Sustainability
Climate Strategy / Initiatives Toward Carbon Neutrality
Climate Change Strategy
The NGK Group strives to reduce CO2 emissions, a major cause of global warming, by setting and working toward achievement of emission reduction targets.
NGK is a member of the Japan Climate Leaders’ Partnership (Japan-CLP), a business coalition in Japan that aims to create a low-carbon society through decarbonization of business, trial business collaborations, policy creation and publicity activities, and cooperation with like-minded international organizations.
NGK Endorses TCFD*
The NGK Group has long recognized the need to consider enhancing our initiatives to reflect national and corporate trends since the Paris Agreement. As part of these evaluations, in February 2020, we announced our support for the TCFD. Since then, we have analyzed the business risks and opportunities presented by climate change to evaluate strategies for responding to those risks and opportunities. In addition to disclosing this information, we will continue to analyze this information and enhance our information disclosure.
TCFD: The Task Force on Climate-Related Financial Disclosures was established by the Financial Stability Board (FSB). The G20 Osaka Summit in June 2019 provided the impetus for many Japanese companies to announce their endorsement of the TCFD recommendations. (As of March 31, 2022, 758 companies and organizations have announced endorsement.)
Management of Climate Change Risks
Action plans proposed by the ESG Committee are deliberated on by the Board of Directors before being carried out under group environmental management. In fiscal 2019, the ESG Committee, made up of management and chaired by the President, was launched to discuss important tasks and strategies and create action plans related to ESG. The ESG Committee discusses the management of climate change risks. With regard to climate change issue-focused aims and strategy, these were decided through discussion among the members of the ESG Committee and Board of Directors and then presented within the NGK Group Environmental Vision released in April 2021. For CO2 emissions reduction, the aim is to reduce emissions to 50% of their fiscal 2013 level by 2030, with the ultimate goal of achieving net zero emissions by 2050. Moving forward, we will provide information as recommended by the TCFD.
New Carbon Offset Initiatives
We anticipate that our current energy-saving activities will not be enough on their own for the NGK Group to achieve the stated aim of the Environmental Vision to realize net zero CO2 emissions by 2050. Thus, in order to overcome this gap, we will pursue a variety of strategies, both in Japan and overseas, which will involve carbon offset initiatives on an unprecedented scale for the NGK Group.
Already in fiscal 2021 the following have been carried out.
- In Japan, three NGK sites (Nagoya, Chita, Komaki) and one Group company (NGK Ceramic Device headquarters) have switched to completely carbon neutral city gas (represents a CO2 reduction of approximately 30,000 metric tons/year)
- A manufacturing site in Belgium (NGK Ceramics Europe) has switched to using 100% renewable energy coming from offshore wind power generation (represents a CO2 reduction of approximately 3,000 metric tons/year)
- A manufacturing site in Poland (NGK Ceramics Polska) is using renewable energy certificates to offset some of its energy consumption (represents a CO2 reduction of approximately 200,000 metric tons/year)
Climate Change Targets
Emissions reduction targets for CO2, which is a major contributor to global warming, are included in the Five-Year Environmental Action Plan adopted by the NGK Group.
Preventing Global Warming
Reducing CO2 Emissions Associated with Manufacturing Activities
By creating and implementing annual improvement plans in line with the business plans of each of our manufacturing sites both within Japan and overseas, the NGK Group has been making steady progress toward achieving the CO2 emissions reduction targets set under our Five-Year Action Plan.
Fiscal 2020, which was the last year of the NGK Group’s fourth Five-Year Environmental Action Plan, saw a drop in production volume as a result of lower demand for core products due to the impact of the COVID-19 pandemic. However, with demand recovering in the latter half of the year, manufacturing site production capacity also picked back up, while work on getting new facilities on-line also moved forward. As a result, in terms of reduction per unit of sales, there was significant improvement over fiscal 2019, and we were able to achieve the Five-Year Environmental Action Plan target of 20% emissions reduction compared with fiscal 2013, which is base year. On the other hand, however, the BAU rate of reduction, which reflects improvement in emissions per unit of production, was significantly impacted by the fact that there was a drop in material volume, which exceeded the per-unit-improvement for production, thus resulting in the target not being met.
In order to help ensure we meet the NGK Group Environmental Vision goal of realizing net zero CO2 emissions by 2050, we began in fiscal 2021 to replace management indicator basic units with CO2 emissions volumes. We will also establish renewable energy usage rate targets for electrical power. Moving forward, we will keep working Group-wide to reduce our CO2 emissions.
CO2 Emissions per Basic Unit of Net Sales*
(All NGK Group manufacturing sites)
Soshin Electric, which was spun off from the NGK Group in fiscal 2020, are omitted for the whole period.
