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Accelerating Our Transformation: Becoming a Company Cherished by Customers Tadahito Yamamoto President and Representative Director Fuji Xerox Co., Ltd.

Top Commitment

1. CSR: Synonymous with Corporate Management

Fuji Xerox is acting swiftly to globalize all its activities, including development, manufacturing, and sales, with the aim of achieving sustained growth. While global business development presents many new opportunities, it also comes with various risks. Differences in commercial practices as well as labor laws and practices and interactions with overseas suppliers can at times lead to unintended involvement in environmental destruction and human rights violations. With the development of information and communication technologies (ICT), the expansion of socially responsible investment (SRI) funds, and the integration of environmental, social, governance (ESG) issues into investment, both society and investors are more rigorously monitoring the activities of businesses. Companies are now expected to recognize that they are accountable for their entire value chain, including all upstream and downstream activities, and to pay careful attention to environmental and social factors in their operations.
At Fuji Xerox, we find our calling in document services and communications. Our primary objectives are to assist customers in creating value and to contribute to the progress of society by providing an environment for valuable communications. Our Mission Statement commits us to "Build an environment for the creation and effective utilization of knowledge," "Contribute to the advancement of the global community by continuously fostering mutual trust and enriching diverse cultures," and "Achieve growth and fulfillment in both our professional and personal lives." These three points are our CSR objectives. For Fuji Xerox, CSR is synonymous with corporate management and cannot be separated from our business pursuits. For us, CSR starts with insightful observation of social issues and extends to thoughtful reflection on how to deliver value to customers, how our actions impact stakeholders, and how to realize the vision of Fuji Xerox including our organizational culture.
Providing customers with outstanding products and services is an essential requirement for any business. No less important is the question of how to accomplish this. "Transforming business processes while making a firm commitment to stakeholders to uphold values that the company believes to be right" and implementing the necessary activities through "unity of words and deeds" (Genko-Icchi in Japanese) pose an enormous challenge, particularly in light of the broad range of issues related to quality and cost competitiveness. Regardless of the difficulty of this challenge, we at Fuji Xerox understand this to be an indispensable part of becoming an Excellent Company that is truly cherished by its customers.

2. Integrating CSR with Our Core Business

I believe that significant changes have to be made to establish CSR as an integral part of corporate culture at Fuji Xerox. All business processes and work styles at the front lines of our business must be transformed with an eye to CSR values, and we must create an environment in which all corporate activities are assessed and executed from the perspective of whether or not they contribute to delivering value to stakeholders. To achieve this purpose, Fuji Xerox has established a CSR Committee comprising directors and corporate officers responsible for all functions of the value chain and charged with determining priorities in responding to important CSR issues in light of management strategies. "Improving customer satisfaction" has always been our top priority and we added the following four high-priority themes for fiscal 2013: "Improving employee satisfaction," "Strengthening environmental management," "Enhancing ethical procurement," and "Engaging in local community development." After establishing a series of key management indicators and numerical goals at the start of the year, we undertook semi-annual management reviews and implemented the plan-do-check-act (PDCA) cycle.
Goals established by management are embedded in frontline plans for product development, procurement, manufacturing, sales, and other activities. As I have been emphasizing, it is critically important to clarify the link between CSR and the mission and objectives of each organization and to achieve a full integration between CSR and our core business. By helping us obtain new technologies, develop attractive products and services, and strengthen cost competitiveness, I believe the integration of CSR and our core business activities is key to creating a new awareness within the company as we pursue our principal business and to changing work processes. My ultimate objective is to create a situation in which each employee realizes the social significance of the work that he or she is performing and CSR management evolves in a natural and self-sustaining way.

