee the calibration between the accelerator and the brake in such business decisions. As an attorney, I always approach such discussions based on the business judgement rule.

The business judgement rule is a standard for confirming whether directors bear legal responsibility: that is, whether directors have violated the duty of care of a prudent manager and the duty of loyalty. This standard evaluates firstly whether their understanding of the underlying factual basis was adequate, and secondly whether multifaceted discussion took place in the decision-making process, and whether the opinions of experts were sought as necessary. On that basis, it then evaluates thirdly whether a reasonable choice was made from among the appropriate options by determining the relative advantages and disadvantages. Based on these evaluations, attorneys prepare legal opinion letters, objectively certifying whether the company's decision-making process was reasonable. This way of thinking and this process are also highly effective in enhancing the effectiveness of management oversight.

Achieving the goals of the long-term management plan means the Board of Directors must continue to flexibly examine changes in circumstances and deepen its forward-looking discussion. On the other hand, treating 2030 alone as the goal also creates a risk that the Company will work too hard to achieve it, which could lead to a loss of energy after 2030 and a subsequent downward trend. Taking these concerns into account as well, the Company needs to remain flexible and consider the possibility of revising its target figures or adjusting them in response to changes in the external environment, as necessary. As such, I recognize that the Company's ability to strike the right balance will be a critical challenge moving forward. It is precisely in such situations that the business judgment rule works well. I understand that one of my roles is to check the Board of Directors' discussions from the perspective of this rule, and to verify the validity of its judgments, and I will continue to contribute to the sustainable growth of the Company's corporate value in this way going forward.

Two of the Company's five Audit Committee members are full-time members, and inside directors serve in this role. In my experience, it is common for people from within a company to serve as full-time auditors, and I believe that this is because there is certain information they can gather quickly and in a timely manner precisely because they are insiders. Because they are on the inside, they can ascertain the reality on the ground and keep a close eye on everything. Having their own personal information networks is also a strength. I believe they can identify even the most critical information, such as misconduct, quickly, precisely because they are full-time Audit Committee members, and when outside directors then promptly assess and review such information, it enables more accurate and effective oversight and auditing.

What becomes important in this process is whether the "bad news first" approach to sharing information between committee members functions effectively. In dealing with misconduct and other forms of wrongdoing, it is difficult to eliminate the personal element, that is, dependency on the committee members who disseminate the information and those who receive it. Having outside Audit Committee members does not automatically remove this problem. What matters is whether a system has been established that enables a full-time Audit Committee member who has found out about some unforeseen event or misconduct to share the information appropriately and without hesitation with the chairperson of the Audit Committee, other Audit Committee members, and the Board of Directors, enabling an agile response.

At Mitsubishi Estate, by having the full-time Audit Committee members liaise with the outside directors, the Company has built an environment for sharing and dealing even with minor incidents that take place before an unforeseen event occurs. I recognize that one of my roles as an Audit Committee member is to make observations as an attorney from the perspective of the business judgement rule about information shared by the full-time Audit Committee members, who are well-positioned to gather the information, and to discuss such information with objectivity as an outside Audit Committee member.

Mitsubishi Estate regards human resources as its greatest asset and cultivates human resources who can demonstrate the three competencies of being a "Professional," a "Change Maker," and working "As One Team" with the aim of driving continuing growth in corporate value. Speaking from my experience, I believe that many talented people have strong personalities compatible with being a "Professional" and a "Change Maker," which require high levels of expertise. However, if the organization is made up exclusively of such people charting their own path, it can become difficult to steer overall. That is why I believe having human resources who work "As One Team" and can organize that team are the most important.

Furthermore, I think the Company needs to foster human resources who possess emotional intelligence (EQ) in addition to the three competencies. The urban development in which Mitsubishi Estate engages is a business with a long-term perspective. Further strengthening the Company's human resources strategy to combine not only excellence but also richness of spirit could deepen mutual respect based on the constant conviction to display strong teamwork and achieve goals even in business over the long term.

