Combating Climate Change

Basic Approach and Policy

Countermeasures for Climate Change

The effects of climate change are becoming more serious every year and adverse impacts can be felt right across society, affecting everything from daily life to major economic activities. In order to mitigate such impacts, companies need to implement measures to combat climate change in cooperation with the national government and others. To meet this requirement, the Nabtesco Group is fostering greenhouse gas emissions reduction and energy conservation activities as countermeasures for climate change based on the Group’s management materiality. We have introduced various environment-related incentive systems. Moreover, we are utilizing an environmental information management tool to monitor the entire Group’s energy conservation activities and effectiveness in a quantitative manner for the steady reduction of greenhouse gas emissions.

In 2016, the Nabtesco Group set its previous long-term greenhouse gas emissions reduction target in line with the 2.0 degrees Celsius target of the Paris Agreement*1, an international framework for dealing with climate change. In July 2021, the Nabtesco Group raised its long-term CO2 emissions reduction targets in line with the 1.5 degrees Celsius scenario and made a declaration to be carbon-free by 2050. The Group aims to achieve virtually zero CO2 emissions by 2050 under its new targets aligned with the 1.5 degrees Celsius scenario. These targets have been approved by the Science Based Targets*2 (SBT) Initiative.

The Nabtesco Group supports the initiative implemented by CDP*3 of the UK to reduce the impacts of climate change and greenhouse gas emissions and has been disclosing our climate change-related strategies and amount of GHG emissions to increase the transparency of our measures. Moreover, we expressed our support for the recommendations made to the Financial Stability Board (FSB)*4 by the Task Force on Climate-related Financial Disclosures (TCFD)*5 and are taking relevant measures. In line with the progress of these measures, we will disclose more climate change-related information in accordance with the TCFD’s recommendations.

  • *1 An international treaty to curb climate change beyond 2020, which was adopted by multiple nations on December 12, 2015 in Paris, following the 21st Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21). Under this agreement, the 2 degrees Celsius target was set as an international target to keep the average rise in global temperature to less than 2 degrees Celsius above preindustrial levels. Also, the 1.5 degrees Celsius target was set to encourage the parties to pursue efforts to limit the temperature rise to 1.5 degrees Celsius.
  • *2 The Science Based Targets (SBT) is a framework that encourages companies to set their medium-term targets (for five to 15 years ahead) at a level that will enable achievement of the 2°C target. Such targets are certified following a screening by the SBT initiative.
  • *3 The CDP is an international non-profit organization. It urges companies that boast the world’s top-ranked total market value to disclose their climate change strategies and greenhouse gas emissions levels. Based on the information disclosed, the CDP annually evaluates the companies and announces their scores to the public.
  • *4 A body consisting of central banks in major countries, financial regulatory authorities and other principal institutions. The FSB acts as a facilitator of cooperation among authorities that take measures against vulnerabilities in and stabilize financial systems.
  • *5 Established in December 2015 by FSB. The TCFD recommends that companies analyze the risks and opportunities associated with climate change and reflect the results in their financial information.

Governance

Nabtesco Corporation's Board of Directors determines and supervises our strategies, basic policies, and the execution of important operations by sharing information through reports on important issues. Regarding climate change, the director in charge of production innovation serves as supervisor and the director in charge of environmental security reports on the progress toward the CO2 emission reduction goal and the status of major environmental facility investments.

Under the guidance and supervision by the Board of Directors, the President and CEO (hereinafter, "CEO") establishes Nabtesco Group's environmental philosophy, environmental action guidelines, and long-term goals. At the Board of Executive Officers (composed of the CEO and executive officers), the director in charge of environmental security reports the status of CO2 emissions at internal companies and main group companies. If there is a gap between the current status and the goal, we identify the causes and take measures accordingly. If any item under discussion or report is deemed to affect our business, the CEO determines appropriate measures and reflects them in our business strategies.

