Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity
• Governance
• Sustainable Raw Material Procurement
• Forest Management
• Product Safety
• Employee Well-being
• Stakeholder Engagement

Environmental Achievements

• Achieved a 70% "CO2 zero energy" ratio.
• Reduced CO2 emissions by 18.9% compared to FY2013 (non-consolidated).

Social Achievements

• Acquired ISO 45001 certification.
• Certified as 2022 Certified Health & Productivity Management Outstanding Organization.
• Established the Diversity Committee and formulated a policy to ensure diversity in human resource development and internal environment.
• Annual health checkup rate of 100%.

Governance Achievements

• Increased the ratio of outside directors to 40%.
• Established the “Group Basic Sustainability Policy” and revised “Group Sustainability Basic Regulations.”
• Strengthened risk management activities by categorizing management risks into 42 items.
• Held training on Labor Standards Law and Anti-Monopoly Act.

Climate Goals & Targets

Environmental Challenges

• Soaring prices for raw materials and fuel.
• Declining demand for printing and communication paper.
• Impact of changes in weather patterns on procurement of raw materials.
• Impact on business due to increased extreme weather.
• Tighter CO2 emission regulations.
• Tighter regulations for the spread of renewable energy.
• Growing criticism of lack of environmental consideration.

Mitigation Strategies

• Expanding overseas business and strengthening its business in Japan.
• Implementing price revisions for all product types.
• Building an even more optimal production system.
• Promoting forest management aimed at improving the multiple functions of forests.
• Assessing and implementing measures for natural disaster risks at mills.
• Developing BCP (Business Continuity Plan).
• Establishment of “Hokuetsu Group Zero CO2 2050” and “Group Environmental Target 2030”.
• Further promoting energy conservation.
• Active use of biomass energy.
• Promoting modal shift to railways.
• Established “Group Fundamental Policy for Raw Materials Procurement”.
• Procured wood materials with proven legality and sustainability.

Supply Chain Management

Supplier Audits: Regular checks on woodchip and pulp suppliers through annual declarations of legality and sustainability, and confirmation of forest certification registration.

Responsible Procurement

• Group Fundamental Policy for Raw Materials Procurement
• Policy on Procurement of Wood Material

Climate-Related Risks & Opportunities

Physical Risks

• Impact of changes in weather patterns on procurement of raw materials
• Impact on business due to increased extreme weather

Transition Risks

• Tighter CO2 emission regulations
• Tighter regulations for the spread of renewable energy
• Soaring fossil energy prices
• Lower valuation from investors

Opportunities

• Sympathy for advanced environmental considerations
• Improved valuation from investors
• Growing need for environmentally-friendly products and services
• Growing need for carbon-free energy
• Growing interest in forest sinks
• Growing interest in water resources
• Growing interest in forest resources

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 45001, FSC-C005497 (Hokuetsu Corporation), FSC-C022642 (Alberta Pacific Forest Industries Inc.), FSC-C012171 (NCT FORESTRY AGRICULTURAL CO-OPERATIVE LIMITED)

UN Sustainable Development Goals

• Goal 7
• Goal 13

The Group contributes to SDGs through efforts to achieve “Group Environmental Target 2030” and “Zero CO2 2050” and develop environmentally-friendly products such as alternatives to plastic materials.

Sustainable Products & Innovation

• Paper cup base paper
• Paper cutlery base paper
• PASCO®
• Vulcanized fiber
• ReCell®

Awards & Recognition

• 2021 Cellulose Society of Japan Technology Award

Environmental Metrics

ESG Focus Areas

• Climate Change
• Responsible Procurement
• Forest Management and Biodiversity
• Safety and Hygiene
• Human Capital Management
• Product Quality and Development
• Stakeholder Dialogue
• Corporate Governance
• Human Rights

Environmental Achievements

• Reduced CO2 emissions by 37.2% compared to FY2005 (non-consolidated)
• Achieved over 70% zero CO2 energy ratio at all mills using biomass energy, waste energy, etc.
• Increased zero CO2 energy ratio to 89% at Kanto Mill (Katsuta) using wood biomass boiler
• Received an “A-” rating in CDP Climate Change Program
• Certified as an Eco-Rail Mark product