Reduction Rate against BAU*
(All NGK Group manufacturing sites)
Soshin Electric, which was spun off from the NGK Group in fiscal 2020, are omitted for the whole period.
Adoption of Environmentally Friendly Production Processes
Through the introduction of highly efficient equipment and the promotion of the collection and use of exhaust heat and improved production efficiency, the NGK Group makes efforts to reduce environmental impacts resulting from production. Also, we will create even more advanced eco-processes, which are aimed at enhancing competitiveness.
Change in CO2 Emissions from Continuous Kilns by Year of Introduction
Note: Change in CO2 emissions from continuous kilns, which constitute major production equipment
Measures to Reduce CO2 Emissions and Effects
As we continue to expand overseas manufacturing, the NGK Group is particularly striving to raise manufacturing efficiency at our overseas sites in order to reduce the CO2 emissions of the Group as a whole. We have made steady progress by introducing the innovative manufacturing processes and improvements to facilities and operations that we have implemented to date in Japan in our overseas manufacturing sites, as well as promoting energy-saving activities for general-purpose equipment.
Examples of Initiatives Aimed at Reducing CO2 Emissions
| Category | Measures | Effects (FY2020) |
|---|---|---|
| Highly efficient manufacturing processes | Main production efficiency initiatives at overseas sites
|
CO2 reduction effect (9,000 metric tons)
Of which
|
| Group company energy-saving diagnostics | Promoted energy savings at overseas sites
|
|
| General-purpose equipment energy-saving activities | Horizontally deployed main improvements
|
Energy-Saving Activities for General-Purpose Equipment and Buildings
The NGK Group has been actively promoting energy-saving activities in relation to general-purpose equipment, such as lighting, air conditioners, boilers, and compressors. The headquarters plays a central role in this in terms of sharing know-how among different manufacturing locations, thereby achieving more efficient activities.
Whenever our buildings are built or altered, we ensure that large-scale energy-saving measures and ZEB principles are incorporated.
（1）Headquarters Supporting Energy-Saving Activities at Overseas Manufacturing Sites
The headquarters Engineering Department has, over the years, sent personnel to overseas manufacturing sites to perform energy audits and, as necessary, help local staff develop and carry out effective energy-saving measures using the know-how gained from practices in Japan. These efforts have produced solid results at overseas companies, including NGK Ceramics Polska. (See “Global Warming Countermeasures Taken by Group Companies.”)
（2）Creating and Distributing a Printed Version of the Energy-Saving Brochure and Guidelines
We have created a printed version (Japanese, English) of our energy-saving guidelines and brochure of best practices, both of which were previously available only in digital formats. Copies have been distributed to each manufacturing site in and outside of Japan to be kept handy at worksites for easy reference. This is expected to help enhance activities to reduce CO2 emissions.
（3）Efforts to Conserve Energy within Buildings
New administration/welfare wingWhenever there is the opportunity to build or renovate a building, we actively endeavor to utilize high-efficiency equipment and introduce renewable energy, and carefully consider each location so as to be able to effectively utilize any natural advantages, such as low-temperature waste heat from our adjacent factories and natural ventilation/lighting, to achieve significant energy savings.
Efforts like these allowed the new administration/welfare wing, which was completed in Mizuho, Nagoya in January 2020, to be a zero energy building (ZEB)-oriented office facility whose CO2 emissions are less than half of the official standard. This construction project has been lauded for its pioneering CO2 reduction technology, and it was adopted as a Leading Sustainable Building Project (CO2 Reduction) by Japan’s Ministry of Land, Infrastructure, Transport and Tourism.
We have many more construction/renovation projects lined up as part of our plans to reorganize corporate structure and update old buildings, all of which will include energy saving and ZEB measures.
Global Warming Countermeasures Taken by Group Companies
NGK Stanger Pty. Ltd. and Hokuriku Energys Corporation
NGK Stanger and Hokuriku Energys collect and recycle gas-filled switches that are being disposed of by clients. These units contain sulfur hexafluoride (SF6) for insulation purposes, and as it has a very high global warming potential, the companies collect all SF6 when disassembling the unit without allowing it to be released into the atmosphere. The total amount of SF6 recovered in fiscal 2020 was 631 kg, which is the equivalent of approximately 14,400 metric tons of CO2.
NGK Ceramics Polska Sp. z o.o.
Since 2011, NGK Ceramics Polska has been focusing on improving processes for manufacturing SiC-based DPFs, its main product. Target areas include particularly energy-intensive calcination and drying processes, for which we have carried out various measures to reduce our CO2 emissions. To further improve our performance, we will introduce new measures, including technologies provided by the Nagoya Site.
