Based on its material CSR issues (materiality), the Nabtesco Group has been promoting Group-wide efforts to reduce greenhouse gas emissions and to enforce energy-saving activities as part of its measures against climate change. We have not only introduced environment-related incentive systems such as the energy conservation activity commendation program, energy-saving product certification system, and environmental contribution achievement ranks but also strive to steadily reduce greenhouse gas emissions through the implementation of NEMS and by quantitatively monitoring the status and effects of Group-wide efforts.

In November 2016, the Paris Agreement^*1, an international framework for countermeasures against climate change beyond 2020, came into effect and the 2 degrees Celsius target^*2 was adopted as an international target. In response, the Nabtesco Group set a long-term target for reducing greenhouse gas emissions, which has been approved by the SBT (Science Based Targets)^*3 Initiative.

The Nabtesco Group also advocates the measures taken by the CDP^*4of the United Kingdom to mitigate the impact of climate change and reduce greenhouse gas emissions. In FY2010, we began to disclose the Nabtesco Group’s climate change strategies and greenhouse gas emissions to the CDP to enhance the transparency of our own efforts. Nabtesco Corporation was selected for inclusion in the Climate A List, the highest CDP rating, from FY2016 to FY2018 and was selected as one of the CDP's Supplier Engagement leaders in FY2018. In addition, we announced our support for the Task Force on Climate-related Financial Disclosures (TCFD)^*5, reported this to the Financial Stability Board (FSB)^*6, and begun efforts to uphold this declaration. Going forward, along with the progress of our efforts, we will disclose climate change related information in accordance with the TCFD.

• *1 An international treaty to curb climate change beyond 2020 that was adopted by multiple nations on December 12, 2015 in Paris, following the 21st Session of the Conference of Parties to the United Nations Framework Convention on Climate Change (COP 21)
• *2 An international target set under the Paris Agreement to maintain the average global temperature rise to well below 2 degrees Celsius (°C) compared to pre-industrial levels
• *3 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.
• *4 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. The CDP represents 803 institutional investors with total assets of 100 trillion US dollars (as of 2017 survey), and calls on Japan’s top 500 companies in terms of market capitalization (that is, the constituents of the FTSE Japan Index) to disclose information.
• *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.
• *6 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.

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, a 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 our 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 Group ESH Committee with jurisdiction over the entire Nabtesco Group. The CEO appoints the chairperson and members of the Group ESH Committee from our officers, including members of the Board of Directors. The chairperson of the Group 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 Group ESH Committee uses the results of this monitoring to evaluate importance and deliberate measures for any issues deemed to be important.

Strategies (Risks and Opportunities)

When the result of the audits by the Group 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.

Risk Management

The Group 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 Group 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 Group ESH Committee evaluates waste, chemical substances, and employees' safety and health.

Indicators and Goals

In FY2016, the Nabtesco Group set long-term greenhouse gas emissions targets for FY2050. Specifically, we aim to reduce (1) CO2 emissions by our Group companies in Japan and (2) CO2 emissions relative to sales (per unit of sales) from global production activities including emissions from our overseas sites, by 30% by FY2030 and by 80% by FY2050 compared to FY2015 levels. Moreover, the long-term target for the reduction of CO2 emissions from Nabtesco Corporation, which is included in (1) above, has been approved by the SBT Initiative.

We have also set medium-term targets for FY2020. Specifically, we aim to reduce our domestic CO2 emissions to a level below that of FY2015 and to lower our emissions per unit of global sales by 9% or more, in light of the anticipated increase in production volume and reinforcement of plants and equipment in line with the expected future growth of our operations.

In addition, we have begun to expand 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 begun 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 FY2019, 69.9% 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.

• Related linkThird-Party Verification Report Percentage of main suppliers with voluntary targets for GHG emission reduction in FY2019

The Nabtesco Group is promoting the use of renewable energy equipment at its facilities. First introduced to the Tarui Plant (Gifu Prefecture) in 2012, solar power generation facilities began operating at the Tsu Plant (Mie Prefecture) and the Kobe Plant (Hyogo Prefecture) in 2016, at the Gifu Plant (Gifu Prefecture) and a precision reduction gear plant of a Group company in China in 2017, at PACKRAFT Co., Ltd. (Former : Toyo Jidoki Co., Ltd.) (Yamaguchi Prefecture) and Nabtesco Service Co., ltd. (Kanagawa Prefecture) in 2018, and in 2019, a second system was introduced at both the Tsu Plant (Mie Prefecture) and the Gifu Plant (Gifu Prefecture).

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

Solar panels at Tsu plant

Solar panels at Kobe plant

Solar panels at Gifu plant

Solar panels at PACKRAFT Co., Ltd. (Former : Toyo Jidoki Co., Ltd.)

Use of Renewable Energy

• * The amount of energy use was estimated for the 12-month period from Jan. to Dec. for each of the fiscal years, including FY2015.

Certification System for Energy-Saving Products

Nabtesco’s eco label and Certificate

This certification system was established to foster the design 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 magazine. For energy-saving product certifications, we internally evaluate products to be released on the market to see whether they meet more than one certification criteria and exceed existing levels in non-requisite criteria items. 

Certification Criteria

Certified Product in FY2019

Product Life Cycle Assessment

Our products, which are used in a range of fields, have an impact on the environment throughout their life cycle. 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.

LCA results

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

The Precision Equipment and Power Control Companies are concerned about 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 to save energy during their opening and closing because its products emit larger amounts of CO₂ in the use phase.

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 FY2019, 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 175 million yen.

Furthermore, in FY2018 we spent about 9.9 billion yen on R&D related to climate change measures, development of green products, and other initiatives.

The Nabtesco Group owns motion control technologies, which are used to control movements of a variety of equipment, including precision reduction gears for industrial robots, travel unit for excavators, aircraft flight control actuation systems, brake operating units and door operators for railroad vehicle, engine control systems for marine vessels, and automatic doors for buildings and other structures. Based on these technologies, we will pursue higher energy efficiency in a range of business fields and thereby contribute to reducing greenhouse gas emissions generated through use of the above equipment  by our customers.