Mitsubishi : Corporate Governance Report

Corporate Governance Report	Mitsubishi Corporation

Report date: February 19, 2021

Mitsubishi Corporation

Takehiko Kakiuchi, President and CEO

Inquiries: Tetsuharu Kuno, Head of Corporate Administration Team,

Corporate Administration Dept. [phone]

Stock code: 8058https://www.mitsubishicorp.com/

I. Basic Stance on Corporate Governance, Shareholder Composition, Corporate Data and Other Basic

Information

1. Basic Stance on Corporate Governance

See "Disclosure Based on Principles of Corporate Governance Code" Principle 3-1 (ii) e. for the basic stance on corporate governance of Mitsubishi Corporation.

[Reason for Not Implementing Principles of Corporate Governance Code]

Based on the above basic stance, Mitsubishi Corporation is working to strengthen corporate governance on an ongoing basis, thus it is implementing all the principles of the Corporate Governance Code.

[Disclosure Based on Principles of Corporate Governance Code]

Mitsubishi Corporation's approaches to corporate governance are described in this report, the Notice of Ordinary General Meeting of Shareholders, Annual Securities Report, Integrated Reports, ESG Data Book, Mitsubishi Corporation's website, and others. See these documents for more information.

The followings are the details of the disclosure items based on the principles of the Corporate Governance Code.

a. Principle 1-4 ■ Stance on Acquisition, Holding and Reduction in Listed Stocks

Mitsubishi Corporation may acquire and hold shares acquired for other than pure investment as a means of creating business opportunities and building, maintaining and strengthening business and partner relationships. When acquiring these shares, Mitsubishi Corporation confirms necessity of its acquisition based on the significance and economic rationale of the purchase. Also, Mitsubishi Corporation periodically reviews the rationality of continuing to hold the shares and promotes reducing holdings of stocks with decreased significance. In the fiscal year ended March 31, 2020, Mitsubishi Corporation sold approximately 0.1 trillion yen of our shareholdings (market value basis), a decrease of 10% from the previous fiscal year.

[Verification policy for holding individual shares]

The Board of Directors verifies all of the listed shares held by Mitsubishi Corporation from the perspectives of both economic rationale and qualitative significance of holding them every year.

The economic rationale is confirmed by whether or not the related earnings from each stock, such as dividends 1

and related business profits on transactions, exceed Mitsubishi Corporation's target capital cost (Weighted

Average Cost of Capital) for the market price of each individual share.

The qualitative significance is confirmed by the achievement or status of progress of the expected purpose for holding the stock, etc.

[Matters verified by the Board of Directors]

Verification was conducted by the Board of Directors for all listed shares held by Mitsubishi Corporation as of March 31, 2020 (market price was approximately 0.5 trillion yen). As a result of verification from the perspectives of both economic rationale and qualitative significance of holding them, numerous shares were identified as candidates for reduction due to a decreased importance of the expected purpose and significance for holding them, etc.

■ Stance on Exercising Voting Rights Relating to Listed Stocks

Mitsubishi Corporation attaches great importance to dialogue and communication with its investment destinations through various channels, aiming to create business opportunities and build, maintain and strengthen business and partner relationships, and from the perspective of raising the mid- and long-term corporate value of Mitsubishi Corporation and these companies. Mitsubishi Corporation considers exercising voting rights to be an important approach. For this reason, when exercising voting rights relating to an investment destination, the responsible department for the oversight of the company reviews its business conditions (earnings, capital efficiency, etc.) from both quantitative and qualitative standpoints in accordance with internal regulations. These regulations stipulate matters to be considered, etc., when determining whether to vote for or against proposals such as appropriation of surplus, election of Directors and Audit & Supervisory Board Members, and revision of executive remuneration. Then Mitsubishi Corporation exercises its voting rights appropriately for individual matters for resolution. Furthermore, with regard to the proposals for the election and dismissal of Outside Directors and Outside Audit & Supervisory Board Members of listed subsidiaries, Mitsubishi Corporation's internal regulation also stipulate that their independence from Mitsubishi Corporation is to be examined before exercising voting rights.

b. Principle 1-7 ■ Transactions between Related Parties

By formulating the Board of Directors Regulations and the criteria for matters to be deliberated, Mitsubishi Corporation requires a resolution of the Board of Directors concerning, transactions between Director and Mitsubishi Corporation (self-dealing, indirect transactions), transactions between Executive Officer and Mitsubishi Corporation (self-dealing, indirect transactions) and transactions between major shareholders and Mitsubishi Corporation.

c. Principle 2-6 ■ Roles of Corporate Pension Funds as Asset Owners

In an effort to utilize personnel with experience in markets and investment, those responsible for pension management are appointed from the Finance Department of Mitsubishi Corporation and serve concurrently as employees of the Mitsubishi Corporation Pension Fund. The basic policy and management guidelines for safe 2

and efficient management of the reserve are drafted and issued to institutions contracted to undertake management, which are then monitored constantly. Marked with the responsibility for autonomous allocations it holds, the fund has announced its acceptance of Japan's Stewardship Code and requires the institutions entrusted with management of the assets to perform stewardship activities.

d. Principle 3-1 (i)

■ Corporate Philosophy

Mitsubishi Corporation's corporate philosophy is enshrined in the Three Corporate Principles, the company's motto since its foundation. The Three Corporate Principles were formulated in 1934, as the action guidelines of Mitsubishi Trading Company (now Mitsubishi Corporation), based on the teachings of Koyata Iwasaki, the fourth president of Mitsubishi. Even today, the Three Corporate Principles serve as the cornerstone of Mitsubishi Corporation as it grows its business and fulfills its responsibility toward the global environment and society.

