ESG funds are investment trusts that place an emphasis on ESG factors when selecting companies to invest in, including companies that are working to achieve ESG and SDG targets toward a sustainable society. These funds can disclose ESG information.

By investing in these funds in the financial market, investors can indirectly support countries and companies that are actively working on sustainability.

We are expanding our product lineup to meet diverse customer needs.

Daiwa Asset Management has established and manages a carbon neutral technology equity fund (nicknamed "Carbon ZERO"). The fund invests primarily in solution companies that contribute to a decarbonized society from among global equities and have a low carbon footprint relative to the MSCI All Country World Index. Candriam S.C.A., which provides investment advice, aims to achieve zero carbon as a fund by contributing a portion of the fees earned from fund advice to green projects aimed at reducing CO₂. The fund's ESG information is disclosed in its Impact Report.

Candriam and some of its sales companies, including Daiwa Securities, donate a portion of trust fees to tree-planting activities in Japan through NPOs. In this way, we create opportunities to walk together with the beneficiaries toward a decarbonized society.

• Special feature on the Carbon Neutral Equity Fund (Carbon Zero) ⟨Japanese only⟩

In the era of living 100 years, managing assets for the medium to long term is critical. Daiwa Fund Wrap is a service that enables customers with no investment experience or too busy to make investment decisions themselves to start long-term diversified investment by having Daiwa Securities invest in and manage assets on their behalf under a discretionary investment agreement. In providing our services, we strive to communicate closely with our customers to build a relationship of trust.
To keep attracting customers over the long term, we will continue our initiatives to implement better structures and systems so as to improve our performance and the quality of our services.

• Balance of domestic Wrap accounts: ¥ 14,647.2 billion (As of March 31, 2023)

• *Source: Data released by the Japan Investment Advisers Association

• Balance of Wrap accounts at Daiwa Securities: ¥3,095.5 billion (As of March 31, 2023)

• *Source: Data released by the Japan Investment Advisers Association

• Daiwa Social Contribution Wrap - Daiwa Fund Wrap with a donation service
  Amount donated in FY2022: ¥7.58 million (cumulative donations in the last 3 years: ¥59.67 million yen)

• *Total donated amount from customers and from Daiwa Securities
• *Donated to: Food aid (UN WFP), medical care (Doctors Without Borders Japan), child support (Japan Committee for UNICEF), environment (WWF Japan), and disaster recovery (Japan Platform)

Many small- and medium-sized companies and small-scale enterprises are now facing the issue of business succession due to the aging of their management team or owners. It is said that about half the managers exceeding the age of 70-the average retirement age-in the next 10 years are yet to decide on their successors. Moreover, even the continuity of their business activities, which support regional economies, has recently been at risk. Daiwa Securities recognizes that it is its duty, as a financial institution, to firmly support, in financial terms, small- and medium-sized companies' efforts to pass down their valuable business resources, employment, and technologies to the next generations, thereby helping to maintain regional supply chains. We will support the sustainable development of local communities and the Japanese economy by encouraging the continuation, development, and growth of small- and medium-sized companies of good standing by providing solutions to inheritance, business succession, M&A, and other issues.

System Product WEB Service is offered as a support tool for customers building assets. Its aim is to realize a prosperous era of the 100-year life.
The service enables customers to centrally manage their stock-based employee benefit plans (such as stock ownership plans, workplace NISA, and defined contribution pension plans) and stock-based compensation plans (such as specified transfer-restricted stock (RS) and stock options) on a single online platform. The service enables us to support asset-building to help our customers realize their life plans and to actively encourage participation in a company's employee benefit plans, such as stock ownership plans and installment-type investment plans.
Utilizing the latest technologies in the context of digital transformation (DX), for companies and their employees, we are working to build highly flexible coordination based on an application programming interface (API), to provide a high degree of convenience, such as making use of cloud services to make opening accounts more effortless and less time-consuming, and to completely eliminate the need for paper and personal seals in various procedures.

Smartphones and other technical innovations are changing the common perception that securities companies are used only by affluent customers and that securities transactions require an advanced level of financial knowledge. We recognize that generating securities services available to all people in consideration of financial inclusion is an issue facing not only Daiwa Securities Group but also the securities industry as a whole.
Daiwa Connect Securities, which launched its services in July 2020, is a new type of securities company established by the Daiwa Securities Group. It features services that allow everything from account opening to securities trading and asset management to be completed via smartphone and allows beginners to start investing with small amounts easily.
Daiwa Connect Securities also partners with external companies to provide a game app that allows people to learn about investing in a fun way, a reward point investment service that allows people to use the reward points they earn from other services to invest, and a credit card regular investment service where cardmembers pay for their investments by credit card, allowing them to earn reward points from card use. These services provide opportunities to easily learn financial literacy with a small amount of money and diversify access to financial services.
Daiwa Connect Securities will continue to develop and provide its services so that all people will be able to access better financial services.

Serving as the lead manager of four key ESG Bonds in 2022, Daiwa Capital Markets America ("DCMA") is helping to solve social issues and protect the global environment. In July 2022, DCMA underwrote a sustainable development bond issued by the International Bank for Reconstruction and Development (IBRD). The raised funds will be used to build a road safety support system. In September, DCMA underwrote a forest conservation bond issued by the Inter-American Development Bank, realizing investments in forest conservation projects. In December, DCMA underwrote a green bond issued by Aguas Andinas, a Chilean water utility company, and the first blue bond issued by the Central American Bank for Economic Integration (CABEI). The funds raised by these bonds were used for water utility enhancement and marine conservation, respectively.

DCMA will continue contributing to the SDGs achievement and ESG investments through its activities.

As a member of the Daiwa Securities Group, Daiwa Capital Markets Europe Limited ("DCME") is committed to the SDGs. It combines investments with the SDGs, recognizing the importance of its role as a securities firm that can positively impact society.

DCME has supported the issuance of ESG bonds since 2008 and has led more than 100 transactions that are aligned with the SDGs. Daiwa Securities Group and DCME will continue to support the financing of environmental and social initiatives.

In September 2022, Daiwa Capital Markets Singapore hosted Daiwa ESG Conference 2022, a webinar on Asian ESG bonds. Speakers from Daiwa Securities' Sustainability Solutions Department, bond issuers, and ESG rating agencies were invited to discuss the current status and outlook of ESG bond markets in Japan and Asia.

In November of the same year, at the Daiwa Capital Markets Conference (DCMC), held face-to-face with audience for the first time in three years, we arranged a speech on blue bonds (samurai bonds) by the Director of Government Bonds, Ministry of Finance of Indonesia. This led to the country's first blue bond issuance in May 2023.

In December 2022, Daiwa Capital Markets Hong Kong and DCMA structured and sold green bonds issued by Aguas Andinas, a public service company engaged in the sale of drinking water and wastewater treatment services in Chile, to Hong Kong investors. The bonds were issued under the Green Bond Framework, which aims to improve water and wastewater services in Chile, which in turn will contribute to social and economic development. The raised funds will be used for infrastructure projects in Chile, including drinking water supply, wastewater treatment, and water distribution systems.

Daiwa Securities Group as an integrated securities group provides, in addition to investment information, a wide range of information on the economy and society. We hope that the measures we propose from a long-term perspective will be helpful to customers, investors and a variety of stakeholders.