Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced final disposal of wastes by 52% year-on-year in FY2020
• Zero environmental accidents in Japan in FY2020
• 30% reduction in energy consumption compared to conventional products through development of thermal insulators and hybrid insulation materials.
• 25% reduction in CFC substitutes used in the production process of Nicalon®

Social Achievements

• Continued cooperation in local events helps good communication between the plants and the surrounding areas.
• Participation in community events like 'ezarai' (cleaning of agricultural ditches)

Governance Achievements

• ISO 14001 certification at three principal manufacturing sites (Toyama, Shiga, Shirakawa plants)
• Regular internal environmental audits in accordance with ISO 14001

Climate Goals & Targets

Environmental Challenges

• Higher energy input intensity than the previous year due to decreased production because of the coronavirus situation.
• Three complaints and questions from neighboring residents regarding odor and noise at the Shiga plant in 2020.

Mitigation Strategies

• Improved thermal insulation of high-temperature furnaces for energy saving.
• Optimization and automation of combustion processes.
• Use of waste heat for preheating air-fuel mixtures.
• Replacement of the transformer with a high-efficient one.
• Shiga plant switched fuel from heavy oil and LPG to LNG and installed a Regenerative Thermal Oxidizer (RTO).
• Preventive maintenance of environment conservation equipment.
• Addressing complaints and preventing recurrences through continuous efforts.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Environmental Reporting Guidelines 2018, Ministry of the Environment, Guide for Items Contained in the Environmental Report (3rd Edition), Ministry of the Environment

Certifications: ISO 14001

Sustainable Products & Innovation

• Thermal insulators and hybrid insulation materials
• Anode materials for lithium-ion batteries
• Carbon fiber reinforced carbon materials
• Nicalon® silicon carbide continuous fibers

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced total greenhouse gas emissions from 122,439 t in 2019 to 114,740 t in 2021
• Reduced amount of final waste disposal from 3,613 t in 2019 to 758 t in 2021
• 1% annual reduction in energy intensity as a reduction target

Social Achievements

• Increased percentage of women in managerial track positions from 8% in 2017 to 14% in 2021
• Established General Employer Action Plan to address matters related to employees’ work and childcare
• Reduced number of occupational accidents from 23 in 2012 to 0 in 2021

Governance Achievements

• Established a Policy for Determining Remuneration for Directors
• Introduced a performance-linked stock remuneration system in 2017
• Established the Corporate Compliance Committee

Climate Goals & Targets

Environmental Challenges

• Difficulties in the sourcing of specific raw materials
• Risk of fire and explosion at a plant
• Risk of quality falsification/defects
• Revision and strengthening of laws, regulations
• Outbreaks of contagion/disease
• Recruitment difficulties, delays in human resource development, and outflow of human resources
• Earthquakes, tsunamis
• Cyberattacks

Mitigation Strategies

• Diversification of raw material suppliers
• Formulation of facility maintenance plans and promotion of self-maintenance
• Formulation of quality control manuals
• Proper collection of information on laws and regulations
• Operation of the Crisis Management Committee
• Rank-based and topic-specific training
• Securing of emergency power supplies
• Construction of defenses against unauthorized access, backup of data

Supply Chain Management

Responsible Procurement

• Promotion of procurement based on our “Basic Policy on Ethics and Compliance,” “Nippon Carbon Code of Conduct,” and “Environmental Policy,” and communication of our procurement policy to suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Increased damage to plants due to typhoons, heavy rains, flooding, and storm surges

Transition Risks

• Carbon pricing
• Equipment upgrade expenses to comply with environmental regulations
• Increased costs of oil- and coal-derived raw materials and fuels

Opportunities

• Increased demand for Nippon Carbon Group products that contribute to decarbonization

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Standards, Ministry of Economy, Trade and Industry “Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation (Guidance for Collaborative Value Creation)”, Ministry of the Environment “Environmental Reporting Guidelines”

Certifications: ISO 14001

Sustainable Products & Innovation

• Fine carbon products for semiconductors, magnets, etc. and for lithium-ion battery anode materials
• Artificial graphite electrodes
• Silicon carbide fiber

