Basic Concept

The Nisshinbo Group's Business Conduct Guidelines include Awareness and Concern towards its environmental impact. The Group is committed to reducing greenhouse gas emissions and providing decarbonized technologies, products, and services to faithfully realize a safe and secure society for all people. The Group manages key performance indicators (KPIs) as part of the systematic measures to achieve its environmental targets for reducing greenhouse gas emissions^*1 and expanding sales of products that contribute to a sustainable society.

【Main measures】

• ①The Group is advancing reduction of greenhouse gas emissions through ISO 14001 activities.
• ②The Group is advancing activities to reduce Scope 1 (in-house emissions) and Scope 2 (off-site emissions of electricity, etc.) at manufacturing sites, and to establish environmentally friendly facilities.
• ③The Group is promoting new solar power generation facilities and switch to electricity derived from renewable energy sources.
• ④In the Wireless and Communications business, the Group is offering products for adaptation to climate change. These include dam and river management systems to prevent flooding damage and disaster prevention notification and communication systems to protect local residents in the event of a disaster.
• ⑤In the Micro Devices business, the Group is expanding equipment to reduce the emissions of PFCs gas^*2 from semiconductor production facilities.
• ⑥The Group is developing, manufacturing and sell ingseparator materials, core components of the fuel cells that contribute to the development of a hydrogen-based society. The Group is also advancing the use of CFCs in insulation products in its Chemicals business.

*1 Greenhouse gas emissions are targeted by Scope 1+Scope 2

*2 PFCs: Fluorinated greenhouse gases used in dry etching and other processes in semiconductor manufacturing

• Sustainability Promotion Plan and KPIs

Please refer to "Promotion System" in "Environmental Activities" for the promotion system.

• Promotion System

Specific Initiatives of The Nisshinbo Group

Greenhouse Gas Emissions Reduction Targets

The Nisshinbo Group aims to capture climate change-related business opportunities and reduce risks. In order to reduce climate-related risks, the Group declared in June 2022 to be carbon neutral by 2050 and established a new long-term environmental target with 2050 as the year of achievement. With the achievement of carbon neutrality as its top priority, the Group actively promoting climate change countermeasures such as energy conservation activities, switching to electricity derived from renewable energy, and reducing emissions of PFCs^* (perfluorocarbons). At the same time, in June 2022, the Nisshinbo Group revised its three-year and medium-term environmental targets for reducing greenhouse gas emissions.

The Nisshinbo Group’s Greenhouse Gas Emissions Reduction Targets

Please refer to " Environmental Activities " for The Group's Environmental Targets and " Material Balance " for business activities and environmental impacts.

Outline of TCFD Response

Climate change is a global challenge for all countries and regions, and the reduction of greenhouse gases is a global long-term target. The Nisshinbo Group believes that it is crucial to incorporate business opportunities caused by climate change and appropriately respond to risks. Accordingly, in FY 2021 the Group began analyzing climate change scenarios in accordance with the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD)^*. In June 2022, the company expressed its agreement to the TCFD recommendations.

Please refer to "Disclosure Based on TCFD Recommendations" for the results of climate change scenario analyses.

• Disclosure Based on TCFD Recommendations

Through climate change scenario analyses, the Group will identify the risks and opportunities that climate change may pose to the business in future, develop more flexible and robust strategies by leveraging the opportunities in the development of business strategies, and increase the resilience against future risks.

* TCFD: The Task Force on Climate-related Financial Disclosure established by the Financial Stability Board (FSB)

Independent Practitioner's Assurance of Environmental Data

The Nisshinbo Group obtained independent practitioner's assurance from Deloitte Tohmatsu Sustainability Co., Ltd. in its Nisshinbo Group Greenhouse Gas Emissions Data 2022 in the Japanese version to improve the reliability of its Greenhouse Gas Emissions (Scope1, Scope2) environmental performance data.

• Nisshinbo Group Greenhouse Gas Emissions Data 2022

Greenhouse Gas Emissions

The Nisshinbo Group's actual greenhouse gas emissions were approximately 438.0 thousand t-CO₂e, down 23% from the previous fiscal year's greenhouse gas emissions. Emissions from energy sources were significantly reduced after the Textiles business shut down its in-house power generation facilities using coal boilers and converted to purchased power; the Automobile Brakes business switched to green power derived from solar, wind, and hydroelectric power generation; and the Textiles business switched to green power derived from geothermal power generation.

