Sustainability

ESG Management

NGK Group Basic Sustainability Policy

Since our founding, the NGK Group has worked to solve social issues through our unique ceramic technologies. Based on the NGK Group Philosophy of Enriching Human Life by Adding New Value to Society, we aim to continue contributing to the realization of a sustainable society and to earn the trust of society by meeting its expectations toward us. We have incorporated this thinking into the NGK Group Basic Sustainability Policy in April 2023.

NGK Group Basic Sustainability Policy

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ESG Action System

ESG (Environmental, Social, Governance) is central to the management of the NGK Group. Amidst ongoing overseas business expansion, we seek to ensure greater managerial transparency and autonomy within an environment which cultivates within every member of the NGK Group a sense of fairness accompanied by decision-making and action in accordance with international norms.
In 2019, the ESG Committee was established as a body for information sharing, opinion exchange and policy discussion among senior management. In 2021, the ESG Management Department was established in order to handle lateral implementation of ESG-related activities across the NGK Group and to strengthen information dissemination about the activities. Furthermore, in April 2022, the ESG Committee was reorganized as the ESG Management Committee, which is chaired by the President, as a body reporting to the Board of Directors for strengthening initiatives on sustainability issues that incorporate elements of ESG and the SDGs.

ESG Action System

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Key ESG Activity Themes and Achievements

The NGK Group views ESG (Environmental, Social, Governance) as the core of business management. We define materiality based on the NGK Group Basic Sustainability Policy. And we work to enhance the effectiveness of governance to serve as the foundation of value creation as we promote environmental and societal initiatives.

NGK Group Basic Sustainability Policy

Materiality
E	Initiatives for climate change Promotion of resource recycling Prevention of environmental pollution Conservation and restoration of biodiversity
S	Pursuit of quality and product safety Contribution to digital social infrastructure Enhancing value of human resource Respecting human rights Promotion of sustainable procurement
Foundation of Value Creation (Governance)
G	Compliance Risk management Corporate governance

Materiality

Key ESG Activity Themes in FY2024

Key themes	Main activities	Activity leader
Environmental initiatives aimed at achieving Vision	Internal carbon pricing towards net zero CO₂ emissions, energy-saving, shift to non-fossil fuels, use of renewable energy Formulation and follow-up on 5-Year Environmental Action Plan and annual plan Response to a recycling-oriented society Response to biodiversity	Environment Action subcommittee
Initiatives on respect for human rights	NGK Group human rights due diligence Promotion of hiring, cultivation of human resources and improvement of labor practices Diversity and inclusion	HR Committee Environment, Safety & Health Committee
Supply chain rollout	Reviewing Supply-Chain CSR Guidelines and establishing Supplier Code of Conduct Implementation of CSR procurement (human rights, labor, environment, and fair business activities, etc.) Supply chain human rights due diligence Assessment of Scope 3 in carbon neutrality	Supply Chain subcommittee HR Committee
Continuous review of the governance system	Integration of management with sustainability issues Strengthening of the supervisory function of the Board of Directors Compliance with Corporate Governance Code Formulating and revising policies related to the Corporate Business Principles, Code of Conduct and sustainability Ensuring of appropriate information disclosure and transparency (complying with domestic and international standards for disclosure)	Governance subcommittee
Social Contribution Activities	Formulating, implementing, and carrying out NGK Group Social Contribution Activities Policy Support for foreign nationals	Social Contribution Activities subcommittee

