Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Quality
• Society
• Governance

Environmental Achievements

• Joined RE100 initiative, committing to 100% renewable electricity by 2030 in Japan and 2050 globally.
• Adopted internal carbon pricing system.
• Reduced CO2 emissions from product usage by 30% by 2030 (compared to 2018).
• Reduced CO2 emissions from operations in Japan by 50% by 2030 (compared to 2018).
• Reduced waste matter generated from operations in Japan by 20% by 2030 (compared to 2018).
• Developed hybrid water and space heating systems.

Social Achievements

• Developed bath monitoring functions to prevent bath-related accidents among the elderly.
• Developed gas water heaters with bacteria-killing functions.
• Developed Multi Grill gas cookers for easier cooking.
• Launched an app providing bathing advice based on weather forecasts.
• Promotes socially responsible procurement with supplier guidelines and monitoring.
• Established S-CORE Hearts K.K. to employ people with disabilities.
• Improved workplace conditions and implemented telecommuting options.

Governance Achievements

• Established Audit & Supervisory Committee.
• Increased ratio of outside directors on the Board of Directors.
• Established Nominating Advisory Committee and Remuneration Advisory Committee.
• Implemented a quantitative risk assessment.
• Updated business continuity plan to address COVID-19 and supply chain disruptions.
• Established the Noritz Group Code of Ethics.

Climate Goals & Targets

Environmental Challenges

• Falling demand for products in Japan due to declining housing starts.
• Need to diversify suppliers amid global supply chain disruptions.
• Rising prices of fuel and raw materials.
• Need to reduce carbon footprint and adopt digital technologies.
• COVID-19 pandemic causing supply chain issues and delayed shipments.
• Shrinking market in Japan due to declining population.

Mitigation Strategies

• Launched a new three-year medium-term management plan.
• Shifting from one-time sales to recurring sales models (inspection alerts, maintenance contracts).
• Improving supply chain resilience (domestic manufacturing, multiple sourcing, parts standardization, redesign).
• Exploring new technologies, products, and businesses through open innovation.
• Improving the Noritz Production System (efficiency, increased parts inventory).
• Implementing risk management across three defense lines.

Supply Chain Management

Responsible Procurement

• Socially responsible procurement guidelines
• Monitoring of human rights, child labor, and conflict minerals

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products
• Development of technologies for diversifying energy sources

Reporting Standards

Frameworks Used: IIRC International Integrated Reporting Framework, UN Sustainable Development Goals, ISO 26000, GRI Sustainability Reporting Guideline, SASB Standards, UN Global Compact Principles, Japan Business Federation's Charter of Corporate Behavior, METI's Guidance for Collaborative Value Creation

Certifications: ISO 9001

UN Sustainable Development Goals

• Goal 9 (Industry, Innovation and Infrastructure)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)
• Goal 17 (Partnership for the Goals)

Noritz contributes to these goals through its business activities, product development, and stakeholder engagement.

Sustainable Products & Innovation

• Highly efficient heat recovery gas water heaters
• Hybrid water and space heating systems
• Solar heating systems
• E1 Combi boiler
• EZ Series tankless water heaters

Awards & Recognition

• Kids Design Award (for energy-efficient remote control unit)
• Recognition from Japan Association of Employers of Persons with Disabilities (for S-CORE Hearts K.K.)
• Award from Japan Organization for Employers of the Elderly, Persons with Disabilities and Job Seekers (for Kashima Co., Ltd.)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Quality
• Social Responsibility
• Governance

Environmental Achievements

• Received an A- score for climate change leadership from CDP in 2022.
• Consolidated eight shipping facilities in Japan to two, outsourcing shipping operations to reduce environmental burden and improve efficiency.
• Switched from plastic pallets to slip sheet pallets for container shipments to increase volume by 30% and reduce waste.
• Aiming for a 30% reduction in CO2 emissions from product usage in Japan by 2030 (compared to 2018 levels) and a 50% reduction in operational emissions by 2030.
• Achieved 95% thermal efficiency in gas water heaters by reusing exhaust heat (2002).

Social Achievements

• Launched a program to groom future managers, training them in business ethics, problem-solving, and communication skills.
• Adopted a new performance management system to improve employee engagement and maximize accomplishments.
• Implemented work-style reforms to improve work-life balance and productivity.
• Established a system for recycling water heaters, creating employment opportunities for people with disabilities.
• Percentage of employees with disabilities was 3.55% of the Group’s entire workforce in Japan (as of June 30, 2022).

Governance Achievements

• Improved the effectiveness of the Board of Directors through various measures, including third-party evaluations and a review of decision-making authority.
• Established Nominating Advisory Committee and Remuneration Advisory Committee to enhance independence and objectivity.
• Renewed the Noritz Group Code of Ethics to better respond to changing societal trends and globalization.
• Strengthened internal controls based on a three-line defense model.
• Revised risk management policy and revamped officer evaluation and remuneration systems.

