Message from the Managing Officer for Sustainability

Message from the Managing Officer for Sustainability

Under the integrated themes of
"Contribution to the environment and energy field"
and "Creation of a safe and secure society,"
the Group will work together
as a group to create innovations.

Under the integrated themes of Contribution to the environment and energy field and Creation of a safe and secure society, the Group will work together as a group to create innovations.

Sustainability Promotion Plan reviewed with backcasting to promote coexistence with the global environment and society together with employees

Nisshin Cotton Spinning Co., Ltd., was established in 1907, and in 2009, the company changed to a holding company structure and changed its name to Nisshinbo Holdings Inc. Upon that transition, the Company established an organization specializing in CSR, and in 2015, it defined three materialities: "Contribution to the environment and energy field," "Creation of a safe and secure society," and "Global compliance."
The three materialities were established by prioritizing social issues based on an assessment of their relevance to the Group's business, risks, and opportunities, while referring to social norms and the items surveyed by CSR evaluation organizations. For example, in terms of contributions to the environment, recent climate change is causing flood damage, and the Group's disaster prevention radio system can help with river and dam management. In the area of creating a safe and secure society, the Group believes that it can contribute to the future by providing brakes and electronic devices for mobility in general, including automobiles, which are undergoing major changes. Based on this idea, the Group is now working as one team to promote activities that were previously carried out by individual operating companies in the three strategic business domains of "Mobility," "Infrastructure & Safety," and "Life & Healthcare" under the integrated themes of "Contribution to the environment and energy field" and "Creation of a safe and secure society."
In FY2022, the Sustainability Development Department was newly established through organizational reform to accelerate this movement throughout the Group and contributes to sustainability management, which aims for sustainable growth together with society. At the same time, from the perspective of backcasting from 2030, the Group has been reviewing the "Fifth Sustainability Promotion Plan" through 2024 during the term, revising and promoting all initiatives and KPIs.

Aiming to achieve 60% sales expansion rate of "the products that contribute to the development of sustainable society" by increasing production of bipolar plates for fuel cells

I would like to talk about the progress of the Sustainability Promotion Plan for FY2022. Regarding the environmental field, the Group endorsed the recommendations of the TCFD (Task Force on Climate-related Financial Disclosure) in June and is aiming to capture climate change-related business opportunities and reduce risks. In FY2021, climate change scenario analysis was conducted for the Solutions business in the Wireless and Communications business, the Automobile Brakes business, and the Chemicals business where risks and opportunities are expected to have a significant impact. In FY2022, climate change scenario analysis was conducted for the Marine System, ICT/Mechanics, and Mobility business in the Wireless and Communications business, the Micro Devices business, the Precision Instruments business, and the Textiles business. The completion of activities in FY2021 and FY2022 will have covered 90% of its sales. Currently, in order to reduce climate-related risks, the Nisshinbo Group is actively promoting energy conservation activities, switching purchased electricity to green electricity, installing more PFCs (perfluorocarbons)*1 and other gas abatement equipment that requires capital investment, and increasing solar power generation, with the aim of achieving carbon neutrality by 2050. To cite a specific example, in the Textiles business, which is a major source of carbon dioxide emissions, the Group as a whole reduced emissions by about 23% from the previous fiscal year by switching to purchasing green power derived from geothermal power generation for electricity at its production plant in Indonesia.
Another key action item is the improvement of the sales percentage by "the products that contribute to the development of sustainable society" with the environmental target of increasing the ratio of such products to sales to more than 60% by FY2024. The relevant products are registered at Nisshinbo Holdings Inc. and reached 55% in FY2022. The breakdown is as follows: friction materials compliant with copper and antimony regulations*2 in the Automobile Brakes business account for 18%, semiconductor products (contributing to energy saving and smaller chip size in electrical appliances) in the Micro Devices business account for 11%, disaster prevention and mitigation-related products in the Wireless and Communications business account for 8%, and others account for 18%. The Group believes that the Group will be able to achieve a sales expansion rate of 60% by increasing production of bipolar plates for fuel cells, including those for automobiles, at its new plant (Midori-ku, Chiba City), which will start operation at the end of 2024.