Perfluorocarbons (PFCs) composed 84% of non-energy related greenhouse gas emissions. The PFCs emissions were mainly from the semiconductor product manufacturing process at Nisshinbo Micro Devices Inc.^*

Trends in Greenhouse Gas Emissions

* In 2018, we changed our fiscal year-end from March 31 to December 31. As a result, the consolidated fiscal year, which is a transitional period, is an irregular accounting period. For this reason, the period used for reference to FY2018 is adjusted to the period from April 1, 2018 to March 31, 2019, to match the period of other consolidated fiscal years.

Greenhouse Gas Emissions by Scope

*1 The same reference values are shown in the graph above for Trends in Greenhouse Gas Emissions.

*2 Data on greenhouse gas emissions are assured by a third party (Deloitte Tohmatsu Sustainability Co., Ltd.).

• Nisshinbo Group Greenhouse Gas Emissions Data 2022

[Calculation method]

【Subject Organizations】

In FY 2022, a total of 100 companies, including Nisshinbo Holdings Inc. and 99 consolidated subsidiaries, were counted.

In greenhouse gas emissions by business, the Micro Devices business accounted for 34% of total emissions. This was followed by the Automobile Brakes business, which accounted for 26%.

Greenhouse Gas Emissions by Business

*1 In 2018, we changed our fiscal year-end from Mrch 31 to December 31. As a result, the consolidated fiscal year, which is a transitional period, is an irregular accounting period. For this reason, the period used for reference to FY2018 is adjusted to the period from April 1, 2018 to March 31, 2019, to match the period of other consolidated fiscal years.

*2 In FY 2019, the Electronics business was separated into the Wireless and Communications business and the Micro Devices business.

Of the Nisshinbo Group's greenhouse gas emissions, the proportion in Japan accounts for 50%.

Greenhouse Gas Emissions in Japan and Overseas

* In 2018, we changed our fiscal year-end from March 31 to December 31. As a result, the consolidated fiscal year, which is a transitional period, is an irregular accounting period. For this reason, the period used for reference to FY2018 is adjusted to the period from April 1, 2018 to March 31, 2019, to match the period of other consolidated fiscal years.

• Environmental Data

Renewable Energy

Solar Power Generation

Solar power generation equipment installed by the Nisshinbo Group remained steady throughout FY2022, generating 6.2 thousand MWh of power. Solar power generation facilities were installed and started operation in April 2022 at Nisshinbo Micro Devices (Thailand) Co., Ltd.

Purchasing Green Power

The Nisshinbo Group is promoting the switch to green power, and purchased approximately 61.4 thousand MWh of green power in FY2022.
Nisshinbo Holdings Inc., Head Office, purchases non-fossil certificates derived from hydroelectric power generation; and Nisshinbo Brake Inc. Tatebayashi Plant, Nisshinbo Somboon Automotive Co., Ltd. and Nisshinbo Automotive Manufacturing Inc. in the Automobile Brakes business purchased electricity derived from solar power generation from solar, wind, and hydroelectric power generation, while TMD Friction UK Limited purchased electricity derived from solar power generation; and PT. Nikawa Textile Industry, PT. Nisshinbo Indonesia and PT. Naigai Shirts Indonesia in Textiles businesses purchase green power derived from geothermal power generation.

Amount of Green Power Purchased by Business Site in FY2022

* PPA: Abbreviation for Power Purchase Agreement.

• Environmental Data

CDP Climate Change 2022 Assessment

The CDP is an international NGO working in the environmental field. The CDP surveys more than 18,700 companies worldwide and assigns scores from A to D in more than 1,100 cities, states, and regions to assess how companies effectively responds to the issues of climate change, deforestation, and water security. The Nisshinbo Group received a B rating in Climate Change 2022.

Selected as a "Zero Emissions Challenge Company" by METI

The following initiatives were highly evaluated, and each of the initiatives selected as Zero Emissions Challenge Companies by the Ministry of Economy, Trade and Industry of Japan: Technology Development Project for Social Implementation of Marine Biodegradable Plastics by Nisshinbo Holdings Inc.; Project for Realization of Energy-Saving Society with Robots and Drones by Japan Radio Co. Ltd.; and Industry-Academia-Government Collaboration Problem-solving Research and Development Project about Advancement of Fuel Cells, etc. Technologies and Utilization Project by Nisshinbo Chemical Inc.