Climate Goals & Targets

Environmental Challenges

• Global shortages of electronic components and resins impacting material procurement and product delivery.
• Russia's invasion of Ukraine, soaring raw material prices, rising transport and energy costs.
• Declining housing starts in Japan reducing demand for products.
• Need to diversify suppliers amid global supply chain disruptions.
• Need to reduce carbon footprint and adopt digital technologies.

Mitigation Strategies

• Restructured the supply chain, modifying procurement conditions and securing alternative sources of components.
• Adjusted procurement conditions, stocked up on inventories, modified product designs, and secured alternative sources of parts and components.
• Investing ¥40 billion in new equipment and facilities to conserve energy, generate electricity from renewables, and reduce CO2 emissions.
• Outsourcing logistics operations to improve efficiency and reduce environmental burden.
• Developing and promoting energy-efficient products, including hybrid water heating systems and heat-recovery gas water heaters.

Supply Chain Management

Supplier Audits: Annual surveys and UN Global Compact self-assessment tool.

Responsible Procurement

• Socially responsible procurement guidelines
• Monitoring supplier compliance with human rights, child labor prevention, and conflict minerals.

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products
• Use of carbon-neutral fuels (hydrogen)

Reporting Standards

Frameworks Used: IIRC International Integrated Reporting Framework, United Nations Sustainable Development Goals, ISO 26000 international standards, GRI Sustainability Reporting Guideline, SASB Standards, United Nations Global Compact Principles, Charter of Corporate Behavior (Japan Business Federation), Guidance for Collaborative Value Creation (Ministry of Economy, Trade and Industry, Japan)

Certifications: ISO 14001, Eco-First (Japan’s Ministry of Environment)

UN Sustainable Development Goals

• Goal 9 (Industry, Innovation and Infrastructure)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)
• Goal 17 (Partnership for the Goals)

Noritz contributes to these goals through its business activities, including product development, resource recycling, and partnerships.

Sustainable Products & Innovation

• High-efficiency heat-recovery gas water heaters
• Hybrid water heating systems
• Solar heating systems
• Hydrogen combustion equipment
• Compact commercial-use heat pumps

Awards & Recognition

• Best Contributor to Product Safety Award (2022)
• Award from the Energy Conservation Center, Japan (2022)

Environmental Metrics

ESG Focus Areas

• Carbon Neutrality
• Sustainability
• Well-being
• Care

Environmental Achievements

• Developed a 100% hydrogen-fueled water heater (2023)
• Reduced CO2 emissions from product usage in Japan by 25% compared to 2018 (2023)
• Reduced CO2 emissions from operations in Japan by 50% compared to 2018 (target for 2030)

Social Achievements

• Established a system for recycling gas water heaters, creating employment opportunities for people with disabilities (2011)
• Improved employee engagement score from 68 to 70 (2023)
• Increased the ratio of female managers at Noritz Corporation to 3.82% (2023)

Governance Achievements

• Increased the time devoted to discussing medium- to long-term management strategies in Board meetings to almost 40% (2023)
• Implemented enterprise risk management (ERM)
• Strengthened internal control system across operational divisions, management and administrative departments, and audit departments

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to the COVID-19 pandemic (2021)
• Declining product demand in Japan (2023)
• Rising raw material costs (2023)
• Overdependence on the Chinese market for international sales
• Labor shortages in Japan

Mitigation Strategies

• Restructured the supply chain (2022)
• Adjusted procurement conditions, modified product designs, and secured alternative sources of parts (2022)
• Promoted high-value-added products in Japan and reduced cost prices (2023)
• Reorganized business portfolio, shifting operational resources to North America, Australia, and Southeast Asia (2023)
• Supplying pre-assembled commercial- and industrial-use water heating systems to reduce installation work (2023)
• Investing in automation and smart factories (2024-2026)

Supply Chain Management

Responsible Procurement

• Securing multiple suppliers of parts
• Expanding inventories
• Developing products without the use of specialized parts
• Modifying product designs to eliminate the need for high-risk procurement of parts

Climate-Related Risks & Opportunities

Transition Risks

• Changes in fuel sources
• Growing calls for decarbonization

Opportunities

• Development of low-emission products
• Development of hydrogen-fueled water heaters
• Development of heat pump and renewable energy applications

Reporting Standards

Frameworks Used: IIRC International Integrated Reporting Framework, UN Sustainable Development Goals, ISO 26000, GRI Sustainability Reporting Guideline, SASB Standards, UN Global Compact Principles, Charter of Corporate Behavior (Japan Business Federation), Guidance for Collaborative Value Creation (METI, Japan)

Sustainable Products & Innovation

• 100% hydrogen-fueled water heater
• Heat-recovery and hybrid water heating systems
• Tankless water heaters
• Aqua Ozone bathwater disinfectant system
• Hiito bathtub