As a promoting organization under the direct control of the CEO that is involved in Environment, Safety, and Health (ESH) management, Nabtesco has established the ESH Committee with jurisdiction over the entire Nabtesco Group. The CEO appoints the chairperson and members of the ESH Committee from our officers, including members of the Board of Directors. The chairperson of the ESH Committee collects important information on the environment, safety, and health, including climate change-related risks and opportunities, from our companies and group companies. The chairperson also visits each site to carry out ESH audits and company-wide energy conservation meetings, etc. The ESH Committee uses the results of this monitoring to evaluate importance and deliberate measures for any issues deemed to be important.

Meeting Climate change-related agenda
Board of Directors meeting
  • Major action (Environment): Reduction of environmental impact (CO2 emissions, twice a year)
  • Reduction of environmental impact: CO2 emissions per unit of sales; energy conservation and creation; development of environment-friendly products (four times a year)
  • Introduction of major environmental equipment (as necessary)
Meeting of executive officers
  • Reduction of environmental impact
  • CO2 emissions per unit of sales, energy conservation and energy creation (12 times a year)
ESH Committee meeting
  • Reduction of environmental impact
  • CO2 emissions per unit of sales, energy conservation and energy creation (At least twice a year)

Strategies (Risks and Opportunities)

In order to identify and manage the possible impact of climate change on our business activities, we are analyzing the risks and opportunities across the entire supply chain, including our business partners and customers, using multiple scenarios developed by external parties about temperature rises, including the “below 2 degrees Celsius” scenario.
When the result of the audits by the ESH Committee shows that any issues (risks or opportunities) associated with climate change have an important effect on our business, they are reflected to our business strategies by the determination of the CEO.

In the future, the following risks are anticipated depending on requests from the market or customers: increase of carbon prices, increase of operating costs due to the purchase of electricity from renewable sources, increase of capital expenditures for the introduction of power generation equipment, etc. using renewable resources and the increase of R&D costs for energy-saving product development. There are also physical risks such as business interruption due to damaged infrastructure or unstable electric power supply caused by wind or water disaster.

On the other hand, the following opportunities are also expected: new business opportunities from the establishment of new laws and regulations (e.g. the energy-efficiency labeling system becoming obligatory) and the expansion of opportunities for the Maintenance, Repair, Overhaul (MRO) business, etc. due to a change in consumers' preferences for longer product lives to reduce CO2 emissions as their awareness of climate change increases.

Going forward, Nabtesco Corporation will continue to strive to identify risks and opportunities associated with the environment and make efforts to take measures to address the risks and realize the opportunities, including the further promotion of energy conservation activities.

Measures taken in line with the TCFD’s recommendations: Results of risk assessment (Scenario we referred to: IEA450/RCP2.6/RCP8.5)

Measures taken in line with the TCFD’s recommendations: Results of risk assessment

*As for impact, we classified the size into “Large,” “Medium” and “Small” based on the frequency of occurrence and financial impact.

  • :Frequency of occurrence: Occurs frequently/Has occurred/May occur/May not occur/Will never occur
  • :Financial impact: Serious (¥5 billion or more)/Large (¥2.5 billion to ¥5 billion)/Medium (¥500 million to ¥2.5 billion)/Minor (¥100 million to ¥500 million)/Very minor (Less than ¥100 million)

Risk Management

The ESH Committee collects important information related to risks and opportunities associated with climate change from the companies and group companies and evaluates whether or not they have a significant impact on our business activities and discusses measures for issues that are determined to be important. They evaluate and prioritize possible amount of financial impact and probability or feasibility. The ESH Committee draws up and discusses the measures to address highly probable risks on a preferential basis, regardless of their impact. In addition to climate change, the ESH Committee evaluates waste, chemical substances, and employees' safety and health.

Indicators and Goals

In July 2021, the Nabtesco Group raised its long-term CO2 emissions reduction targets for 2050 in line with the 1.5 degrees Celsius scenario.

Specifically, we are aiming to reduce CO2 global emissions from the entire Nabtesco Group by 63% as of FY2030 and by 100% as of FY2050 compared to FY2015 levels. This target has been approved by the SBT Initiative.

