Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance
• Compliance

Environmental Achievements

• Reduced CO2 emissions: NGK Japan: Emission volume of 151,000 tons (Target: under 174,000 tons); Domestic Consolidated: Basic unit per sales value of production 7.1% reduction from 2005 (Target: reduction of 4% or higher)
• Reduction of by-products generated: NGK Japan: Reduction of 20% from 2005 (Target: reduction of 15%); Domestic Group: Reduction of 13% from 2005 (Target: reduction of 9%)
• Developed a consolidated environmental management framework; set targets for reducing environmental load of Group companies outside Japan
• Completed introduction of integrated environmental management database system
• Operated NAS® battery systems in the world’s first facilities to combine storage batteries with a wind power plant and a large-scale solar power plant
• First in the world to commercialize high-precision NOx sensors

Social Achievements

• Enacted a campaign to eliminate customer complaints
• Began evaluation of quality activities as a group
• Renewed the “NGK Global Seminar” program
• Enhanced education and training for middle management
• Promoted greater employment opportunities for disabled people, women and the elderly
• Enacted initiatives for shortening overall working hours (2008 to 2010)
• Encouraged utilization of leave system for child and nursing care
• Established a helpline specifically for suppliers
• Conducted a questionnaire regarding environmental measures taken by suppliers
• Instituted assistance for foreign students (provided scholarships to 20 students, and housing to 40 students)
• Conducted language and cross-cultural exchange classes for local residents near student housing complex
• Conducted cross-cultural exchange classes for employees

Governance Achievements

• Revised NGK Group Guidelines for Corporate Behavior in April 2008; distributed pamphlets to and raised awareness among all NGK, Japan Group company employees
• Confirmed status of formulation of policies, etc. among listed domestic and overseas Group companies
• Conducted education and training regarding content of corporate behavior guidelines through position-based training
• Enacted risk response measures in every division based on NGK’s first CSA (Control Self-Assessment) questionnaire
• Conducted CSA questionnaire among NGK, Japan Group companies
• Compiled an “Information Security Handbook” and conducted a related education program through position-based training
• Enacted measures to strengthen IT networks at Group companies (primarily in Japan)
• Created a manual pertaining to competition laws (EU, U.S.)
• Conducted seminars pertaining to competition laws (EU, China)
• Conducted education and training regarding competition laws at seminars for staff preparing for outside Japan postings
• Developed regulations for export management (U.S. Group companies)
• Promoted education and training regarding security export control at seminars for staff preparing for outside Japan postings
• Instituted education and training regarding practical safety for 320 managers
• Inspected appropriate driving techniques and conducted education and training for safe driving for managers and commercial-vehicle operation managers
• Signed Memoranda of Understanding with suppliers to agree not to do business with criminal elements or organizations
• Conducted Group education and training on laws governing procurement

Climate Goals & Targets

Environmental Challenges

• Adverse impact of a sharp economic downturn worldwide
• Reducing CO2 emissions in manufacturing processes for ceramics products
• Globalizing and diversifying risks
• Maintaining employment rate for disabled persons above the legally mandated ratio

Mitigation Strategies

• Switching to fuels with fewer CO2 emissions and minimizing energy consumption
• Developing and adopting more efficient processes
• Implementing a risk management system, including control self-assessment (CSA)
• Broadening the job types for which applicants with disabilities can be hired

Supply Chain Management

Supplier Audits: Roughly 400 companies surveyed regarding environmental measures

Responsible Procurement

• Memoranda of Understanding with suppliers to agree not to do business with antisocial forces or organizations
• Green Procurement Guidelines

Climate-Related Risks & Opportunities

Physical Risks

• Wind or flood damage, natural disasters, major transportation disasters

Transition Risks

• Not disclosed

Opportunities

• Development of energy-efficient products
• Expansion of NAS® battery systems for renewable energy storage

Reporting Standards

Frameworks Used: Ministry of the Environment’s Environmental Reporting Guidelines (2007), Global Reporting Initiative’s 2006 Sustainability Reporting Guidelines

Certifications: ISO 14001

Third-party Assurance: Tohmatsu Environmental Research Institute Ltd.

Sustainable Products & Innovation

• NAS® batteries for power storage
• High-precision NOx sensors
• Solid oxide fuel cell (SOFC)
• Wavelength conversion device (PPLN)

Awards & Recognition

• Japan Fine Ceramics Association’s Award for Technical Advancement
• Minister of Economy, Trade and Industry Prize (Chunichi Industrial Technology Awards)
• THP “Progress Award” (Japan Industrial Safety & Health Association)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Resource Recycling
• Prevention of Environmental Pollution
• Conservation and Restoration of Biodiversity
• Pursuit of Quality and Product Safety
• Contribution to Digital Social Infrastructure
• Enhancing Value of Human Resource
• Respecting Human Rights
• Promotion of Sustainable Procurement

Environmental Achievements

• Reduced CO2 emissions to 560,000 tons against a target of 600,000 tons in FY2022.
• Achieved a 55% reduction rate per unit sold for waste generation compared to FY2013, exceeding the target of 46% and reaching the FY2025 target of a 50% reduction.
• Achieved 25% renewable energy share in total energy usage.

Social Achievements

• Implemented NGK Group Human Capital Management Policy, Human Resource Development Policy and Workplace Development Policy in June 2023.
• No serious legal non-compliance incidents in FY2022.
• Improved employee engagement scores compared to FY2020.

