MATERIALITY(KEY CORPORATE SUSTAINABILITY ISSUES)OF NORITSU KOKI GROUP

MATERIALITY
FRAMEWORK

In moving towards the realisation of a sustainable society,
the Noritsu Koki Group has identified 4 corporate materialities.

MATERIALITY
ACTION PLAN

We have set targets and developed a Materiality Action Plan
for achieving our identified material issues.

Materiality Our actions Goals
for 2023
2023 Results Goals
for 2024
Contributing to society and the community through business operations
01
Shaping the future and making a positive contribution to creating a prosperous society and enriching people`s lives by manufacturing products that society needs
1 Strengthening and promoting quality management Monitor Group response to customers concerns about quality problems
  • ・Monitored Group response to customers concerns about quality problems (based on reporting standards of each Group company)
  • ・Conducted quality audits based on annual plans (manufacturing bases)
  • ・Monitor response to customers
  • ・Conduct quality audits
2 Investing in R&D to create new technologies and value R&D investment of ¥4.0 billion Invested ¥3.9 billion in R&D
  • ・R&D investment of ¥4.1 billion
  • ・Hold discussions for setting KPIs
3 Promoting activities that support cultural development and local communities with links to our businesses Promoted activities that support cultural development and local communities with links to our businesses Carry out each Group company plan
02
Enhancing our supply chain framework to make it more environmentally and socially responsible
4 Delivering environmentally responsible products Make efforts to be environmentally conscious throughout the entire lifecycle of products based on the plan
  • ・Reduced use of virgin plastic in products and packaging materials (Teibow, AlphaTheta and JLab)
  • ・Reduced use of organic solvents by reviewing materials and the production process (Teibow)
  • ・Developed products with an energy-saving mode (AlphaTheta)
  • ・Developed a new Bluetooth chipset that saves energy and helps conserve resources, and integrated it into products (JLab)
  • ・Develop environmentally responsible products with consideration for product lifecycles
  • ・Hold discussions for setting KPIs (including calculating volume of plastic used)
5 Reducing greenhouse gas emissions (Scope 1, 2 and 3)
  • ・37% reduction in Scope 1 and 2 greenhouse gas emissions by 2030 (compared with 2019)
  • ・Implement a greenhouse gas emission reduction plan
  • ・Reduced greenhouse gas emissions
  • ・Started calculation of Scope 3 emissions
  • ・Calculate Scope 3 emissions (discuss targets)
  • ・Review 2030 targets (Scope 1 and 2)
  • ・Formulate and implement Scope 1 and 2 reduction plan
  • ・Review TCFD scenario
6 Establishing our supply chain management framework and promoting risk mitigation Inform all key suppliers about the Noritsu Koki Group Procurement Policy
  • ・Informed all key suppliers about our procurement policy
  • ・Conducted supply chain audits of contract manufacturers through a quality audit framework
  • ・Conducted human rights risk evaluation (Tier 1 suppliers)
  • ・Formulate a procurement guideline
  • ・Establish a system to ensure supplier compliance
  • ・Carry out human rights due diligence
  • ・Confirm the non-procurement of conflict minerals and set policy
Establishing a robust corporate foundation
03
Creating inclusive workplaces where diversity is respected and all employees can thrive and contribute with a future-oriented mindset
7 Creating a safe and healthy work environment Monitor the promotion of health and productivity management and address issues based on the results Monitored the promotion of health and productivity management and addressed issues
  • ・Monitor occupational health and safety (Teibow)
  • ・Monitor KPIs for health and productivity management tailored to each Group company and respond to issues
8 Improving initiatives for developing talent, skills, a proactive mindset and leadership skills of employees at all levels Provide an average of 22.4 hours of training per employee per year Provided an average of 18 hours of training per employee per year
  • ・Provide an average of 22.3 hours of training per employee per year
  • ・Establish training systems
9 Respecting diverse values and promoting flexible workstyles
  • ・Conduct human rights training (once a year or more)
  • ・Monitor the promotion of diverse and flexible workstyles and address issues based on the results
  • ・Conducted human rights training (at least once a year at all Group companies*)
  • ・Revised human rights policy
  • ・Conducted human rights risk assessment (the Group)
  • ・Monitored the promotion of diverse and flexible ways of working and addressed issues based on the results
  • ・Conduct human rights training
  • ・Further investigate the results of the human rights risk assessment (the Group)
  • ・Monitor KPIs for workstyles tailored to each Group company and respond to issues
04
Enhancing our sound corporate governance structure to achieve sustainable growth
10
  • ・Enhancing the effectiveness of Board of Directors
  • ・Promoting stakeholder engagement
Address issues based on the 2022 assessment results and continue to assess Board effectiveness Assessed Board effectiveness and addressed issues
  • ・Continue to assess Board effectiveness and address issues
  • ・Expand opportunities for engagement with shareholders and investors
  • ・Enhance information disclosure
11 Strengthening risk management system and promoting risk response measures Reviewed the initiatives of the Materiality Action Plan and classified provision of information security training under action 12
  • ・Clarified risks related to the Group and each Group company, and formulated countermeasures
  • ・Conducted drills based on BCPs at each Group company
  • ・Conduct a risk assessment, and consider/promote response measures to issues
  • ・Review and strengthen BCPs
12
  • ・Cultivating an ethical corporate culture based on a code of conduct
  • ・Responding to ESG-related laws and regulations
Provide information security training once a year or more
  • ・Provided information security training (at least once a year at all Group companies*)
  • ・Provided compliance training (participation rate: 100%*)
  • ・Formulate and review various policies
  • ・Provide training (compliance training, information security training, etc.)
  • ・Operate a hotline
  • ・Monitor and respond to ESG-related laws and regulations
  • * All executives and employees at NKC, Teibow, AlphaTheta including part-time, temporary staffs and contractors (only permanent employees at soliton, Taibo and JLab, excludes long-term absentees at Teibow)