FY2023 ESG Management Committee Achievements

Times	Date	Topics of discussion
1st	April 2023	Positioning of ESG Management Committee Awareness of sustainability issues facing our group NGK Group Basic Sustainability Policy and materiality disclosures Annual action plans for each subcommittee
2nd	May 2023	Establishment of NGK Group Code of Conduct Revisions to Corporate Governance Report
3rd	June 2023	5th 5-Year Environmental Action Plan Green bond reporting Formulating Social Contribution Activities Policy Enforcement of NGK Group Code of Conduct Revisions to Corporate Governance Report Production status report on NGK Report 2023
4th	September 2023	Status of response to Group ESG issues Environmental Value Acquisition Plan Progress of Sustainability Information Disclosure Project
5th	December 2023	Revision of CO₂ Emissions Reduction Plan Revision of Policies Dealing with ESG evaluation bodies
6th	March 2024	Net Zero CO₂ Emissions Project Activities Progress of Sustainability Information Disclosure Project Social contribution activities Creation of NGK Report 2024 integrated report

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Communication with Stakeholders

In addition to promoting understanding regarding the NGK Group among customers, suppliers, shareholders, investors, regional communities, governments, international organizations, universities, research institutes, and employees, we are continuously improving our activities and initiatives through dialogue with all of our stakeholders.

NGK Group Basic Sustainability Policy Materiality

Basic Approach

In the NGK Group Corporate Business Principles and Code of Conduct, our commitment to Disclosure of Company Information and Accountability as a part of stakeholder communication is expressed through the following.

Disclosure of Company Information and Accountability

	We will promote a healthy and transparent management by active disclosure of information and discussions with stakeholders. We will accurately and promptly disclose information required by society. We will take seriously the voices of our stakeholders and fulfill our obligation of accountability. We will also build relationships of trust through continuous dialog with stakeholders.

We will promote a healthy and transparent management by active disclosure of information and discussions with stakeholders.

We will accurately and promptly disclose information required by society.
We will take seriously the voices of our stakeholders and fulfill our obligation of accountability. We will also build relationships of trust through continuous dialog with stakeholders.

NGK Group Corporate Business Principles and Code of Conduct

Stakeholder Engagement

Stakeholders	Approach	Communication (objectives)	Communication (methods)
Customers	To earn and maintain the trust of customers, we engage in the creation of new value through the provision of products and services realizing global environmental conservation and social safety and peace of mind from a long-term and global perspective.	Enhancement of customer satisfaction Quality improvement	Official website Contact desk Participation in exhibitions Open innovation
Suppliers	With Relationship with Society, Open and Fair, and Partnership at the core of its procurement activities, the NGK Group aims for mutual prosperity based on mutual trust with suppliers through open, fair, and equitable procurement practices that not only comply with laws but also take into consideration global environmental conservation, respect for human rights, and the working environment. We also established a supplier helpline to provide unwavering support for important inquiries in an effort to build and maintain fair supplier relationships.	Realize fair, free, and transparent transactions Exchange information with suppliers Establish better supply chain	Financial results presentations Supplier helpline Individual visits to suppliers in Japan and overseas
Shareholders and Investors	The NGK Group aims to meet expectations for enhanced corporate value through dialogues and efforts to disclose information pertaining to management, finance, products, and services in a timely and appropriate manner.	Enhancement of corporate value	General Meeting of Shareholders Financial results briefings Individual visits and interviews Participation in IR events Responding to ESG investment Official website
Employees	We will create the following kind of work environment as the stage upon which our personnel can demonstrate the abilities they possess. Diverse and Inclusive Workplace Enriched and Lively Workplace Open Workplace that encourages challenges We also support the growth of human resources and fair treatment enabling each employee to maximize their skills.	Respect for the human rights of employees Development of safe and comfortable workplace environments Conducting of surveys on workplace environment and employee satisfaction Penetration of corporate philosophy and policies	Company newsletter Global MIZUHO English-version company newsletter In-house video newsletter Intranet Labor-Management Advisory Board meetings, regular Labor-Management Council meetings Survey on workplace vitality CRS (Corporate Risk Survey) Helpline Hotline
Local Communities	We proactively engage in social contribution activities in response to community needs with the intent of becoming a corporate citizen trusted by society with concern for social issues in all countries and regions where we do business.	Contribution to local communities as a trusted corporate citizen	Collaborative activities with NPOs, etc. Volunteer activities by employees Social contribution activities in cooperation with labor unions Invitation to plant tours and events
Governments and International Organizations	We proactively participate in international initiatives and other activities in order to realize mutual cooperation as key actors seeking to resolve social issues.	Promotion of initiatives to resolve social issues	Participation in international initiatives
Universities and Research Institutes	Through research and educational activities based on industry–academia collaboration, we have been pushing forward with the development of scientific technologies and other technologies that will contribute to resolving social issues.	Development of scientific technologies Development of technologies that will contribute to solving social issues	Joint research