Corporate Responsibility to Society "Shoki Hoko": Strive to enrich society, both materially and spiritually, while contributing towards the preservation of the global environment.

Integrity and Fairness "Shoji Komei": Maintain principles of transparency and openness, conducting business with integrity and fairness.

Global Understanding Through Business "Ritsugyo Boeki": Expand business, based on an all-encompassing global perspective.

■ Strategic Direction and Management Plan

In November 2018, Mitsubishi Corporation formulated "Midterm Corporate Strategy 2021: Achieving Growth Through Business Management Model" as a new management direction for the three years commencing the fiscal year ended March 31, 2020.

Hegemonic tensions between the U.S. and China, advances in digital technology and the emergence of platform companies have driven business model transformations at a level that can be described as the Fourth Industrial Revolution. The Midterm Corporate Strategy 2021 sets out management policies that will navigate Mitsubishi Corporation to sustainable business growth through these trends.

Mitsubishi Corporation will realize triple-value growth* through its business management model, underpinned by the four pillars of the Midterm Strategy; (1) Business Portfolio, (2) Growth Mechanisms, (3) HR System Reforms and (4) Financial Targets & Capital Policy.

Please visit the following website for details of "Midterm Corporate Strategy 2021: Achieving Growth Through Business Management Model."

https://www.mitsubishicorp.com/jp/en/about/plan/pdf/mcs2021_181102.pdf

* Simultaneously generating economic value, societal value, and environmental value

[Progress on Midterm Corporate Strategy 2021]

In the fiscal year ended March 31, 2020, the business environment came under pressure due to a global economic slowdown, compounded by the additional impact of the coronavirus 2019 (COVID-19) pandemic. In this challenging environment, Mitsubishi Corporation steadily pushed ahead with asset replacements and other 3

measures to build up its customer base in downstream businesses and the Services sector, including IT and logistics.

1．Business Portfolio

• • Progress with Asset Replacements in the Business Portfolio Sustains Mitsubishi Corporation's Resilience in a Worsening Business Environment

• • Progress on Measures in Downstream Businesses and the Services Sector

  • － Expansion of downstream businesses with measures such as the acquisition of Eneco, an integrated European energy business

  • － Steady strides in the Services sector, such as an agreement to invest in HERE Technologies, a leading provider of location information services

2．Growth Mechanisms

• • Value-Added Cyclical Growth Model & Enhanced ROE － Steadily executed replacement of value added assets, such as the sale of overseas power generation assets

• • Enhancement of New Business Creation & Digital Strategies － Progressed digital transformation (DX) from planning to the implementation stage collaborating with

  NTT Corporation in a business partnership and establishing a company-wide Industrial DX Task Force.

3．HR System Reforms

• • Commenced Operation of a New HR System for Continuous Development of Highly Skilled Management Professionals

• • Completed the Deployment of Redesigned Evaluation and Compensation Systems to

  Ensure Reciprocal Growth Between the Company and Employees

4．Financial Targets & Capital Policy

• • The fiscal year ended March 31, 2020 Consolidated Net Income: 535.4 Billion Yen, the fiscal year ended March 31, 2021 Forecasts: 200.0 Billion Yen, taking into account the negative impact of COVID-19, including the stagnation of resource prices, of approx. 300.0 Billion Yen

• • Financial Discipline and Continuation of the Progressive Dividend Scheme － The fiscal year ended March 31, 2020 dividend: 132 yen; the fiscal year ended March 31, 2021 dividend outlook: 134 yen

e. Principle 3-1 (ii)

■ Basic Stance and Policy on Corporate Governance

Mitsubishi Corporation's corporate philosophy is enshrined in the Three Corporate Principles. Through corporate activities rooted in the principles of fairness and integrity, Mitsubishi Corporation strives to continuously raise corporate value. Mitsubishi Corporation believes that by helping to enrich society, both materially and spiritually, it will also meet the expectations of shareholders, customers, and all other stakeholders.

In order to achieve these goals, Mitsubishi Corporation recognizes strengthening corporate governance on an ongoing basis as an important management issue as it is foundation for ensuring sound, transparent and efficient management. Mitsubishi Corporation, based on the Audit & Supervisory Board Member System, is thus working to put in place a corporate governance system that is even more effective. This includes 4