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• 1% annual reduction in energy intensity as a reduction target
• Initiatives to effectively minimize water input, through means such as the use of circulation equipment

Social Achievements

• Established an environment conducive to women playing an active role
• Several leave systems for caring for children in addition to the regular paid leave system
• Promoting a fundamental review of our evaluation system in addition to enhancing various employee education and training programs

Governance Achievements

• Appointed a female officer as an Outside Director in March 2022
• Established the “Basic Policy on Ethics and Compliance” and the “Nippon Carbon Code of Conduct”

Climate Goals & Targets

Environmental Challenges

• Sharp rise in energy and raw material costs
• Inexpensive artificial graphite electrode imports hampered domestic price increases
• Automobile production was adjusted in 2022 due to the shortage of semiconductors
• Profitability has deteriorated due to rising energy costs and other factors

Mitigation Strategies

• Conducting business management based on business structural reform and improvement of corporate constitution under our Mid-term Management Policy “BREAKTHROUGH 2024.”
• Entered into a capital and business alliance with SEC Carbon, Ltd. in 2022 to improve quality and strengthen competitiveness
• Working to reduce costs
• Actively undertaking capital investment to meet demand

Supply Chain Management

Responsible Procurement

• Promotion of procurement based on our “Basic Policy on Ethics and Compliance,” “Nippon Carbon Code of Conduct,” and “Environmental Policy,” and communication of our procurement policy to suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Heavy rains, flooding, and other weather anomalies

Transition Risks

• Carbon pricing
• Increased costs due to changes in manufacturing processes to comply with environmental regulations
• Increased energy costs
• Increased logistics costs
• Soaring raw material prices

Opportunities

• Increased demand for energy-saving- and renewable energy related products
• Increased demand for artificial graphite electrodes
• Increased demand for EV-related products
• Positive evaluation by investors, etc. of leading response

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Standards, Ministry of Economy, Trade and Industry “Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation (Guidance for Collaborative Value Creation)”, Ministry of the Environment “Environmental Reporting Guidelines”

Certifications: ISO 14001

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• 1% annual reduction in energy intensity
• Initiatives to minimize water input by effectively using circulation equipment
• Reduction of waste through 5R activities

Social Achievements

• Established the “Nippon Carbon Human Rights Policy”
• Efforts to improve the percentage of men taking leave for childcare
• Relaxation of restrictions on the number of times that childcare leave is allowed
• Introduction of a telecommuting program

Governance Achievements

• Strengthened corporate governance to ensure transparency and fairness in management
• Established a Corporate Compliance Committee
• Established an Internal Audit Bureau

Climate Goals & Targets

Environmental Challenges

• Soaring energy costs and raw material prices
• Decline in demand for artificial graphite electrodes and drop in market prices
• Decline in capital investment
• Recruitment difficulties

Mitigation Strategies

• Restructuring of business portfolio
• Collaboration with TMS to capture new demand in the US
• Establishment of a Technical Center to streamline new product development
• Efforts to reduce costs and improve quality
• Rank-based and topic-specific training programs

Supply Chain Management

Responsible Procurement

• Promotion of procurement based on the “Basic Policy on Ethics and Compliance,” “Nippon Carbon Code of Conduct,” and “Environmental Policy”

Climate-Related Risks & Opportunities

Physical Risks

• Heavy rains, flooding, and other weather anomalies

Transition Risks

• Carbon pricing
• Increased costs due to changes in manufacturing processes
• Increased energy costs
• Increased logistics costs
• Soaring raw material prices
• Emergence of innovative technologies

Opportunities

• Increased demand for energy-saving and renewable energy-related products
• Increased demand for artificial graphite electrodes
• Increased demand for EV-related products
• Positive evaluation by investors

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Standards, Ministry of Economy, Trade and Industry “Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation (Guidance for Collaborative Value Creation)”, Ministry of the Environment “Environmental Reporting Guidelines”

Certifications: ISO 14001

Sustainable Products & Innovation

• Fine carbon products for solar power generation, LEDs, semiconductors, electric vehicle parts
• Artificial graphite electrodes for electric furnaces
• Lithium-ion battery anode materials
• Silicon carbide fiber