Nabtesco will globally carry out energy conservation activities, and is planning to introduce highly energy-efficient equipment to its production bases as well as to build or rebuild plant facilities with the latest environmental technologies. Moreover, the Company will promote energy creation initiatives such as solar power generation, and promote renewable energy procurement (purchase of renewable energy certificates) to achieve its long-term CO2 emissions reduction targets.

Long-term emissions reduction targets (aligned with the 1.5 degrees Celsius scenario/Scope1+2)

  FY2015
(Baseline year)
FY2030
(Down 63%)
FY2050
(Down 100%)
Global emissions (t-CO2) 54,803 20,277 0

In addition, we are expanding activities from our company alone to our suppliers as well. Of the greenhouse gas emissions from the entire supply chain, the percentage of emissions from purchased goods and services (category 1 of Scope 3 emissions) is high, making it essential for our suppliers to take initiatives to reduce their greenhouse gas emissions. In response, we conduct a survey of our main suppliers (the top suppliers constituting 70% of annual purchases) to see if they have set voluntary targets to reduce their greenhouse gas emissions. As of FY2022, 72% of our main suppliers have set voluntary targets to reduce their greenhouse gas emissions and begun to take initiatives to achieve these targets. We will provide support so that all of our main suppliers set voluntary reduction targets by 2025.

Measures

Targets and Results for the Fiscal Year

Under the medium-term management plan for FY2022 to FY2024, we set the target of reducing our CO2 emissions by 25% relative to the 2015 level, while making efforts to boost sales. In FY2022, we conducted energy conservation activities including those to increase the energy efficiency of air conditioning and lighting equipment and the updating of transformer equipment. As a result, CO2 emissions from the Nabtesco Group came to 47,033 tons against the target of 50,737 tons, and we achieved a 14% emissions reduction relative to 2015. Going forward, we will continue to conduct such energy-saving efforts.

The Nabtesco Group has been fostering energy conservation activities to achieve the long-term reduction targets, including improving the efficiency of its production and air-conditioning equipment and utilizing energy monitoring systems. Although our production volume will further increase in line with our business growth, we make it a rule to make each of our new plants in Japan and overseas at least 40% more energy efficient compared to our existing plants. We will also apply the energy-saving technologies and know-how adopted for our new plants to our existing plants in and outside Japan, thereby reducing the CO2 emissions of the Group as a whole.

Targets and Results of FY2022 (Scope1+2)

Item (Global) FY2022 Targets FY2022 Results Status
Total CO2 emissions
47,898 47,033 Achieved
Per unit of sales
0.209 0.152 Achieved
  • *The calculation policy and standards comply with the Act on the Regional Use of Energy and the Act on the Promotion of Global Warming Countermeasures, and are aligned with the internal Guidelines on the Management of Environmental Information.
    The calculation period covers January to December 2022.
    The calculation scope includes Nabtesco Corporation and Japanese and overseas consolidated subsidiaries, which are listed at “Scope of Environment and Other Data (Excel 20.8 KB) .”

The Amount of CO2 Emissions [Global] and CO2 Emissions per Unit of Sales

The Amount of CO2 Emissions per Unit of Sales

Calculation of Scope 3 Emissions

The Nabtesco Group calculates greenhouse gas emissions from the entire supply chain with a view to identifying and effectively reducing the environmental impact of our business activities as a whole. The calculation results of the past five years are as shown below.

Emissions from the entire supply chain(Unit: t-CO2)

Classification FY2018 FY2019 FY2020 FY2021 FY2022
Direct emissions (Scope 1)*6 *7 8,781 6,599 4,491 4,061 3,893
Indirect emissions through the use of electricity and others (Scope 2)*6 *7 61,395 53,874 48,073 41,021 43,140
Emissions from the supply chain (Scope 3)*8 979,097 940,976 819,726 957,099 934,968
  • *6The calculation scope includes Nabtesco Corporation, and Japanese and overseas consolidated subsidiaries.
  • *7The calculation policy and standards comply with the Act on the Regional Use of Energy and the Act on the Promotion of Global Warming Countermeasures, and are aligned with the internal Guidelines on the Management of Environmental Information.
  • *8The calculation scope includes Nabtesco Corporation only.