3. CSR Activities at Fuji Xerox

In a word, CSR activities at Fuji Xerox can be characterized as the thorough and committed pursuit of innovative and progressive themes that anticipate the needs of the age. While delivering new value to our customers and society through our core business, we have selected an evolving series of key CSR issues beginning with "New Work Way" in the late 1980s. This was followed by "Integrated Recycling System" in 1995 and "Ethical Procurement" in 2007. At the same time, we have applied the principles of CSR to our entire value chain, acting step-by-step to expand the scope of our CSR activities to include group companies and partners.
The following sections present the main points of our CSR activities during fiscal 2013 as seen from five perspectives: (1) creating a better communication environment for human society by helping customers solve problems, (2) realizing happiness and growth for employees, (3) realizing a sustainable global environment, (4) enhancing supplier engagement, and (5) contributing to local community development by utilizing our core business and more.

Transforming business processes while making a firm commitment to
stakeholders to uphold values that the company believes to be right-
this is an indispensable part of becoming an Excellent Company.

(1) Creating a better communication environment for human society by helping customers solve problems

Fuji Xerox aims to expand the horizons for services and styles of work by improving communications quality and productivity in all settings, including offices, government agencies, educational institutions, and medical facilities by integrating paper-based and digital information and linking this with cloud and mobile technologies to form a seamless network. To create this form of high-value communication that is "human-centered," Fuji Xerox goes beyond the development and sales of equipment and promotes solutions and services that can generate a fundamental transformation in the business processes of customers. During fiscal 2013, we moved forward on cloud services and mobile solutions that contribute to work styles that are not bound by IT environment and location. We also introduced an array of products and services designed to match the specific needs of local markets in various countries. Thanks to these efforts, once again in fiscal 2013, Fuji Xerox achieved a high ranking in customer satisfaction surveys conducted by external organizations. We will continue to make customer satisfaction our top management priority and will strive to further improve our performance in this critical area by strengthening relations with customers at all customer contact points.

(2) Realizing happiness and growth for employees

Employee satisfaction is the wellspring of innovation and a company's ability to meet new challenges. At Fuji Xerox, we believe that creating a workplace where employees can utilize their capabilities to the maximum is one of the most important aspects of our management base. During fiscal 2013, Fuji Xerox as well as its domestic sales companies and affiliates developed a common format for their employee morale surveys. Parallel to this, the CSR Committee discussed how to improve employee satisfaction and identified a series of companywide challenges for achieving this objective. Key CSR indicators are steadily improving at Fuji Xerox. These include the adoption of appropriate working hours, increasing the ratio of women in managerial positions, and reducing the number of work loss days. Going forward, Fuji Xerox will implement the PDCA cycle to enhance employee satisfaction and will actively promote remote working and other forms of ICT-based flexible working styles. We will nurture an organizational culture that supports a satisfying and stimulating workplace and encourages all employees– regardless of gender, nationality, disability, or age–to aim to become professionals whom customers trust and rely on. We will step up our efforts to strengthen our managerial capabilities and to support dialogue in the workplace. Fuji Xerox will promote corporate transformation by identifying emerging problems with a highly honed sensitivity to changes in the social and business environments, and by accelerating the training of human resources capable of acting on their own and taking ownership in the challenge to create change.

(3) Realizing a sustainable global environment

Fuji Xerox is committed to countering global warming, one of the most pressing challenges in realizing a sustainable earth. For this purpose, we have established goals for reducing greenhouse gas emissions with 2020 as the target year, and we are working toward reducing the whole-life-cycle CO2 emissions of our products and lowering the CO2 emissions of customer sites. Subscribing to the principle that "used products are not waste but constitute valuable resources," we constantly endeavor to achieve resource recycling and zero-waste throughout all our business territories in the Asia-Pacific region.
In fiscal 2013, under internal slogan "Challenge Eco No. 1," Fuji Xerox launched a companywide initiative aimed at providing the world's top-level environmental value. In this program, individual employees on the front lines of operations identify problems intrinsic to our core business from the perspective of creating new environmental value, such as resource saving, transport saving, and space saving, and endeavor to transform business processes and approaches to work. These efforts are aimed at reducing CO2 emissions over the entire value chain and target such challenges as accelerating the introduction of products and services based on the concept of "RealGreen" (the parallel achievement of customer utility and environmental friendliness), providing solutions and services that contribute to reducing the environmental burden caused by society overall, developing technologies for improved energy efficiency, and building businesses that recycle and reuse resources.