My intuitive guess is that Mitsubishi Estate's corporate culture and concept of ideal human resources may actually have roots in the nature of the sport of rugby, and that is why the Company enthusiastically supports the sport and has adopted working "As One Team" as a competency. People with strong personalities forming "One Team" to enhance competitiveness, while simultaneously displaying their individual characteristics — that is most definitely the spirit of "One for All, All for One." In my interactions with the Company's employees, I feel that a culture of working "As One Team" is certainly being fostered. If the Company can further develop these capabilities of its human resources going forward, I expect that its corporate value will increase even more and Mitsubishi Estate will be able to achieve its goal of becoming "The World's Leading Developer Group."

Although I became an outside director of Mitsubishi Estate in June 2023, I had regarded it as a friendly company with a well-defined approach to dialogue prior to assuming my role. I am currently involved in the management of the Company as an outside director and have gained a renewed sense of its approach to dialogue through interactions with President Nakajima, other executives, and my fellow outside directors.

In particular, the outside directors all have an exceptionally high level of specialist expertise and proactively share valuable insights grounded in a diverse range of expertise and experience. Members engage in genuine dialogue, and the discussions that take place at meetings of the Board of Directors, the Nominating Committee, and the Remuneration Committee are open and quite lively, so much so in fact that they surprised me initially. As the outside directors have high expectations of Mitsubishi Estate, they are driven by a keen desire to ensure that each discussion genuinely helps enhance the Company’s corporate value, to make Mitsubishi Estate a better company, and to realize attractive urban development that is truly meaningful for stakeholders. This shared commitment fosters positive and constructive discussions, which are a key strength of Mitsubishi Estate.

It goes without saying that pursuing management and operating businesses as a team does not require each director to possess a complete set of skills. I believe that combining diverse human resources who possess a variety of different specialist expertise, skills, and experience strengthens management. For this reason, carefully considering the kind of skills matrix to create is vital.

If I had to designate a skill that is required for Mitsubishi Estate's future growth, I would include “well-being” in the skills matrix. In fact, some companies are already beginning to include well-being in their skill categories for the purpose of improving creativity and achieving higher productivity, but it remains difficult to determine the actual skills and experience that would correspond, or contribute, to the concept of well-being. I believe that it is important to widen the definition of well-being from the level of individual companies and cities to include the well-being of Japan as a whole, the world, and the planet, and define the term with an emphasis on the point of view of communities. It is also important to bring on board people with the skills to visualize well-being in this way.

Every year, the Nominating Committee discusses the skills necessary for the Board of Directors to exercise its management oversight and monitoring functions effectively to ensure that the Company realizes Long-Term Management Plan 2030 and prepares for the future that lies beyond the plan. Given the external environment, including future geopolitical risks, and changes in the Company’s business domains, the Nominating Committee will continue its discussions to identify the skills necessary to enhance management oversight and monitoring functions. At the same time, it will aim to nominate directors who can create value for the future.

Today, assessments of the impact of corporate activities require companies to develop a road map for improving corporate value as a story. I have long maintained that backcasting from an ideal future is a useful way to create a long-term narrative. Starting out with a vision for the ideal society of the future and incorporating into a road map an outline of the urban development and human resources that would be required to achieve that vision enhances the likelihood of success. An ideal urban area may be one where people attracted by such narratives assemble and where many stakeholders connect with each other through collective action and partnerships. The Company currently sets a variety of key performance indicators (KPIs), including financial indicators such as return on equity (ROE) and return on assets (ROA), as part of efforts to realize Long-Term Management Plan 2030 and Sustainability Vision 2050. As for non-financial indicators, I believe that “future financial indicators” would be a more appropriate term for them as creators of financial value in the future. For future financial indicators, creating a road map by backcasting from the vision of the future that the Company aspires to achieve will bring to light more specific barometers of impact. I am keen to establish specific future financial indicators while incorporating opinions and other insights from experts.

Needless to say, I understand that it is challenging to formulate strategies only by backcasting from an ideal future in today’s world, where change is dramatic and forecasting is difficult. I believe that such circumstances make it all the more necessary for Mitsubishi Estate to maintain multiple future scenarios simultaneously. It must also examine scenarios that anticipate the risk of a future that differs from its ideal while drawing on the scenarios of the Task Force on Climate-related Financial Disclosures and the Taskforce on Nature-related Financial Disclosures and create a narrative that allows Mitsubishi Estate to secure its presence, regardless of the scenario that transpires. Creating specific scenarios brings risks and fears to light, which in turn enables the preparation of solutions and precautionary measures in advance. While there are challenging aspects to realizing the ideal society of the future, I regard it as my mission to thoroughly ingrain the backcasting approach at Mitsubishi Estate.