The breakdown of our Scope 3 CO2 emissions is as shown below. Of our Scope 3 CO2 emissions, “Purchased goods and services” (category 1) accounts for the largest percentage of 78.7%, followed by “Upstream transportation and distribution” (category 4) at 16.6%.

At the Nabtesco Group, we will continue to identify and reduce greenhouse gas emissions from our entire supply chain.

In order to ensure the reliability of the calculation results, we had them verified by a third party, LRQA Limited.

Scope 3 Emissions (FY2022)

Category Emissions (t-CO2) Rate (%) Remarks
1 Purchased goods and services 773,875 82.77%  
2 Capital goods 35,801 3.83%  
3 Fuel- and energy-related activities 6,354 0.68%  
4 Upstream transportation and distribution 96,248 10.29%  
5 Waste generated in operations 909 0.10%  
6 Business travel 2,063 0.22%  
7 Employee commuting 1,589 0.17%  
8 Upstream leased assets -   N/A (No corresponding leased assets)
9 Downstream transportation and distribution -   N/A (Completed products transported on consignment are included in Category 4)
10 Processing of sold products -   N/A (Nabtesco products are completed products and not processed after being sold)
11 Use of sold products 17,221 1.84%  
12 End-of life treatment of sold products 908 0.10%  
13 Downstream leased assets -   N/A (No corresponding leased assets)
14 Franchises -   N/A (No corresponding franchises)
15 Investments -   N/A (No corresponding investments)
Total 934,968 100%  

*The Scope 3 calculations for FY2022 were made by the following method and for the following period and scope.

  • :Calculation method: As shown in the basic guidelines on the calculation of greenhouse gas emissions from supply chains set by the Ministry of the Environment and the Ministry of Economy, Trade and Industry
  • :Targeted period: January 1 to December 31, 2022

Reduction in Energy Consumption

The Nabtesco Group strives to reduce its energy consumption. We are continuously working to conserve energy and replace existing equipment with energy-saving alternatives. We have also installed electricity meters in our energy-heavy production facilities to monitor excessive use of electricity and standby power, repair equipment, and improve operational methods.

We have also visualized our energy consumption by introducing a monitoring system, which permits us to monitor our energy consumption on a real-time basis.

Energy Consumption [Global]

Energy Consumption [Global]

Renewable Energy

The Nabtesco Group is promoting the use of renewable energy equipment at its facilities. Starting with installation at the Tarui Plant (Gifu Prefecture), we have been installing solar power generation facilities sequentially at our major manufacturing bases since then. In 2021, we also expanded the facilities at the Tarui Plant. Then in 2022 we also expanded the facilities of Nabtesco Power Control (Thailand) Co., Ltd. and Shanghai Nabtesco Hydraulic Co., Ltd.

The Nabtesco Group will continue its proactive measures to promote the use of renewable energy in the future.

Electricity generated by solar power generation

Use of Renewable Energy

Internal Commendation Systems for Environmental Contribution

The Nabtesco Group has multiple internal commendation systems to foster energy conservation, creation and other activities and annually gives commendation under the systems.

Item Commendation for energy conservation activities Nabtesco Award Evaluation of the level of environmental contribution
Target Plants and Group companies Employees Employees
KPI CO2 emissions reduction
CO2 emissions reduction per unit of sales
CO2 emissions reduction rate per plant/per product group CO2 emissions reduction
CO2 emissions reduction per unit of sales
Remarks Prize money Prize money and a certificate of commendation Reflected in the amount of bonus

Mitigation of Environmental Impact Caused by Products and Services

The Nabtesco Group eventually contributes to reducing greenhouse gas emissions by increasing the efficiency and reducing the weight of its Condition Monitoring System with Fail-Safe (CMFS), aircraft equipment, railroad vehicle doors and compressors, automatic doors, precision reduction gears and hydraulic motors. We are also providing and expanding maintenance, repair and overhaul (MRO) services for our railroad equipment, commercial vehicle equipment, marine vessel equipment, aircraft equipment, automatic doors and packaging machines. Through MRO services we will build a system to foster product repair and overhauling and expand the recycling and reuse of our products as much as possible to reduce the generation of waste, while helping customers use our products more efficiently, prolong the product lives and reduce the use of resources and greenhouse gas emissions from the products.

