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Basic Views and Features

Achieving higher levels of sound and transparent corporate management

Basic Views

Our targets for 2030 is to make Kao a company with a global presence, valuable to society. In order to become an essential company in a sustainable world, we are significantly shifting our direction to ESG (environmental, social, and governance) management. While aiming to become a high-profit global company, we are also working toward raising the level of social contribution by capturing changes in business environments surrounding us and changes in stakeholders' values. In order to gain trust from society, which is indispensable for these corporate activities and business activities, we are constantly strengthening our corporate governance in both systems and operations. We position our corporate governance as one of our most important management issues and our basic stance on measures related to corporate governance is to set up and operate a management structure and an internal control system, timely implement necessary measures and achieve accountability so that we can swiftly respond to changes, realize efficient management that is sound, fair, and highly transparent, and continuously enhance corporate value. We have been actively engaging in activities to listen to stakeholders' voices and based on input from stakeholders and social trends, we conduct reviews of our corporate governance and implement necessary measures and improvements in an appropriate manner.

Features of Kao's Corporate Governance

Integrity We practice corporate governance that places our corporate philosophy, the Kao Way, at the
core of our business management, and with a consistent focus on walking the right path
(Integrity), which is one of values of the Kao Way. Employees work together based on mutual
respect and fairness, bring an attitude of sincerity and diligence, and conduct themselves lawfully
and ethically, and by so doing we are able to maintain the support and trust of all stakeholders
and engage in sound and honest business activities.
Innovation We have pursued creation of the most optimal structure to respond to changes in the business
environment as well as social demands. At the 116th Annual General Meeting of Shareholders in
March 2022, we revised our structure and its operations to further raise the level of our
governance, including the appointment of nine directors, including one non-Japanese director
and two female directors, in order to ensure the further diversity of the Board of Directors and
further strengthening Kao's ESG management, supervision and decision-making from a global
perspective.
ESG Vision We have established our ESG Vision in order to become a company that is essential to a
sustainable world, and we position the creation of effective corporate governance as a
prerequisite and a driver to vigorously advance the realization of this vision.
Use of outside
executives
We have put in place a system of governance able to maintain a high degree of objectivity,
including making 7 of the 14 members of the Board of Directors/Audit & Supervisory Board
Members independent and outside members and having an Outside Director serve as Chairman
of the Board of Directors, to ensure that the Board of Directors is able to appropriately perform
management oversight. Outside Directors and Outside Audit & Supervisory Board Members are
designated with priority placed on their independence as well as their expertise and high-level
insight. They oversee and audit planning and execution of business strategy and the like from
their diverse viewpoints, facilitating effective and judicious decision-making.
Strengthening
internal control
The Internal Control Committee leads discussions on compliance, risk and crisis management,
and related topics across the Kao Group to improve the effectiveness and efficiency of our
business processes, ensure the credibility of our financial reporting, comply with laws and
regulations in our business activities, and preserve our assets, and we are strengthening internal
control throughout the Kao Group.

The Path toward Strengthened Governance

We have also practiced Innovation, which is one of Values of the Kao Way, in the area of corporate governance from an early stage. We have pursued creation of the most optimal structure to respond to changes in the business environment as well as social demands, and will continue to take steps to reform our governance.

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Standards for Independence of Outside Directors/Audit & Supervisory Board Members

Kao has established the "Standards for Independence of Outside Directors/Audit & Supervisory Board Members of Kao Corporation" to clarify the standards for independence of an outside director/Audit & Supervisory Board Member.

Kao Group Tax Policy

The Kao Group has implemented a "Tax Policy" aiming to improve its tax governance framework, reflecting the group's tax code of conduct and its consistent standards for approaching tax matters throughout the group.

The publication of this strategy statement is regarded as satisfying the duty under Paragraph 16(2), Schedule 19, Finance Act 2016 in UK.

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