Any report on potential concerns pertaining any of our business activities will be handled confidentially and will not lead to any negative consequences for anyone who wishes to make such a report.

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Endorsement and Participation in Initiatives

Based on our corporate policy, NGK is striving to provide better value through our business activities to help achieve a sustainable society. We are actively involved in international initiatives to help resolve global social challenges as a responsible corporate citizen.

NGK Group Signs UN Global Compact

The NGK Group is a signatory to the United Nations Global Compact, which advocates for independent action on the part of companies, endorsed by the United Nations. We believe that addressing a broad range of social problems through our business activities, while measuring progress against indicators such as the Sustainable Development Goals (SDGs), is an important corporate social responsibility.

UN Global Compact

Task Force on Climate-Related Financial Disclosures (TCFD)

In February 2020, the NGK Group announced our support for recommendations issued by the Task Force on Climate-Related Financial Disclosures (TCFD) created by the Financial Stability Board (FSB). Since then, we have evaluated how to apply the TCFD framework towards resolving issues facing NGK Group operations, such as the risks and opportunities posed by climate change, and towards necessary information disclosure.
Below, we disclose information related to scenario-specific analyses conducted based on the four themes outlined in the TCFD recommendations: governance, strategy, risk management, and metrics and targets.
We will continue to expand analysis work and enhance information disclosure as part of our commitment to communicating with our stakeholders. We will accurately identify climate change-related influences on Group operations and implement response measures to promote sustainable growth for our business.

Information Disclosure Based on TCFD Recommendations

Taskforce on Nature-related Financial Disclosures (TNFD)

In January 2024, the NGK Group endorsed the efforts of the Taskforce on Nature-related Financial Disclosures (TNFD), an international initiative that strives to develop and provide a framework for disclosing nature-related financial information. We also registered as a TNFD Early Adopter. Going forward, we will promote disclosures aligned with the recommendations of the TNFD, and accelerate our efforts to protect and restore biodiversity and nature.

Information Disclosure Based on TNFD Recommendations

SBTi (Science Based Targets initiative)

The NGK Group has obtained certification from the international accrediting agency SBTi (Science Based Targets initiative)*1 under its Corporate Net-Zero Standard*2 for our greenhouse gas reduction targets. We are working towards a more than 90% reduction in emissions (Scope 3) by 2050 for our entire value chain compared to the base year of FY2022. As a step towards achieving this goal, we have set a target of 25% reduction in Scope 3 emissions by 2030 compared to the base year. This has allowed our goal to be certified as a Net-zero target by SBTi.

SBTi (Science Based Targets initiative)

1 SBTi
An international environmental initiative that encourages companies to set greenhouse gas emission reduction targets in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting the rise in average global temperatures to 1.5°C above pre-industrial levels. It was jointly established in 2015 by four organizations: the CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF).

2 Corporate Net-Zero Standard
A standard for achieving the goal set by the Paris Agreement of limiting the rise in average global temperatures to 1.5°C above pre-industrial levels. SBTi recognizes that in order to keep the rise in global average temperatures to 1.5°C, it is necessary to reduce emissions of greenhouse gases by at least 90% throughout the entire value chain by the year 2050. The initiative believes that Net zero can be achieved by removing the remaining 10% of greenhouse gases from the atmosphere using techniques such as carbon removal.

