Sustainability
TCFD

TCFD-Recommended Information Disclosure

TCFD

The Nitta Group recognizes climate change as a material issue affecting business continuity. In May 2022, we announced our endorsement of the Task Force on Climate-related Financial Disclosures (TCFD)*. We analyze the risks and opportunities that climate change presents to Group business and endeavor to reflect this in our management strategy and risk management, as well as work to enhance our information disclosure. *The TCFD was established by the Financial Stability Board at the request of the G20 (Summit on Financial Markets and the World Economy). It treats climate change as both a risk and opportunity and recommends disclosure of the impact that greenhouse gas-induced temperature rise has on corporate finances.

Governance

For the Nitta Group, addressing environmental challenges, including climate change, is a key management issue. In order to enhance our efforts aimed at meeting the sustainability-related challenges facing society, we established the Sustainability Committee on May 13, 2022 and transferred to it some of the duties which had previously been handled by the CSR Promotion and Risk Management Committee.
The Sustainability Committee is chaired by the president and meets four times a year to deliberate, from a medium-to-long-range and ESG perspective, on the risks and opportunities created by climate change, as well as how the Nitta Group should respond to climate change risks, based on the NITTA Group Mission, the NITTA Group Code of Conduct, and the Sustainable Management Policy. The results of these deliberations are reported four times per year to the Board of Directors, which then deliberates and decides on important matters based on these results.

Sustainability Committee
Chair
Representative Director, President, President Executive Officer
Vice chair
Director, Managing Executive Officer and General manager of Corporate Center
Members
Directors, Audit & Supervisory Board members, executive officiers, and people appointed by the chair
Secretalist director
Executive Officer in charge of management administration
Secretariat
Management Administration Department; Safety, Environment, and Quality Group
Corporate Governance System
Corporate Governance System
Climate Change-related Governance System
Organization Role Frequency
Board of Directors Decision-making and reporting regarding chief climate change-related matters 4 times/year
Sustainability Committee Discussion of, and reporting to the Board of Directors regarding, chief climate change-related matters 4 times/year
Sustainability Committee Main Agendas
Held Main agenda
Each quarter
  • Check progress in development of environmentally friendly products
  • Carbon-neutral initiatives
  • Expansion of health management
  • CSR support for suppliers
  • Progress in environmental investment using internal carbon pricing
  • Policy on labor cost reduction and report on negotiation status
First quarter
  • Status of employment of persons with disabilities and future activity plans
  • Policy for the preparation of the integrated report
  • Revision of the General Employer Action Plan (integrated plan under the Act on Advancement of Measures to Support Raising Next-Generation Children and the Act on Promotion of Women’s Participation and Advancement in the Workplace)
Second quarter
  • Improvement of CDP questionnaire responses
  • Results of non-financial KPIs and plan for the next fiscal year
Third quarter
  • Disclosure content on human capital information
  • Kurumin certification status and future policy
Fourth quarter
  • Sustainability activity report and plan for the next fiscal year
  • Report on CDP score results

Strategies

We have studied the risks and opportunities that climate change presents for Nitta Group business. Among these, we have identified transition risks and opportunities arising from such factors as changing governmental policies, regulations, and other social demands. We have identified physical risks and opportunities arising from such factors as increasingly extreme weather phenomena.
In analyzing possible scenarios, we utilized scientifically grounded scenarios presented by the International Energy Agency (IEA) and others to investigate potential impact on Nitta business. Our most recent scenario analysis looked at the entire supply chain, including raw material and parts procurement, product development, manufacturing, and sales, for the Nitta Group’s belt and rubber products business, hose and tube products business and Air conditioning products business and other business. We considered the impact that a 4°C temperature rise scenario and 1.5°C temperature rise scenario would have on this business in 2030.

4℃ scenario
This scenario assumes the current level of climate change action is maintained, resulting in an approximately 4℃ rise in average global temperature by the end of this century compared with the average global temperature prior to the industrial revolution. Weather phenomena would become more intense and sea levels would rise, among other effects. On the one hand, physical risks would increase, while on the other hand restrictions on corporate activity and consumer activity would not increase beyond current levels.
1.5℃ scenario
This scenario assumes greater efforts are made to achieve carbon neutrality, resulting in an approximately 1.5℃ rise in average global temperature by the end of this century compared with the average global temperature prior to the industrial revolution. On the one hand, this would limit the increase in physical risks, while on the other hand restrictions on corporate activity and consumer activity, in the form of taxes and laws and regulations, would be stronger.
Item Impact on total sales Impact on business
4℃ 1.5℃ Risk Opportunity
Transition Governmental policies and regulations Carbon cost
(carbon tax)		 ─ 4

【1.5℃】
Due to the fact that production activities emit CO2, the introduction of carbon taxes would increase costs in line with CO2 emissions

 ─
Emissions trading
Response to greenhouse gas emissions regulations		 ─ 2

【1.5℃】
A more robust emissions trading system instituted in more countries and territories would incur additional costs, such as from purchasing credits for emissions that exceed greenhouse gas emissions quotas

