Sustainability

Environmental

Preventing Global Warming

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*

Logo of the task force on climate-related financial disclosures.

The NGK Group is committed to making even greater efforts amidst government and private sector actions to achieve the goals of the Paris Agreement. The Group’s top management determined the importance of endorsing the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), which encourages the disclosure of climate-change related risks and opportunities towards making plans for reducing CO2 emissions. In February 2020 the Group announced its endorsement of the recommendations of the TCFD.

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 June 22, 2020, 276 companies and organizations have announced endorsement.)

Management of Climate Change Risks

Action plans proposed by the NGK Environmental Protection 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.

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.
Demand for NGK’s main products has gone down due to the effects of the COVID-19 pandemic beginning in late fiscal 2019. Factors such as the occurrence of temporary energy losses due to the start-up of facilities at new bases have presented difficulties in our efforts to reduce CO2 emissions. Combined with the effects of a strong yen, these have prevented us from achieving the target for CO2 emissions per unit of net sales that we set under the Five-Year Action Plan.
However, thanks to steady reduction efforts at manufacturing bases, we were able to achieve our annual target for reduction rate against BAU, an indicator newly introduced under the Five-Year Action Plan to help visualize the effect of measures to reduce emissions.
In fiscal 2020, the final year of the Five-Year Action Plan, we predict a large decrease in demand for most products due to the COVID-19 pandemic. We thus foresee extreme difficulty in achieving the Five-Year Action Plan targets. That being said, we will revamp our production system and do everything possible to carry out our initially planned CO2 reduction measures.
Believing that preventing future global warming is one of our most important duties as a company, from a long-term perspective we have already started deliberating on how to further reduce CO2 emissions after the end of our current Five-Year Action Plan. As part of this we are considering where we want to be as a company during the period between 2030 and 2050, and the policies that we will need to implement to realize that.

Note: In calculating CO2 emissions under our environmental action plan, considering consistency with the target values from the past, we use the following CO2 conversion factors, which differ from the figures in the section titled “Overall Perspective of Environmental Impact.”
CO2 emission volume = Σ (Consumption of each energy × CO2 conversion factor of each energy)

<CO2 conversion factor of energy>
(Unit of electric power factor: kgCO2/kWh Unit of fuel factor: kgCO2/fuel unit)
Electric power: Japan: 0.42; United States: 0.709; Belgium: 0.292; France: 0.061; Poland: 0.986; South Africa: 1.096; China: 0.983; Thailand: 0.687; Indonesia: 0.790; Australia: 1.390; Mexico: 0.741; Malaysia: 0.543
Fuel: Natural gas (Nm3): 2.02; City gas (Nm3): 2.29; LPG (kg): 3.007; LNG (kg): 2.70; Light oil (L): 2.64; Fuel oil A (L): 2.677; Kerosene (L): 2.49; Industrial steam (MJ): 0.06

CO2 Emissions / Basic Unit per Net Sales*(All NGK Group manufacturing sites)

Graph of CO<sub>2</sub> emissions/basic unit net sales. CO<sub>2</sub> emissions were 910,000 tons in fiscal 2019. The basic unit per net sales was 91, assuming a value for fiscal 2013 of 100.

Basic unit per net sales calculated with the value in fiscal 2013 set at 100.

CO2 Emissions / Reduction Rate against BAU*(All NGK Group manufacturing sites)

Graph of reduction rate against BAU (%). We achieved the fiscal 2019 target of 16%.

Reduction rate against BAU: The percentage rate of emissions reduction resulting from implemented actions against a computed value for the hypothetical absence of the actions.

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 further advanced eco-processes through our New/Reformed Manufacturing Structures, which are aimed at enhancing competitiveness.

Change in CO2 Emissions from Continuous Kilns by Year of Introduction

Graph of CO<sub>2</sub> emissions over time following introduction of continuous kilns. Taking the value in 1984 as 100, emissions decreased to 31 in 2015.

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 (FY2019)
Highly efficient manufacturing processes Main production efficiency initiatives at overseas sites
  • Introduction of innovative production processes
  • Facility improvements
  • Operational improvements
CO2 reduction effect (17,000 metric tons)
  • Japan: 7,000 metric tons
  • Overseas: 11,000 metric tons
Of which
  • Production process improvements
    • Japan: 4,000 metric tons
    • Overseas: 10,000 metric tons
  • General-purpose equipment energy savings
    • Japan: 3,000 metric tons
    • Overseas: 1,000 metric tons
Group company energy-saving diagnostics Promoted energy savings at overseas sites
  • An English version of the voluntary energy-saving guidelines and a best practice brochure created and distributed to overseas sites
  • Headquarters staff visited overseas sites and conducted activities with local employees
General-purpose equipment energy-saving activities Horizontally deployed main improvements
  • Replaced boilers with more efficient models
  • Eradicated air and steam leaks from plumbing
  • LED lighting
  • Renewed air-conditioning equipment and eliminated wasteful air conditioning
Picture of customer gas-filled switches to be disposed of, collected by NGK Stanger and Hokuriku Energys. The sulfur hexafluoride they contain is safely recovered and then recycled.

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 2019 was approximately 910 kg, which is the equivalent of approximately 20,800 metric tons of CO2.

Picture of employee working on improvement activities to reduce CO<sub>2</sub> emissions at NGK Ceramics Polska.

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.

Picture of oil circulation system with automated controls at NGK Metals, which contributes to reduced CO<sub>2</sub> emissions.

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 from Logistics

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 2019, the five-year average deteriorated by 5.1% year-on-year.

Transport Volume / Basic Unit per Transport Volume

Graph of CO<sub>2</sub> emissions in the supply chain. In fiscal 2019, the basic unit per transport volume was 50.8 ton-kilometers.

Introduction of Green Power

Picture of Green Power Certification System contract. About 60% of the annual power consumption of the NGK headquarters building is covered by outsourced biomass-generated electricity.

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.