Scope 3 GHG Emissions

Environmental Data Collection

RE100

RE100 (100% Renewable Electricity) is a global initiative made up of companies that aim to use renewable energy to power all of their operations. We joined the initiative in October 2022. The NGK Group identified carbon neutrality as one of the social issues to be addressed in its mid- to long-term vision NGK Group Vision: Road to 2050. In the NGK Group Environmental Vision formulated at the same time, the Group set the target of net zero CO₂ emissions by 2050 and has been working on expanding its use of renewable energy as a strategy to achieve this target.

RE100

Other Initiatives We Participate In

Japan Climate Leaders’ Partnership (JCLP)

Keidanren Initiative for Biodiversity Conservation

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Position on SDGs

Ever since its foundation, the NGK Group has pursued business in the energy, ecology, and electronics sectors in an effort to keep nature’s air and water clean and thus help people live a comfortable, healthy life. Many of our technologies and products contribute to the SDGs, and we will continue to provide new value by leveraging our unique ceramic technologies towards the realization of a sustainable society.

Goals		Value provided by the NGK Group
	End poverty in all its forms everywhere	Creating appropriate employment helps to end poverty
	End hunger, achieve food security and improved nutrition, and promote sustainable agriculture	The social infrastructure created by the NGK Group’s products helps secure equal access to work opportunities
	Ensure healthy lives and promote well-being for all at all ages	Micro-lenses are increasingly used instead of mercury in UV LED light sources for applications such as the sterilization of water and air, thus contributing to reduced use of mercury Ceramics for purifying automobile exhaust make exhaust gas clean
	Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all	Creating appropriate employment gives people the chance to have equal access to education
	Achieve gender equality and empower all women and girls	The social infrastructure created by the NGK Group’s products helps provide more opportunities for women to enhance their abilities Securing equal opportunities for women to participate and be leaders in society
	Ensure availability and sustainable management of water and sanitation for all	Ceramic membrane filters provide highly safe water Ceramic membrane filters purify wastewater
	Ensure access to affordable, reliable, sustainable, and modern energy for all	Insulators are indispensable to stable power supply NAS batteries allow stable supply of renewable energy Ceramics for purifying automobile exhaust make exhaust gas clean, thus enabling clean usage of fossil fuels DCB and AMB substrates support stable power supply in EVs and renewable energy applications that use power modules
	Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all	Creating appropriate employment and providing employees with a satisfying work environment contributes to economic growth
	Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation	Thin lithium-ion rechargeable batteries provide power for the new IoT generation Ceramics used in electronics make ICT cheap and ubiquitous Ceramics for semiconductor manufacturing equipment let the semiconductor industry be the foundation for modern daily life Metal-related products are widely used in mobile phones, automobiles, industrial equipment, and other devices that undergird modern life
	Reduce inequality within and among countries	We prevent discrimination and take prompt and appropriate action when violations occur
	Make cities and human settlements inclusive, safe, resilient, and sustainable	NAS batteries enable innovation in urban energy management for the creation of sustainable cities
	Ensure sustainable consumption and production patterns	We efficiently use the natural resources used to make ceramics
	Take urgent action to combat climate change and its impacts	NAS batteries aid in the ﬁght against climate change by allowing stable supply of renewable energy AMB and DCB substrates support stable power supply in renewable energy applications that use power modules
	Conserve and sustainably use the oceans, seas, and marine resources for sustainable development	Ceramic membrane filters purify wastewater to prevent marine pollution
	Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss	We protect biodiversity on land owned by the NGK Group
	Promote peaceful and inclusive societies for sustainable development, provide access to justice for all, and build effective, accountable and inclusive institutions at all levels	We comply with the rules and regulations of the countries and regions in which we do business, and ensure respect for and strict compliance with international treaties
	Strengthen the means of implementation and revitalize the global partnership for sustainable development	We encourage and promote effective partnerships among governments, corporations, and society as a whole

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