Social Achievements

• Launched hSA25 (hokuetsu Safety Action 2025) to achieve zero serious accidents and 25 or fewer occupational accidents by FY2025
• Achieved target for number of occupational accidents in FY2022
• Improved Group’s safety performance, with lost-time accidents decreasing by 9.3 points from the previous year
• Certified as a Health & Productivity Management Outstanding Organization (Large enterprise category) for the second consecutive year
• Revised work system to support flexible working styles
• Expanded support system for work-life balance
• Women accounted for over half of new graduate hires in April 2023 (71%)
• Continued CSR activities including mill tours, supporting various organizations and events

Governance Achievements

• Established a Chief Risk Management Officer
• Strengthened information security management
• Conducted training on data falsification concerning quality and the environment
• Signed the United Nations Global Compact
• Established the “Hokuetsu Group Human Rights Policy”
• Established a Nomination and Compensation Committee with a majority of outside directors

Climate Goals & Targets

Environmental Challenges

• Tighter CO2 emission regulations
• Soaring fossil energy prices
• Growing criticism of lack of environmental consideration
• Impact of changes in weather patterns on raw material procurement
• Impact on business due to increased extreme weather
• Human resource shortages
• Cyberattacks/information security

Mitigation Strategies

• Realize “Hokuetsu Group Zero CO2 2050” and “Hokuetsu Group Environmental Targets 2030”
• Promote further energy conservation
• Use biomass energy
• Use carbon-neutral fuels
• Promote modal shift
• Introduce high-efficiency chip carriers
• Study introducing advanced CCS
• Implement “Group Fundamental Policy for Raw Materials Procurement”
• Assess and implement measures for natural disaster risks at mills
• Review BCP
• Promote profitable and stable procurement by diversifying suppliers
• Develop composite materials of cellulose nanofiber and carbon fiber
• Develop and expand sales of plastic alternatives
• Develop and expand sales of battery separators
• Develop electrical power generation business with renewable energies
• Strengthen information security management

Supply Chain Management

Supplier Audits: Annual third-party audits

Responsible Procurement

• Group Fundamental Policy for Raw Materials Procurement
• Fundamental Policy on Procurement of Wood Material
• Procure only raw material produced legally in the forest where resources are protected, forests are cultivated, and properly managed

Climate-Related Risks & Opportunities

Physical Risks

• Damage to mills and facilities due to extreme weather
• Suspension of services due to damage to infrastructure
• Supply chain disruptions due to damage to infrastructure
• Deteriorate growth of trees and impact negatively on raw material procurement

Transition Risks

• Financial impact of carbon taxes
• Increase in unit price of levy to promote power generation with renewable energy
• Lower valuation from investors due to delay in addressing climate change

Opportunities

• Sales increase due to heightened consumer awareness of environmentally friendly products
• Improved valuation from investors through advanced climate change initiatives
• Increase needs for renewable energy to achieve carbon neutrality
• Growing interest in forest sinks that sequester and fix CO2

Reporting Standards

Frameworks Used: IFRS Foundation's International Integrated Reporting Framework, Ministry of Economy, Trade and Industry's Guidance for Collaborative Value Creation 2.0, GRI Standards

Certifications: ISO 45001, ISO 9001 (Dumas), ISO 14001 (Dumas), IATF16949:2016 (Dumas), FSC®-FM (Iwate Prefecture)

Sustainable Products & Innovation

• Paper materials as alternatives to plastics
• Biodegradable biomass products
• Electromagnetic noise suppression sheet
• Fluorine-free air filter paper

Awards & Recognition

• Certified Health & Productivity Management Outstanding Organization (Large Enterprise Category)
• Chairman’s Encouragement Award from the Japan Air Cleaning Association

Environmental Metrics

ESG Focus Areas

• Climate Change
• Responsible Procurement of Raw Materials
• Forestry Management and Protection of Biodiversity
• Ensuring Safety and Hygiene of the Workplace
• Human Capital Management
• Delivering Responsible Product Quality and New Product Development
• Dialogue with Stakeholders
• Improving Corporate Governance
• Respect for Human Rights

