P.47 Human Capital

47 02. Foundations for Accelerating Transformation

Human Capital

“Strategy Powered by People” ̶Realizing Medium-Term Management Plan 2026 and looking beyond

Alongside continuous medium- to long-term investment in the five fundamentals, we identify priority areas of human capital for each stage of our strategy and take measures to strengthen our strategy execution capability. Under our previous medium-term management plan, SHIFT 2023, we pursued structural reforms to strengthen downside resilience and raise our earnings power. These included exiting low-profit businesses, implementing turnarounds, and reallocating management resources to steady business growth where we could better leverage our strengths. As a foundation for these initiatives, we overhauled our HR system and eliminated institutional barriers, such as seniority and job classification. This laid the groundwork for pursuing optimal talent deployment on a global basis, grounded in the principles of “Pay for job, Pay for performance,” without being constrained by personal attributes, while focusing on each personʼs individuality, strengths, and values. Under Medium-Term Management Plan 2026, which marks a major shift toward a growth phase, we are building on the foundation established in the previous plan to achieve our goal of becoming “No. 1 in Each Field.” To this end, we are focusing on “Empowering people and organizations,” where individuals hone their own strengths, while our organizations maximize those strengths and combine diverse talents. We are also advancing and enhancing human capital management on a global basis to further strengthen our ability to execute global SBU strategies. We will expand the initiatives and achievements from our previous medium-term management plan̶which focused on removing barriers in Japan̶to a more global scale going forward. For example, goal management processes and evaluation systems vary by region, presenting a challenge for members around the world trying to work as a unified team to advance strategies toward a common goal. To remove these obstacles, we will progressively establish systems and frameworks that should be standardized globally, while enhancing the visibility of each talentʼs capabilities, skills, and experience to enable the strategic deployment of the best talent on a global basis.

HR roadmap for the future: Priorities aligned with the strategic stage

• 5 Fundamentals
• Business Philosophy
• Inclusion
• Talent Development
• Well-being
• Total Rewards
• SHIFT 2023 3 Shifts
• Eliminate institutional barriers
• Medium-Term Management Plan 2026 No. 1 in Each Field
• Empowering people and organizations
• And beyond…
• →Corporate Value Enhancement

Initiatives to empower people and organizations

We conduct an annual engagement survey globally, including at regional organizations in Japan and overseas, to monitor the effectiveness of our initiatives to “empower people and organizations.” When we look at initiatives in our current medium-term management plan by engagement survey item, we find that “Understanding of Business Philosophy” and “Respect & Recognition” have remained at consistently high levels. This reflects the results of our ongoing efforts, including the Besshi Copper Mine training program for employees hired overseas, the practice of Sumitomoʼs Business Philosophy and Group Management Principles in day-to-day operations, expanded programs that support diverse approaches to life and career, and raising awareness of inclusion. These efforts provide a strong foundation for an organizational culture where everyone is empowered to thrive in their own way. We also advanced operational reforms, including the delegation of authority over personnel-related matters to the front lines under each business groupʼs autonomous management, as well as our global rollout of Microsoft 365 Copilot. These have led to significant improvements in “Quality & Customer Focus,” “Authority & Empowerment,” and “Work, Structure & Process” compared with the previous medium-term plan. They have also encouraged faster decision-making at the front lines and reduced internally focused work, leading to a mindset shift toward greater speed and a stronger focus on creating added value. Meanwhile, despite improvements in the areas of “Leadership” and “Development Opportunities,” these still require further enhancement. In addition to nurturing organizational leaders through management talent development, we are working to foster self-leadership and empowering individuals to think and act on their own initiative. Going forward, we will further deepen these initiatives and accelerate the development of talent capable of envisioning and driving businesses on a global basis.