Contents 001 Contents CSR Strategy Quick Reference (Navigation) 037 Message from the Chairperson of the CSR Committee 038 Dentsu Group CSR About us 039 Dentsu Group SDGs-related Action 003 Overview of the Dentsu Group 005 History Environment Dentsu Group's Growth Story 041 Reduction of Environmental Footprint 007 Top Message 009 How We Create and Share Value Society 011 Our Business 043 Respect for Human Rights and Pursuit of Humanity Business Lineup and Primary Services 044 Diversity and Inclusion 019 Dentsu Group Medium-term Direction 045 Decent and Creative Work 021 Financial/Non-financial Highlights 046 Responsible Communications and Content 023 Message from Chief Financial Officer 048 Community 027 Discussion: The Transformation “Phase 2” of the Dentsu Group ESG Data Summary Governance 049 Data Summary 031 Corporate Governance 034 Compliance Corporate Data 035 Message from Outside Director 053 Subsidiaries and Affiliates 036 Board Members/Management 054 Information for Shareholders 054 Share Information Editorial Policy Period covered by the report • This integrated report explains the Dentsu Group’s operating performance for the Centered on activities during FY2018 (January 1, 2018 through December reporting period and introduces the Group’s strategies and initiatives to create value 31, 2018), but also describes some activities from preceding or more recent over the medium to long term. Information related to efforts to enhance sustainability periods. is also arranged within an ESG framework, taking increased disclosure requirements into account. Organizations covered • Target audience Dentsu Inc. and Dentsu Group companies All stakeholders including shareholders and investors Publication date Reference guidelines August 2019 IIRC (International Integrated Reporting Council) (Next edition scheduled for publication in August 2020) The International Integrated Reporting Framework Contact info Guidance for Collaborative Value Creation, Ministry of Economy, Trade and Industry CSR Department, Legal Division, Dentsu Inc. Email: [email protected] GRI (Global Reporting Initiative) Sustainability Reporting Guidelines, Version 4 (G4) Investor Relations Department, Corporate Strategy Division, Dentsu Inc. Email: [email protected] Forward-looking Statements This integrated report contains statements that constitute “forward-looking statements” regarding the intent, belief or current expectations of Dentsu Inc. or its management with respect to the results of operations and financial condition of Dentsu or the Dentsu Group. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ from those in the forward-looking statements as a result of various factors. The information contained in this integrated report identifies important factors that could cause such differences. These forwardlooking statements speak only as of the date hereof. Dentsu disclaims any obligation to up- date or publicly announce any revisions to these forwardlooking statements to reflect future events, conditions or circumstances. 001 Dentsu Integrated Report 2019 Quick Reference (Navigation) The Dentsu Integrated Report 2019 has been designed to enable readers to easily navigate the site, to find the information in which they are most interested. Please use the following for reference while reading the Integrated Report. ? Content Frequently Asked Questions Search Content Summary Location ◦ Top Message • Toward the creation of a new Dentsu Group P. 7 What are issues that • In accordance with its corporate philosophy Dentsu must address with of “Good Innovation.” the Dentsu Group respect to changes in the ◦ How We Create and Share Value contributes to the achievement of a sustainable P. 9 society by working together with clients to pro- business environment? vide optimal solutions to global social issues. Discussion (Heads of Japan and Interna- Second phase of Dentsu Group transforma- ◦ • P. 27 tional Businesses) tion—Aiming to Become One Dentsu— • Performance highlights for three-year period including FY2018 ◦ Financial/Non-financial Highlights P. 21 • Underlying factors and explanations of FY2018 FY2018 Performance performance Dentsu regards 2019–2020 as a second phase Message from CFO • P. 23 ◦ in its development aimed at promoting Groupwide business reform Implementing wide-ranging reforms that How We Create and Share Value • P. 9 ◦ provide value to people and society Discussion (Heads of Japan and Interna- Second Phase of Dentsu Group Evolution— ◦ • P. 27 How will Dentsu achieve tional Businesses) Aiming to Become One Dentsu— medium- to long-term growth in its international business? ◦ Key Persons • Perspectives of Dentsu Group key persons P. 12-18 • Dentsu’s own innovation ◦ Dentsu Group Medium-term Direction