MATERIALITY ASSESSMENT PROCESS

We have identified our materialities by conducting our materiality assessment based on the
following processes with cross group co-operation and the help of external advisory experts.

STEP1
Identify potential
social issues
and impacts

Working to incorporate diverse stakeholder expectations, we used 11 different globally-recognised sustainability standards such as ESG disclosure guidelines, evaluation criteria provided by ESG evaluation agencies, and codes of conduct. We performed an analysis on sector-specific material issues and identified 31 potential social issues that impact our business in order to define our materiality.

  • *1 GRI Standards, SASB Standards
  • *2 DJSI (RobecoSAM), FTSE, MSCI
  • *3 SDGs, ISO26000, Ten Principles of the UNGC, OECD Guidelines for Multinational Enterprises
  • *4 World Economic Forum(WEF)“Measuring Stakeholder Capitalism”, “Resolving Societal Issues Through Innovation — Listings of Societal Issues” FOR CO-CREATING THE FUTURE
STEP2
Assess and
prioritise material
topics

The 31 social issues selected in Step 1 were evaluated and weighted using a scoring method, incorporating the views of stakeholders and Group businesses, and prioritised according to the following criteria.

  • 1) Stakeholder Input: assessment based on the relative interests and importance of stakeholders by external advisory experts and scholars.
  • 2) Business Impact and Values: reassessing the evaluation scores provided by our 4 major group businesses based on the business impact and values of the Noritsu Koki Group.

As a result, we identified 15 social issues that matter the most to our business and stakeholders.

STEP3
Define materiality

The 15 potential social topics selected in Step 2 were clustered into groups on the basis of our MVV and business model. We refined a list of core corporate material issues that could highly affect our business.
Having had insightful feedback from external advisory experts and far-reaching discussions with senior management including our CEO, we integrated them into 4 significant material topics that need to be addressed and worked on as a group.

STEP4
Determine and
disclose the
materiality

We designed a materiality matrix and validated the credibility of the identified 4 material issues. Approved by the Board of Directors, we finally defined them as the Noritsu Koki Group’s materialities.

MATERIALITY FRAMEWORK

MATERIALITY MATRIX

We designed the materiality matrix using “Priority for stakeholders” and “Priority for business”.
We selected topics with high scores (i.e. indicating the level of priority) for the social issues that our Group needs to address.