Climate Change Data

NIPPON CARBIDE INDUSTRIES CO., INC.

Climate Impact & Sustainability Data (2021-04 to 2022-03, 2023-04 to 2024-03)

Reporting Period: 2021-04 to 2022-03

Environmental Metrics

Total Carbon Emissions:50,700t CO₂ (46% reduction from FY2013)
Total Energy Consumption:114,896 MWh/year

ESG Focus Areas

  • Carbon neutrality
  • Electronics
  • Safety
  • SDGs
  • DX

Environmental Achievements

  • Aiming for a 46% reduction in CO2 emissions by FY2030 (compared to FY2013) and carbon neutrality by 2050. Initiatives include using renewable energy, process efficiency reforms, waste heat recovery, fuel conversion, and switching to energy-efficient equipment.

Social Achievements

  • Established a New Normal Working Team with young employees to propose work style reforms.
  • Adopted a new evaluation system to reward employees for challenges.
  • Working to increase the ratio of female managers and promote non-Japanese and mid-career hires.

Governance Achievements

  • Established the Nomination and Compensation Committee, with a majority of independent outside directors.
  • Introduced a new medium- to long-term incentive stock compensation (restricted stock) system for directors.
  • Regularly evaluates the effectiveness of the Board of Directors with an outside consultant.

Climate Goals & Targets

Long-term Goals:
  • Achieve carbon neutrality by 2050
Medium-term Goals:
  • Reduce CO2 emissions by 46% by FY2030 (compared to FY2013)
  • Increase female managers to 15% or more by FY2025
  • Achieve net sales of 62 billion yen and operating profit of 7 billion yen by FY2025

Environmental Challenges

  • Supply chain disruptions due to geopolitical risks (Russia's invasion of Ukraine, China's lockdown)
  • Rising raw material prices
  • Delays in condominium construction due to the Tokyo Olympics and Paralympics and the COVID-19 crisis
  • Shortage of semiconductors impacting automobile production
Mitigation Strategies
  • Focusing on domestic investments
  • Strengthening the business structure through the PDCA cycle and break-even point awareness
  • Developing alternative sourcing strategies (implied)
  • Improving profitability through a market-in and product-out approach

Climate-Related Risks & Opportunities

Physical Risks
  • Lowered productivity due to increased heat stroke and global warming-related illnesses
  • Inundation of production facilities and disruption of supply chains caused by floods
Transition Risks
  • Increased energy and raw material costs due to carbon tax
  • Increased costs to meet GHG reduction targets
  • Intensifying technological and cost competition
Opportunities
  • Expansion of EV-related demand
  • Increase in demand for all solid-state batteries
  • Increase in demand for decarbonization facilities and zero-carbon steel
  • Increase in demand for hydrogen fuel production facilities
  • Increased sales of product lines with insulation and blocking effects

Reporting Standards

Frameworks Used: IFRS Foundation "Integrated Reporting Framework", Ministry of Economy, Trade and Industry "the Guidance for Collaborative Value Creation", TCFD

Sustainable Products & Innovation

  • Carbon-neutral transition facilities
  • Environmentally friendly molded products
  • Environmentally friendly packaging films

Awards & Recognition

  • Good Design Award 2022 (LED Coping)

Reporting Period: 2023-04 to 2024-03

Environmental Metrics

Total Carbon Emissions:71,193 tCO2e/year (2023)
Total Energy Consumption:82,860 MWh/year (2023)
Water Consumption:5,044,000 m3/year (2023)

ESG Focus Areas

  • Carbon Neutrality
  • Co-existence and Co-prosperity with Local Communities
  • Increased employee satisfaction and feeling of being rewarded
  • Development of social and industrial digital infrastructure
  • Realization of healthy living and a safe and secure society

Environmental Achievements

  • Reduced GHG emissions to 71,000 tCO2 in 2023 from 111,170 tCO2 in 2013
  • Installation of solar power generation facilities at various factories, reducing GHG emissions by approximately 2,000 tCO2 per year
  • Active promotion of energy-saving activities, conversion to renewable energy, and Scope 3 reductions through collaboration with suppliers

Social Achievements

  • Increased ratio of female employees to 40%
  • Increased ratio of female managers to 13%
  • Held several classes on aerial imaging technology at a children's center
  • Concluded an agreement with Namerikawa City regarding the supply of drinking water in times of disaster
  • Participated in community events such as the Kathina Festival and GOMIZERO environmental activity
  • Donated stationery and other items to nearby elementary schools and support groups
  • Improved retention of new graduates after 3 years (69%)

Governance Achievements

  • Established a DE&I Promotion Team
  • Revised personnel performance evaluation system to encourage challenges
  • Introduced an internal entry system and an internal open recruitment system
  • Board of Directors consists of four internal directors and five external directors, with one woman among the six directors with voting rights
  • Implemented a medium- to long-term incentive stock compensation plan for directors

Climate Goals & Targets

Long-term Goals:
  • Achieve carbon neutrality by 2050
Medium-term Goals:
  • Achieve 12% or more ROE by FY2025
  • Achieve D/E ratio of 0.5 or less by FY2025
  • Increase ratio of women in management positions to 15% by FY2025, 20% by FY2030
Short-term Goals:
  • Reduce GHG emissions by 46% from the fiscal 2013 level by FY2030 (below 60,000 tCO2)

Environmental Challenges

  • Long-term slump in the semiconductor and electronic device markets
  • Continued sharp rise in raw material and resource prices
  • Rising labor costs
  • Sluggish motorcycle sales due to rising interest rates in Vietnam and Thailand
  • Decrease in the number of housing starts in Japan
  • Delays in the completion of construction projects for the steelmaking sector
Mitigation Strategies
  • Focusing on developing new customers and improving profitability by strengthening the structure in non-strategic market areas
  • Improving productivity and further price pass-through
  • Accelerating development in China for display-related adhesives
  • Shifting to high-value-added products in the field of ceramic substrates
  • Expanding sales in the US market for retroreflective sheets
  • Thoroughly pursuing Outstanding values = One & Only and promoting high value-added products

Supply Chain Management

Responsible Procurement
  • Fair and equitable procurement activities based on Basic Purchasing Transaction Policy
  • Requesting suppliers to use raw materials from CFS Conflict-Free Smelter certified smelters
  • Requesting investigation into risks in high-risk areas for minerals like cobalt and natural mica

Climate-Related Risks & Opportunities

Physical Risks
  • Inundation of production sites and supply chain disruption due to flooding
  • Increase in cooling costs due to higher average temperatures
Transition Risks
  • Rise in energy and raw material costs due to the introduction of carbon tax
  • Increase in capital investment to implement measures for GHG emission reduction
  • Increase in technical and cost competition
Opportunities
  • Increase in EV-related demand
  • Increase in demand for solid-state batteries
  • Increase in demand for decarbonization equipment and zero-carbon steel
  • Increase in demand for hydrogen fuel production facilities

Reporting Standards

Frameworks Used: IFRS Foundation Integrated Reporting Framework, Value Reporting Foundation（VRF）International Integrated Reporting Framework, TCFD

Sustainable Products & Innovation

  • Carbon-neutral engineering equipment
  • EV components
  • Biomass materials
  • High-performance building materials
  • Next-generation high-performance films
  • Reflective sheets for license plates