Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Social Responsibility
• Governance

Environmental Achievements

• CO2 emissions reduction target of 10% (by 2030)

Social Achievements

• Aiming for top rating in employee engagement
• Aiming for 100% customer satisfaction
• Zero-accident safety target

Governance Achievements

• Group management restructuring

Climate Goals & Targets

Environmental Challenges

• Severe business environment due to factors like declining birthrate and aging population
• Globalization and unpredictable future

Mitigation Strategies

• Group management restructuring
• Focus on social contribution through environmental sustainability, disaster resilience, and solutions for labor shortages
• Strengthening bonds with stakeholders (local community, employees, business partners, shareholders)

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Contribution to SDGs through environmental sustainability, disaster resilience, and solutions for labor shortages

Sustainable Products & Innovation

• New products and expansion of new businesses (¥120 billion, 40% of sales target)

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Reduced head office costs by seven percent (7%) in the fiscal year ending in March 2022 compared to that of the fiscal year ending in March 2018; Self-manufacture of PSA oxygen, resulting in a more stable and energy-efficient operation, reducing environmental impact and costs; Newly proceeding with challenging projects such as exhaust heat recovery and efficient use of CO2 through an academic-industrial alliance with a local university and joint research with business partners.

Social Achievements

• Not disclosed

Governance Achievements

• Established a Nomination and Compensation Committee composed of two (2) Independent Outside Directors, one (1) Outside Director, and one (1) Director, as a non-binding advisory board for the board of directors; Strengthened the structure through which the director candidates are determined on the basis of the advice and recommendations of the Nomination and Compensation Committee; Improved the objectivity and fairness of the composition of the Nomination and Compensation Committee.

Climate Goals & Targets

Environmental Challenges

• Serious equipment failures at its major plants and employee fatalities in 2021; Rapidly and significantly changing business environment, such as digitalization and SDGs; Difficult management environment due to the novel coronavirus pandemic, Russia’s invasion of Ukraine, and the escalating price of iron scraps, materials and energy.

Mitigation Strategies

• Absorption-type merger of two wholly-owned subsidiaries in October 2019; Made Kotecs Co., Ltd. a wholly owned subsidiary in April 2020; Established Innovas Co., Ltd. in July 2021; Made large-scale capital investments such as rationalization work for the Nagaoka Rolling Plant; Actively engaged in business structure reform based on the long-term vision “Metal Vision 2030 ” and the medium-term business plan “2024”; Strengthening the processed product business by enhancing a standardized business process from raw materials to processed products; Consolidation of the management and indirect departments which are dispersed in each of the group companies, and optimization of the costs of the entire group; Actively carried out M&A and alliances with other companies; Renewal of a high-voltage substation at low cost under an umbrella agreement with a group company of Tokyo Electric Power Company Holdings, Inc.; Developing new businesses, such as the expansion of sales of processed products, new products and the resource recycling business.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Social Responsibility
• Governance

Environmental Achievements

• Increased renewable energy share at Kitakata factory to over 20% of total energy use.
• Recycled oxidized slag from electric furnace process into a product called "Metal Stone", used as a substitute for natural crushed stone.

Social Achievements

• Implemented 1on1 meetings and expanded training programs (e-learning, communication education) to support employee growth.
• Sponsored Albirex Niigata Ladies soccer team and held soccer classes at local elementary schools.
• Contributed to the Nagaoka Matsuri fireworks festival.

Governance Achievements

• Increased the number of independent outside directors and appointed a new independent outside auditor.

Climate Goals & Targets

Environmental Challenges

• Decreasing sales volume due to delays in construction projects.
• Increased electricity costs due to fuel price adjustments and power company price hikes.
• Shrinking market in Niigata prefecture due to population decline.
• Industry-wide shortage of skilled workers in the construction sector.
• High volatility in the steel scrap market impacting profitability.

Mitigation Strategies

• Increased product sales prices to offset rising raw material and energy costs.
• Actively introducing solar panels in factories to reduce reliance on purchased electricity.
• Strengthening sales and manufacturing capabilities for high value-added processed products.
• Focusing on sales growth in the Kanto region.
• Developing high value-added products to address labor shortages and contribute to national resilience.

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Metal Stone

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by approximately 110t/year at Kotex Maebashi factory through solar panel installation.
• Reduced CO2 emissions by approximately 820t/year at Sanjo rolling mill by switching fuel from heavy oil to city gas.

Social Achievements

• Introduced a 60-year-old retirement age, 65-year-old re-employment system, and 65-year-old optional retirement system.
• Implemented a 5.9% wage increase (exceeding the union average of 5.2%).
• Support for the Albirex Niigata Ladies professional soccer team and community contributions.

Governance Achievements

• Increased the number of independent outside directors and appointed a new independent outside auditor, resulting in one-third of the directors being independent outside directors and 16.7% female representation.

Climate Goals & Targets

Environmental Challenges

• High construction material costs and persistent high prices.
• Construction project delays and cancellations due to labor shortages.
• Significant electricity price increases in the Tohoku Electric Power area.
• Increased logistics costs due to the 'Logistics 2024 Problem'.

Mitigation Strategies

• Efforts to transfer cost increases to product sales prices.
• Strengthening the processed product business.
• Implementing cost reduction measures, including logistics optimization and railway container transportation.
• Seeking cooperation from clients to secure delivery lead times and increase delivery lots.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by approximately 110t annually through solar panel installation at Kotex Maebashi Factory.
• Reduced CO2 emissions by approximately 820t annually through fuel conversion from heavy oil to city gas at Sanjo Rolling Mill.
• Recycled concrete formwork from business partners and group companies, contributing to a circular economy.

Social Achievements

• High percentage of female employees in management positions compared to industry peers.
• High female employee wage index compared to industry peers.
• Proactive approach to encouraging follow-up medical checkups for employees with health concerns.

Governance Achievements

• Strengthened corporate governance by implementing various measures based on the principles of the Corporate Governance Code.
• High percentage of outside directors (50%) and female directors (33%).

Climate Goals & Targets

Environmental Challenges

• High volatility in the steel scrap market.
• Decreased domestic steel demand due to material price increases and labor shortages.
• Increased logistics costs due to driver compensation improvements and fuel surcharges.

Mitigation Strategies

• Cost reduction efforts.
• Implementation of fuel surcharges and adjustments for highway tolls.
• Strategic use of warehouses and transportation methods to optimize logistics costs.
• Strengthening the processed products business to create a stable profit base.

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Eco-friendly mortar (UNeco mortar) with 39% reduction in CO2 emissions during manufacturing.
• Roll-formed steel bars for construction materials.