 ─
Regulations on the use of fossil fuels ─ 1 ─

【1.5℃】
Our maple syrup uses thinned wood from our Company-owned forests as fuel during production, which is a low-environmental-impact biomass fuel, making it less susceptible to performance impacts from regulations.
Plastic-related regulations ─ 3

【1.5℃】
As plastic-related regulations grow, costs will increase due to switching over to alternative materials and adopting more advanced recycling

 ─
Forest conservation-related governmental policies ─ 2 ─

【1.5℃】
As forest absorption and carbon removal system credits are more actively utilized, afforestation activities will be promoted, increasing opportunities for CO2 absorption and generating jobs and industry in afforested areas

【1.5℃】
In the maple syrup business, we are promoting the planting of maple trees on bare land and larch forests to increase harvest volume. We aim to increase harvests while contributing to forest conservation.

【1.5℃】
Our Toftusu Forest (a Company-owned forest) in Hokkaido has been certified by the Japanese Ministry of the Environment as an Other Effective area-based Conservation Measure (OECM) (a 30by30 site). Through this activity, we aim not only to conserve forests but also to curb and reverse biodiversity loss risks.
Renewable energy policies ─ 2

【1.5℃】
Stronger emissions regulations (e.g., carbon taxes) will increase demand for renewable energy, thus increasing renewable energy costs and, thereby, leading to greater energy costs

【1.5℃】
As renewable energy policies progress, the demand for wood biomass power generation will increase, leading to more opportunities to provide fuel such as thinned wood.
Energy-saving policies ─ 3

【1.5℃】
Stronger energy-saving policies will lead to increased expenditures stemming from pressure to update to higher efficiency equipment and fixtures

【1.5℃】
Demand will rise for energy-efficient air conditioning, and sales will increase for energy-efficient filters that reduce power consumption due to lower energy loss during ventilation.

Reputation Changes In customer reputation ─ 3 ─

【1.5℃】
With rising environmental awareness in society, our maple syrup business, which owns vast forests and continues to plant maple trees, is highly valued as a product and company that embodies the philosophy of the SDGs. Along with this, our recognition increases and product demand grows.

【1.5℃】
As our stance on biodiversity conservation becomes recognized by society through initiatives such as certification as an OECM, our brand value improves.
Technologies Diffusion of renewable energy and energy-saving technologies ─ 3 ─

【1.5℃】
Stronger energy-saving policies will lead to increased demand for energy-saving products. Thus, sales of energy-saving products like Zeroseam™ will increase

【1.5℃】
As energy-saving demand grows, sales of transmission belts capable of lowering power consumption will increase

【1.5℃】
By switching from AC to DC, demand will increase for circulating fans with lower power consumption, resulting in greater sales of energy-efficient filters.

Evolution of low-carbon technologies ─ 3

【1.5℃】
The evolution of EV will be accompanied by decreasing demand for internal combustion engine parts and, thus, declining sales of automotive fuel tubes

【1.5℃】
Namd™ is expected to be a lightweight, high-strength material. If it can be applied to aircraft and automobiles through technological development, sales will increase due to increased demand for EVs and electric aircraft, where weight reduction is an issue.

【1.5℃】
Increasing large-scale data centers will result in greater demand for server cooling, which will mean greater demand for cooling piping and, thus, greater demand for plastic tubing

【1.5℃】
As we transition to a low-carbon society, the development of smart cities will drive up the demand for semiconductors. Consequently, this will result in increased sales of semiconductor-related parts.

【1.5℃】
The evolution of EV and FCV, which require lighter parts and battery cooling, will be accompanied by increased sales of plastic tubing for cooling piping
Market Evolution of next-generation technologies ─ 3 ─

【1.5°C】
Demand will increase for plant-based nanocellulose filters, which are renewable, low-carbon products.

【1.5°C】
There will be more replacement purchases of air conditioners, including energy-efficient filters, due to the expansion of power storage technologies.
Physical Acute Intensifying weather phenomena
(typhoons, torrential rains, landslides, storm surges, etc.)		 3 1

【４℃】
Production sites and the supply chain will be tremendously affected, resulting in operational and logistical interruptions and increased costs to deal with them

【４℃】
Delivery delays of procured materials and increasing procurement (shipping) costs

 ─
Chronic Increasing average temperature 3 2

【４℃】
Increased air conditioning load, leading to increased energy costs

【４℃】
As temperatures rise, opportunities to go out will decrease, leading to growing demand for delivery services. Thus, sales of cargo conveyor belts will increase

【４℃】
As average temperatures rise, it becomes more challenging to maintain constant, refrigerated, and frozen conditions. Consequently, the growing demand for cold chain transportation will lead to increased sales of belts with high low-temperature characteristics.