In collaboration with Keidanren, the New Energy and Industrial Technology Development Organization (NEDO), and the Ministry of Agriculture, Forestry and Fisheries (MAFF), METI is working on the Zero Emissions Challenge project, which lists the companies that are accepting the challenge of innovation aimed at achieving 2050 carbon neutrality and which provides investors with useful information.

In cooperation with the Federation of Keidanren, NEDO and MAFF, METI has positioned the company as a Zero Emi Challenge Company to accept the challenge of innovation efforts in order to achieve a decarbonization society. METI announced the TCFD Summit 2021 in October 2021 as a second issue following 2020.

The list of companies covers programs run by METI and MAFF tied to the Zero Emission Innovation Strategy, and 45 projects run by NEDO. A total of 623 companies that agreed to the aims of the Zero Emi Challenge are listed.

Participation in Keidanren's Challenge Zero

The Nisshinbo Group participates Challenge Zero (Challengenet Zero Carbon Innovation), a project led by the Federation of the Japanese Economic Organization (hereinafter referred to as the “Keidanren”), participates.

Challenge Zero is a new initiative in which the Keidanren, in cooperation with the Japanese government, strongly promotes and publicizes innovative action by companies and organizations in Japan and overseas that are tackling the challenge of realizing a "decarbonizing society". This initiative positions the aims of the International Framework for Climate Change Control, known as the Paris Agreement, as a long-term goal.

In light of the goal of Challenge Zero, Nisshinbo Holdings Inc. will promote the creation of innovation in order to reduce greenhouse gases and contribute to the realization of a carbon-free society through its business activities.

Keidanren's official "Challenge Zero" website https://www.challenge-zero.jp/

View case studies of the Group's efforts to realize a decarbonizing society is presented.

Specific Activities of the Group Companies

Progress in Installation of PFCs Abatement Equipment and Reduction of Greenhouse Gas Emissions

Nisshinbo Micro Devices Fukuoka Co., Ltd., is implementing measures to reduce greenhouse gas emissions by focusing on PFCs and electricity, which emit the largest amounts of greenhouse gases. The two main activities are the introduction of high-efficiency equipment and inverters in conjunction with the replacement of electrical equipment, along with the installation of abatement equipment at facilities using C₃F₈ gas (PFCs).

In FY 2022, annual greenhouse gas emissions were 33,128 t-CO₂, down 27.3% from 2014 (12,437 t-CO₂ reduction), while PFCs emissions were flat at 16,998 t-CO₂. With two units installed in January, PFCs emissions are expected to be reduced by 4,018 t-CO₂/year and total emissions by 36.2% (16,510 t-CO₂ reduction).

In parallel, the company is considering installing a third PFCs gas abatement system ahead of schedule, as well as installing additional abatement equipment at facilities that use CF₄ gas.

Expand the Use of Renewable Energy

Nisshinbo Micro Devices (Thailand) Co., Ltd., in Thailand installed photovoltaic panels with an installed capacity of 1,524 kW on the factory roof in April 2022. With a total panel area of 10,184 m², this is the largest installation of power generation panels in the factory building. This initiative has made it possible to convert approximately 2,107 MWh (938 t-CO₂) of the company's annual electric energy use to renewable energy.

The solar power operation was originally planned to start in December 2021. However, because of the global outbreak of the COVID-19, procurement of power generation panel components was delayed, and the pilot operation was successfully completed in April 2022. After three months of pilot operation, full operation began in July 2022.

Since the start of full solar power generation operation, the current power generation is in line with the initial estimate and has continued to steadily generate power. The company will continue to monitor power generation and promote the stable use of renewable energy.

On-site PPA Solar Power Generation

Nisshinbo Brake Inc., Tatebayashi Plant, installed solar power generation equipment by concluding an on-site PPA^* and started generating electricity in December 2022. Approximately 3,698m² of solar panels were installed on a portion of the roof of the Tatebayashi Plant. The system has a capacity of 500 kW and is expected to generate approximately 741 MWh per year. The annual greenhouse gas emissions are expected to be reduced by approximately 285 t-CO₂, or 2.3% of the plant's total greenhouse gas emissions.