An important duty of outside directors is to verify the progress of initiatives based on material issues while auditing the initiatives and offering advice. Currently, Mitsubishi Estate promotes four key sustainability themes identified from its material issues as its strategies for increasing social value. The Board of Directors discussed these themes during the selection process and I offered my opinions. I am convinced that the four themes selected on the back of these discussions are outstanding examples of “double” material issues that incorporate all of the matters that need to be addressed on a priority basis to ensure the sustainability of both the Mitsubishi Estate Group and of society. The first theme, “pursue tangible and intangible urban development for the next generation,” connects directly to the aforementioned urban development centered on well-being, and the second theme, “maintain commitment to reducing environmental impact,” steadily promotes efforts to preserve biodiversity and mitigate and adapt to climate change across the supply chain with the ultimate aim of ensuring that the Group contributes to society through its businesses by becoming climate positive. The third theme, “consider people, empathize with people, protect people,” includes key perspectives that are indispensable to Mitsubishi Estate’s business activities, such as those on Japan’s low birthrate and aging population as well as diversity and inclusion. Lastly, “create and circulate new value” encompasses material issues such as innovation and partnerships, which are closely related to the other three key themes. Indeed, a structure advancing and realizing initiatives related to the three themes that leverage this fourth theme may be easier to understand.

Diversity is essential for spurring innovation. Mitsubishi Estate has many employees who joined the Company as new graduates, a large number of whom exhibit qualities typical of Mitsubishi Estate's human resources. While this is not a bad thing, human resources who are change makers and who represent a departure from Mitsubishi Estate's traditional culture will become increasingly essential going forward. Although the Company currently focuses on innovation, I think that the recruitment of people with the spirit to change established frameworks, including rulemaking, through true transformation will become a crucial strategy.

Looking at my own career thus far, my area of expertise lies in staying ahead of the curve. I also enjoy imagining, in a positive way, how I can contribute to creating a hopeful future filled with joy; so I will share this approach with others while aiming to establish a corporate culture that empowers all stakeholders connected with Mitsubishi Estate to think and act positively. If the Mitsubishi Estate Group continues to make rapid progress toward its clear vision, I am certain that it can transform Japan's future. While my contribution may be modest, I am committed to accompanying the Group on its journey toward realizing a wonderful future.

Mitsubishi Estate has steadily reformed its corporate governance system by continuously taking a variety of steps in the right direction, including the transition to a company with nominating committee, etc., in 2016; changes to the composition of committees and the proportion of inside and outside directors who comprise their membership; revision of the remuneration system; and the adoption of flexible capital policies, such as share buybacks and cancellations of treasury stock. I believe that the Company's deeply rooted commitment to self-transformation has played a major part in driving these reforms.

The Board of Directors continues to be expected to bolster its monitoring functions and enhance its diversity and independence, and I am confident that the Company's current governance system is more than capable of addressing such demands. For example, in its monitoring of the long-term management plan, the Board of Directors receives detailed explanations continuously on individual strategies from those in charge of business execution, and these explanations form the basis for rigorous discussions at meetings of the Board of Directors. The diversity and independence of the Board's members are also of a level that is satisfactory.

With that said, the Company must not become complacent. Internal and external conditions will undoubtedly continue to change, and external demands will evolve in response to the changing conditions in the operating environment. Going forward, further efforts will be required to address these changes. However, as I have already stated, Mitsubishi Estate's strong commitment to self-transformation means that it will not hesitate to conduct reforms as necessary. Accordingly, the Company will take steps to further enhance its governance system.

The Company currently has three committees—namely, the Nominating, Audit, and Remuneration committees. Each contributes directly to management supervision and monitoring by comprehensively fulfilling its respective roles. In particular, the fact that the Nominating and Remuneration committees are both membered solely by outside independent directors ensures that they have a higher level of independence and a greater degree of objectivity in their discussions.

