Our fundamental corporate governance philosophy is to maintain a strong and sound management and financial structure trusted by the international energy market while ensuring an autonomous and independent corporate culture and a management system that allows us to make fair and prompt decisions.
Toward this end, we established our Corporate Governance Guidelines in October 2019 for building and implementing an appropriate corporate governance system and are continuously working to strengthen and enhance it.
To achieve sustainable corporate growth and improve corporate value over the medium to long term, a company must implement corporate governance so as to support accurate decisionmaking by management. The environment surrounding our company is changing rapidly amid the emergence of global trends toward energy security and decarbonization. As this happens, we are expected to work on various governance issues with a sense of urgency through such means as facilitating a better functioning Board of Directors, empowering diverse talent, and enhancing nitiatives to address issues related to sustainability.
We will strive to continuously enhance governance to earn the trust of our shareholders, investors, and other stakeholders.
Overview of Corporate Governance
Corporate Governance Structure
In order to expand business throughout the world in a wide range of fields, the Board of Directors— consisting of directors from JERA who are intimately familiar with our business and outside directors who have extensive knowledge and experience—make material business decisions and supervise the execution of business operations. Further, JERA has corporate auditors as independent officers who are responsible for auditing the execution of the Directors’ duties. In addition, a Statutory Auditor Panel has been formed to enable each corporate auditor to communicate and to provide information and exchange views on auditing and management, business and other relevant matters.
In addition, JERA has adopted a system in which executive officers are responsible for business execution based on the decisions made by the board. This separates the key management decision-making and supervision of management from business execution and produces accurate, prompt decision-making and efficient business execution.
Roles, Responsibilities, and Diversity of the Board of Directors
The Board of Directors makes decisions on management targets, business strategies, and other important management matters based on applicable laws and regulations, our Articles of Incorporation, and our internal rules. It also supervises the execution of business operations.
In addition, we believe that in order to expand our business throughout the world in a wide range of fields, we will have to respond quickly and appropriately to the business environment and ensure the objectivity and soundness of our decisions. As such, in addition to directors who work for JERA or started as shareholders, we hire independent outside directors to ensure diversity of knowledge, experience, and other attributes among the board.
We designates independent outside directors and independent outside corporate auditors using the following independence criteria.
Support for Directors
We have established a system that provides directors with the support they need to perform the duties expected of them. Among other benefits, the system provides each director with comprehensive, accurate information, as well as opportunities to learn more about our company’s core businesses from outside experts around the world.
We endeavour to provide each director with materials as early as possible in advance of board meetings.
In addition, we strive to ensure that outside directors are provided with opportunities for advance explanations and Q&A sessions on agenda items prior to meetings, so that they can conduct well-informed and sufficient deliberations and make effective use of the limited deliberation time available.
In FY2022, the Board continued to discuss the decarbonisation strategy, financial strategy and regional strategy from FY2021. In addition, a wide range of topics were covered in the directors' discussion, including multiple discussions on key management issues such as safety initiatives.
Evaluating Board Effectiveness
In order to tie our efforts into continuous improvement of the effectiveness of the Board of Directors, we conduct an annual survey among all directors and corporate auditors, asking them to consider the state of deliberations and operations of the Board of Directors. The Board of Directors analyzes and evaluates the results of these surveys, considers and implements measures to address the issues identified, and constantly strives to improve the effective functioning of the Board of Directors.
- Main measures for FY2022
- Invitation of external experts to directors' discussions
- Inspection visits to power stations by external directors (to understand front-line practices and the status of safety initiatives)
- Allocation of appropriate deliberation time based on the characteristics of the agenda
- Application of guidelines for the preparation of deliberation materials
- Resumption of face-to-face meetings including outside directors
- Results of the assessment in FY2022
- It is necessary to further optimise the deliberation time per proposal and to spend even more time on discussions concerning company-wide management strategies.
- Continue to increase the number of independent outside directors
- Main measures for FY2023
- Ensuring diversity, including increasing the ratio of international and female directors
- Ensuring proper allocation of deliberation time, including the use of written resolutions
- Improvement of guidelines for the preparation of BoD meeting materials
Leadership Panel and Expert Committees
JERA has established a Leadership Panel that consists of the chair, the president, and officers in charge as a forum for deliberating on and deciding important management matters and receiving necessary reports based on the policies set by the Board of Directors.
Moreover, expert committees have been established as subsidiary bodies to the Leadership Panel—in principle, one for each major field under its purview—to provide advice to the Leadership Panel from an expert perspective and support its deliberations. In principle, all matters to be proposed and reported to the Board of Directors are discussed and decided by the Leadership Panel based on advice from the relevant expert committees. The results of deliberations by the Leadership Panel are reported to the Board of Directors, along with advice from the expert committees.
Strengthening of JERA Group Governance
JERA provides appropriate support to group companies so that they can autonomously develop and operate systems suitable to their business. Specifically, we strive to ensure that group companies can make efficient decisions and execute their duties swiftly and appropriately by clarifying responsibilities and authority within our Affiliate Management Regulations and other internal rules. In accordance with the Affiliate Management Regulations, JERA has established a system for prior consultation and reporting from group companies on important matters concerning the execution of duties.
In FY2021, in order to establish a more advanced internal control system for the entire group, we worked to support the development of a system of rules and regulations for group companies and strengthen the group company management system.
From FY2022, we are continuing to strengthen group governance by checking the status of those operations and other such efforts. We also carry out regular education and training for newly appointed officers and candidates, including those of group companies, to deepen their understanding of our vision for governance and the roles and responsibilities expected of directors and corporate auditors.