Materiality / External Recognition

Materiality

Materiality Identification Process

SMS Group has identified the material issues we should prioritize to create value over the medium to long term. We refer to these as our "materiality," identified through the following process.

Step 1: Identifying Issues

We began by identifying our company's management issues, as well as the broader issues facing society at large. We then cross-referenced these against international frameworks such as the GRI Standards, the evaluation criteria of major ESG rating agencies (MSCI, FTSE, and EcoVadis), and the disclosure requirements of our Annual Securities Report to compile a list of issues for consideration.

Step 2: Assessment from Two Perspectives

We assessed the issues identified in Step 1 from two perspectives: "impact on stakeholders" and "impact on SMS Group's corporate value and financial performance," and prioritized them on this basis.

Step 3: Deliberation and Approval Process

The Sustainability Committee reviewed the prioritized draft, which was then reported to and approved by the Board of Directors, formally establishing our materiality.

Review and Update

The materiality we have identified will be reviewed annually in light of changes in society and the development of our business. We also plan to update our material issues in conjunction with the formulation of our next medium-term management plan.

SMS Group's Materiality

External Recognition

We have been selected as a constituent of the following ESG indices in recognition of our sustainability initiatives.

FTSE JPX Blossom Japan Index

Developed by FTSE Russell, part of London Stock Exchange Group (LSEG), this index is designed to measure the performance of Japanese companies that demonstrate strong Environmental, Social and Governance (ESG) practices, and is widely used by investors around the world as a key reference in investment decisions. We have been a constituent of the index since July 2026.

FTSE Russell confirms that SMS Co., Ltd. has been independently assessed according to the index criteria, and has satisfied the requirements to become a constituent of the FTSE JPX Blossom Japan Index. Created by the global index and data provider FTSE Russell, the FTSE JPX Blossom Japan Index is designed to measure the performance of companies demonstrating specific Environmental, Social and Governance (ESG) practices. The FTSE JPX Blossom Japan Index is used by a wide variety of market participants to create and assess responsible investment funds and other products.
FTSE Blossom Index Series

FTSE JPX Blossom Japan Sector Relative Index

Also developed by FTSE Russell, this index is designed to measure the performance of Japanese companies that demonstrate relatively strong ESG practices within their respective sectors, and is widely used by investors around the world as a key reference in investment decisions. We have been a constituent of the index since July 2024.

FTSE Russell confirms that SMS Co., Ltd. has been independently assessed according to the index criteria, and has satisfied the requirements to become a constituent of the FTSE JPX Blossom Japan Sector Relative Index. The FTSE JPX Blossom Japan Sector Relative Index is used by a wide variety of market participants to create and assess responsible investment funds and other products.
FTSE Blossom Index Series

MSCI Japan Empowering Women (WIN)

Developed by Morgan Stanley Capital International (MSCI, U.S.), this is an index for ESG investment that selects companies with excellent gender diversity from each GICS®* industry classification in the parent index (MSCI Japan IMI Top 700 Index) to construct the index. We have been a constituent of the index since June 2024.
*GICS：Global Industry Classification Standard

The inclusion of SMS Co., Ltd. in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement or promotion of SMS Co., Ltd. by MSCI or any of its affiliates. The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

S&P/JPX Carbon Efficient Index

Developed jointly by S&P Dow Jones Indices (US) and Japan Exchange Group, Inc. (JPX), this index uses TOPIX (Tokyo Stock Price Index) — a leading benchmark index representing the Japanese equity market — as its underlying universe, with constituent weights determined based on companies' disclosure of environmental information and their level of carbon efficiency (carbon emissions per sales).