Proportion of sales from MRO services in Nabtesco’s consolidated net sales (in millions of yen)

  FY2019
Results
FY2020
Results
FY2021
Results
FY2022
Results
Net sales (consolidated) 289,808 279,358 299,802 308,691
MRO sales/Net sales 26% 25% 24% 25%

Since FY2021 we have been selling the NATRUS+e automatic doors, which contribute to better indoor environments and barrier-free and energy conservation measures by reducing unnecessary opening/closing of the doors and the door opening time by reading the movements of people, thereby preventing wind from blowing into the inside and mitigating changes in indoor temperatures to improve the indoor environment while also saving energy.

Certification System for Energy-Saving Products

We established this certification system to foster the research and the development of energy-saving products in order to promote environmental protection and the development of a sustainable society. Through this system we are contributing to the mitigation of global warming while increasing the environmental awareness of our employees.

For products that have obtained the certification, we issue certificates, approve the use of the certification mark and make announcements about the certification in our in-house notification. We internally evaluate our products to be released into the market and certify the following as energy-saving products: those that meet at least one of the certification criteria and that are at least equal to conventional products on all of the unmet criteria.

In FY2021, we certified the smart foaming machine SF-L250-35 and the smart foaming machine SF-M150-25 from TS Precision Co., Ltd. as energy-saving products. For the smart foaming machine SF-L250-35, its weight and energy consumption have been reduced by 11% and 23% relative to conventional products and also for the smart foaming machine SF-M150-25, its weight and energy consumption have been reduced by 11% and 33.7% relative to conventional products, contributing to energy conservation by customers. The Nabtesco Group will combat climate change by further expanding motion control technologies to move and stop goods with precision.

Nabtesco’s eco label and Certificate

Nabtesco’s eco label and Certificate

Certification Criteria

Downsizing and
weight reduction
Higher efficiency and less energy use Longer life Non-use of hazardous substances
By 15% or more compared
with previous models
By 15% or more compared
with previous models
By 20% or longer compared
with previous models
Not contained

Certified Product in FY2021

Product name Evaluation criteria
Downsizing and
weight reduction
Higher efficiency and less energy loss Longer life Non-use of
hazardous substances
The smart foaming machine SF-L250-35
gear series
11% reduction in machine weight 23% reduction in power consumption On par with conventional On par with conventional
The smart foaming machine SF-M150-25
machine
11% reduction in machine weight 33.7% reduction in power consumption On par with conventional Not used

Product Life Cycle Assessment

The products of the Nabtesco Group, which are used in a range of fields, have an impact on the environment throughout their life cycle. In order to make environment-friendly products, we carry out environmental assessments, as detailed below, at the design stage of new products.

Evaluation items for environmental assessment (Part of the items):
  • Energy conservation (Reduction of energy consumption at the product manufacturing and use stages)
  • Resource conservation (Reduction of the amount of materials and the number of components used in products, adoption of low-emission materials, and simplification of packaging materials)
  • Recycling (Design suitable for recycling and structural separability)

In this environmental assessment, we include the evaluation of energy consumption at the product manufacturing and use stages with a view to reducing the environmental footprints of all our products. Also, we quantify their environmental impact for each of their life cycle stages to implement necessary environmental measures to reduce that impact. As part of this effort, we also disclose the results of the life cycle assessment (LCA*), as shown below.