Aiming to accelerate innovation, the Group is reforming its corporate culture by establishing a system that allows a diverse mix of people to work together.

Human resources can only open up such innovation. The Group now has a diverse range of companies with different histories, backgrounds, and cultures, and with strong capabilities in their respective business fields. The Group formulated the "Group Human Resources Strategy" for 2020 so that each and every one of the more than 20,000 employees from various backgrounds, both in Japan and overseas, can look in the same direction and fully demonstrate their abilities in the Nisshinbo Group. With an eye on future business development, the Group is attracting a wide range of diverse human resources, not limited to new graduates, and placing the right people in the right positions for development. While emphasizing engagement to draw out enthusiasm and creativity, the Group will also pay attention to health management and create an environment where capable people are treated appropriately. Specifically, 18 of the 100 companies in its group, including consolidated subsidiaries, have shifted to a Japanese-style role grading system, while respecting the corporate culture of each company. Approximately 70% of the domestic workforce (as of the end of FY2022) falls under this category. The Group also unified the talent management system and is working to raise the level of human resource utilization. Furthermore, the Group introduced a Learning Management System, and 92% of Japan employees were able to take courses by the end of FY2022. By unifying the various personnel-related systems and measures, the Group made it much easier to transfer employees between group companies, and I am convinced that the Group will make further progress toward a culture in which innovation will occur one after another as the Group promote the cross-border transfer of diverse people under a fusion of themes.
In addition, the participation of people with diverse backgrounds and women is essential for innovation. The Group aims to achieve a ratio of female managers in 2030 equivalent to the ratio of employees at the same point in time with a target of 23.5% at Nisshinbo Holdings Inc. in 2030. However, the current ratio is only 8.5%. Although the Group hired more than half of the clerical staff as women, and the Group received very talented people, the ratio of women in managerial positions is still low. The Group is further clarifying the reasons and obstacles that prevent women from demonstrating their full potential and is taking the first step toward creating a workplace environment in which both women and men can play active roles.
In addition, the Group recognizes that thorough human rights due diligence at all stages, including the supply chain, is an extremely important prerequisite for advancing sustainability management, and the Group will establish and develop a human rights due diligence system by the end of 2023. The Group has been promoting the development of a "Corporate Ethics Reporting System" and various human rights and compliance-related training programs for some time, and will further brush up its efforts to achieve a global level.

Continuing Sustainability Management as an Environment and Energy Company group that Meets Stakeholders' Expectations

Lastly, I would like to talk about the "Global Survey," which measures the status of engagement with employees. The most recent survey was conducted in 2022, and a total of 16,000 people in Japan and overseas locations responded with an average response rate of 96% for the companies covered. Overall, the results were healthy, with top management reading through all of the approximately 4,500 open-ended responses from a wide range of levels. I am encouraged by positive comments, such as "We are engaged in progressive activities, and we promote our operations with pride," and "We look forward to working as an Environment and Energy Company group."

The Group has always been transforming its business portfolio and achieving development and will continue to promote corporate activities that contribute to the protection of the global environment as an Environment and Energy Company group that meets the expectations of its employees and all stakeholders, as well as continue to provide solutions to realize a waste-free society.
The Group sincerely appreciates your continued support and encouragement.

Makoto Sugiyama

Executive Managing Officer
Senior Manager of Sustainability Development Department,
Corporate Strategy Center
Nisshinbo Holdings Inc.

*1 PFCs (Perfluorocarbons): fluorinated greenhouse gases used in dry etching and other processes in semiconductor manufacturing.

*2 Copper and antimony regulations: Japanese and foreign laws and regulations that restrict the use of copper and antimony, which are considered highly toxic when released into the environment.