The status of the solar power generation equipment can be monitored in real time using a Web browser, including the amount of electricity generated on the day of installation, the cumulative amount of electricity generated since installation, and the presence or absence of abnormalities in the equipment and its history. The company plans to gradually add more solar power generation facilities in the future because there is space on the roof for more solar panels.

*PPA: Abbreviation for Power Purchase Agreement, a power sales contract

On-site PPA to Install Solar Power

Nisshinbo Somboon Automotive Co., Ltd. in Thailand installed a solar power generation system with an on-site PPA and started generating electricity in December 2022. Approximately 5,900 m² of solar panels have been installed on the roof of the plant. The system has a capacity of 1,000 kW and is expected to generate approximately 1,580 MWh of electricity annually. The annual greenhouse gas emission reduction effect is estimated to be approximately 790 t-CO₂, or about 18% of the greenhouse gas emissions generated for the company's electricity use.

The status of the solar power generation facilities can be monitored in real time using a Web browser, including the amount of electricity generated on the day, the cumulative amount of electricity generated since installation, and the presence or absence of abnormalities in the facilities and their history. The company will use the accumulated solar power generation history to find more efficient ways to use solar power generation and further reduce greenhouse gas emissions.

Expansion of Bipolar Plates for Fuel Cells Manufacturing, Sales, and Development System

Nisshinbo Chemical Inc. has decided to expand the production capacity of Bipolar Plates for Fuel Cells, which it has been manufacturing and selling at its Chiba Plant.

The company began full-scale production and sales of bipolar plates when they were adopted for use in ENE-FARM, a household fuel cell system that was launched in Japan in 2009. Currently, as countries around the world accelerate their efforts to achieve carbon neutrality, fuel cells are considered one of the key devices for achieving this goal, and their deployment in stationary applications, such as data centers, communication base stations, buildings, construction machinery, and small generators, is progressing around the world. In the future, the market is expected to expand to include trucks, buses, and other in-vehicle applications, as well as marine and railroad applications, and demand for bipolar plates, one of the key components, is expected to grow.

Under such circumstances, the company has been receiving strong inquiries from customers and has decided to increase production capacity by expanding the plant. The company has also started development of next-generation bipolar plates to strengthen competitiveness. Through business activities, the company will continue to contribute to the expansion of the fuel cell market and global environmental protection and work toward the realization of a sustainable society.

Initiatives to Use Renewable Energy in Indonesia

It is estimated that Indonesia has 28,000 MWh of geothermal energy, more than 40% of the global geothermal energy potential. This resource is the second largest in the world after the United States. The basic mechanism is simple: power is generated by turning turbines with steam from groundwater heated by magma beneath volcanoes. The main features of this system are that it has a low environmental impact because it does not require fossil fuels, that electricity prices are not affected by fuel market conditions, and that it provides more stable power than other power generation methods of solar and wind power, which are easily affected by weather conditions.

Three of Nisshinbo Textile's subsidiaries in Indonesia (PT. Nikawa Textile Industry, PT. Nisshinbo Indonesia, and PT. Naigai Shirts Indonesia) have switched their contracts to geothermal power from the state-owned power company (PLN). In FY2022, the three Indonesian companies reduced greenhouse gas emissions by approximately 40,000 t-CO₂ by switching to geothermal power generation.

Utilization of Biomass Fuel

PT. Nisshinbo Indonesia in Indonesia is mainly engaged in the dyeing and finishing of dress shirts and uniforms. In the bleaching, dyeing, and resin treatment processes, steam and heated oil are required to heat the processing solution and cleaning water or to dry the fabric, for which boilers are used.

Boilers use coal as fuel, but the company is now actively using coconut shells as a biomass fuel. Indonesia is the world's largest producer of palm oil, and the coconut shells emitted during the production process are considered to have zero CO₂ emissions from combustion, since CO₂ is taken up during the growth of the oil palm, the raw material. By actively using these coconut shells as boiler fuel, the company is reducing the amount of coal used, thereby reducing CO₂ emissions.

In FY2022, the company used 6,190 t of biomass fuels, such as coconut shells, reducing coal use by 33% and reducing greenhouse gas emissions by approximately 9,000 t-CO₂. The company will continue to strive to use biomass fuels as a renewable energy source.