Moreover, as a means to identify the sources of environmental impact existing in relation to our products and systems and the improvements that we can make to reduce the impact, we assess the environmental impact of the major products of Nabtesco (unconsolidated) on global warming (in terms of CO2 emissions and the use of fossil fuels) at each of the stages from the procurement of materials through to the disposal and recycling of the products. As for raw materials wasted in our manufacturing process and hazardous substances contained in our products, the amount is very limited in both cases, and only a minimum amount of water is used at the procurement, manufacturing, transportation and use stages of our products. Moreover, concerning our products, emissions of air pollutants other than CO2 are very small relative to CO2 emissions and can therefore be excluded from the target of LCA. We therefore assess the life-cycle impact of our products targeting only CO2 emissions (and the use of fossil fuels) and deem this as the “full LCA” of our products. The Nabtesco Group is thus developing products based on the criteria set in consideration of the environment impact of its products.

*LCA: Life Cycle Assessment. A method of quantifiably estimating and assessing the resources and energy used by products and the environmental burdens imposed by products, across the life cycle, including raw material procurement, manufacturing, use, recycling, and eventual disposal. It also assesses the potential environmental impact of products.

Purpose Identification of sources and improvements that can be made regarding the environmental burdens of products and systems
Product scope Major products (in Nabtesco Corporation)
Assessment method Assessing environmental issues, i.e., the impact on global warming (CO2 emissions)
Usage of assessment results Utilized in the design of future products
System scope From Domestic procurement to disposal and recycling
CO2 emission rate in the phase (%)

Taking these results into consideration, the products of the Nabtesco Group recognize the important orientation of our company toward environmentally friendly designs as follows.

LCA results

Company Product category CO2emission risks in phases Result
(product
development
orientation)
Raw
Materials
Manufa-
cturing
Use Dis-
posal
Precision
Equipment
Company
Precision Reduction Gears: RV
Component Type
Gear Head Type
Gear Head Type(Table Type)
High Low - Low Weight
reduction,
rigidity
improvement,
recycle
Precision Reduction Gears: RV Component Type Gear Head Type Gear Head Type
(Table Type)
Power
Control
Company
Traveling Unit for Crawlers
Control Valve for Mini Excavators
Swing Unit for Hydraulic Excavator
High Low - Low Weight
reduction,
recycle
Traveling Unit for Crawlers Control Valve for Mini Excavators Swing Unit for Hydraulic Excavator
Aerospace
Company
Flight Control Actuation System
High Voltage Electric Power Distribution Unit
Middle Low - Low Weight
reduction,
MRO
Flight Control Actuation System High Voltage Electric Power Distribution Unit
Railroad
Products
Company
Unit Brakes
Brake Operating Units for Railroad Vehicles
Door Operators for Railroad Vehicles
Middle Low - Low Weight
reduction,
MRO
Unit Brakes Brake Operating Units for Railroad Vehicles Door Operators for Railroad Vehicles
Marine
Systems
Company
Main Engine Remote Control System(M-800-VII)
Electronically controlled hydraulic valves
GAP sensors
Middle Low - Low Weight
reduction,
MRO
Main Engine Remote Control System (M-800-VII) Electronically controlled hydraulic valves GAP sensors
Accessibility
Innovations
Company
Automatic Doors
Automatic Platform Doors
Platform Screen Doors (Full-height Type)
Low Low High Low Energy saving,
in design and
opening and
losing
Automatic Doors Automatic Platform Doors Platform Screen Doors (Full-height Type)

The Precision Equipment and Power Control Companies focus on weight reduction and MRO in the design of their products because their products emit larger amounts of CO2 in the raw materials phase. The Accessibility Innovation Company designs its products with a focus on saving energy during their opening and closing because its products emit larger amounts of CO2 in the use phase.

Cost of Implementing Anti-Climate Change Measures

The Nabtesco Group collects important information about the environment, safety, accident prevention, health, and others, including climate change-related risks and opportunities, assesses the materiality of related issues, and discusses measures to implement for those that are deemed to be important.
In FY2022, to diminish the risks of climate change, we implemented some measures, for example we replaced air conditioning facilities with the models that are expected to increase energy efficiency as the rising average temperature accelerates their use, and moved forward with measures to prevent the leakage of rainwater and drainage problems. The expenses for these activities were approximately 100 million yen.

Furthermore, in FY2022 we spent about 10.9 billion yen on R&D related to climate change measures, development of green products, and other initiatives.