【４℃】
Due to the impact of natural disasters, including extreme weather events, increasing natural disasters will cause an increase in damage to facilities, equipment, roads, etc. Thus, demand for construction machinery will increase, which will mean increased sales of hose products
Impact of average temperature increase on raw material growth 1 ─

【４℃】
Since the amount of sap from maple trees, the raw material for maple syrup, is affected by growth temperature, a rise in average temperature makes it difficult to harvest high-quality sap and reduces the harvest volume
Note: Rating criteria (estimated impact)
1 10 million yen or less
2 Over 10 million to 50 million yen
3 Over 50 million to 100 million yen
4 Over 100 million yen to 500 million yen
5 Over 500 million yen

These analyses, ratings, and the study of countermeasures have been implemented in coordination with an outside consulting firm and based on discussion conducted by the Sustainability Committee.
Moving forward, we will continue to perform regular analyses and rating reviews of risks and opportunities based on trends and changes in the external environment.

Countermeasures

We are pursuing the following initiatives in order to strengthen our resilience in the face of the listed risks and opportunities.

Classification Risk countermeasure policy
General Intermediate Specific
Transition Governmental policies and regulations Carbon cost
(carbon tax)

[Energy-saving initiatives]

Achieving highly efficient operation of cogeneration system*

*A cogeneration system is an energy system that generates electricity using fuels such as city gas and effectively utilizes the waste heat produced during power generation.

(Progress)

  • In FY2025, the downsizing of existing cogeneration systems improved operating rates, leading to enhanced operational efficiency. In the event of a disaster, even if cooling water supply is interrupted, power generation can continue through air-cooling, enabling continuous electricity supply to key facilities on-site. This is expected not only to ensure employee safety but also to enable the site to serve as an evacuation shelter for nearby residents

Introduction of Internal Carbon Pricing (ICP)

To accelerate the introduction of facilities that contribute to reducing CO2 emissions, we introduced and began operating an internal carbon pricing (ICP) system based on our own standards starting in FY2023.

(Progress)

  • Internal carbon price set at JPY 18,000 per t-CO2
  • Number of equipment installations evaluated under ICP in FY2025: 25
Renewable energy policies

[Introduction of Renewable Energy]

Introduction of on-site PPA

(Progress)

  • FY2022: First on-site PPA introduced at the Nabari Plant
  • FY2025: Introduced at the Chiba Logistics Processing Center

[Introduction of GHG-free Energy]

Switching to renewable energy-derived electricity

Since FY2022, we have been systematically promoting the transition to electricity derived from renewable energy across our Group companies and business sites.

(Progress)

  • FY2022: Switched to renewable energy-derived electricity at the head office and plant sites
  • FY2023: Began offsetting emissions using I-REC non-fossil certificates at five overseas subsidiaries
  • FY2024: Began offsetting emissions using FIT non-fossil certificates at two domestic subsidiaries
  • FY2026: Planned switch to renewable energy-derived electricity at one overseas subsidiary
Energy-saving policies

Conversion of lighting to LED

Replacement with highly energy-efficient equipment

(Progress)

  • Formulated and promoted a plan to convert all fluorescent lighting to LED across all sites
  • Efficient operation of cogeneration systems
Technologies Evolution of low-carbon technologies

Development and promotion of environmentally friendly products, such as automotive parts for EVs and belts that reduce environmental impact

(Progress)

  • Developed and launched “belts capable of operating in low-temperature environments”
    These belts can operate at temperatures as low as -30°C without placing additional load on motors, offering performance equivalent to operation at normal temperatures in cold chain transportation processes
  • Developed tube products that shift from fossil-based raw materials to natural-derived materials
    Products using plant-derived polyamide resin as the main material
    Products using plant-derived polyurethane resin as the main material
Physical Acute Intensifying weather phenomena
(typhoons, torrential rains, landslides, storm surges, etc.)
  • BCP countermeasures

Risk Management

The Nitta Group recognizes that the changes resulting from climate change is a major risk factor and therefore works, through the Sustainability Committee (which was entrusted in May 2022 with the duties previously handled by the CSR Promotion and Risk Management Committee), to assess, avoid, mitigate, and prevent the risks posed by climate change.
As a general rule, the Sustainability Committee meets four times per year and, in order to assess the impact of climate change on Group business, undertakes scenario analyses and other measures to identify, analyze, and rate climate change risks and opportunities. The committee then provides the Board of Directors with a report four times a year on the risks and opportunities it identifies.

Indicators and Goals

The Nitta Group pursues a basic policy of reducing greenhouse gas emissions arising from the production phase and, towards that end, is working to reduce emissions by 46% by fiscal 2030 (compared with fiscal 2013) and to achieve carbon neutrality by fiscal 2050. To reduce greenhouse gas emissions, we will continue to achieve three initiatives: (1) thoroughly implement energy-saving measures to reduce energy consumption, (2) expand the use of renewable energy, and (3) purchase greenhouse gas-free energy.

Change in Greenhouse Gas Emissions (Scope1, 2)

Sustainability