(4) Enhancing supplier engagement

Fuji Xerox launched ethical procurement of production materials in 2007 by integrating the required QCD(Quality, Cost, Delivery) and CSR. In the following years, the initiative was expanded to cover logistics and general products as well. A pro forma pledge to ethical procurement can lead to potential risks. To avoid such problems, it is important to develop a common awareness of the purpose and challenges of ethical procurement with suppliers' top executives so that they will take the initiative in undertaking necessary improvements. Fuji Xerox and its suppliers form partnerships for joint study and empowerment aimed at achieving ethical procurement. Based on this partnership, the business processes of suppliers are reviewed in order to minimize CSR risks in such areas as the environment, human rights, labor, and corporate ethics. This approach allows us to respond to the requirements of society while at the same time reducing procurement risks.
In the procurement of production materials, Fuji Xerox continued in fiscal 2013 to dispatch its procurement personnel posted at its manufacturing sites in China to perform on-site checks of supplier factories. This monitoring process was bolstered by reviewing the checklist and drawing on the assistance of expert teams. In the area of logistics, the scope of overseas suppliers covered by ethical procurement initiatives was expanded. With regard to conflict minerals, a cross-functional organization was created within Fuji Xerox to respond appropriately to customer needs and to review the sourcing of conflict minerals used in our products. Going forward, further efforts will be made to strengthen supplier engagement on a global scale, including the start of an ethical procurement program at the new plant that came into operation in November 2013 at Fuji Xerox Hai Phong (Vietnam).

(5) Contributing to local community development by utilizing our core business and more

Fuji Xerox and its affiliates actively harness their products and human resources to foster mutual trust and to enrich diverse cultures of the world by contributing to local community development in the fields of document services, communications and more.
During fiscal 2013, Fuji Xerox focused on strengthening its social contribution programs related to "Education for future generations" and "Conservation of diminishing cultures and information" by utilizing its core business. In the area of educating future generations, Fuji Xerox is collaborating with customers and local NGOs to produce and deliver educational materials for underprivileged children in emerging economies using our cloud technologies and production printers. The first such project was started in the Philippines. For the conservation of cultures, we opened a center to reproduce historical documents at Fuji Xerox R&D Square, our main base for research and development. Significant contributions were made to the reproduction of historical documents based on state-of-the-art technologies for color matching and the production of specialized toners.
Fuji Xerox is continuously learning new things through its social contribution in areas affected by the Great East Japan Earthquake of 2011. One such initiative that draws on our business strengths is the development of an integrated patient information system to support community-based medical services in depopulated and aging areas. We intend to assist other regions and communities in overcoming similar challenges by offering this system to them.

4. Constant Pursuit of New Growth and Value Creation

During fiscal 2013, Fuji Xerox continued to make steady progress in transforming itself as a provider of solutions and services. At the same time, Fuji Xerox was able to achieve revenue and profit growth thanks to strong sales in all the countries and regions where it operates. For Fuji Xerox, fiscal 2014 will mark an important milestone in the further transformation of its business structure and in establishing a clear vision for the realization of future growth. In this context, we believe that strengthening CSR management is key to building a firm foundation for future growth.
The business environment is constantly changing and CSR will remain a perpetual challenge so long as companies continue to exist. Our starting point in CSR boils down to three simple questions: How can we ensure the sustainability of Fuji Xerox and of society by acting through our business activities to assist customers in the solution of management problems? How can we bring satisfaction and happiness to stakeholders? And, what are the fundamental requirements for realizing these objectives? At Fuji Xerox, we are committed to thinking these questions through and to conveying a powerful message to society on what we hold to be true. I pledge to make a united and constant effort to create a common understanding of CSR principles and values among all employees, to encourage all employees to hone their sensitivity to ongoing social changes, and to continue to be a provider of excellent solutions to customers and to society. It is our firm belief that such solutions fostered through the process of "unity of words and deeds"(Genko- Icchi ) can be the key to breaking through barriers and obstacles.

It is critically important to clarify the link between CSR and the mission
and objectives of each organization and to achieve a full integration
between CSR and our business.

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