NGK Metals Corporation
NGK Metals is reducing CO2 emissions by updating control systems and improving the operation of production equipment. Among various efforts, a particularly distinctive effect resulted from automating the control units of the oil circulation system for rolling mills. The automation eliminated unnecessary around-the-clock operation, a measure taken to address inefficient activation/deactivation processes, as well as simplifying complex manual processing. This change helped reduce electric power consumption as well as CO2 emissions.
Reduction of CO2 in Logistics Processes
NGK has worked to reduce CO2 emissions from logistics, setting a target of reducing the basic unit per transport volume by 1% year-on-year on a five-year average, as required by the Energy Conservation Act. To achieve this target, we have implemented a number of measures, including improving loading efficiency and promoting a modal shift. In recent years, the basic unit per transport volume has shown a tendency to deteriorate due to a decline in the volume of goods transported by sea on account of a change in the product mix. In fiscal 2020, the final year of the fourth Five-Year Environmental Action Plan, the five-year average deteriorated by 1.6% year-on-year.
Transport Volume / Basic Unit per Transport Volume
Introduction of Green Power
As part of our corporate activities aimed at harmony with the environment, NGK began introducing “green power” (energy sources such as wind and solar power and biomass fuels) in 2002. The Green Power Certification System contract we signed with Japan Natural Energy Company Limited calls for them to generate two million kilowatt hours of biomass-generated electricity for us each year.
This accounts for about 60% of the power consumed annually at the NGK headquarters building, attaining a reduction effect of approximately 1,000 metric tons of CO2 emissions per year, or the annual amount of CO2 absorbed by approximately 71,000 cedar trees.
Scope 3 GHG Emissions
Starting in fiscal 2017, NGK has been calculating Scope 3 emissions on a non-consolidated upstream basis in response to emerging expectations for businesses to expand the relevant data reporting scope to include supply chain CO2 emissions levels. In fiscal 2020, NGK confirmed that the total volume of CO2 emission from NGK logistics was 893,000 metric tons, which was over seven times more than the 133 thousand metric tons of NGK in-house CO2 emissions (sum of Scope 1 and 2), and that Category 1 (purchased goods and services) amounted to over 80% of total CO2 emissions. NGK will continue to develop calculation methods that can ascertain CO2 emission levels in relation to a greater range of items.
Please note that the calculation used for Scope 3 data was carried out in accordance with Basic Guidelines Regarding the Calculation of Greenhouse Gas Emissions through the Supply Chain (Ver. 2.2) (Ministry of the Environment; Ministry of Economy, Trade and Industry).
The fifth Five-Year Environmental Action Plan, which starts from the current fiscal year, expands Scope 3 calculations to the entire Group and includes downstream categories.
Scope 3 GHG Emissions
| Category | Item | Unit | FY2017 | FY2018 | FY2019 | FY2020 |
|---|---|---|---|---|---|---|
| Non-consolidated | Non-consolidated | Non-consolidated | Non-consolidated | |||
| 1 | Purchased goods and services (including resale items) | 103 metric tons of CO2 | 762 | 863 | 842 | 770 |
| 2 | Capital goods | 103 metric tons of CO2 | 84 | 152 | 99 | 90 |
| 3 | Fuel-and energy-related activities | 103 metric tons of CO2 | 16 | 18 | 16 | 15 |
| 4 | Upstream transportation and distribution | 103 metric tons of CO2 | 11 | 8 | 14 | 13 |
| 5 | Waste generated in operations | 103 metric tons of CO2 | 1 | 3 | 2 | 2 |
| 6 | Business travel | 103 metric tons of CO2 | 1 | 1 | 1 | 1 |
| 7 | Employee commuting | 103 metric tons of CO2 | 2 | 2 | 2 | 2 |
| 8 | Upstream leased assets | 103 metric tons of CO2 | 0 | 0 | 0 | 0 |
| Total | 103 metric tons of CO2 | 877 | 1,047 | 977 | 893 |
Internal Carbon Pricing
Introducing Internal Carbon Pricing
Internal carbon pricing (ICP) refers to the establishment and use of in-house carbon pricing for the purpose of promoting decarbonization-focused investment and policies. By establishing our own per-volume price internally on GHG emissions, these emissions become capable of affecting our financial indicators. The TCFD also recommends the adoption of ICP as a tool for ascertaining risks and opportunities, as well as influencing behavior, accompanying the transition of companies to a low-carbon society.
NGK is considering the use of ICP as a means of incentivizing investment in high-efficiency equipment and facilities and renewable energy-related infrastructure that will help us realize our NGK Group Environmental Vision target of net zero CO2 emissions by 2050.