Governance Achievements

• Established the NGK Group Basic Sustainability Policy in April 2023.
• Established the Risk Management Committee in April 2023.
• Revised the NGK Group Corporate Business Principles and established the NGK Group Code of Conduct in July 2023.

Climate Goals & Targets

Environmental Challenges

• Climate change impacts on business (risks and opportunities)
• Resource depletion and price inflation
• Geopolitical risks
• Supply chain disruptions
• Water resource security
• Cyberattacks
• Information leaks
• Human rights risks in the supply chain

Mitigation Strategies

• Internal carbon pricing
• Energy-saving initiatives
• Shift to non-fossil fuels
• Use of renewable energy
• Promotion of resource recycling
• Improved chemical substance management
• Strengthened information security
• Supply chain CSR guidelines and supplier audits
• Human rights due diligence surveys

Supply Chain Management

Supplier Audits: Audits conducted on 43 main raw materials suppliers in FY2022.

Responsible Procurement

• Supply-Chain CSR Guidelines
• Green Procurement Standard
• CSR procurement

Climate-Related Risks & Opportunities

Physical Risks

• Effects of natural disasters on operations

Transition Risks

• Shrinking of internal combustion engine-related markets
• Increase in costs due to greenhouse gas reduction

Opportunities

• Expansion of CN-related business opportunities
• Reduction of costs
• Enhancement of brand reputation

Reporting Standards

Frameworks Used: GRI Standards, TCFD, UN Global Compact, SDGs

Certifications: ISO 14001, ISO 45001, ISO 9001, IATF 16949

Third-party Assurance: Deloitte Tohmatsu Sustainability Co., Ltd.

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 9 (Industry, innovation, and infrastructure)
• Goal 12 (Responsible consumption and production)
• Goal 13 (Climate action)

NGK's products and services contribute to these goals through energy efficiency, sustainable materials, and emission reduction technologies.

Sustainable Products & Innovation

• NAS batteries
• HONEYCERAM
• Diesel Particulate Filters (DPFs)
• Gasoline Particulate Filters (GPFs)
• In-Vehicle High-Precision NOx Sensors
• Low-Level Radioactive Waste Treatment Systems
• Micro-Lenses for Ultraviolet LEDs
• Zinc rechargeable battery
• CO2 separation membranes

Awards & Recognition

• Ministry of Health, Labour and Welfare “L-boshi” certification
• Ministry of Health, Labour and Welfare “Platinum Kurumin” certification
• Nagoya City Certification of Company Promoting Women’s Active Participation
• Aichi Prefecture “Shining Women” Certification

Environmental Metrics

ESG Focus Areas

• Climate Change
• Resource Recycling
• Pollution Prevention
• Biodiversity Conservation
• Product Quality and Safety
• Digital Social Infrastructure
• Human Resource Value Enhancement
• Human Rights
• Sustainable Procurement

Environmental Achievements

• Achieved a 55% reduction in waste generation per unit sold compared to FY2013 (FY2022)
• No serious violations of environmental laws in FY2022
• Reduced GHG emissions (Scope 1+2) to 560,000 metric tons in FY2023 (from 870,000 in 2019)

Social Achievements

• Formulated the NGK Group Human Capital Management Policy (June 2023)
• Received 28 human rights-related reports in FY2022, addressed through investigations and corrective actions
• Conducted company-wide QuiC (Quality up innovation Challenge) quality improvement activities

Governance Achievements

• Established the Risk Management Committee (April 2022)
• Established the ESG Management Committee (April 2022)
• Revised the NGK Group Corporate Business Principles and established the NGK Group Code of Conduct (July 2023)

Climate Goals & Targets

Environmental Challenges

• Shrinking internal combustion engine-related markets due to vehicle electrification
• Effects of natural disasters on operations
• Geopolitical risks
• Increased costs due to greenhouse gas reduction and energy conversion
• Damage to brand reputation
• Semiconductor shortage impacting automotive industry
• Sluggish economy
• Slow pace of social implementation and commercialization of new technologies

Mitigation Strategies

• Developing new carbon neutrality-related products
• Exploring new markets in collaboration with Corporate NV Creation
• Investing in R&D (300 billion yen over 10 years)
• Promoting digital transformation (DX)
• Strengthening partnerships with other companies
• Improving profitability through price revisions, productivity improvements, and cost cutting
• Implementing business continuity plans (BCP)
• Developing alternative sourcing strategies
• Materials informatics (MI) to accelerate R&D

Supply Chain Management

Supplier Audits: CSR self-assessment survey conducted on approximately 630 suppliers in FY2022

Responsible Procurement

• NGK Group’s Supply-Chain CSR Guideline
• Green Procurement Standard
• Agreement to comply with NGK Group’s Supply-Chain CSR Guideline

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Typhoons
• Storm surges

Transition Risks

• Increased costs due to greenhouse gas reduction
• Adoption of carbon pricing
• Decline in demand for internal combustion engine products

Opportunities

• Growth in CCU/CCS market
• Increased demand for NAS batteries and Zinc Rechargeable Batteries
• Increased demand for semiconductor-related products
• Improved assessments by contributing to carbon neutrality

Reporting Standards

Frameworks Used: IIRC, GRI Standards, SDGs, TCFD

Sustainable Products & Innovation

• Sub-nano ceramic membranes
• NAS batteries
• Zinc Rechargeable Batteries
• Honeycomb products for direct air capture (DAC)