Environmental Achievements

• Reduced CO2 emissions by 37.8% compared to FY2005 (non-consolidated, 638,000 tons in FY2023)
• Increased zero CO2 energy ratio to 89% at Kanto Mill (Katsuta) using wood biomass boiler
• Received an “A-” rating from CDP for Climate Change for two consecutive years
• Received a “B” rating from CDP for Forest
• Sodegawa forest in Iwate Prefecture certified as a “Symbiosis with nature” site by the Ministry of the Environment
• Shares included in the FTSE Blossom Japan Sector Relative Index and MSCI Nihonkabu ESG Select Leaders Index

Social Achievements

• Established the Hokuetsu Group Human Resource Development Policy and promoted diversity
• Developed new products for plastic-free and electromagnetic wave noise suppression
• Held approximately 80 IR and SR meetings annually to enhance dialogue with shareholders and investors
• Maintained certification as “Health & Productivity Management Outstanding Organization” for the third consecutive year
• Lowest number of occupational accidents since the current Group was formed (36 in FY2023)

Governance Achievements

• Promoted active involvement of external directors and improved operation of the Board of Directors
• Nomination and Compensation Committee considered director selection and compensation systems
• Signed the United Nations Global Compact
• Formulated the Hokuetsu Group Human Rights Policy
• Implemented various compliance training programs

Climate Goals & Targets

Environmental Challenges

• Declining demand for printing and communication paper
• Changes in market structure
• Falling international pulp prices
• Soaring raw materials and fuel prices
• Supply chain disruptions due to extreme weather or natural disasters
• Companies not considering ESG in their supply chain
• Environmental destruction and biodiversity loss
• Mill and equipment accidents
• Serious accidents, overwork, and mental health issues
• Product complaints
• Violations of regulations and laws
• Human rights issues due to poor supplier management

Mitigation Strategies

• Reorganized sales structure to strengthen business competitiveness in Japan and overseas
• Established New Business Development Department
• Optimized production system for profitable purchasing and multiple suppliers
• Transferred production of some product brands to mitigate risks from natural disasters
• Improved business process efficiencies through digital transformation
• Revised product prices to reflect changes in the external environment
• Implemented hSA25 safety and health activities using ISO 45001
• Entered into a Basic Strategic Business Alliance Agreement with Daio Paper Corporation
• Implemented “round transportation” to improve logistics efficiency
• Initiatives aimed at forest management and biodiversity conservation
• Investing in human capital through the Hokuetsu Group Human Resource Development Policy
• Promoting diversity
• Improving corporate governance by strengthening the risk management system
• Developing and implementing “Fundamental Policy on Procurement of Wood Materials”
• Obtaining declarations of legality and sustainability from suppliers
• Conducting fact-finding and on-site inspections
• Conducting verification of procurement by third-party certification bodies
• Completing and renewing registration as a wood business under the Clean Wood Act
• Implementing environmental, social, and biodiversity-conscious afforestation projects
• Adhering to FSC-FM standards and sustainable forest management
• Promoting management of company-owned forests in accordance with certification principles
• Maintaining FSC-FM certification
• Reducing waste and complying with environmental laws and regulations
• Promoting environmental impact reduction through information disclosure
• Improving resource efficiency
• Increasing the amount of water reused and reducing water withdrawal
• Implementing compliance training programs
• Reviewing business continuity plans

Supply Chain Management

Supplier Audits: Annual third-party audits for legality and sustainability of wood procurement; traceability reports

Responsible Procurement

• Hokuetsu Group Fundamental Policy for Raw Materials Procurement
• Procuring raw materials produced legally and sustainably

Climate-Related Risks & Opportunities

Physical Risks

• Mill shutdowns and logistics disruptions due to extreme weather
• Restriction of water supply to mills due to drought or water pollution

Transition Risks

• Increased costs associated with responding to forest fires
• Supply chain disruptions due to extreme weather events
• Decreased supply of natural resources
• Increased costs associated with shutdowns due to extreme weather

Opportunities

• Increased demand for products manufactured using sustainable raw materials
• Lower operational costs through improved resource efficiency

Reporting Standards

Frameworks Used: International Integrated Reporting Framework (IIRC), Ministry of Economy, Trade and Industry’s Guidance for Collaborative Value Creation 2.0, GRI Standards, TCFD

Certifications: ISO 45001, FSC-FM

Sustainable Products & Innovation

• Plastic-free paper containers
• Electromagnetic wave noise suppression sheets
• Fluorine-free air filter paper
• Biomass products

Awards & Recognition

• Health & Productivity Management Outstanding Organization (three consecutive years)