IR

Sustainable Finance

Green Bonds

The proceeds of the green bonds will be used to finance carbon-neutral R&D and the group’s decarbonization projects, all designed to put “NGK Group Vision: Road to 2050” and “NGK Group Environmental Vision for 2050” into practice.

Overview of the Green Bonds

Overview of the Green Bonds
Name of bonds Seventh Series of NGK INSULATORS, LTD. Unsecured Straight Bonds (With Inter-Bond Pari Passu Clause) (Green Bonds)
Maturity 7 years
Issuance amount 10 billion yen
Interest rate 0.180%
Issuance date December 21, 2021
Redemption date December 21, 2028
Credit rating “A+” provided by Rating & Investment Information, Inc.
Lead bookrunners Nomura Securities Co., Ltd., Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., SMBC Nikko Securities Inc. and Daiwa Securities Co. Ltd.
Structuring agent* Nomura Securities Co., Ltd.

* Structuring agent is a party which helps issuance of green bonds through providing advice on developing a green bond framework and acquisition of external review.

Projects Eligible for the Green Bonds’ Financing

We have set projects for development and distribution of products and services contributing to realizing “carbon neutrality,” “a recycling-oriented society,” and “harmony with nature,” and for investment in development of the manufacturing processes of such products, as eligible projects for green bond financing.

NGK’s green bond framework

Second Party Opinion

The green bond framework is aligned with the ICMA Green Bond Principles 2021 and the Green Bond Guidelines 2020 by the Ministry of the Environment and has obtained “Green 1(F),” the highest rating, provided by an external reviewer (Japan Credit Rating Agency, Ltd.).

Green Bond Framework Evaluation provided by JCR

Reporting

Allocation Reporting

We have allocated proceeds from green bonds each eligible project as the following table 3.328 billion Yen out of Bond Proceeds 9.945 billion Yen which was exclude the issuance fee has been allocated for new investment from January to March 2022. We expect unallocated amount 6.617 billion Yen will be allocated by March 2023.

(Million Yen)

Issuance amount Issuance fee Bond proceeds
10,000 55 9,945

(Million Yen)

Eligible project categories Allocated amount
(January to March 2022)
Breakdown of allocated amount Unallocated amount
R&D Capital Investment Manufacturing Cost/Expense
Batteries 1,542 989 - 553 6,617
Next-generation power semiconductors 848 848 - -
CCU/CCS and hydrogen/ammonia 637 637 - -
Clean energy utilization 231 - 231 -
Energy-efficient manufacturing 68 - 68 -
Total 3,328 2,475 299 553

(Million Yen)

New investment / Refinancing Amount Percentage(%)
Total amount in FY2021 (January – March 2022) 3,328 -
New investment 3,328 100%
Refinancing - -

Impact Reporting

Eligible project categories Impact Reporting Indicators
Batteries
  • NGK established “Ena Electric Power Co., Ltd.” to achieve a Zero-Carbon City through local production and local consumption of renewable energy in April 2021.
  • The NAS batteries, which NGK supplied to German chemical group BASF has started operation at BASF’s Antwerp Verbund site (Belgium) in September 2021.
  • Kinmen Energy Storage Demonstration Project for which NGK supplied NAS batteries for power storage won Gold Award in SDG7 of first “Taiwan Sustainable Action Award (TSAA) 2021” held by Taiwan Institute for Sustainable Energy (TAISE) in November 2021.
  • NGK and Ricoh Company, Ltd. (“Ricoh”) starts a trial project in fiscal 2022 for tracking all processes from renewable energy generation to consumption, including charging and discharging of surplus generated electricity in NAS batteries for storing electricity. The demonstration test will seek to enable maximum usage of generated renewable electricity in a form that displays its environmental value by using these facilities of Ena Electric Power and a renewable energy distribution record platform that uses blockchain (Distributed Ledger Technology) developed by Ricoh to verify the tracking of the generation, storage, and consumption of renewable electricity.
  • NGK established “Abashiri Electric Power Co., Ltd.” to achieve a Carbon Neutral through local production and local consumption of renewable energy in April 2022.
  • NGK succeeded to establish the Virtual Power Plant (VPP) technology through NAS batteries and started to provide adjustment capability in demand adjustment markets for electricity in April 2022.
Next-generation
power semiconductors
  • NGK exhibited at CEATEC 2021 ONLINE in October 2021 and showcased the ceramics product for the electrical and electric equipment utilizing our unique ceramic technologies including DCB and AMB substrates.
CCU/CCS and hydrogen/ammonia
  • NGK received Incentive Award at 20th Green and Sustainable Chemistry Award for Development of CO2 Separation and Recovery Technology Using DDR-Type Zeolite Membranes in June 2021.
  • NGK announced CO2 Separation Membrane Developed for Industrial Exhaust Gas in November 2021. In testing with simulated industrial exhaust gas, the membrane achieved CO2 separation factor approximately five times that of conventionally developed DDR-type zeolite membrane used for CO2 separation. The Company aims to continue with development for further increases in separation performance, aiming for commercialization in 2030 after demonstration testing.
Clean energy utilization
  • NGK installed the testing kiln with the hydrogen burner and modified the existing kiln from January to March 2022 in order to evaluate the specification of the ceramics products by using hydrogen as fuel.
  • Ena Electric Power Co., Ltd. which is NGK’s subsidiary installed photovoltaic system (1.4MW) and NAS batteries (0.2MW) in March 2022.
  • NGK CERAMIC DEVICE CO., LTD., one of NGK’s subsidiaries, will install photovoltaic system (2.6MW) with existing NAS batteries at Tajimi Factory in fiscal year 2022.
  • NGK will renew existing NAS batteries at Nagoya in fiscal year 2023.
Energy-efficient manufacturing
  • NGK promotes new capital investment of the high-efficiency facilities by using the internal carbon pricing (130 US dollar per ton) from April 2022.
  • NGK made the capital investment which will be more contributable the reduction of CO2 emission than existed facilities from January to March 2022.