Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by 1.5% from FY2014 levels
• Reduced energy per unit of production by 2.3% from FY2014 levels
• Installation of solar power generation equipment nationwide (7 plants and 10 sites domestically)

Social Achievements

• Acceptance of Vietnamese technical interns
• Recruitment of international students
• Acceptance of SUNSCO technical employees
• Development of an environment where women can continue to work (childcare support/job return support systems)
• Initiatives towards eliminating occupational accidents
• Social contribution of ¥38 million

Governance Achievements

• Introduction of Outside Directors
• Evaluated operations, composition, and other aspects of Board of Directors
• Created Advisory Committee for Director nomination and compensation
• Introduced stock compensation system for Directors and Managing Officers
• Introduced restricted stock compensation system for Internal Directors
• Formulation and Revision of Corporate Governance Guideline
• Compliance Training provided to all employees

Climate Goals & Targets

Environmental Challenges

• Shortage of workers
• Decreased demand for building materials
• Decrease in automobile sales volume
• Impact of the Novel Coronavirus on overseas subsidiaries

Mitigation Strategies

• Increasing production and clerical work efficiency using IoT and AI
• Renewal of facilities, and review of recruitment policy and work styles
• Merger and relocation of four group facilities, including head office
• Use of female and overseas human resources
• Enhancement of support system for early return from childcare leave
• Company-wide measures in place to prevent infection
• Focusing on boosting domestic sales staff and increasing number of distributors
• Strengthen company-wide initiatives to reduce manufacturing costs

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ISO 14001

UN Sustainable Development Goals

• Goal 7
• Goal 9
• Goal 11
• Goal 12
• Goal 13

Environmental Metrics

ESG Focus Areas

• Human resources & working styles
• Consideration for the environment
• Corporate governance
• Social contribution activity

Environmental Achievements

• Proactive use of renewable energy through a mega solar power project
• Conversion of manufacturing facilities to those with energy-saving property
• Switch of gases used at Takuma Plant to liquefied natural gas (LNG)

Social Achievements

• Created a working environment where diverse human resources can play active roles
• Promotion of empowerment of women by providing training and expanded childcare and return-to-work support programs
• Acceptance of international students and foreign technical interns
• Provision of overseas training and global business training for employees stationed overseas
• Strengthening safety measures with emphasis on safety awareness raising activities and training programs
• Social contribution activities aiming for around 0.5% of non-consolidated net income after dividend payment

Governance Achievements

• Established corporate governance systems based on the Companies Act and Japan’s version of the SOX Act
• Reinforcement of speedy and accurate decision-making supervisory functions
• Ongoing efforts to enhance corporate governance
• Established the Compliance Committee to support and give instructions on the practice of compliance

Climate Goals & Targets

Environmental Challenges

• Impact of COVID-19 on steel demand in Japan and overseas
• Tight supply of feedstock coils
• Sharp increase in purchase price of feedstock coils
• Turmoil in Asian steel market conditions due to oversupply and import restrictions
• Concerns about resurgence of COVID-19 and potential demand decrease

Mitigation Strategies

• Policies to accurately track changes in each region and swiftly minimize negative factors
• Prioritizing increases in finished product prices to improve spread between product sales prices and material purchase prices
• Efforts to improve productivity and reduce costs at manufacturing plants
• Negotiations with motorcycle manufacturers to raise product prices (SUNSCO)
• Extension of production line at Bangalore Plant (KUMA) to capture demand

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Highly corrosion-resistant 55% aluminum-zinc plated structural steel tube products

Environmental Metrics

ESG Focus Areas

• Organizational Governance
• Consumer Issues
• Fair Operating Practices
• The Environment
• Human Rights
• Labor Practices
• Community Involvement and Development

Environmental Achievements

• Proactive use of renewable energy through a mega solar power project, conversion of manufacturing facilities to those with energy-saving property, and switch of gases used at Takuma Plant to liquefied natural gas (LNG).
• Aims to reduce Group CO2 emissions in Japan by 46% compared with FY2013 levels by 2030 (a 30% reduction by FY2023)

Social Achievements

• Created a working environment where diverse human resources can play active roles. Promoting empowerment of women by providing training and expanded childcare and return-to-work support programs, accept international students and foreign technical interns as we expand our overseas operations, provide overseas training, and offer global business training for employees stationed overseas.
• Provides aid in Japan and abroad, with the goal of returning every year to society about 1 percent of non-consolidated net income after payment of dividend through social contribution activities. We support educational, cultural, sports, medical and environmental protection activities inside the country, and health/medicine and educational activities in emerging countries.