Meanwhile, the committees fulfill their own duties while reporting to the Board of Directors on matters including the details of committee meeting discussions. The contents of Board meeting discussions based on these reports are then shared with the committees. I believe that this loop strengthens the relationship between the Board of Directors and the committees, further enhancing the effectiveness of management supervision.

I serve as the chairperson of the Nominating Committee, which has the onerous duty of, and authority for, deciding on director nomination proposals. Matters decided by the Nominating Committee must therefore both receive approval at the General Meeting of Shareholders and satisfy all stakeholders. Assessing candidates from within the Company is no easy task and necessitates considerable effort from the Nominating Committee, which is composed solely of outside directors. Although they do not have the same amount of information available to them as inside directors, members of the Nominating Committee resolutely endeavor to collect the necessary information under such preconditions and make nominations while defining the most important qualities in directors from their objective and independent position as outside directors.

A skills matrix is a valuable indicator and highly useful for making these nominations. The Nominating Committee configures the Board of Directors with members who possess the skills necessary to enable the Board to exercise management supervision and monitoring functions properly. The committee engages in repeated discussions on this topic, examining candidates’ skills while ensuring consistency with the existing Appointment Standards for Candidates for Directors. Choosing the skills to include in the matrix is of great importance, and the committee must also remain conscious of diversity. Given that the participation of members with a variety of standpoints and approaches invigorates and deepens discussions at meetings of the Board of Directors and at those of the committees, the Nominating Committee will strive to study optimal solutions from many perspectives.

Today, the ability of companies to adapt to change is being tested as never before due to the monumental changes seen in global affairs in the last few years. Mitsubishi Estate must be prepared for rapid change to remain as a constant feature of its business environment and take action without delay, developing businesses with an eye on what lies ahead. The Board of Directors must also promote the longterm management plan from this perspective while conducting monitoring to ensure that the plan can be revised in a timely and appropriate manner.

In FY2023, Mitsubishi Estate thoroughly reviewed Long-Term Management Plan 2030, updating it to clarify the significance of the plan's contents and narrow down its themes without overhauling the mutually necessary strategies for increasing shareholder and social value. In strategies for increasing shareholder value, the review revised the road map toward achieving the plan's key performance indicators (KPIs) and other metrics, a portion of the strategies, and shareholder return policies pertaining to dividends and share buybacks. Meanwhile, in strategies for increasing social value, the review untangled the Group's businesses from a sustainability perspective and reorganized its material issues. In doing so, the review clarified that promoting both tangible and intangible businesses related to real estate, the Group's core business, helps increase the social value it provides. I believe that this is a very important and significant conclusion. Employees can therefore have confidence that promoting and accomplishing their own work contributes to sustainability. I will aim to help further update and achieve the goals of the long-term management plan through continued and repeated dialogue with the management team, employees, others within the Company, the Group at large, and external stakeholders.

As stated previously, the pace of change in the business environment is becoming ever faster. Since there are no exceptions to the rule of evolution that only those who can adapt to change will survive, questioning whether change can be navigated to proceed to the next step is vital.

Mitsubishi Estate has a solid business base underpinned by a long tradition in the Otemachi, Marunouchi, and Yurakucho areas. Rather than depending solely on this strength, the Company must leverage it to spearhead major transformation in the coming era. Doing so will require a broad perspective to anticipate and address changing trends in Japan and overseas. Nevertheless, I am convinced that the Company has the ability to develop measures to inspire new trends with this spirit. I believe that managing the risks that emerge in this process while building the optimal business portfolio is exactly the fundamental role that outside directors should aim to fulfill.

I have had numerous interactions with leaders at many companies through my long involvement in the management of an energy company with diverse operations in Japan and overseas as well as in my six years serving as an officer of Keidanren (Japan Business Federation). During these interactions, I have offered many opinions on the state of the economy and society in both Japan and globally. Needless to say, there is a limit to my knowledge of the real estate business. However, I can help enhance the Group's corporate value by leveraging the knowledge that I have gained from my extensive experience and the ways of thinking I have learned over the years. I believe that that is my role and duty.