P. 19 • Leading the Dentsu Group into a new phase How is the Working • The significance of working environment reforms Environment Reform ◦ Decent and Creative Work • Working environment reforms: specific initia- P. 45 Plan in Japan progressing? tives and their current progress ◦ Overview of the Dentsu Group • At a Glance—Quick Facts about Dentsu— P. 3-4 • Message from the Chairperson of the CSR How is Dentsu ◦ Dentsu Group CSR Committee P. 37,39 engaged in achieving • Dentsu Group SDGs-related Actions the Sustainable Development Goals • Focus on Goal Three: Health—working with Common Ground NGOs to prevent global infectious diseases, Website (SDGs)? such as malaria and tuberculosis • Consumer Survey on SDGs Dentsu Team SDGs • Production of SDGs Communication Guide Website 002 Dentsu Integrated Report 2019 About us Overview of the Dentsu Group As the driving force in Japan’s advertising industry, the Dentsu Group maintains long-term business relationships with a variety of customers that include leading corporations in Japan and overseas. We have also established distinctive services in overseas markets and built a solid network covering Japan, Americas, EMEA and APAC. Our operations are led by Dentsu in Japan and Dentsu Aegis Network internationally. Operating Area Finance Revenue less Cost of Sales 9,3 2 6 billion January to December 2018 Over 145 countries and regions International Business around the world Share of Profit by Region Digital Domain Ratio Ratio APAC 14% Americas Japan 24% 40% EMEA 60.4% 22% in Japan 23.9% (1.7pt↑) January to December 2018 % (2.7pt↑) international 60.6 Japan Business International Business Market Position Award Share of the Japanese Ranking of Advertising Number of international Advertising Market Holding Company Groups awards for advertising No. Share 1 Top Worldwide 28.8％ 5 171 Calculated by comparing sales by Number of awards for advertising business category in Dentsu’s Japan Source: Advertising Age, April 29, 2019 during the last year business to nationwide advertising (As of June 10, 2019) expenditures in 2019 003 Dentsu Integrated Report 2019 Number of Employees (consolidated) EMEA Americas As of December 31, 2018 17,814 12,497 62,608 Male Female Male Female 8,096 9,718 5,733 6,764 45.4% 54.6% 45.9% 54.1% APAC Japan 13,758 18,539 Male Female Male Female Male Female 32,443 3 0,16 5 6,195 7, 563 12,419 6,120 51.8 ％ 48.2％ 45.0% 55.0% 67.0 % 33.0% Sustainability Non-finance SDGs-related Action Reduction Rate of DentsuTeam SDGs Common Ground CO2 Emission 18.6 % Year-to-year comparison basis, scope 1+2+3 Number of companies participat- ing in CSR Procurement Survey Dentsu Diversity LAB Global Compact Network Japan 750Companies As of the end of December, 2018 Assessment from Outside Institutions 004 Dentsu Integrated Report 2019 About us History Dentsu Group's Growth Story One hundred and nineteen years after its founding, Dentsu has transformed itself from a telecommunications company to an advertising company and an integrated communications company. Dentsu aims to become “the best partner in realizing the business transformation of our customers. ” The images below show the progress of the Group, which will become One Dentsu under the new structure in 2020, together with its other milestones 1901 1974 Hoshiro Mitsunaga established Japan Advertising Ltd. The US-based magazine Advertising Age and Telegraphic Service (currently know as Dentsu). ranks Dentsu the No.1 advertising agency worldwide in terms of billings (calendar 1973). 1951 Commercial radio broadcasting begins: Establishment 1984 of Radio Division at the Head Office. Contributing to the support of the Los Angeles Olympic Games. 1953 Eatablished DYR, an international service network jointly with US- Commercial Television Broadcasting begins. based Young & Rubicam. Establishing Radio and Television Division at the Head Office and Osaka Office. 1989 Net sales exceed one trillion yen in the fiscal year ending March 1989. 1955 1996 The corporate name is changed to Dentsu Inc. Contributing to the establishment of cyber communications inc.(cci), Japan's first Internet advertising agency. 1959 Establishing Marketing Department. 1998 Promote the introduction of marketing. Contributing to the support of the Nagano Winter Olympic Games. Opening a New York office. 2000 1964 Establishing the Bcom 3 Group with the US-based firms Leo Group Contributing to the support of the Tokyo Olympic Games. and the McManas Group. 1970 Contributing to the support of the Osaka Expo '70. 1901 1974 With the astonishing development of the mass me- In an era in which corporate communication needs include dia due to the rapid economic growth in Japan after sports, cultural activities, and mecenat activities,