Governance Achievements

• Put in place corporate governance systems based on the Companies Act, Japan’s version of the U.S. Sarbanes-Oxley Act (SOX), which accords the prime importance to internal control of financial reporting and is applicable to accounting periods started from April 2008 onward.
• Established the Compliance Committee, whereby supporting and giving instructions on the practice of compliance.

Climate Goals & Targets

Environmental Challenges

• Harsh conditions are expected to continue due to the impact of the novel coronavirus (“COVID-19”), combined with factors such as new risks to the global economy posed by Russia’s invasion of Ukraine.
• Supply of feed stock coils remains tight, and with slim expectations of a recovery in demand in the construction sector and automobile production.
• Rising logistics costs and fuel prices are primarily adding to projections of the manifestation of inflation risk and a rise in USD-denominated interest rates.
• Intensifying competition in the Vietnamese market and a period in which it was forced to continue production with the plant in isolation due to COVID-19.
• Concerns about demand stagnating with the future transition to electric vehicles.

Mitigation Strategies

• Strive to prevent the further spread of COVID-19 and continue to push ahead with policies to accurately track changes in each region and swiftly minimize the negative factors, in order to ensure the implementation of our key measures in the second year of the 6th Medium-Term Management Plan.
• Passing these price increases onto our product prices as our top priority management issue to keep the deterioration of the spread between product sales prices and material purchase prices to a minimum.
• Increasing supply from Japan of BA tubes for semiconductor manufacturing equipment to meet growing demand, we will consider the possibility of local production of these products.
• Working to bring inventory levels down and pursue the depreciation of equipment, as well as concentrating on sustainable management by reducing borrowings and strengthening competitiveness.
• Consider new markets in consideration of concerns about demand stagnating with the future transition to electric vehicles.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Climate Change
• Governance
• Social Responsibility

Environmental Achievements

• TCFD recommendations disclosure in July 2022
• Issued ESG report in August 2022 outlining efforts towards zero carbon and long-term sustainable growth.
• Aiming for a 30% reduction in CO2 emissions by 2023 (compared to 2013)

Social Achievements

• Introduced a performance-linked dividend system
• Implemented a shareholder reward program
• Introduced live streaming of the annual general meeting for improved shareholder communication

Governance Achievements

• Established a new BA pipe manufacturing subsidiary in Texas, USA

Climate Goals & Targets

Environmental Challenges

• Decreased domestic crude steel production due to slow recovery of automobile production
• Global crude steel production decrease
• High inflation and interest rate hikes in the US
• Supply chain disruptions in Europe
• Uncertainty in the future outlook due to the prolonged Ukraine situation
• High energy costs
• Increased raw material costs
• Increased subcontracting costs
• Decreased order backlog in North America

Mitigation Strategies

• Continued efforts to raise product prices
• Focus on improving factory productivity and cost reduction
• Increased production of high value-added products for semiconductor manufacturing equipment
• Introduction of a new cutting machine at Hamamatsu processing center
• Development of a new pipe-making machine with female workers in mind
• Capacity expansion of BA pipe production at Maruichi Stainless Steel Tube Co., Ltd.
• Careful control of procurement and inventory levels
• Efforts to achieve early profitability for MNT company
• Establishment of MST-X company in Texas to meet growing demand for BA pipes

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Human Rights
• Environmental Sustainability
• Social Responsibility

Social Achievements

• Established a basic sustainability policy aimed at achieving stable growth by conducting business activities with consideration for all stakeholders.

Governance Achievements

• Established a Sustainability Committee and a risk management system.
• Appointed independent Outside Directors to be at least one-third (1/3) of its Directors.
• Ensured a majority of Outside Auditors on the Audit & Supervisory Board.
• Established internal and external compliance consultation desks for whistleblowing.

Climate Goals & Targets

Supply Chain Management

Responsible Procurement

• Strive to gain the understanding and cooperation of suppliers in the supply chains in which it is involved.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD

Environmental Metrics

ESG Focus Areas

• Governance
• Environmental
• Social

Environmental Achievements

• All pipe manufacturing plants and steel plate processing plants have obtained ISO 14001:2015 certification for their environmental management systems. The company implements measures to conserve energy and resources, reduce and properly manage waste (sorting), and treat wastewater and reduce noise.

Social Achievements

• The Company strives to ensure diversity, including the active participation of women, foreign nationals, and mid-career employees.

Governance Achievements

• Implemented all principles of the Corporate Governance Code revised in June 2021.
• Established a Nomination and Compensation Committee composed of Representative and Outside Directors.
• Established an advisory committee, which is under the Board of Directors and composed of Representative and Independent Outside Directors, to strengthen the independence, objectivity, and accountability of the Board of Directors functionality in relation to matters such as the nomination and compensation of senior management and Directors.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

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: TCFD

Certifications: ISO 14001:2015

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed