Nippon Light Metal GroupNIPPON LIGHT METAL GROUPINTEGRATED REPORT 2023

Nippon Light Metal GroupCONTACT INFORMATION

Nippon Light Metal Holdings Company, Ltd.
Planning Administration Dept. Public Relations
Urbannet Uchisaiwai-cho Building, 1-1-13 Shimbashi, Minato-ku, Tokyo 105-8681 Japan
TEL: 03-6810-7100
https://www.nikkeikinholdings.co.jp

Basic Information

NLM Group Management Policy/NLM Group Business Conduct Guideline

NLM Group Management Policy

Corporate Philosophy

Contribute to improving people’s quality of lifeand environmental protection
by continuing to create business,
focused on aluminum.
Basic Policies● The Group will create healthy, safe workplaces, and achieve zero-accident operations.
● The Group will continuously provide diverse value to customers by deepening the levelof collaboration and coordination within and outside the Group.
● The Group will work actively to achieve carbon neutrality, to help create a sustainable

society.
● The Group will engage in fair and honest business operations, with respect for humanrights and an emphasis on ethics.
● The Group will respect diverse values, and develop human resources from a long-term

global perspective.

NLM Group Business Conduct Guidelines●C reating the future together

We create a future that goes above and beyond by working through the whole processfrom research and development to engineering, production, and supply as a team.

● Go-an-zen-ni!

We never let our team members get hurt. “Show up smiling, go home smiling” is ourgoal.

● Working with our community

We actively engage with local and environmental issues to create a sustainable andprosperous society.

● Beyond what customers

We communicate sincerely with our customers to provide value beyond what they
demand.

demand● Team Nikkeikin● Gogen Shugi (three actuals +principles)● “May I” and “Give it a try”

We take Gogen Shugi (Onsite, Products, Reality, Principles and Rules) seriously so that
we can be proud of what we produce and provide.
We encourage the mindsets of “May I” and “Give it a try” to keep us willing to take on
new challenges.

● Picture your own evolution

At all times, we approach our jobs with the broad perspective of “what am I capableof?” along with open minds and curiosity.

● To become a trustworthy andWe accurately understand and comply with any rules and codes. We work according
to the dictates of conscience and learnings from the history of our business.

reliable company

01

We count our team members’ issues as “our own issues” and work together as ateam to achieve our goals.

Integrated Report 2023

Editorial Policy

CONTENTS

Introduction
As in the previous year, the NLM Group will
publish an integrated report in 2023. The
report is designed to communicate theGroup’s vision for value creation in bothfinancial and non-financial terms to all
stakeholders, including shareholders andinvestors.
In the Integrated Report 2022 that wepublished last year, we reported the 2022
mid-term management plan and the NLMGroup’s initiatives on priority issues, among
other things. Reflecting changes in theGroup’s situation and its businessenvironment, we formulated a new midterm management plan that started in
FY2023. In this report, we describe ourinitiatives to address the current priority
issues and the priority issues in the new
mid-term management plan, as carefully
and conscientiously as possible. We would
be happy if this report is useful to readers,
our stakeholders in their understanding of
the NLM Group’s business activities.

Basic Information

Reference guidelines
This report has been prepared withreference to the International Integrated
Reporting Framework advocated by the
IFRS Foundation, the Sustainability
Accounting Standards Board (SASB),
Sustainable Development Goals (SDGs),
ISO 26000, and the Guidance forCollaborative Value Creation from the
Ministry of Economy, Trade and Industry. In
addition, information disclosures on thefoundations supporting value creation havebeen prepared with reference to theEnvironmental Reporting Guidelines (2018edition) of the Ministry of the Environment
and Global Reporting Initiative (GRI)
standards.

Value Creation

01 NLM Group Management Policy/

Foundations of Value Creation

Data

51 Compliance
54 Dialogue with Shareholders andInvestors

NLM Group Business Conduct Guideline
03 At a glance

55 The Environment
59 Action on Climate Change — Disclosure

Value Creation

61
63
65
67
69
71

05 Message from CEO
11 The NLM Group’s Quality-Related
15
17
19
21
27
31
39

Misconduct Incidents, etc.
Value Creation History
The Value Creation Process
The Source of Value Creation
Sustainability Strategy
Mid-term Management Plan
Segment Overview
Financial Strategy

Foundations of Value Creation
41
47
49
50

Governance
List of Officers & Skills Matrix
Risk Management
Information Security

Reporting Media

Based on the TCFD Recommendations
Quality
Human Resource Strategy
Occupational Health and Safety
Developing a Fulfilling Workplace
Diversity & Inclusion
Securing and Cultivating Human
Resources
73 Protecting and Respecting Human
Rights75 Supply Chain Management
77 Local Communities

Data
79 Financial and Non-Financial Highlights
81 Operating Results and Financial
Analysis
Data
Independent Assurance Report
Business Conduct Guideline
Company Information and ShareInformation
92 Global Network

85
89
90
91

Further details and past initiatives are available on our website.

Financial information

Non-financial information

Period covered
Data for the report was collected between
April 2022 and March 2023.
(Note) Data collected before or after this period is also

Integrated Report 2023

used in some sections of this report.

Scope of the report
This report describes the activities of andfacts about Nippon Light Metal Holdings
Co., Ltd. and its 77 consolidated
subsidiaries (a total of 78 companies)
unless otherwise specified.

● Website● Website

https://www.nikkeikinholdings.co.jp/
ir/ir-data/

https://www.nikkeikinholdings.co.jp/
sustainability/https://www.nikkeikinholdings.com/
sustainability/ (English)● FACT BOOK

Period of issuance
March 2024 (Previous issue: March 2023)
Independent assurance
A ★ symbol indicates that a third party,
KPMG AZSA Sustainability Co., Ltd., hasprovided independent assurance regarding
the reliability of the data.

●	Shareholders’Newsletter

Integrated Report 2023

02

Basic Information

At a glance
The products we offer at the NLM Group range from aluminum to intermediate
products and processed products. We operate businesses widely and provide
comprehensive solutions by providing products and services with high quality
and high added value, a unique strength of a comprehensive aluminum
manufacturer. Businesses of the Group are categorized into four segments
based on manufacturing methods.

Aluminum Ingot and Chemicals◆ Net
化成
・地金 Sales & Operating Profit (million yen)■■Net Sales

Operating Profit

155,981
127,633
117,008
102,833
91,181
13,021
10,902

9,616

10,201

9,614➡ P.31Net Salesby Segment

30％

Foundations of Value Creation

Data

Consolidated Financial Results (FY2022)

Net Sales

Ratio of Operating Profit
to Net Sales

Operating Profit

516,954 million yen

Percentage of
Net Sales

Value Creation

7,539 million yen

Fabricated Products and Others

1.5%➡ P.35Percentage of
Net Sales30％◆ Business Summary◆ Net Sales & Operating Profit (million yen)
加工関連

◆ Business Summary

In the Alumina and Chemicals Segment, the Chemicals Div. of
Nippon Light Metal Co., Ltd. provides aluminum hydroxide, alumina,
and various other chemicals. These products are used in a range offields, including as fire retardants, raw materials for ceramics andindustrial materials for the manufacture of pulp and paper.
The Aluminum Ingot Segment provides a variety of aluminum
ingots, with the leading role played by Nikkei MC Aluminium Co.,
Ltd., and is highly evaluated for the development of highlyfunctional ingots that cater to customers’ needs.

■■Net Sales

In Fabricated Products and Other Businesses, we provide
distinctive products and services that are highly valued for their
quality. These products include truck bodies from Nippon FruehaufCo., Ltd., commercial refrigerator and freezer panels from Nikkei
Panel System Co., Ltd., and fabricated aluminum products forinfrastructure, including for civil engineering and construction, from
Nikkei Engineering Co., Ltd. We also supply anodized aluminum
foil for aluminum electrolytic capacitors, automotive parts, andcarbon products, among others.

180,259

Operating Profit

172,975
157,297

11,681

10,440

153,415

153,167

8,892
3,776

◆ Major Products and Services
2018

2019

2020

2021

2022
(Fiscal year)

Our website

https://www.nikkeikinholdings.com/group/chemical.html

Aluminum Sheet and Extrusions➡ P.33

Percentage of
Net Sales

21％

2019

2020

2021

2022
(Fiscal year)◆ Major Products and Services
Our website

https://www.nikkeikinholdings.com/group/
process.html

Aluminum Foil, Powder and Paste➡ P.37

Percentage of
Net Sales

19％◆ Net Sales & Operating Profit (million yen)
板押出

◆ Business Summary

箔粉末◆ Net Sales & Operating Profit (million yen)

◆ Business Summary■■Net Sales

The Rolled Products Div. of Nippon Light Metal Co., Ltd. And Nikkeikin
Aluminium Core Technology Co., Ltd. play central roles in thisbusiness. Aluminum sheets and extrusion products are used in a wide
variety of fields, such as for automotive parts and railway cars in thetransport industry, thick sheets and relevant parts for semiconductor/
liquid-crystal manufacturing equipment, and fabricated sheets for PC/
tablet bodies in the electrical and electronics industry. The NLM Groupmakes use of its technologies and expertise cultivated over many
years to proactively develop products that meet customers’ needs andto supply highly functional sheets and extrusion products.

■■Net Sales

Toyo Aluminium K.K. plays the leading role in the Foil and Powder
Products Business.We have established our position as a leading
manufacturer by providing a wide range of products thatincorporate the special characteristics of aluminum and are useful
in society, industry and everyday life. They include packaging
materials for food and medical products, products for electronics,
aluminum powder and aluminum paste products.We develop new
fields by utilizing our own technologies as the foundation andprovide a range of highly functional materials and products inmarkets at home and abroad.

107,835

Operating Profit

113,876
101,193

7,152

97,8505,950

107,399

7,518

3,556

-541
2018

03

59
2018

2019

2020

2021

2022
(Fiscal year)

95,349https://www.nikkeikinholdings.com/group/
extrusion.html

88,9455,114◆ Major Products and Services
Our website

Operating Profit

2018

86,240

3,074

3,311

2019

2020

91,655

100,407

1,570

1,518

2021

2022
(Fiscal year)◆ Major Products and Services
Our website

https://www.nikkeikinholdings.com/group/
powder.html*Toyo Aluminium K.K. and other companies constituting the Foil and Powder Products segment are to be excluded from the scope of consolidation through a transfer of shares.
https://www.nikkeikinholdings.com/news/news/common/pdf/p2022090201hde.pdf

Integrated Report 2023

Integrated Report 2023

04

Basic Information

Message from CEO

Value Creation

Foundations of Value Creation

Data

As Team NLM, we will strive to bea groundbreaking innovator ofaluminum and beyond.
President and CEO

Ichiro Okamoto

We will seriously work on our tasks one by one as a team.
Review of the past year
First, I would like to summarize the Group’s businessresults for last year and describe our future outlook. The
consolidated financial results of the NLM Group haveremained steady since 2012, when we adopted a holding
company structure, with ordinary profit having exceeded
30.0 billion yen in FY2018, for example. Last fiscal year,
however, while net sales grew 6.2% year on year, to 517.0
billion yen due to revisions to the sales prices that reflectedaluminum ingot market conditions and raw material andfuel prices, ordinary profit stood at 8.9 billion yen,
down61.4% year on year, falling short of the target, mainlyreflecting a decrease in sales attributed to sluggish
automobile-related demand caused by semiconductor
shortages, and delays in truck chassis supply, as well as
higher costs that resulted from a surge in prices of aluminum and other raw materials, materials, and fuel, among
other factors.
At present, we are pursuing initiatives to achieve arecovery in our business performance, such as continuing
to accelerate overseas expansion and stepping up efforts
to create new businesses and products, as well as passing
higher raw material and fuel prices on to sales prices
appropriately.

In the meantime, the demand for aluminum in Japan has
remained almost flat since 2000. The ratio of demand foraluminum in Japan to that in the global market is approximately 5%, with an annual amount of around 4 million tons.
Even in China, the only country where quantitative expansion has taken place, the annual per-capita consumption ofaluminum is approaching 30 kilograms, which is regarded
as the global average consumption, in recent years. We
believe that an increase in aluminum consumption to amuch higher level is as unlikely in China as it is in Japan,
Per-capita Demand for Aluminum
U.S.

Brazil

China

Japan

U.K.

Germany

(Kg)
40
35
30
25
20
15
10
5
0

2000

2005

2010

2015

2020
(Fiscal year)●

Ordinary profit*Source: Data from the Japan Aluminum Association

Consolidated Financial Results■

Net Sales(billion yen)
500

30

400

25

300

20

200

15

100

10

0

05

(billion yen)

2012

Integrated Report 2023

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023
(Fiscal year)

5

Integrated Report 2023

06

Basic Information

Value Creation

Foundations of Value Creation

Data

Message from CEO

Changes in Demand for Aluminum in the World■ Total■ China ■ U.S.

■ Europe ■ Japan ■ Other Asian countries■ Other countries(thousand tons)

77,13080,00070,00060,00050,92950,00040,00034,00530,00025,53019,71520,00012,50410,000
0

5,157

1960

1970

1980

1990

2000

2005

2006

2007

2008 2009

2010

2011

2012

2013

2014

2015

2016

2017

2018 2019 2020
(Fiscal year)*Source: Data from the Japan Aluminum Association

Europe, and the United States. While the quantitative
expansion of aluminum based on high-volume production
and consumption now approaching its limit, what weshould dedicate ourselves to is simply the development of
new applications and the creation of what is perceived asvalue for customers. I believe it is important to provide
products and services needed by customers by leveraging
the strengths of the NLM Group.

Results of investigations into the quality-related
misconduct incidents and prevention of recurrence
Before explaining the NLM Group’s Management Policy
and management measures, I want to take this opportunity
to sincerely apologize once again for, and report the
progress of measures on, the revocation of JIS certification
and request that we cease the use of the JIS mark (quality
problem), which has caused you inconvenience andconcern.
I will start by explaining the investigation report from theSpecial Investigation Committee consisting of external
experts and other members. Because the scope of theinvestigations was expanded to business sites other thanJIS-certified sites, the investigation period was long, at one
year and nine months. The investigations were completed
in March this year, and we received the investigation report.
While the investigations by the Special Investigation
Committee were ongoing, we ourselves held repeateddiscussions on structural factors behind the incidents andinitiatives to prevent any recurrence. While taking theinvestigation results from the committee seriously, we haveadopted measures to prevent any recurrence of the
problems, aiming to become a corporate group that istrusted by its stakeholders.

07

Integrated Report 2023

workplace. Thus, we attempt to have ideas of the
management and details of our initiatives shared by a totalof about 8,000 Group employees in Japan. In workplace
visits, I myself as the leader of the management team visit
plants, branches, offices, and other workplaces and holdtalks with about 20 employees each. I tell them whatmanagement is thinking while employees tell me about the
problems they face in working, issues in their workplaces,
and other matters as the opinions of people working on thefront lines. As in the site manager meetings, I will talkdirectly with all employees through a total of 400 workplace
visits, speaking with 20 people per visit. In this context, at
one workplace that I visited, employees working in a plantvoiced an opinion, “We want to introduce a day when westop all equipment for around 30 minutes and talk about
quality in each workplace.” I agreed with them, saying “Thatsounds good. Let’s do it.” Thus, it was decided that theplant will introduce its own Quality Day. Having witnessed
the moment when each employee treated the quality
problem as their own issue and their fire was lit, I feel this isexactly what I am responsible for making happen.

Moreover, in April 2023, the NLM Group BusinessConduct Guideline was formulated, with the leading role
played by 36 young and mid-career employees from 16
Group companies. This was determined and approved
through presentations by the representative of theemployees, which were given directly to the Group
Executive Committee, the Board of Directors, and others.
Thus, the NLM Group Business Conduct Guideline verymuch reflects the thoughts of the NLM Group and the 36
project members. Ifan event going against the BusinessConduct Guideline should occur in the future, they will
point it out and say with a loud voice, “That’s against the
principle.” I regard these activities as epitomizing Sottaku
Doji*. I am seeing signs of our evolving into a corporategroup where everyone can express their opinions more
freely than ever. Reforming corporate culture is a neverending process. I will continue to light each employee’s fire.
* Sottaku Doji: It means that the activities of master and pupil conform with eachother. It means that the minds of the two are in accord.

As initiatives to prevent a recurrence, we will advance
management reforms, including rebuilding the Group’s
governance structure, and will reinforce internal control
functions such as reforming our corporate culture.
In particular, our corporate culture took a long time totake root in the NLM Group. I understand that it cannot bechanged overnight. To fully communicate the ideas ofmanagement to employees working on the front lines andto permit direct dialogue between management andemployees, we launched site manager meetings andworkplace visits in April this year. For the site manager
meetings, we have divided each workplace of the NLMGroup into teams of roughly 20 members and appointed
the teams’ representatives as site managers. We convene
the site manager meeting each month with the participationof around 400 site managers. Agenda items discussed in
the meeting include Group-wide management issues, suchas causes of quality problems and measures to prevent
their recurrence. After a meeting, each one of the 400 sitemanagers gives explanations to 20 members of their

Working as one to achieve the 2023 mid-term management plan
Our thoughts reflected in new Team NLM

A workplace visit

Reflecting the changes in our business environment andinitiatives to prevent a recurrence of the quality problem, we
reviewed the 2022mid-term management plan this fiscal
year, or one year after its launch, and adopted the 2023
mid-term management plan, under which the NLM Groupwill make a fresh start as new Team NLM. The 2023 mid-term management plan is also an expression of ourdetermination as we make a fresh start as new Team NLM.
The word “new” in new Team NLM conveys the meaningthat we will be reborn and achieve a recovery of social trustand earnings. Initiatives for new Team NLM constitute oneof the pillars of the management policy under the 2023
mid-term management plan in the aspects of both offense
and defense.

Integrated Report 2023

08

Basic Information

Value Creation

Foundations of Value Creation

Data

Message from CEO

Even with new Team NLM, however, the fact remains thatpeople and organizations work together organically within
the Group, we demonstrate the Group’s comprehensive
capability by leveraging the combined wisdom ofindividuals, and we continue to create new value forcustomers. We will work consistently to attain our targets.

Rebuilding of the Group’s governance structure
One of the initiatives for new Team NLM is to promotemanagement reforms and reinforce internal control
functions. As a leader of the management team, I will workon the reform of our corporate culture by continuing thesite manager meetings and workplace visits that I
mentioned above. Meanwhile, reviewing the NLM Group’s
structure once again, I noted that 69 of the total 78 Group
companies have 300 or fewer employees each, and that
42% of all Group employees belong to these companies.
This means that the NLM Group includes many small andmidsize subsidiaries. We are planning to rebuild theGroup’s governance structure by bundling these small andmedium enterprises into some what larger groups andmanaging those groups.

Establishment of Nikkeikin ALMO
If the above is about the aspect of defense, such as reforms ofcorporate culture and rebuilding of the governance structure, an
example of our more proactive measures is the establishment of
Nikkeikin Aluminum for Mobility Company, Ltd. (Nikkeikin
ALMO). We have integrated our automotive components
businesses, which had been divided based on manufacturingmethods and operated by Group companies, into a single
corporate organization, aiming to facilitate the consolidation ofdispersed management resources and their flexible allocation.
The automotive market, where actions for carbon neutrality andelectrification are underway, has diverse potential, for instance inmaterials and manufacturing methods. We can therefore expect
major business opportunities for the NLM Group. The strengthsof the Group lie in the fact that we have comprehensive
capabilities, ranging from manufacturing methods andprocessing technologies, such as casting, processing, andbonding, to development, design, maintenance, and services,which are based on our comprehensive knowledge aboutmaterial properties. I believe that by consolidating thesestrengths, we can provide the products and services demanded
by customers along with high added value.

Toward the realization of sustainable management
At the NLM Group, we are forging ahead with sustainable
management under the Corporate Philosophy: Contributeto improving people’s quality of life and environmental
protection by continuing to create business, focused onaluminum. In this context, we have set the following fivethemes as our priority issues (material issues) to address toenable the NLM Group to achieve sustainable growth andto enhance its corporate value.
● Protecting the global environment● Providing sustainable value● Happiness of employees● Responsible procurement, production and supply● Corporate ethics and governanceDriving carbon neutrality
Driving carbon neutrality is one of the important tasks of
new Team NLM for protecting the global environment andproviding sustainable value. Because of our historicalcontext, we have diverse business segments, fromupstream to downstream. It is true that it was difficult for
the Group to drive carbon neutrality optimally only with theplans and measures of the individual business segments. In
response, we have established the Green Growth Strategy
Office as an entity that plans and drives the integrated
decarbonization strategy of the Group. This is a new09

Integrated Report 2023

challenge that we are taking on to manage risks andopportunities in our decarbonization strategy with an
integrated approach, aiming to achieving net zero
greenhouse gas emissions by FY2050.
Generally, among the processes of manufacturing newaluminum ingots, a large amount of electricity is consumed
when aluminum as a metal is taken from the raw material,
leading to an idea that the manufacturing process emits agreat deal of CO2. From the viewpoint of the entire lifecycle,
however, aluminum contributes to reducing CO2 emissions
because this material is expected to improve energy
efficiency while it is used, such as by reducing the weight ofautomobiles and other products. In addition, aluminum also
features superior recyclability. At the same time, the CO2burden of recycled ingots is one-tenth that of new aluminum
ingots. We therefore believe that we can make a major
contribution to future decarbonization through recycling.
At the NLM Group, horizontal recycling of aluminum for
expanded materials, which is the major application of newaluminum ingots, is an important means of decarbonizationand carbon reduction. On the other hand, to use scrap
from the market directly for expanded materials, it isessential to establish a technology for sorting out andseparating from scrap only that portion that is equivalent to
the portion of new aluminum ingots for expanded materials.
We aim to establish, and find practical application of, thetechnology by harnessing the knowledge of Nikkei MC
Aluminium Co., Ltd., which has been engaged in therecycling business at the Group for many years. To do this,we have integrated the functions for procurement,
production, and sales of materials for expanded materials
into a new Metal Business Division, thus establishing aframework for implementing measures such as enhancing
procurement of low-carbon materials, expanding the use of
scrap from products we produced, and building closedloop supply chains with customers.
We will also work to improve our upgrading technology
by leveraging aluminum material technologies as ourstrength, thus contributing to not only expanding theGroup’s business but also protecting the global
environment and providing sustainable value.

Helping build a sustainable society withthe happiness of employees as the driving force
I believe that, among the priority issues of the NLM Group,
what serves as the engine of sustainable management is
the happiness of employees. I understand that it is only
when each of our employees feels pleasure and job
satisfaction and can work daily with pride in being amember of the NLM Group that initiatives to address eachissue make progress and targets, including the KPIs, areachieved. As one initiative for this purpose, we havebecome an official partner of Japan’s national wheelchairrugby team and engage in a number of activities. Five
young employees of the Group are playing the leading rolein this initiative. They are widening the circle of activities,
such as participating in events to support the Japan’snational team when they play and in the operation ofgames as volunteers. Further, at Tomakomai Complex of
Nippon Light Metal Co., Ltd., we have renovated Nikkei
Arena, a gymnasium, as part of our initiatives to improve
the work environment. In the renovation, the entire building,including pathways and locker rooms, were designed to bebarrier-free. We are also proactive in offering the space forexternal teams. At present, it is widely known as a hub ofparasports activities, where people can take part inwheelchair rugby, wheelchair basketball, and otherparasports. I believe that these social contribution activities
will give employees working together the pleasure of andpride in serving society as corporate citizens and lead tothe happiness of employees, and ultimately, to the recovery
of social trust in the Group, improvements in its earning
power, and its sustainable growth.

In Closing
I think that the task with top priority for enabling the Groupto achieve sustainable growth is to recover social trust.
Improving earnings strength is built upon social trust. Whatis important for this purpose is that each member of the
management team and each employee should be proud of
being a member of the new Team NLM and should find it
rewarding and enjoyable to work for the NLM Group. As amajor duty to fulfill for this purpose, I will continue to lightpeople’s fire through site manager meetings andworkplace visits.
We will continue our efforts to be a groundbreaking
innovator of aluminum and beyond, so as to recover yourtrust and fulfill your expectations.

Integrated Report 2023

10

Basic Information

NLM Group Quality-Related incidents of misconduct, etc.

Outline of the Incidents
At the NLM Group, we deeply apologize for the great inconvenience caused to our customers and other stakeholders by theincidents of misconduct (hereafter the “Incidents”) that occurred in relation to the manufacturing and inspections of products,
including matters at Group company that violated the Ministerial Ordinance on Certification of Conformity with the JapaneseIndustrial Standards (hereinafter “JIS”) of Mineral or Industrial Products.
To uncover the whole truth about the Incidents, we established the Special Investigation Committee on June 9, 2021 andreceived the investigation report from the Special Investigation Committee on March 29, 2023. At a meeting of the Board of
Directors of NLM Holdings held on the same day, we deliberated and determined measures to prevent the recurrence of the
Incidents. We have since been working on corrective measures to address the Incidents and prevent their recurrence.

Facts
The facts about the Incidents from the outset to the present are as follows.
2021

2023

May 14

Nagoya Plant of Nippon Light Metal Co., Ltd.: Revocation of JIS Certification

May 17

Establishment of the JIS Certification Violation Investigation Committee at NLM Holdings

June 9Establishment of the Special Investigation Committee — NLM Holdings JIS Certification Violation Investigation Committee dissolved

July 2

Revocation of Nikkei Niigata Co., Ltd.’s JIS certification

March 29

Reception of the investigation report from the Special Investigation Committee
Announcement of results of investigations into the quality-related incidents of misconduct at theGroup, prevention of their recurrence, etc.

Foundations of Value Creation

Data

At the NLM Group, we took a quality problem at another company as an opportunity to conduct a full check of quality in theGroup in 2017 (hereafter the “2017 Full Quality Checks”). We found 44 incidents of misconduct through the checks and tookcorrective measures against them. The following table shows the incidents of misconduct organized in chronological order
together with the 214 incidents of misconduct that were identified in the investigations by the Special Investigation
Committee. For details of the 214 incidents, see table 1 (pages 37 to 47) in the report we published on March 29, 2023.
Conduct
Manufacturingmethods

Testing andinspection methods

Handling of testingand inspection results

Total

Reporting/announcement

Total

Falsification,etc. includedin the left

Total

Falsification,etc. includedin the left

Total

Falsification,etc. includedin the left

Total

Falsification,etc. includedin the left

Total

Falsification,etc. includedin the left

Incidents that occurred before thefull quality checks

22

2

69

3

71

56

3

0

165

61

Incidents identified in the full quality checks

3

0

4

1

37

29

0

0

44

30

Incidents not identified in the full quality
checks

19

2

65

2

34

27

3

0

121

31

Incidents that occurred after the full
quality checks

4

0

20

0

17

5

7

1

48

6

Incidents whose time of occurrenceis unknown

0

0

1

0

0

0

0

0

1

0

Total

26

2

90

3

88

61

10

1

214

67

They included 67 incidents of misconduct that are considered falsification or fabrication. These incidents of misconduct
occurred at different times, but it was revealed that they include 121 incidents that were not identified in the 2017 Quality Full
Checks and 48 incidents that occurred after those checks.
We conducted causal analyses from the perspectives of motivation, justification, and opportunity to commit misconduct toidentify the structural factors that existed behind the fact that misconduct had occurred widely across the Group.

April 27

Establishment of the Business Transformation Office for managing the progress in recurrence
prevention and verifying its effects

Perspective

June 19

Report on progress of recurrence prevention (1st installment)

Motivation❶ The appropriate relationships the between sales, development, manufacturing and quality assurance departments had been lostin their struggle to meet tight deadlines, which motivated them to do non-compliant actions to maintain strict delivery dates.

September 28

Report on progress of recurrence prevention (2nd installment)

Incorrect
justification❷ They wrongly justified their conduct, believing that it would not cause actual harm to product safety.

Incidents of misconduct that were discovered and analysis of their causes
It was reported that investigations conducted by the Special Investigation Committee identified 214 incidents of misconductat 36business sites of 18 Group companies. The identified incidents of misconduct are categorized as follows.
Category

Manufacturing

Testing andinspections
Handling of testingand inspection
results
Reporting/announcement

11

Value Creation

Integrated Report 2023

Examples⃝Products with alloys and section sizes that differ from those specified by customers were
manufactured and shipped.
⃝Products that were found to deviate from the standards in the process analysis were shipped asconforming products.
⃝Inspections were conducted with shapes or dimensions that differ from the standards⃝Inspections were conducted with methods differing from the methods specified in the standards.
⃝Although regular inspections (of measuring instruments) were not conducted, records were
fabricated to make it appear as if they had been regularly calibrated (inspected and adjusted).
⃝When an analytical value of a product sample deviated from the standard, the value was falsified
using a substitute value.
⃝False reporting in JIS certification maintenance review

Factor❸ Functions checking work sites were insufficient, giving employees opportunities to commit misconduct.
❹ The independence and authority of quality assurance functions were insufficient, resulting in the failure to fully identify andcorrect non-conformities.
Opportunities❺ Due to the history of the NLM Group, some Group companies and business sites have developed a closed nature, which led,
in a distorted way, to increases in the motivation, justification, and opportunity to commit misconduct.
❻ These factors interacted with each other, preventing employees from taking a stand on misconduct and leaving cross-sectoral
and Group-wide measures to address difficulties faced at the business sites unimplemented.

Safety verification
Regarding products, etc. related to the incidents of misconduct, we conducted inspections and assessments on our own. As
a result, it is our judgement that safety was unaffected in all of the incidents of misconduct. We have continued to report andexplain each matter to customers on an individual basis.

Status of corrective measures
Of the three incidents for which corrective measures were being taken as of March 29, the measures were completed for twoof the incidents (#2 and #201 in table 1) and are being taken in one (#126 in table 1). (As of September 15, 2023)
Integrated Report 2023

12

Basic Information

Value Creation

Foundations of Value Creation

Data

NLM Group Quality-Related incidents of misconduct, etc.

(4) Investigating business sites which have yet to be investigated*1

Framework for promoting the prevention of recurrence
The incidents of misconduct occurred widely across the Group, at 36 business site of 18 companies. A strong driving force isneeded to correct and prevent the recurrence of these incidents because Group-wide and individual initiatives are required. To
promote initiatives which focus on management reforms and the enhancement of internal control functions without delay toprevent recurrence, we established the Business Transformation Office directly under the President of NLM Holdings on April
27, 2023. This office promotes measures to prevent recurrence, manages their progress, verifies their effects, reports theirprogress to the Board of Directors and stakeholders, and promotes and manages other initiatives.

CountryJapan

Major initiatives for preventing recurrence
１. Reporting and sharing investigation results and information about the prevention of recurrence(2) Explanations to customers(as of September 15, 2023)⃝Beginning additional investigations of domestic business sites (two sites of one company) and overseas sites (11 sites of eightcompanies) that have yet to be investigated jointly with external organizations⃝Contents of investigations: Questionnaire survey (early August 2023/1,098 subjects/response rate: 95%)
→ on-site investigations → organizing results

Number of target companies: 4,106
Explanations given to: 4,106 companies
Approval received from: 4,045 companies

MexicoT. S. T. Nikkei

Ingots, molten aluminum

99 (84%)

October 2023

Ingot

115 (105%*2)

Nikkei Siam Aluminium

Aluminum sheet and foil

348 (93%)

Nikkei Siam Aluminium

Heat exchanger

144 (94%)

Nikkei Siam Aluminium

Panel

65 (112%*2)

Fruehauf Mahajak

Truck body, Panel

106 (92%)

3 sites of 3 companies－

Being planned

Nikkei MC Aluminum Thai Wellgrow
Nikkei MC Aluminum Thai Sri Racha(6) Ceaseless examination(2) Rebuilding the relationships between NLM Holdings and Group companies(7) Strengthening supervision by the
Board of Directors of NLM Holdings*1 Business sites that were excluded from subjects of investigations by the Special Investigation Committee*2 The response rate exceeds 100% because employees who are not directly employed are included.

2. Driving management reforms⃝Checking recurrence prevention for 211 of the 214 incidents of misconduct, excluding a total of three incidents at nonmanufacturing sites⃝The follow-up audits found one case where inspections were insufficient. Corrective measures and recurrence prevention
measures are being taken.

(3) Addressing management issues and risks as the Group

3. Strengthening internal control functions(4) Cross-sectoral measures taken by sales, development, manufacturing, and quality
assurance departments(2) Reforming corporate culture(5) Rebuilding the quality assurance system

Site manager meetings*4 has been integrated into 34) Developing a system for cooperation and mutual
checks between Group companies*
5) Investing resources in the quality assurance function

3) Reinforcing and improving the quality assurance system ina Group-wide manner

3. Strengthening internal control functions(1) Building and operating effective internal control systems under the supervisionof the Board of Directors(5) Strengthening the internal audit
department(2) Reforming corporate culture(6) Reforming whistleblowing systems(3) Enhancing reporting and sharing of information(7) Utilizing external resources(4) Promoting activities to strengthen complianceBeing planned

2) Enhancing quality audits: Follow-up audits(1) Rebuilding the Group governance structure — Strengthening cooperation in the Group —2) Enhancing quality audits

November 2023

(5) Rebuilding the quality assurance system

2. Promoting management reforms

1) Strengthening the NLM Holdings quality assurance system

September 2023
October 2023

China(4) Investigating business sites whichhave yet to be investigated

129 (94%)92 (96%)

Recurrence prevention to be worked on in a Group-wide manner is as shown in the figure below.

(3) Clarifying where
responsibilities lie

Nikkei Joint-Aland
Ingots, molten aluminum

Progress, etc. of measures to prevent recurrence related to the quality incidents of misconduct(2) Explanations tocustomers

Shimizu Works, Shizuoka Kosan

Number of questionnaire
Timing of on-site
subjects
investigations(response rate)

Nikkei MC Aluminum America

Thailand(1) Explanations toemployees

Kambara Works, Shizuoka Kosan

Major manufacturing items

U.S.
Consultation inprogress with:61 companies

1. Reporting and sharing investigation results and information about the prevention of recurrence

Business site name

Questionnaireadministrator
TargetPresident and Directors

Site managers*3⃝Creating a corporate culture which enables employees to voice
their opinions without hesitation (opportunities to voice theiropinions directly)⃝Exchange of information and opinions between upper
management and site managers
Purpose⃝Reporting of current situations of work sites by site managers⃝Transfer of information by site managers to their workplaces (400site managers x 20 employees per workplace = 8,000 employees)⃝Reinforcing relationships between site managers
Plan
200 site managers per meeting x 2 meetings per month
August: 287 participants
July: 319 participants
Implementation
May: 324 participants
statusApril: 365 participants
1,295 participants in total

A workplace visit
President and Directors
Employees (excluding site managers)⃝Creating a corporate culture which enables employees tovoice their opinions without hesitation (opportunities tolisten directly to them)⃝Direct conversations between management and employees⃝Communicating the thoughts and enthusiasm of the
management⃝Improving employees understanding and actual
workplace conditions⃝Reinforcing relationships between employees
20 employees per meeting x 400 meetings = 8,000 employees
August: 14 visits, 257 participants
July: 6 visits, 117 participantsJune: 12 visits, 207 participants
May: 11 visits, 204 participants
Total: 43 visits, 785 participants*3 One representative per 20 employees from sites with 20 or more employees each, in addition to plant managers, branch managers and sales office managers

13

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14

Basic Information

Value Creation History

Value Creation

Foundations of Value Creation

Data

Net sales(billion yen)

As a corporate group that has been aroundfor a century, Team NLM continues to growsustainably into a groundbreaking
innovator of aluminum and beyond.
1939

1950s

Nippon Light Metal Co., Ltd. isestablished.
Aluminum smelting begins.

Rapid and widespread adoption ofdaily necessities made fromaluminum700

The technology for smelting aluminum was invented in the early 19th century. Over a history spanning some two
centuries, aluminum has come to be used in every facet of our daily lives. Therefore, we can say that aluminum is arelatively new material. While it has diverse origins, the development of the NLM Group has progressed mainly
through aluminum smelting in Japan. The environment surrounding our smelting business later became difficult due
to the rising electricity costs triggered by the Oil Shock. This led us to operate various businesses with aluminum at
our core, and resulted in the expansion of our fields of business.
It is this history of having overcome these changes in the external environment and having gone through changes
in our business that forms our foundation as a “groundbreaking innovator of aluminum and beyond” that continues tomove forward in constant pursuit of new value for customers, without fearing change. By passing down this history
while engaging in sustainable business activities for the future as the new Team NLM, the NLM Group will continue tohelp improve people’s lives and protect the environment going forward.

1960s

1970s

1980s

1990s

2000s

∼ 2010s:

Aluminum sashes, truck bodies

Industrial refrigeration panels,
public landscaping productsElectrode foil, wheels and heatexchangers for vehicles, memory
disk substrates

Secondary alloy business (recycling)
Automotive parts

Foil, powder and paste business

Overseas expansion(China, Southeast Asia, India,
North America)

600

500

400

Development achieved as an aluminum smelting company

1974:

〜

Founding and development phase

Expansion into aluminum processing and aluminum-related products

1974 〜:

Into a groundbreaking innovator of aluminum andbeyond that pursues value for customers

Promotion of global expansion

Business expansion andtransformation phase2003 〜:

Overseas businessexpansion2012 〜:

Holding company
systemHistory and Significance of Business Activities

1939

1952

1974

1980s

2003

2012 〜

Nippon Light Metal Co., Ltd. is establishedwith the aim of smelting aluminum throughjoint investment from Tokyo Dento Company
and Furukawa Electric Co., Ltd.

A capital and technological alliance isagreed to with Canada-based Aluminium
Limited.

Through merger with Nikkei Aluminium Co.,
Ltd. and takeover of sales business from
Nikkei Aluminium Rolling Co., Ltd., a total
integrated production system for aluminumproducts is established.

Effective withdrawal from the domestic
aluminum smelting business andacceleration of the transition to theprocessing business

Full-scale operation of the overseas
business is started by restructuringbusinesses in Southeast Asia and China

Holding company system

The birth of an aluminum smelting manufacturer
possessing large-scale hydroelectric power
generation capacity significantly contributed to thestable supply of aluminum, whose applications
across industry and people’s daily lives continued to
expand.

The world-class cutting-edge technologies brought
through an alliance with a major worldwide
aluminum manufacturer became the basis for the
new products and technologies that followed andcatered to the rapidly growing demand during theperiod of high economic growth in Japan.

Due to the sharp rise in electricity rates due to the
Oil Shock, the business was rapidly switched fromaluminum smelting to focus on aluminum
processing.

In the extended aftermath of the Oil Shock, theGroup decided to effectively withdraw from thesmelting business by withdrawing completely fromthe smelting business in Niigata and Tomakomai andsignificantly downsizing the smelting business at theKambara Complex.

A structure in which the NLM Group takes theinitiative in the operation of overseas business wasestablished by dissolving the capital relationship with
Alcan and restructuring the businesses in Southeast
Asia and China.

300

Business groups that suddenly emerged and grew
during the business expansion phase were
integrated, and by strengthening coordination
through a cross-functional structure, Team NLM wasborn with the ability to serve users in moresophisticated and detailed ways.

200

100

■Nippon Light Metal Co., Ltd.

■NLM Group*Due to the lack of accurate data, figures prior to 1948 are not listed.

1939

15

Integrated Report 2023

1952

1974

1980

2003

2012

2022
Integrated Report 2023

016

Basic Information

The Value Creation Process
Based on its Management Policy, the NLM Group aims
to solve a range of material issues under the slogan of“becoming a groundbreaking innovator of aluminum andbeyond as Team NLM.” We will invest both financial andnon-financial capital in a wide range of businesses andcontribute to the improvement of people’s quality of lifeand environmental protection through the circulation ofcapital that is achieved by providing value to eachstakeholder and creating social value.

Protecting
the global
environment

 eveloping new marketsDand expanding existing
businesses by responding
to the social structure andenvironment●

 uilding a robust, safe andB
secure supply chain●

Achieving carbon neutrality

Financial Capital●Shareholders’ equity
196.5 billion yen●

Interest-bearing debt
163.6 billion yen●●

Climate change risks●

Inter-material competition
risks

●

Geopolitical risks●●

R isk of the prolongation of
the supply chain slowdowns●● isks of initiatives beingRinferior to those ofcompetitors

Carbon neutrality●

Circular economy●

Technological innovation●

Changing demographics●

Advance of globalization●

 espect for human rights /Rdiversity & inclusion●

Food issues

FY2023-25 Mid-termManagement Plan
(2023 Mid-term Plan)

Responsible
procurement,
production and supply

1 Initiatives for the new Team NLM
2 Providing products and businesses that contribute to the creationof social value

Production sites(49 domestic plants and fivecountries overseas)
Capital expenditures
18.3 billion yen

Human CapitalEmployees
12,633A nnual expenditure on
education and training
34,700 yen/employee●

Number of patents held
1,341

●

R esearch and development
expenses
6,391 million yen

Social Capital●S trong relationships that can
respond to customer needs● ide variety of customer
W
groups through a broad
range of business fields

Natural Capital●

Corporate ethics
and governance

SlabHigh-purity aluminum

Rolling

Aluminum Ingot
and Chemicals

Extruded shapes

Billets

Aluminum hydroxide
Alumina

Melting andcasting
Secondary alloys

Caustic soda
Chlorine-related products

Scrap and recycling
RecyclingElectrical energy usage
Water consumption
0.8 million m3

Shareholders andinvestors

Customers
Electricalmachinery,electronics andtelecommunications
Environment,
safety andenergyCreatingsocial value

Improvementof people’squality of life

Provision of solutions
to problems

Global environment
Environmental impact,
reducing CO2 emissions

Environmental
protection

Employees
Public facilities,
landscaping andarchitecture

Safe and secure workplaceand job fulfillment

Casting, forging, die-casting

Fabricated Products
and Others

Recovery

Processing
Various processed products

Extrusion

Value provided
directly to
stakeholders

Automotive

Coils and sheets Foil
rolling

Aluminum
Sheet andExtrusions

Casting

OUTCOME

Improving corporate
value Stable dividends

Foil and powder products

Aluminum Foil,
Powder and Paste

Segregation

7.7PJ
●

Market Sectors

Powder production

Intellectual Capital

External Environment●

Happiness of
employees

Fixed Capital
●

Risks

Providingsustainable value

Business Activities

Alumina
production●

FY2022 /As of March 31, 2023

Aluminum (importing)A chieving the Corporate
Philosophy

Data

Conversion into various types of capital through increased social value

INPUT

Aluminum hydroxide (importing)●Foundations of Value Creation

Contribute to improving people’s quality of life and environmental protection bycontinuing to create business, focused on aluminum.

Corporate Philosophy

Material Issues

Opportunities

Value Creation

Transportation

Business partners andpartner companies
Co-existence andco-prosperity

Food andhealth,industrial
products

Local communities
Coexisting with local
communities

Accumulation of various types ofcapital through business activities*Toyo Aluminium K.K. and other companies constituting the Foil and Powder Products segment are to be excluded from the scope of
consolidation through a transfer of shares.
https://www.nikkeikinholdings.com/news/news/common/pdf/p2022090201hde.pdf

17Integrated Report 2023

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18

Basic Information

The Source of Value Creation

Value Creation

Foundations of Value Creation

Data●Automotive

Into a Groundbreaking Innovator of Aluminum and Beyond

Creating new value as Team NLM●Electrical and electronic equipment●Telecommunications

About the Nikkei Research and Development Center

The NLM Group’s research and development base is the Nikkei Research andDevelopment Center. This facility originatesfrom Nippon Light Metal ResearchLaboratory, Ltd., which was established in
April 1961 as a subsidiary of Nippon Light
Metal Co., Ltd. for research and development related alumina, aluminum electrolysis, and aluminum materials. Later, in 1984
Electronics Telecommuniit was integrated into Nikkei Techno-ReElectricity
search Co., Ltd., and it accumulated
cations
academic knowledge related toAutomotive
Environmental
various processing technologies
Bonding
Bendingin addition to its foundationof aluminum material
Safetytechnologies during theHaving started as an aluminum smelting
company, the NLM Group has knowledge
and expertise that it gained through an
uncompromising focus on aluminum as amaterial at its technological core. This is
symbolized by the Nikkei Research andDevelopment Center.

Extrusion

Surfaceprocessing●Environment, safety

and energy

As a result of business operation in diverse processing
domains, the NLM Group has trade relationships with many
diverse customers, including world-leading companies ineach sector.
At the NLM Group, we aim to evolve from our previous
product-oriented research and development aimed atcommercializing products using new technologies tomarket-oriented research and development creating new
products through the combination of new and existing

Drawing
EnergyAluminummaterial
technologies

Publicfacilities

Diverse customer needsgLandscaping

Cutting
Assembly

HealthDiverse market sectors

Diverse processing
technologies

Shearing

Ro

stin
DesignIndustrial
products

Aluminum material
technologies

llin

g

Ca

AnalysisGroup’s rapid shift of the focus of its
business from aluminum smelting toaluminum processing after the Oil Shock.
Since the Nikkei Research andDevelopment Center was integrated into
Nippon Light Metal Co., Ltd. in 1995, it has
been engaged in activities every day as a
research and development base for newvalue creation, focused on supporting theoperating divisions, promoting value
creation through the combination ofmultiple technologies (organization-spanning cross-functional collaboration), anddeveloping new elemental technologies,
which are the three pillars of its researchand development.

Architecture

Transportation
Food

Diverse processing technologies
Aluminum is processed into products using avariety of technologies because its low
melting temperature enables it to be softerat lower temperatures than standard metals
which makes it easy to process. At the NLMGroup, we operate businesses in a broad
range of sectors using these diverse
processing technologies.

Expansion of businessdomains andtechnological domains

The rising cost of electricity triggeredby the Oil Shock made it difficult tocompete with overseas companies on costor scale of business in the smelting business.
Against this background, we have continued to
expand our business in the domain of aluminum
processing. As a result, the NLM Group has
obtained many of its diverse aluminum
processing technologies through various
businesses within the Group.
In recent years, we have been ready toflexibly combine these diverse technologies as
we become involved in customers’ design andsupply chain construction.

Processing

BauxiteAlumina
production
process

technologies in response to market needs. Customers indiverse sectors are valuable sources through which we
identify diverse market needs.
Catering to market needs as Team NLM using thediverse technological resources of the Group is the missionof the NLM Group and the source of its strength.

Foil rolling process

Aluminum hydroxide
SlabRolling process(coils, sheets)

Heat treatment

Alumina●Public facilities,

Cutting of productsElectrolytic
smelting
process

New aluminum
ingotsCreation of new value

Aluminum material technologies

Molten aluminum

Billets

Extrusion process(extruded shaped
products)

landscaping andarchitecture

Anodizing(surface processing)

Hot press
Casting process(cast and forgedproducts)

Secondaryalloy ingots

NLM Group’s business domain

Recycling●Transportation
Finishing process
Drawing/bending/cutting/bonding/assembly and others●Food and health●Industrial products

19

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20

Basic Information

Sustainability Strategy
Material Issues of the NLM Group

Step2

Assessing Importance

Step3

Confirming Validity and Comprehensiveness

Step4

Identifying the Material Issues

activities (scope 1, 2)● Reducing greenhouse gas emissions in the supply
chain (scope 3)● Action on climate change (TCFD)● Responding to water stress● Preventing environmental pollution● Efforts to expand the use of renewable energy● Developing and providing low-carbon products andservices

Key Performance Indicator (KPI)● Total scope 1 and 2 emissions (per unit of sales/Japan only)● Total scope 3 emissions (per unit of sales/Japan only)● Number of environmental incidents and complaints

FY2022 results

Target*1● -30%compared to the FY2013 level,

Items important tothe corporate valueof the NLM GroupFY2050: Net zero● -30%compared to the FY2013 level,

FY2050: Net zero● 0, FY2050: Continue to achieve 0

incidents and complaints● 1.38 tons CO2/million yen● 4.67 tons CO2/million yen

Our assessment○○● 6 environmental incidents

and 7 environmental
complaints

×

Identifying
items of highimportance

Major Initiatives● Continuing to implement energy-saving initiatives and promoting

fuel conversion and electrification● Horizontal recycling of expanded aluminum materials and use ofgreen aluminum● Group-wide expansion of countermeasures and prevention of

occurrence and recurrence of similar incidents● Reinforcing the framework for the research and development of● Growth rate of sales of products for eco-friendly vehicles(Japan)● Compared to FY2021: Up 300%● Up 30%△

new products for eco-friendly vehicles● Improving the comprehensive capability of the Group as a whole

to make suggestions to the automotive market● Promoting a recycling-oriented economy and society● Building a system for the stable procurement of scrap as raw● Development and provision of robust infrastructure● Contributing to the stable supply of food

Items ofparticularly highimportance

Major KPIs/Targets/Results/Assessments/Initiatives

Material Issues●Reducing greenhouse gas emissions from company

Data

Horizontal Axis: NLM Group Importance*For details of the steps for identifying material issues, please refer to page 9 of
the Nippon Light Metal Group Integrated Report 2021.

List of Material Issues

Providing sustainable value

Identifying a Group of Candidate Material Issues

Vertical Axis: Social Importance

Step1

The NLM Group will contribute to the realization of the sustainable society envisaged by the SDGs through the comprehensive
and wide-ranging fields of business related to aluminum. As part of this process, in order to recognize the issues the NLMGroup should address in particular and raise them as important management issues for the Group’s sustainable growth andthe creation of corporate value, our Board of Directors identified the material issues of the NLM Group.
We have set KPIs (target values) for each of the issues and are working towards achieving them based on concrete plansof action.

The Five Material Issue Themes

Foundations of Value Creation

Steps to Identifying Material Issues

Approach and Promotion Framework

Protecting the global
environment

Value Creation● Rate of purchase of external scrap● Overall Group: Above 30%● 30%△● Shaping the future through innovationmaterials● Promoting horizontal recycling by strengthening cooperation withexternal parties● Preventing injuries and similar injuries through the five gen● Number of lost-time injuries

Happiness of employees● 0, FY2050: Continue to achieve 0 injuries● 16 (Japan)×● Introducing stories about experiences with the childcare leave● Occupational health and safety● Developing a fulfilling workplace● Percentage of childcare leave taken by male employees● FY2024: Above 30% (Japan)

FY2030: 100% (Japan)● 40.6% (Japan)○● 5.7% (consolidated)△● Diversity & inclusion● Securing and cultivating human resources● Percentage of managers that are women● Number of employees who received next-generation

management training
Percentage of managers who received managerial training

Responsible procurement,
production and supply

principle (Genchi or real site, Genbutsu or real goods, Genjitsu or
reality, Genri or principles, and Gensoku or general rules)● FY2024: 7% or above (consolidated)

FY2030: 10% or above (consolidated)● Next-generation management: 10 or moretrainees every year
Managerial: 100% of newly appointed managers● Next-generation management:

16 trainees
Managerial: 100% (Japan)● Percentage of major suppliers*2 that responded to a● Providing safe and secure products and services● Protecting and respecting human rights

questionnaire survey to check that they understand and haveapproved our CSR procurement policy● 78%△● Motivating and helping employees to develop their careers

through individual interviews● Developing core human resources in a well-planned manner

through repeated training and practical experience● Conducting a CSR procurement questionnaire survey using acommon format● Ensuring thorough activities to prevent recurrence and● Developing a stable supply chain● A resilient value chain that is flexible to changes● 100%○and programs related to support for balancing work andchildcare via the internal newsletter● Promoting the acquisition of Kurumin Mark certification within
the Group● Number of serious quality problems that occurred● 0, FY2050: Continue to achieve 0

incidents and complaints

● 21

×

establishing a framework for preventive activities● Promoting activities to enable on-site workers to voice theiropinions and promote internal policing.
● Number of self-assessments conducted by the Board of

Corporate ethics andgovernance● Strengthening governance● Reinforcing the compliance framework

Directors● Number of times an opportunity to inspect business locations,etc. was provided to Outside Officers● Percentage of managers or employees who found ourwhistleblowing system reliable● Rate of provision of compliance training● Maintaining a frequency of at least oncea year● At least two times a year● Percentage of answers to anonymous

employee surveys that are positive: 60%
for managers, 50% for general employees● Annual percentage of officers andemployees provided training: 80% or above

● 1
● 3

● 50% for managers, 35%

for general employees● 15%● Evaluating effectiveness regularly and making improvements○

based on evaluation results● Providing Outside Officers with opportunities to inspect businesslocations, etc.
△×● Implementing PDCA through promotion of compliance andsurveys● Developing learning infrastructure and creating and distributing

educational content*1 The targets are FY2030 targets unless otherwise noted. *2 Suppliers constituting 80% of the Group’s total purchases by amount21

Integrated Report 2023

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22

Basic Information

Value Creation

Foundations of Value Creation

Data

Sustainability Strategy

Reasons for the Selection of Material Issues and Initiatives for Solution

Material Issue Theme ❶Protecting the global environment
EMISSIONS REDUCTION TARGET BY COUNTRY

activities (scope 1, 2)● Reducing greenhouse gas emissions in the supply chain(scope 3)● Action on climate change (TCFD)Net ZeroTargetby 2060

reduction of GHG emissions
by 2030%

compared to1990

by 2050

reduction of CO 2 emissions per GDP
compared toby 2030%
2005

45

by 2070

by FY2030

46

by FY2050

by 2030

30%

65

China

*Aim to peak out CO2 emissions before 2030

55

EU

India

Reasons for the Selection of Material Issues
As global warming has been an issue for the entire world, the achievement ofcarbon neutrality throughout the supply chain is becoming a requirement for every
company to continue their business activities. In recent years, we have begun to see
moves leading to actual financial burdens being imposed, such as carbon taxes thathave already been introduced, mainly in Europe, and an increase in investors andfinancial institutions that require decarbonization initiatives as a condition forinvestment. We can say that these moves are significant risks to business
continuity. On the other hand, these issues are also risks for many business
operators including other companies in the same industry. We believe that if we cancontribute to solving these issues, that could also be a great opportunity to enhance
our corporate value.

Reduction Target
reduction of CO 2 emissions per GDP
compared toby 2030%
2005

Country● Reducing greenhouse gas emissions from company

compared to%2013*Keep challenging to reduce more than 50%

Japan

Rusia

reduction of GHG emissions
by 2030
USA

50-52%

Aluminum recycling is broadly divided into two types. One is horizontal recycling, in which aluminum is recycled back into
alloys with the same degree of purity and alloy composition. The other is cascade recycling, in which aluminum is reused asa general material while downgraded to a low-purity material containing many impurities. The horizontal recycling of materials
with high aluminum purity, including expanded materials, requires a sorting technology to eliminate impurities and recover
only highly pure aluminum. We will reduce CO2 emissions attributed to new aluminum ingots, which constitute the majority ofthe emissions from the NLM Group, by increasing the rate of use of scrap for materials with high aluminum purity as well byusing sorting technology, in addition to enhancing the procurement of low-carbon materials, such as new aluminum ingots
made using renewable energy. In addition, we will replace the fuels used in the melting aluminum materials and for otherpurposes with renewable energy, etc., thereby making the Group’s entire supply chain a low-carbon, circular, sustainablesupply chain.
Flow of impact

compared to1990

compared to2005

Updated in October 2022
Source: 3-06 Greenhouse gas reduction target of each country
Japan Center for Climate Change Actions (JCCCA)

ImportMinimizing environmental costs including carbon taxes

Input

Initiatives for achieving
decarbonization

OutcomePurchasingaluminum ingots

Enhancing procurementof low-carbon materials

Reducing Scope 3
CO2 emissions

Impact30% reduction by 2030

Purchasing green aluminum

Procurement

Scrap collection
Recycling generated scrap

Manufacturing

Fossil fuels/electricity

Increasing the sophistication
and achieving the practicalutilization of sorting
technology

Promoting horizontal
recycling

Shifting to
renewable energy

Reducing Scope 1
and 2 emissions

Energy-saving investments

Development

Reduction of CO2 emissions through recycling
Aluminum Products

Cost reduction

by 2050

Providing sustainable value● Efforts to expand the use of renewable energy

Competitive advantage of aluminum as a low-carbon material

Integrated decarbonization strategy of the Group.

Material Issue Theme ❷Major material issues

Increase in sales

by 2060

Financial and non-financial capital

Major material issues

Creating Impacts by Providing Sustainable Value

Recycling aluminummaterials

Achieving a recycling rateof 30%

Achieving carbon
neutrality

30% reduction by 2030

Building a sustainablesupply chain

Technology development

Collection and Sorting● Development and provision of low-carbon products andservices● Promoting a recycling-oriented economy and society

Enhancing social capital

Increasing visibility as an environmentally friendly company

Protecting the environment

Building a low-carbon, circular ecosystem

Recycling Route
Reasons for the Selection of Material Issues
Because aluminum features a low melting point and high recyclability, thepromotion of aluminum recycling is said to be a significant key to the achievementof carbon neutrality. However, for expanded materials and some other aluminummaterials, there are strict requirements regarding impurities, hampering the use of
scrap. The reality is that new aluminum ingots, which contain few impurities, areused for those materials. We believe that expansion of recycling through technology
development will cater to the needs of society, which is aiming to achieve carbon
neutrality, and be a great opportunity leading to many potential new products andbusinesses.

23

Integrated Report 2023

CO2 emissions during recycling:
approx.

10％*Based on 100% emissions whenmanufacturing new aluminum ingots

Secondary AluminumAlloy Ingots

Melting and casting

Case Example

Horizontal recycling of truck bodies

In response to a customer request, Nippon Fruehauf Co., Ltd., aGroup company, manufactured and sold truck bodies usingaluminum scrap instead of new aluminum ingots. This makes it
possible to reduce CO2 emissions from the products delivered tocustomers by 8 tons per vehicle. Customers regarded the material
highly, stating it was able to be used as before, and the finish of thevehicles was satisfactory.

Recycling rate:

100%

Reduction of
8 tons CO2 /vehicleIntegrated Report 2023

24

Basic Information

Value Creation

Foundations of Value Creation

Data

Sustainability Strategy

T O

P

I C

Establishment of a Carbon Neutrality Promotion Framework
Issues in the promotion of carbon neutrality
As the achievement of carbon neutrality is a goal society is working toward, the hopes people are placing in aluminumas an easy-to-recycle material have been growing. At the NLM Group, we believe that we have a social responsibility
to meet these expectations by providing recyclable, low-carbon aluminum-related products. However, our businesssegments are diverse, upstream and downstream. It has been difficult to optimally move forward with carbon
neutrality as a group only, with the conventional plans and measures left up to the individual business segments.

Planning and promoting an integrated decarbonization strategy — Establishment of the Green Growth Strategy Office —At the NLM Group, we needed to identify the CO2 emissions from the entire supply chain across a broad range of businessdomains, and then assess and prioritize measures to reduce emissions from each business segment based on common
indicators and then ensure the measures are reflected in the integrated decarbonization strategy of the Group. We haveestablished the Green Growth Strategy Office at NLM Holdings as an entity that plans and promotes the green growthstrategy and manages its progress. We plan to announce our roadmap to a 30% reduction of Scope 1, 2, and 3 emissions(from the FY2013 level) by FY2030, and to the achievement of carbon neutrality by 2050, by around FY2024.

Procuring low-carbon materials and promoting recycling — Reorganization of metal-related segments —Approx. 70% of CO2 emissions from the Group’s supply chain stem from new aluminum ingots, and carbon
reduction and decarbonization initiatives for the ingots are important for achieving carbon neutrality. At present, theprimary raw material used for the materials (billets and slab) for expanded materials is new aluminum ingots while
the primary raw material used for materials (alloy ingots) for casting and die-casting is scrap. Therefore, it isnecessary that our main initiative be replacing the materials used for expanded materials with new aluminum ingots
made using renewable energy and scrap. The NLM Group has a secondary alloy business (Nikkei MC Aluminium
Co., Ltd.), in which aluminum is recycled mainly for casting and die-casting, in addition to the knowledge about
aluminum material technologies generated by the Nikkei Research and Development Center. We aim to leverage thespecial characteristics of the Group that are its strengths mainly to push forward measures to procure low-carbon
aluminum materials and recycle them mainly into materials for expanded materials. For this purpose, we havereorganized the metal-related segments which supply aluminum materials into the implementation body that will
push forward with these measures.

Establishment of Nikkeikin ALMO Co., Ltd.
The automotive industry has entered a period of major change, and it is necessary to respond to the demand forelectric vehicles and create new value to establish a carbon-neutral society. This is expected to result in major
structural changes in the automotive industry. Specifically, these changes are: 1) the growth in demand for thedevelopment of automotive manufacturing methods and parts with new functions, reflecting electrification, 2) the
importance of parts suppliers which can implement initiatives to reduce environmental impact, 3) the need torespond to demand around the world, and, 4) the importance of entities with a series of functions from development
and design to manufacturing. We believe that it will be important to respond to the changing market by more quickly
investing the resources possessed by the Group.
We studied business activities that would contribute to our stakeholders by responding promptly to thosechanges in the automotive industry and maximizing the Group’s functions. As a result, we established Nikkeikin
ALMO Co., Ltd. We will provide customers with greater value than before and enhance initiatives to achieve a more
resilient business structure. ALMO stands for “Aluminum for Mobility.” We aim to make it a company that contributes
to the establishment of an affluent society by providing the world with mobility-related products and services
reflecting our pursuit of safety, environmental friendliness and comfort.
Purpose of the establishment of the new company
Item

PurposesCentralizing information andmaking decision promptly

Establishing a businessfoundation

We will consolidate information and combine various manufacturing methods andprocessing technologies more promptly, aiming to fulfill customer needs, such as theirneed for their environmental impact to be reduced, ahead of others.

Consolidating dispersed
resources and allocatingthem flexibly

Establishingcompetitive
advantages

We aim to take actions to launch new products onto the market more quickly by
combining our resources (functions including development, design and quality
assurance).

Developing a global supply
capacity

Expanding businessdomains

We aim to improve profitability by expanding our existing overseas sites and enteringother regions aggressively.

Establishing our brand andincreasing brand recognition

Enhancing businessvalue

We aim to enhance the value of the NLM Group’s existence in the automotive parts
market by transforming its distinctive operations, ranging from materials to processing.

What to do in the future

Net sales of Nikkeikin ALMOFY2023

Carbon Neutrality Promotion Framework

Board of Directors
President

NLM Holdings: Entity that creates the integrated decarbonization strategy of the Group
Business
Transformation
OfficeGroup
Executive
Committee

Green Growth Strategy Office
Reducing Scope 1 and 2
emissions

Reducing Scope 3 emissions Promoting horizontal recycling

Plan

Nikkei MC Aluminium

Implementation[Nippon Light Metal]
Organization promoting decarbonization usingaluminum materials
Cooperation

Metal Business Division
Reducing Scope 3 emissions Promoting horizontal recycling

25

Integrated Report 2023

1) Planning and driving
decarbonization strategy
Established the Green Growth Strategy Officeas the entity that creates integrated strategyof the Group tailored to the operation ofdiverse businesses

2) Promoting the decarbonization
strategy
Because integrated procurement, manufacturing,and sales activities are necessary for the
decarbonization of aluminum materials, we
integrated these functions into the Metal
Business Division, which serves as animplementation unit that can act agilely forrecycling and the reduction of Scope 3 emissions.

Launching EV
components onto
the market
Expanding forgedsuspension
components
Launchingcomponents related
to brakes and air
conditioners onto
the market
Reinforcing
the managementfoundation

FY2024FY2025Construction of production lines and Expansion and next-generation
Japan: Launching newlaunching products into markets
development
products
Construction of production lines andOverseas: Starting to
Product development
launching products into markets
operate as a new entrant
North America: Increasing Stabilizing operations
Expanding production lines
production aggressively
Japan and China:
Productivity improvement, etc.
Strengthening profitability
Japan: Launching new
Construction of production lines and Expansion and next-generation
products and increasing
launching products into markets
development
production

Overseas: Starting tooperate as a new entrant
Human Resource
Development
Operational innovation
through DX

Construction of production lines andProduct
development
launching products into markets

日軽金ALMO 売上高(Unit: billion yen)Comprehensivesynergy

100.0

50.0
32.5

2022

37.0

2023
forecast

2025
target

Early
2030s

Developing management human resources andspecialized human resources
Fundamental review and integration

Integrated Report 2023

26

Basic Information

Mid-term Management PlanAt the NLM Group, we formulate amid-term management plan every three years. We have been steadily implementing
measures based on this plan in our efforts to achieve our targets. As a result, we were mostly able to achieve the targetsof the 2013 and 2016 mid-term management plans. During the 2019 mid-term management plan, we were not able toachieve the targets but could secure a certain level of profit.
We formulated the new 2022 mid-term management plan last fiscal year. However, we revised the 2022 mid-term
management plan in light of the changes in the Group’s business structure and strategic initiatives and once again
formulated a plan, the 2023 mid-term management plan. During the 2023 mid-term management plan, we will continue
to implement measures to build a stable profit structure and strengthen our management foundation under the theme ofachieving growth by contributing to a sustainable society. At the same time, we will work to reform our businessstructure, aiming to enhance the Group’s corporate value further as the new Team NLM.

Review of the mid-term management plans

30.2

29.9

What we want to be
Corporate Philosophy

Value Creation

Foundations of Value Creation

Contribute to improving people’s quality of lifeand environmental protection by continuing tocreate business, focused on aluminum.

30.0

30.1

26.8

(Targets)

24.6

Operating profit (billion yen)

Data

24.2

22.2

17.0

19.3

(Value that has
been announced)

12.6
8.2

2012

Position

Basic Policies

Business targets
and results

Achievements
and challenges

27

Integrated Report 2023

7.5

2013

2014

2015

2016

2017

2018

2013 mid-term management plan

2016 mid-term management plan

Maximizing consolidated earnings
by strengthening cooperation
within the Group

Attempting to create value asa new type of material
manufacturer

Aluminum is our foundation.
We will use it as a springboard
to new heights

2019

2020

2021

2023

2025 (Fiscal year)

2022 mid-term management plan

2023 mid-term management plan

Investing resources in new
products and new fields toachieve continued growth

Building a corporate structurethat enables continued
sustainable growth

Implementing initiatives forthe new Team NLM aimed atcontinued sustainable growth

As Team NLM, we will work to bea groundbreaking innovator ofaluminum and beyond.

As Team NLM, we will work to bea groundbreaking innovator ofaluminum and beyond.

As Team NLM, we will work to
be a groundbreaking innovatorof aluminum and beyond.

As Team NLM, we will work to bea groundbreaking innovator ofaluminum and beyond.

1. Business development through strategies
by region and by sector
2. Creating growth drivers leveraging new
products and new businesses
3. Reinforcing the business structure

1. C reating new products and business models
by strengthening cooperation within the Group
2. Business development through strategies
by region and by sector
3. Reinforcing the business structure(Reinforcing the business foundation)

1. Creating new products and new businesses
2. Investing resources in growth
3. Reinforcing the management foundation

1. Providing products andbusinesses that contribute to
the creation of social value
2. Reinforcing the managementfoundation

1. Implementing initiatives for the new Team
NLM
2. Providing products and businesses that
contribute to the creation of social value

Plan

Plan

Plan

Results

2019 mid-term management plan

2022

Results

Results

Net Sales

440.0 billion yen 464.4 billion yen

Net Sales

500.0 billion yen 500.5 billion yen

Net Sales

540.0 billion yen 486.6 billion yen

Operating Profit

25.0 billion yen 26.8 billion yen

Operating Profit

32.0 billion yen 30.1 billion yen

Operating Profit

37.5 billion yen 22.2 billion yen

Ratio of Operating
Profit to Net Sales

5.7％

5.8％

Ratio of Operating
Profit to Net Sales

ROCE

8.9％

9.0％

ROCE

6.4％

6.0％

10.0％

10.8％

Achievement

Issue

Achievement

Issue

Targets were achieved
through aggressive
overseas expansion andthe development of new
products.

Continuing to increase
the earning power ofoverseas sites
Improvement offinancial position

Cooperation within theGroup made it possible
for new products tocontribute to profits
Improvement offinancial position

Investing funds, humanresources and otherresources aggressively
to achieve continued
growthRatio of Operating
Profit to Net Sales
ROCE

Achievement

Reference value
Operating Profit

30.0 billion yen

Plan
Net Sales

530.0 billion yen

Operating Profit

30.0 billion yen
5.7％

6.9％

4.6％

Ratio of Operating
Profit to Net Sales

11.4％

8.7％

ROCE

Issue

A certain level of profit
Responding to andwas secured despite the addressing thetough environment.
sedimentation problem at
the Amehata Dam andinappropriate acts related toJIS, among other problems

10.3％

We revised the 2022 mid-term management plan in light of the changes in
the Group’s business structure and strategic initiatives and began
implementing the new 2023 mid-term management plan.
● Changes in the Group’s structure● Integrated initiatives aimed at achieving carbon neutrality● Initiatives to prevent the recurrence of quality-related misconduct incidents within the Group

Integrated Report 2023

28

Basic Information

Value Creation

Foundations of Value Creation

Data

Mid-term Management Plan

2023 Mid-term Management Plan

Basic Policies

Measures
Structural reforms toenhance the Group’s
corporate value

We will work under the policy of improving the Group’s
corporate value by both creating the value that customers
demand and addressing social issues, aiming to growsustainably into the corporate group that we want to be.

Changing demographics● A decline in demand for aluminum inJapan resulting from the population
decrease● Labor shortage resulting from thedecrease of the working-age population● Acceleration of the shift of thedemand center attributed to global
population growth● Attention being drawn to theinnovation in the automotive industry● Growth in demand for semiconductors
attributed to the evolution ofcommunication technologies● Labor-saving and automation of
manufacturing process

Advance of globalization

Respect for human rights anddiversity & inclusion (D&I)● Supply chain risks due to the impactof geopolitical events● Expanding opportunities to continue
to foray into growth markets● Shortage of business expertise andhuman resources outside JapanS
O

with customers● Power of cross-sectoral teams that transcend the divisionalframework● Achieving the Corporate Philosophy by solving social issues● Developing new products and businesses in response to changes in29

Integrated Report 2023

Bonding
processing

Die-casting

Initiatives forthe new
Team NLM

Carbon neutrality(as risks)WT

problems and rebuilding the management foundation● Insufficient ability to respond to supply chain slowdowns andmarket fluctuations

T: Threats● Physical and transition risks of climate change

Using
the NLMGroup

Development
Analysis anddesignHeat Exchanger Div.

Nikkeikin Aluminium Core Technology Automobiles and device cooling

Establishment of the Green Growth Strategy Office■ Reducing greenhouse gas emissions ■■ Announcement of support for the TCFD ■Reducing emissions from company activities (Scopes 1 and 2)
Reducing emissions in the supply chain (Scope 3)
Announced targets in 2022
Reducing emissions 30% (from the 2013 level) by FY2030

Task Force on Climate-related Financial
Disclosures (TCFD)
Announced support in 2022

Promoting the Group’s initiatives to achieve carbon neutrality in an integrated manner

Promoting management
reforms andstrengthening internal
control functions

Initiatives for preventing the recurrence of quality problemsby the Business Transformation Office

Expansion into
growth areas

Aggressive expansion in the areas of automotive parts and semiconductor-related products

increased active participation of
women and other minorities● Growing need to promote D&I● Supply chain risks related to humanrights problems● Implementing measures steadily to prevent the recurrence of quality

Production
technologies andmass production

Net-zero greenhouse gas emissions
in FY2050● Expectations regarding the

W: Weakness

Assembly

Gravity
casting● Promoting management reforms● Strengthening internal control functions

Nikkeikin ALMO Co., Ltd.

Brake calipers● Diverse aluminum-related knowledge and diverse points of contact

the environment and the structure of society.

Industrial Parts Div.

● Structural change attributed to technologicalrecyclability of aluminum● Building a collection and circulation
system for recycling● Promoting horizontal recycling which
contributes to decarbonization andresource conservation

At the NLM Group, we believe that the broad base of our business domains makes understanding the SWOT of the Group
as a whole even more important. We have set measures in the 2023 mid-term management plan to address medium- tolong-term material issues based on the following SWOT and are advancing these initiatives.

O: Opportunity

Extrusion

Promptly developing components related to electrical powertrains and batteries through the development of composite products while alsohoning existing technologies and improving products’ competitivenessTechnological innovation

SWOT analysis

S: Strengths

Forging

Materials

Formation of a circular economy

manufacturing of new aluminum ingots● Engaging in initiatives throughout
the supply chain, including initiatives
reducing scope 3 emissions● Building a system which sees initiatives
for decarbonization as added value

Creating value from mobility components by integrating different strengths(materials, manufacturing methods, processing technologies and development capabilities)

Integrating strengths

We can say that the environment surrounding us remains uncertain, mainly due to the impact of the increasing geopoliticalrisks affecting the product markets and the fluctuation of exchange rates related to interest-rate trends, although thesituation that was a result of the impact of the supply chain slowdowns attributed to the semiconductor shortage is returning
to a normal state. However, we believe that, initiatives for Group’s material issues that we work steadily over the medium andlong term will be also needed to work on in society for the purpose of achieving the sustainable growth. Accordingly, we
position the2023 mid-term management plan as a new start in our implementation of strategic initiatives based on changes
in the Group’s business structure while we aim to solve our material issues over the medium and long term.

● Paying for the CO2 emissions from theEstablishment of Nikkeikin ALMO Co., Ltd., a new company

Using externalorganizations
Suppliers
Business alliancepartners

The Environment Surrounding Us

2050 carbon neutrality

Actions

Providing
products andbusinesses
that
contribute to
the creationof socialvalue

Overseas strategies

Thick sheets for semiconductor
manufacturing equipment

Nikkei Panel System Co., Ltd.

Non-CFC insulation panels for semiconductor
plant clean rooms

U.S. and India: New business development China: Sales expansion
Nikkeikin ALMO Co., Ltd. U.S.

Forged suspension components for automobiles

Carbon neutrality(as an opportunity)

Nippon Light Metal Co., Ltd.,
Rolled Products Div.

Nikkei MC Aluminium Co., Ltd. India

Aluminum secondary alloy ingot

Nikkeikin ALMO Co., Ltd. China

Battery cooling plates

Expanding sales of products and services for eco-friendly vehicles
Nikkeikin ALMO Co., Ltd.

Nippon Light Metal Co., Ltd.,
Rolled Products Div.

Nippon Light Metal Co., Ltd.,
Chemicals Div.

● Risks related to materials prices and competition between

materials resulting from changing market trends

Heat dissipation plates for power controller units

Pre-plated aluminum bus bars with low
contact resistanceAluminum hydroxide and alumina asheat-dissipating fillers

Integrated Report 2023

30

Segment Overview

Aluminum Ingot
and Chemicals

The Alumina Sector is impacted by the decline in demand
attributed to the slump in the semiconductor market and thesluggish demand reflecting the reduction of automotive
production in growth fields, mainly including aluminum hydroxide
and alumina for heat dissipation and fire-resistant fillers intended
for sectors related to automobiles and electronic materials, aswell as low soda alumina for semiconductor manufacturing
equipment. In addition, the rising price of imported aluminumhydroxide, a raw material, and energy prices are squeezing profit.
In the Chemicals Segment, stable demand that supports
industrial infrastructure is expected in the field of basic chemicals
in the soda electrolysis business, which are used mainly for ironand steel, papermaking and industrial chemicals. However, therising cost of manufacturing, logistics and other expenses arepressuring profit due to rising raw materials and fuel prices.
Further, movement toward decarbonization is increasing both inJapan and overseas, and the segment as a whole is facing amajor turning point toward new business development, in addition
to the conversion and replacement, etc. of power sources.

Toshihiro Matsuba
Director in charge of the
Chemicals Business andthe Metals Business

Analysis of Present State (SWOT Analysis)
S: Strengths

W: Weakness●A wide array of products● Aging of manufacturing

and close relationships
with many diverse
business partners●U se of renewable energy,
with the source of muchof our power beinghydroelectric

S

O: Opportunity●G rowing demand formeasures to address heataffecting materials related
to eco-friendly vehicles●G rowth of domestic demandfor high-performancesemiconductors associatedwith growing concerns
about economic securityOequipment● Delay in expanding
business domains

W

T: Threats● Rising prices of imported

aluminum hydroxide andfuels and the instability of
their procurement● Main customers in Japan
reducing production

T

10.2

10.5

2022

2023
Forecast

180.0

12.0

2025 (Fiscal year)
TargetValue Creation

Foundations of Value Creation

Data

売上高比率

20.0%
Public facilities,
landscaping andarchitecture

2.0%Electrical machinery,electronics andtelecommunications

Automotive

70.0%

8.0%

T OP ICS

Sodium borohydride (SBH) contributing to a decarbonized society
In the Chemicals Sector, we engage in a soda electrolysis business using clean hydroelectric
power. We are working on the development of sodium borohydride (SBH) with the goal ofutilizing the hydrogen obtained from this business. SBH is white powder that containshydrogen. The hydrogen can be extracted by having SBH react with water. Hydrogen from thewater used in the reaction can also be used. Therefore, as much as 2,400 L of hydrogen can beobtained from 1 kg of SBH. The NaBO2 that remains after the release of hydrogen can be turnedback into SBH by having it react with hydrogen that we manufacture, which means that it can be
repeatedly used. We aim to help solve environmental and energy problems, which are social
issues, using SBH as a renewable hydrogen carrier.

SBH

SBH
H₂

H₂

SBH production(reproduced from NaBO 2)

NaBO 2Business Environment
The sector of secondary alloys for automobiles slowed down due
to supply constraints resulting mainly from the COVID-19
pandemic and the semiconductor shortage. However, partly
reflecting the market price of primary aluminum ingots thatremained high, the cost benefit of scrap, etc. increased, and theearnings environment remained stable. Amid the growing social
demand for the reduction of CO2 emissions, it is expected thatthe shift to eco-friendly vehicles will progress and the previously
existing demand for internal combustion engine materials will be
replaced by demand for new products, such as materials for car
body structure and electrical components. Further, it is also
expected that there will be growing demand for theestablishment of a recycling-oriented supply chain that switchesfrom using primary aluminum ingots to recycled aluminum ingots
and the generated scrap is reused.

Analysis of Present State (SWOT Analysis)
S: Strengths

W: Weakness●A bility to develop● Insufficient ability toaluminum alloys●G lobal operations● High degree ofprocess scrap

Sdependence on theautomotive sector

W

O: Opportunity●G rowing demand formaterials for eco-friendly
vehicles●A ttention focused onrecycled aluminum as a
low-carbon materialO

T: Threats● Decrease in demand forinternal combustion
engine parts resulting
from the switch toeco-friendly vehicles● Scrap supply shortage
attributed to the promotionof horizontal recycling

T

Business Policies and Strategies in the 2023 Mid-term Management PlanAt the Alumina Segment of Chemicals Div. of Nippon Light Metal Co., Ltd., we aim to increase earning power by aggressively
investing, including in new product development, by positioning the fields of semiconductor manufacturing equipment,
secondary batteries and heat dissipation and fire-resistant fillers as growth businesses while the commodity business in fields
such as flocculants, refractory materials and common ceramics supports our business as are venue base based on ourstrong relationships with customers maintained through the stable supply of products. We will also develop new,unprecedented alumina-related products through internal cooperation within the Group and collaboration with external parties.
In the Chemicals Segment, we will build a stable supply system and protect the global environment by replacing someaging equipment, such as soda electrolysis equipment and utility equipment, with equipment which enables the reduction of
CO2 emissions. At the same time, we will provide green chemical products with low CO2 emissions (caustic soda,hydrochloric acid, chlorine and hydrogen) as eco-friendly, high-value-added products leveraging our strength of hydroelectric
power generation being the power source.

Integrated Report 2023

Others●Operating Profit

Basic Information

Ingot Sector

Business Policies and Strategies in the 2023 Mid-term Management Plan

31

Sales ratio (%)■Net Sales

156.0 160.0

Aluminum Chemical Sector
Business Environment

Net sales/Operatingyen)
profit
化成
・地金(billion売上高

Water + Hydrogengenerator

H₂

NaBO 2Conceptual rendering of hydrogen carrier recycling

In its medium-term strategy, Nikkei MC Aluminium Co., Ltd. aims to establish structures for developing, producing andselling products, and further, to build a framework for purchasing scrap as a material in major automotive markets in theworld. In India, a market whose growth has been remarkable, we will build and begin operating a plant (in the spring of 2024)
under Nikkei CMR Aluminium India Private Ltd., a new company, and move into the black as quickly as possible, in ourefforts to achieve market penetration. We will expand sales by providing alloys developed by the NLM Group as products for
eco-friendly vehicles and for non-automotive sectors, including electrical and electronic equipment, in addition to our existing
market sectors. In addition, we aim to enhance equipment for sorting scrap and technologies for melting it, in addition to
expanding the resources we purchase, to increase the rate of use of low-grade scrap in addition to the high-grade scrap
equivalent to primary aluminum ingots that will be difficult to procure on the market in the future. We aim to help customers
reduce their CO2 emissions through alloy development, global operations and aluminum recycling technologies.

Nikkei CMR Aluminium India Private Ltd. plant being constructed as our third site in India

TOPICS

Nikkei MC Aluminium Co., Ltd. has established Nikkei CMR Aluminium India Private Ltd. At Pune, Maharashtra in midwestern India as the third site in the
country. The company is constructing a new plant for manufacturing aluminum secondary alloys and molten aluminum, aiming to start operating it in thespring of 2024. Nikkei MC Aluminium already has two sites in India, plants of a joint venture(CMR Nikkei India Private Ltd.) with CMR Green Technologies Ltd., the largest manufacturer of
secondary alloy ingots in India. This time, unlike previous activities, Nikkei MC Aluminium willplay the leading role (with a 60% stake) in operating the business. The city of Pune is close toan automotive industry cluster. In addition, India has the largest population in the world and has
enjoyed remarkable economic growth in recent years. We will therefore take on challenges toachieve a new leap forward in our business in India.

Render of the new plantIntegrated Report 2023

32

Segment Overview

Aluminum Sheetand Extrusions

Others●Operating Profit

Basic Information

0.5

Masahito Saotome

Yoshiaki Ito

Director in charge of the Sheet andExtruded Products BusinessDirector in charge of the Nikkeikin Kakoh
Kaihatsu Business

In FY2022, sales of products related to automobiles andtrucks and other products in the Sheet Product Sector
declined, mainly due to the semiconductor shortage andthe COVID-19 pandemic disrupting the supply chain. In
addition, demand for thick sheets for semiconductor
manufacturing equipment, which had been strong,stagnated in the second half. In FY2023, demand for
products related to automobiles and trucks and otherproducts has been on a recovery trend, but theenvironment has remained extremely difficult in other fields,
including the highly profitable area of thick sheets forsemiconductor manufacturing equipment. While we areresponding to the soaring cost of additive elements andenergy by revising prices, the improvement of profitability
has remained an urgent task.

9.0

15.0%

2022

2023
Forecast

Public facilities,
landscaping andarchitecture

25.0%

-0.6
2025 (Fiscal year)
TargetValue Creation

Foundations of Value Creation

Data

売上高比率

107.4 105.0

Automotive

30.0%Electricalmachinery,electronics andtelecommunications

10.0%

Food andcommodities

Transportation

10.0%

10.0%

Extruded Products Sector

Business Environment

Analysis of Present State (SWOT Analysis)
S: Strengths

W: Weakness●A bility to develop alloys intended●D elay in the establishment offor high value-added sectors●C ustomer convenience
ensured through the small-lot
production of many products
and quick deliveryS

O: Opportunity●E xpansion of demand for thicksheets for semiconductor
manufacturing equipment●E xpansion of demand related
to batteries for eco-friendly
vehiclesO

a production system for
expanding the processing
business● I nsufficient profitability ofoverseas business
T: ThreatsW●P rice volatility and unstableprocurement of raw materials
and fuels●P aradigm shift in batteries for
eco-friendly vehicles to theuse of all-solid-statebatteries, etc.

T

Business Policies and Strategies in the 2023 Mid-term Management PlanAt the Rolled Products Div. of Nippon Light Metal Co., Ltd., we continue to work on the development of new fabricatedproducts in addition to the expansion of sales in sectors where we have competitive advantages related to technology andmanufacturing aspects of the business and which are expected to grow.
Specifically, for thick sheets for semiconductor manufacturing equipment, demand for which is expected to grow, we will
strive to have our materials used in more parts by leveraging their workability which is their strength, in our efforts to expand
their sales. In the field of battery materials, an area where we excel, we will strive to increase sales in expanding markets
such as China and North America by increasing our production capabilities while striving to have our products newly
selected for use in automobiles by leveraging our ability to develop alloys that fulfill the needs of customers. Regarding thedevelopment of new fabricated products, our sales and manufacturing teams are doing a market search mobilizing all
resources, creating roadmaps for the development of new products in promising fields, with the goal of launching fabricatedproducts in addition to expanding sales of components of semiconductor manufacturing equipment and bus bars
(conductors for conducting large amounts of electrical current used in distribution boards, control boards, batteries, andother devices). Through these and other initiatives, we are commercializing products.

Expansion of aluminum sheets for automotive batteries

T OP ICS

Alloys we have developed on our own, including the “LB Series” and “MFX2”, have been used in mobile phones anddigital cameras for more than 20 years. These alloys are attracting attention for their properties once again as products
for automotive batteries. The main required property of the alloys used as battery materials is a balance between
formability, strength and weldability. Our strengths at the NLM Group lie in our research and development base, whichenables us to develop alloys with properties appropriate for the purposes of use of the batteries, and in our track recordof supplying product with stable quality. These strengths lead to the use of our new products in automotive applications.
While initiatives for achieving carbon neutrality are attracting attention, we are also collecting scrap materials generated
in the processing process by the customers using our products. Thus, we are promoting initiatives for horizontal
recycling.
Automotive lithium-ion batteries

Integrated Report 2023

Sales ratio (%)■Net Sales

150.0

Sheet Products Sector

33

Net sales/Operatingyen)
profit板・押出 (billion売上高

Business Environment
Businesses related to automobiles and trucks andconstruction materials businesses have shown signs of arecovery due to the alleviation of the impact of the global
semiconductor shortage that occurred last year. On theother hand, demand has remained sluggish in thesemiconductor and machinery-related markets. The
business environment will remain uncertain due to theimpact of the year2024 problem in the logistics sector ontransportation cost and delivery deadlines, in addition to
the persistently high market prices of aluminum ingots andfuels. On the other hand, actions to reduce environmental
impact have accelerated, and it is expected that there will
be progress in the collection of scrap and horizontal
recycling with cooperation from customers.

Analysis of Present State (SWOT Analysis)
S: Strengths

W: Weakness●D evelopment, manufacturing● Creation of new growth fields

and sales through cooperation
within the Group● Extrusion technologies forlarge, long extrusion materials
and integrated production linefrom materials to processingS

and new businesses● Low profitability ofbusinesses, including genericproduct businesses

O: Opportunity●G rowth of demand forlighter-weight vehicles
reflecting changes in the social
environment and the need toreduce CO2 emissions●R elationships with customers
strengthened through thepromotion of horizontal recycling

T: ThreatsW● Rising prices and procurement

instability impacting raw
materials● Geopolitical risks in ChinaO

T

Business Policies and Strategies in the 2023 Mid-term Management Plan
In its medium-term strategy, the Extruded Product Sector aims to have materials for car body structures used for more partsand have aluminum extrusion shapes adopted for more parts in the field of batteries. In addition, in the sectors where our
products are in demand, including the truck, railway, industrial equipment and construction materials sectors, we will
enhance our activities to identify new needs and develop products based on these findings leveraging our strong
relationships with customers that have been cultivated over many years.
Moreover, as measures to tackle increased prices, we will introduce fuel surcharges and take other initiatives on a timely basis,
and at the same time, improve yield in operations and enhance operating efficiency, thus improving the earnings structure.
For the reduction of CO2 emissions, we will proactively promote initiatives including switching the main raw materials forbillets from new aluminum ingots to scrap-derived materials, introducing high-efficiency equipment in production processes,
and converting fuels. In addition, we will expand cooperation with customers in horizontal recycling, in which used products
are dismantled and segregated and then melted, cast and extruded again by the Group to produce the same products,
aiming to use resources even more efficiently and further reduce CO2 emissions.

From Shinkansen to Shinkansen — Horizontal recycling of materials for car body structures —Last year, jointly with Central Japan Railway Company and other entities, we succeeded in realizing thehorizontal recycling of aluminum from car body structure to car body structure, in which the body structureof bullet train (Shinkansen) cars to be scrapped are recycled into a part of the body structure of newly
manufactured cars. Previously, the car body structure of bullet train cars was recycled into only some othercar body parts through cascade recycling, in which the car body structure is recycled into low-grade
aluminum containing many impurities. Horizontal recycling uses an advanced recycling method in which thecar body structure is used again as the material for car body structures, which is an important part of the
body of rolling stock. Adopted for a part of the roof structure of JR Central’s N700S bullet train cars, thisinitiative makes it possible to reduce CO2 emissions by approx. 50 tons per train (16 cars). We will continue
to transform the Group’s recycling and manufacturing technologies and proceed with research anddevelopment efforts aimed at expanding the scope of their application, such as considering the reduction ofprocesses for collecting scrap materials and studying efficient manufacturing equipment.

TOPICS

A bullet train car
to be scrapped
Car body structure (roof)

Extrusion shapes (image)Aluminum scrap

Billets

Flow of the horizontal recycling of
Shinkansen train cars

Integrated Report 2023

34

Segment Overview

Fabricated Products
and Others
Toshikazu Tanaka

Toshio Yanagimoto
Executive Officer in charge of
the Panel System Business

Analysis of Present State (SWOT Analysis)
S: Strengths

W: Weakness●A bility to develop products in●C ontinuation of the reflecting

collaboration with the NLMGroup and the Isuzu Group●L argest share of the market
in Japan (in terms of quantity)of the soaring prices ofmaterials and parts in sales
prices●D elay in the expansion ofbusiness in overseas markets

O: Opportunity

T: Threats

S

W

●E
 xpansion of service●E ntry of overseas competitors

businesses reflecting thediversification of logistics●C ooperation within the Group
regarding decarbonizationand cold chain logistics

and competitors from otherindustries into thecommercial EV market●L ong-term downsizing of thedomestic market

O

T

10.0%

Public facilities,
landscaping andarchitecture

Electricalmachinery,electronics andtelecommunications

182.0

200.0

0.1

7.0

2022

2023
Forecast

Value Creation

Foundations of Value Creation

Data

売上高比率

10.0%

15.0%
2025 (Fiscal year)
TargetFood andcommodities

15.0%

Transportation

40.0%

FRUEHAUF CONNECT as solutions to problems related to trailers
Nippon Fruehauf Co., Ltd. provides FRUEHAUF CONNECT, a location information system with a communication
terminal with low power consumption. Now, we have upgraded the system into one in which the built-in
battery of FRUEHAUF CONNECT can be charged when the trailer is connected to the tractor, making it possible
to obtain vehicle information even when the trailer has been disconnected from the tractor. The system thus
visualizes vehicle location information on a real-time basis. In addition to suggesting improvements in theefficiency of vehicle dispatch tasks with the use of IoT to address the shortage of drivers and the reform ofworkstyles, we provide a service which uses official data provided by the Japan Meteorological Agency andother organizations about earthquakes, heavy rains and other disasters, identifies customers’ vehicles in areas
affected by disasters, and sends notifications to customers for the safety of their drivers.

Business Environment
In the clean room sector, semiconductor-related demand inJapan is expected to increase due to social implementationof digital technologies, and properties are growing larger. In
the sector of low-temperature spaces, panels for foodsupermarkets, convenience stores, and others have been
decreasing, but an upward trend is seen in renovation
projects for food factories, logistics warehouses, and otherareas, thanks to the boost in economic activities after the
COVID-19 pandemic. On the other hand, in the constructionindustry generally, problems such as construction delays
reflecting the labor shortage are occurring, while measuresagainst the “2024 problem” in the construction industry alsoneed to be watched. In addition, raw materials prices haveremained high, and uncertainties such as future crude oil
prices and the exchange rate impact has been growing. At
present, however, the supply shortage of panel cores andsteel sheet materials, which are the main materials, is easing
to a certain degree.

Analysis of Present State (SWOT Analysis)
S: Strengths

W: Weakness●L argest market share in the● Human resource development

domestic industry●C omprehensive capabilities
with expertise in sales,
design, production andinstallationand operational efficiency
improvement● Limited points of contact withend users

O: Opportunity

T: Threats●E xpansion of semiconductor-● Prices of raw materials staying

related market●G rowing demand for fireproof
insulation panels

high and an increase inrevisions to construction plans● Labor shortages in theconstruction and logistics
industries

S

O

W
T

Business Policies and Strategies in the 2023 Mid-term Management Plan

Nippon Fruehauf Co., Ltd. posted a large ordinary loss in FY2022 due to a temporary significant decrease in the volume ofgoods and the soaring prices of materials and parts. Under the 2023 mid-term management plan, we have been striving tomove into the black and increase profits again through a recovery in the volume of goods, price revisions, and cost cutting.
On the other hand, over the medium to long term, we will proactively develop differentiated products for the realization ofsustainable logistics, by seeing the changes in the logistics environment that will occur over the next ten years as opportunities.
Specifically, we will provide services that contribute to the improvement of the efficiency of logistics by delivering logistics thatnever stops, in addition to providing power supplies for mountings in response to the industry’s switch to commercial vehicles
that are EVs and developing products related to the modal shift that will eliminate the driver shortage.
Outside Japan, we will strive to ubiquitize cold chain logistics which help reduce food loss in addition to catering to the needfor decarbonization. For this purpose, we will participate in the creation of international standards leveraging our technologies
and experience cultivated in Japan and provide products that meet local needs ahead of others. In addition, in the domains ofautonomous driving and EVs, we will accumulate technologies and experience to prepare for their ubiquitization in Japan.

Integrated Report 2023

Automotive

10.0%

Basic Information

Panel System Sector

Business Policies and Strategies in the 2023 Mid-term Management Plan

35

Others●Operating Profit

13.0

Truck Body Sector
We expect that steady demand will remain in the truck
market in Japan with a recovery from a temporary decline
attributed in part to supply chain disruptions. In addition,
the global movement toward decarbonization has
accelerated, and there is also growing demand for lowcarbon vehicles such as EVs in the commercial vehicle
market. Further, the driver shortage has become serious, so
the reform of drivers’ workstyles and improvements in theefficiency of logistics are urgent tasks that the logistics
industry needs to address as it moves towards theapplication of an upper limit on work hours in the logistics
sector in 2024. From a global perspective, the reduction offood loss in logistics has been set as a task for addressing
food shortages and poverty. Thus, the logistics industry hasentered a once-in-a-century great transformation towards
the achievement of sustainable logistics. A response tothese changes is also required for truck bodies and trailers,
which support logistics.

Sales ratio (%)■Net Sales

153.2

Director in charge of the Nippon
Fruehauf BusinessBusiness Environment

Net sales/Operatingyen)
profit (billion売上高
加工関連

T OP ICS

Real-time location display

Confirmation of present location

FRUEHAUF CONNECT

Nikkei Panel System Co., Ltd. positions ESG-management-based business activities as its key medium-term policy. In
society where decarbonization is necessary, insulation panels play an important role in conserving energy. In the production
division, we have begun to construct Shimonoseki Plant No.2 to increase the production of non-CFC fireproof insulation
panels, so as to respond to the increase in clean rooms reflecting growth in semiconductor-related demand in Japan. In the
installation division, we will use Tec Lab to ensure the safety of work sites and drive improvements in the work environment
together with our partner companies engaged in installation. Outside Japan, we will work together with Group companies topopularize cold chains, which help reduce food loss, by leveraging our experience and technologies cultivated in Japan. We
will continue to invest aggressively in the automation of production and reduction of labor in our production processes andimprove operational efficiency by using many digital technologies. Nikkei Panel System Co., Ltd. will continue to provide newspaces and new value to enrich people’s lives and revitalize the earth.

To Accelerate Product Development and Ensure High Quality
Nikkei Panel System Co., Ltd. has begun to construct Shimonoseki Plant No. 2 to respond to thegrowing demand for semiconductors in Japan. We will rebuild the production system to solidify
business continuity, in addition to establishing a system for stable supply to the market.
Positioning the construction as a decisive shift to aggressive manufacturing, we will continue torespond flexibly to market needs, take environmental measures, and engage in activities for the
automation of production and reduction of labor. Specifically, we will introduce an automatedappearance inspection system using AI software, starting from Shiga Plant as the core plant,
and expand it to Shimonoseki Plant as well.

TOPICS

Rendering of Shimonoseki Plant No.2

Integrated Report 2023

36

Net sales/Operatingyen)
profit (billion売上高
箔粉末

Segment Overview■Net Sales

Aluminum Foil,
Powder and Paste

The environment surrounding the foil business has remained
tough due in part to an increase in the inflow of low-priced
aluminum foil manufactured overseas and the shrinking of
the domestic market reflecting the population decrease.
However, the movement toward a decarbonized society
is increasing globally and the shift to EVs is progressing at
an accelerated rate in the automotive industry. This is
expected to lead to a rapid increase in demand foraluminum foils used as the outer material of automotive
lithium ion batteries.
Further, demand for aluminum foil as a pharmaceuticalpackaging material, the aluminum foil for what is called PTP(press through pack) sheets, has remained strong.

Kaoru Kusumoto

1.5

Director in charge of the Toyo
Aluminium Business Group

2022

Foundations of Value Creation

Data

Automotive

10.0%Electricalmachinery,electronics andtelecommunications

10.0%

3.0
2023
Forecast

Value Creation

売上高比率

30.0%

100.4 103.0

2025 (Fiscal year)
TargetFood andcommodities

50.0%

Powder and Paste Sector
Analysis of Present State (SWOT Analysis)
S: Strengths

W: Weakness● Largest share of the domestic● Aging of production facilities

aluminum foil market●S ignificant technology
development capabilitiesS

O: Opportunity● Low cost competitivenessagainst aluminum foil
manufactured overseas

T: ThreatsW●E xpansion of the EV market● Inflow of aluminum foil manu-●E xpansion of the market for

factured overseas● Population decline and theshrinking of the domestic
marketpharmaceutical double-sided
aluminum PTP sheets in India
and other countries

O

T

Business Policies and Strategies in the 2023 Mid-term Management Plan
We will focus its efforts on expanding the aluminum foil for outer materials business by steadily tapping into the growing
demand for lithium ion batteries. At present, the market has been at a standstill, partly reflecting the impact of inventory
adjustments at various parts of the supply chain, and it is expected to be some time before demand for consumer batteries
recovers. However, it is urgently necessary to respond to the growing demand for automotive batteries. Therefore, we aim toestablish a supply capacity and production system that fulfill the demand from customers in terms of quantity. At the sametime, we will also continue to work to reduce costs with a focus on the improvement of production efficiency.
On the other hand, general plain foils and food and pharmaceutical packaging materials are expected to decrease
gradually, affected by the shrinking of the domestic market as the population contracts. We will therefore maintain quantity
mainly by ensuring stable supply to the domestic market. Further, to make up for the decrease in existing products, we will
focus our efforts on developing new technologies and new markets, including overseas markets, and will continue to search
for new applications of aluminum foils leveraging our core technologies.

Tapping into the growth of the Indian market through SVAM TOYAL

T OP ICSThe Indian market is expected to continue growing, and demand for pharmaceutical packaging materials is
anticipated to remain strong. India has been called the world’s pharmacy, with one-third of tablets and 20% ofgeneric drugs distributed worldwide said to be manufactured there.
In Japan, PTP packaging with a transparent surface is the mainstream because importance is attached tovisibility. However, PTP packaging with both surfaces being aluminum foil, or the so-called Alu-Alu packaging, isfavored in South Asia, including India, Southeast Asia, Middle East, Africa, South America, Europe, and otherregions. This Alu-Alu packaging accounts for 95% of production items at SVAM TOYAL Packaging Industries
Private Limited, a Group company.
PTP packaging with both surfaces beingaluminum foils
Moving forward, we will increase the production capacity of this company by replacing its facilities, thus
keeping pace with the growth in demand, and will achieve a higher level of quality than customers demand,
aiming for further business expansion including the application of aluminum foils to products other than Alu-Alu packaging.

37

Sales ratio (%)●Operating Profit

OthersFoil Sector
Business Environment

Basic Information

Business Environment
Aluminum paste is used as a pigment for automotive
paints. The demand for aluminum paste depends a great
deal on trends in colors of automobiles as well as theirproduction. As for the trend with the silver color, for which
the largest quantity of aluminum paste is used, the levelhas been low in recent years. In addition, reflecting rising
environmental awareness, the switch to water-based
paints, which do not use organic solvents, is progressing,
mainly in Europe and the United States.
On the other hand, aluminum powder is used not only as
the raw material for aluminum paste but also for heatdissipation of electronic materials and others. Demand forheat dissipation materials is expected to increase, mainlyreflecting the increasing use of 5G telecommunications
equipment and EVs, as well as growing demand forelectronic equipment.

Analysis of Present State (SWOT Analysis)
S: Strengths

W: Weakness●L arge global market shares of● An earnings structure thataluminum paste for
automotive paints●S ignificant productdevelopment capabilities

depends a great deal on theautomotive market● The weak profit structure ofoverseas subsidiariesS

O: Opportunity● I ncreasing environmental

T: ThreatsW● Changes in color trends ofawareness and tightening of
regulations●G rowing demand for heatdissipation materials, mainlyreflecting the increase in 5G
telecommunications equipmentOautomobiles● Price competition pressure

from competitors

T

Business Policies and Strategies in the 2023 Mid-term Management Plan
Regarding aluminum paste, which is widely used for automotive paints, we expect a gradual decline in existing products,
with the use of silver remaining at a low level and existing colors being abolished. We will compensate for the decline by
expanding sales with a focus on new products, including colored aluminum paste, and silica-treated products for waterbased paints as environmentally friendly products that do not use organic solvents. We will also optimize production byleveraging the structure with five operating facilities worldwide. For aluminum powder, we will attempt to expand thebusiness by setting our sights on growth in demand for heat dissipation materials. While higher heat dissipation has begun to
be required, demand for alumina and aluminum nitride as heat dissipation materials has been growing. Among them,aluminum nitride for sintering is not expected to grow significantly. For aluminum nitride for fillers, we aim to achieve growththat outpaces the market by expanding sales in overseas markets while continuing to maintain domestic market share.

Development and expansion of aluminum powder for 3D printers

TOPICS

3D printing (laminate molding) technologies allow complex and elaborate products to be cheaply manufactured, and also enable “digital transportation,”where the digital modeling data is sent instead of transporting the physical product so that it can be produced on-site. For these reasons, 3D printing is
attracting attention as a next-generation manufacturing technology with the potential to significantly transform
manufacturing. As 3D printing using aluminum alloy powder offers greater freedom in molding compared withconventional production methods, it is possible to make components lighter and manufacture products withmore elaborate shapes.
The NLM Group’s aluminum alloy powder features superior quality, including improved flowability in theprinter and a higher fatigue limit of printed objects, which are enabled by controlling the form and size ofparticles. Accordingly, demand for our powder as a material for 3D printing has increased. We arecollaborating with a university in developing an alloy powder that is more suitable for 3D printing. We willcontinue to focus our efforts on this field by deepening our collaboration with Group companies as well.
3D printing using aluminum alloy powder*Toyo Aluminium K.K. and other companies constituting the Foil and Powder Products segment are to be excluded from the scope of consolidation through a transfer of shares.
https://www.nikkeikinholdings.com/news/news/common/pdf/p2022090201hde.pdf

Integrated Report 2023

Integrated Report 2023

38

Basic Information

Financial Strategy
We are working to formulate a financial strategy that balances investments to achieve sustainable growth as a corporategroup, the maintenance and improvement of the financial structure and other elements, while aiming to ensure stableshareholder returns.

Our Environment
During the ten years since we introduced the pure holding company system, we have proactively reinforced our financial
foundation while also stably providing shareholder returns based on the cash flows created by increasing our earnings
capacity through cooperation within the Group. The consolidated equity ratio was improved from 25.0% in FY2012 to 39.0%
in FY2022, which is the most recent figure. In parallel with this, the D/E ratio has also improved, settling at below 1.0. While
we have not presently issued bonds, etc. in Japan, our long-term credit rating has also improved, and is currently maintainedat the A- level. Although profit decreased significantly on a year-on-year basis in FY2022, we will increase shareholder returns
and aggressively invest for future growth in a well-balanced manner while continuing to reinforce our financial foundation withthe aim of achieving a recovery of our business performance with a focus on products for automobiles, transportation,
semiconductors, and other fields, where a market recovery is expected. We understand that these are our tasks in the
period of the 2023 mid-term management plan.
●

Equity ratio (%) ●D/E ratio■ Long-term credit rating (JCR)

35.6
25.0

1.8

25.5

1.8

26.6

1.6

2013

2014

39.0

39.6

38.1

37.6

39.0

43.4
(Mid-term management
plan target)

1.4

0.8

0.7

2015

0.8

0.7

0.8

0.8

0.8
(Forecast)

0.7(Mid-term management
plan target)

2017

2018

2019

2020

2021

2022

2023

Our basic policy is to maintain and improve our financial standing while paying stable dividends in consideration of the balance
between cash acquired from business activities and the use of the cash. As the financial discipline benchmark used for thispurpose, we consider a D/E ratio of 1.0 or below to be a rough guide. In addition, we disclose ROCE, which is less affectedby leverage, as the investment efficiency indicator. Generally, the payment of dividends is the method for providing shareholder
returns. However, we use total payout ratio as the indicator so that we are able to flexibly choose various methods.
The financial figure of the NLM Group may fluctuate greatly according to the condition of the aluminum ingot market. In the2023 mid-term management plan, we have disclosed target values for FY2025 based on the assumption that the market
environment will remain unchanged from what it is now. We aim to achieve operating profit exceeding 30.0 billion yen toincrease dividends.
(Unit: billion yen)

FY2019results

FY2020results

FY2021
results

FY2022
results

FY2023
forecasts

FY2025 Targets
in the mid-term
management plan

Net Sales

465.9

432.6

486.6

517.0

550.0

530.0

Operating Profit

24.6

24.2

22.2

7.5

17.0

30.0

Ordinary profit

23.5

24.0

22.9

8.9

16.0

30.0

Profit attributable to owners of parent

7.5

3.4

16.8

7.2

7.5

20.0

ROCE*

8.0%

8.4%

8.7%

3.2%

5.2%

10.3%

Total payout ratio

74.6%

119.6%

31.4%

43.0%

41.3%

31.0%

*ROCE (return on capital employed): Ordinary profit before interest / Capital employed at the beginning of the fiscal year

Integrated Report 2023

(Unit: billion yen)2025 (Fiscal year)

Basic Financial Policy

39

Breakdown of investments under 2023
mid-term management plan (construction)

Aー
2016

Data

Regarding net cash provided by operating activities, we provide dividends stably based on our policy. In addition, under past
mid-term management plans, we allocated cash in ways that attached importance to the improvement of our financial
standing. However, since the 2019 mid-term management plan, under which a certain level of improvement was seen in our
financial standing, our policy has been to divert cash to investments for continued growth. Under the 2023 mid-term
management plan, we will continue to aggressively invest at a level that far exceeds depreciation. Regarding the content ofinvestments, we will increase the ratios of investments in sales expansion and new products, investments for redoubling ourefforts to ensure safety and reduce labor, and environmental investments, in line with the Group’s material issue themes. We
will also increase research and development expenses which are the source of our new future products.
(Unit: billion yen)If surplus funds are generated under2016 mid-term
2019 mid-term
2023 mid-term
these policies, we will use them to improveItemmanagement
plan
management
plan
managementplan
our financial standing, in activities such as
the repayment of interest-bearing debt andOperating CF
97.0
91.9
101.5
the increase of our cash position. Further, if
Shareholder returns
-15.5
-15.2
-11.5
a promising large-scale investment project
occurs, we will consider it flexibly on the
Reinforcing the financial foundation
-31.9
-3.3
0.0
condition that we maintain our financial
Capital investment CF
-49.6
-73.4
-90.0
discipline (D/E ratio at 1.0 or below) andlong-term credit rating.
Depreciation
51.0
57.9
61.0

15.6

Research and development expenses
0.9

Foundations of Value Creation

Cash Allocation

28.8

BBB+

BBB
2012

37.2

41.5
(Forecast)

Value Creation

Sales expansion
and new products

Maintenanceand renewal

33%
29.6

33%
29.6

Amounts invested in construction and R&D■ Maintenance andrenewal■ Labor reduction,
safety, and others■ Sales expansion
and new products■ Research anddevelopment
expenses■ Toyo Aluminium

Labor reduction, safety,
and others

34%
30.0

18.2

(Unit: billion yen)

112.0

120
100

86.5

97.2

80
60
40

10.7
7.5
10.3

20

37.6

0

17.0

Period of 2016 mid-term
management plan (2016-2018)

12.7

15.3
29.6

17.1
16.3

30.0

28.3

29.6

Period of 2019 mid-term
management plan (2019-2021)

Period of 2023 mid-term
management plan (2023-2025)(Fiscal year)

Depreciation

51.0

57.9

61.0

(value for Toyo Aluminum included in it)(12.1)(13.7)(5.0)*We plan to review our cash allocation when the impact of the exclusion of Toyo Aluminum from the scope of consolidation has become clear.

Shareholder Return Policy
Our basic shareholder return policy is to provide dividends to our shareholders by comprehensively considering the consolidated
financial results and other factors from a medium- to long-term perspective while striving to strengthen our financial standing andmanagement foundation. A total payout ratio of 30% or higher is the indicator for profit allocation, while we also consider
balancing this with the■ Dividend per share (yen) ● Total payout ratio (%)
investments needed to100.00119.6(Target value)achieve sustainable100
90.00 90.00
growth. We select85.00
80.00 80.00
80
methods of returning
74.6 65.00
50.00
60.00
60
profits to shareholders
50.00 (Target)
50.00
by comprehensively
48.6 40.00
40
43.0
42.4
41.3
considering our cash
31.4
31.0
30.00
28.2
27.5
27.1
23.1
21.0
20
position, equity ratio
and other factors,
0aiming to sustainably
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021 2022
2023
2025(Fiscal year)
and stably provide(Note) On October 1, 2020, we conducted a one-for-ten reverse stock split. Accordingly, the impact of the reverse stock split was considered
for the amounts of dividend per share for FY2019 (fiscal year ended March 2020) and before.
shareholder returns.
Integrated Report 2023

40

Basic Information

GovernanceFoundations of Value Creation

Audit reports
Consulting

AdviceBusiness Transformation OfficeNomination andCompensation Committee
Consulting

Audit reports

Directors
Outside Directors

Board of Directors

Appointment/Removal

Green Growth Strategy OfficeGroup Executive Committee

AdvicePresident and CEO
Officers(5) NLM HD shall have constructive dialogue withshareholders and investors through various IR activities
to facilitate sustainable growth and improved corporate
value in the medium-to-long-term.

https://www.nikkeikinholdings.co.jp/news/common/pdf/cgn.pdf

Appointment/Removal

Appointment/Removal

Departments, subsidiaries and affiliates
Internal audit

Opinion exchangeGroup Compliance Committee
Group Quality Committee
Group CSR Committee
Group Environmental
Committee, etc.

Opinion exchange

Central CSR and Audit Office

Progress of Enhanced Corporate Governance

Audit reports/Opinion exchange
Male

Development of the Internal Control System were revised tobuild a governance system for realizing the Group’s
Management Policy. NLM HD will continue to revise its
governance system in line with the intent of the Corporate
Governance Code and other guidance.

Organization

Composition

Initiatives for Enhancing Corporate Governance
2012

2016

2013～2015

2017

2018

2019

2020

2021

2022

Ensuring the diversity of the Board of Directors
Appointment of Outside Directors 2 people appointed

Increased to 3

Increased to 4

Basic Policies

Increased to 5
1 person appointed

Appointment of female Directors⃝Skills matrix created

Skills matrix
Improving the effectiveness of the Board of Directors⃝Questionnaire survey conducted
and improvement initiatives taken

Evaluation of the effectivenessof the Board of Directors⃝Introduction of an executive officer
system based on delegation agreements⃝Introduction of an executive officer system⃝Introduction of stock remuneration

Stock remuneration⃝Establishment of the Nomination andCompensation Committee

Nomination andCompensation Committee
Strengthening internal control

41

Environmental protection⃝2012: Establishment of the Environmental Committee (now Group Environmental Committee) ⃝2022: Expression of support for the TCFD recommendations

Information security⃝2020: Introduction of CSIRT

Corporate ethics⃝2012: Establishment of the Compliance Committee (now Group Compliance Committee) Establishment of the NLM Group Compliance Code⃝2023: Revision of the NLM Group Compliance CodeInternal control and risk
management⃝2012: Establishment of the Basic Policy on the Development of the Internal Control System⃝2013: Establishment of the CSR Committee (now Group CSR Committee)⃝2023: Revision of the Basic Policy on the Development of the Internal Control System

Quality⃝2012: Establishment of the Quality Committee (now Group Quality Committee)

Integrated Report 2023

Board of Directors

OutsideInternal
members members

Since the pure holding company system was introduced in2012, NLM HD has been gradually strengthening its governancesystem, considering that corporate governance is one of its
most important management challenges. In April 2023, the NLMGroup Compliance Code and the Basic Policy on the

Board ofAuditors(4) The Board of Directors, Auditors and Board of Auditors
shall recognize their fiduciary responsibility toshareholders, and fulfill their respective roles andresponsibilities appropriately to realize sustainablegrowth and enhance corporate value in the medium-tolong-term.

General Meeting of Shareholders
Appointment/Removal

Auditors
Outside Auditors(3) NLM HD shall make information disclosures as requiredby laws and regulations, and actively strive to disclose
information needed by stakeholders to fulfill its
accountability obligations and ensure transparency.

Governance Structure

Statutory auditor
audits(2) NLM HD shall endeavor to appropriately cooperate withshareholders and many other stakeholders. The Board of
Directors and top management shall exercise leadershipto foster a corporate culture that respects the rights andstandpoints of stakeholders, as well as corporate ethics.

Appointment/Removal(1) NLM HD shall respect the rights of shareholders andensure their substantial equality.

In addition, by separating the supervisory functions of management from business execution functions while actively
appointing Outside Directors and Outside Auditors, NLM HD
has ensured the supervision of executive functions and reciprocal monitoring of Directors, and the soundness in management
through audits by Auditors including Outside Auditors.

NLM HD has adopted the system of a company with a Board ofAuditors. This decision was taken based on the belief that asystem where Outside Directors and the Board of Auditors
supervise management from their respective perspectives is aneffective way to strengthen supervisory functions.

Reports/
Proposals●Corporate Governance Report (Japanese only)

Basic Policy on Corporate GovernanceAccounting
audit

The NLM Group has introduced a pure holding company systemand operates under Nippon Light Metal Holdings Co., Ltd.
(“NLM HD”), the holding company. NLM HD aims to improve
corporate value by working to achieve sustainable growth andenhance its competitiveness through the formulation anddetermination of Group-wide strategy, strategic allocation ofmanagement resources, and the supervision of operatingcompany management.
Because NLM HD has adopted an executive officer system,
the Board of Directors has been simplified, consisting of 14
Directors (5 Directors, 36% of the board, are Independent
Outside Directors). This has enabled the Board of Directors to
flexibly operate and substantively deliberate. In addition, toclarify the missions and responsibilities of Directors and Officers,
each Director or Officer’s term of office is 1 year.
Regarding audits, NLM HD has adopted a corporate auditor
system. At present, there are 5 Auditors (including 3 Independent
Outside Auditors, 60% of the Board of Auditors). The Auditors
constitute the Board of Auditors. As an independent body that plays apart in corporate governance, the Board of Auditors attend importantinternal meetings such as Board of Directors meetings, monitoring theexecution of duties by Directors in accordance with audit policies andaudit plans that comply with the standards for audits by Auditors.

Executive officer system

Data

Framework

Accounting Auditor

PolicyValue Creation

Authorities andresponsibilities

FemaleNomination and Compensation Committee

Japanese

Non-Japanese

Board of Auditors

Chairperson

Chairperson
Chairperson(Percent that are outside members: 36%)

(Percent that are outside members: 83%)

(Percent that are outside members: 60%)

So that NLM HD can make appropriate and flexible
decisions and supervise the execution of those decisions,
the Board of Directors as a whole shall be composed of
Directors from within NLM HD who have the requisite skills
and knowledge for each business field, corporate planning,
research and development, production and other skills.
Independent Outside Directors who are able to actively
share their views and raise issues regarding growthstrategy and the enhancement of governance from thestandpoints of a diverse range of stakeholders and society
shall constitute at least one-third of the Board of Directors.

The Committee shall comprise at least 3 members including
the President, and the majority of its members shall be
Independent Outside Directors. In addition, the Board of
Directors appoints one of the Independent Outside Directors
who is a member of the Committee as its chairperson.

The Board of Auditors conducts
auditing activities that maintain an
independence from management
by securing the participation of
Outside Auditors with experienceand insight into many fields. In
addition, the Auditing Office that
supports auditing operations ofAuditors is assigned dedicatedemployees not subject to thedirection or orders of Directors.

The Board of Directors makes decisions on the basic andimportant management matters of the NLM Group, andsupervises the status of Directors in the execution of theirduties.

The Committee discusses and reports on matters determining
nomination and compensation in response to a request for
consultation from the Board of Directors and President. In
considering particularly important matters such as appointment
of officers and their compensation, NLM HD seeks theappropriate involvement of and advice from the Committee,
whose main members are Independent Outside Directors, in aneffort to ensure the independence and objectivity of the Boardof Directors’ functions and strengthen its accountability.

Auditors audit the status of internal
control including compliance, risk
management and the timely
disclosure of information from theperspective of enhancing theeffectiveness of corporate
governance.

Term

1 year

1 year

4 years

Body that appoints(selects) its members

General Meeting of Shareholders

Board of Directors

General Meeting of Shareholders

Maximum numberof members

15

Not limited

7

Frequencyof meetings

Every month *FY2022: 15 times

3 times a year *FY2022: 4 times

Regularly *FY2022: 15 times

 uality problems at the NLM Group (including causeQ
analysis and formulation of measures to prevent theirrecurrence, which were made by NLM HD)● Management integration of Toyo Aluminium K.K.
● Integration of the automotive parts business(Establishment of Nikkeikin ALMO Co., Ltd.)● Formulation of a mid-term management plan withFY2023 as its starting year
● Revisions to the whistleblowing regulations●

Major mattersdeliberated(discussed)
in FY2022T otal amount of compensation for Directors for FY2022 andpolicy for determining it● Reprimand of Officers for the quality problems● Personnel affairs of Officers●

 onitoring of the Board ofM
Directors’ response related tothe quality problems● Formation of opinions of theBoard of Auditors● Expression of opinions in writing●

Integrated Report 2023

42

Basic Information

Value Creation

Foundations of Value Creation

Data

Governance

Organization

Business
Transformation
OfficeGreen Growth
Strategy OfficeGroup Executive
Committee

General Manager/
Chairperson

Number ofmeetings

Details

Director of theCompany

In response to the results of the investigations into the quality-related misconduct incidents within
the Group and the prevention of their recurrence, etc., which were announced in March 2023, inApril of the same year, this office was established as an organization under the direct control of
the President with a Director of NLM HD serving as its General Manager. It was established topush the Group’s initiatives to prevent recurrence forward without delay, with the core initiatives ofpromoting management reforms and strengthening internal control functions.
The duties of this office concerning the issues to be addressed to prevent recurrence include
specifying the issues more clearly, proposing and implementing measures to solve the issues,
managing the progress on the measures, verifying their effects, and providing information about
them to the Board of Directors and external stakeholders. With all members meeting approximately
every other week, this office plays the leading role in the promotion of reforms within the Group, sothat the initiatives to prevent recurrence will be implemented effectively without delay.

Officer of theCompany

This office was established in April 2023 as an organization under the direct control of the
President that formulates the integrated decarbonization strategy of the Group and plays theleading role in efforts to achieve decarbonization, for the Group to achieve carbon neutrality. Thisfiscal year, which is its first fiscal year, the office played the central role in calculating the actual
CO2 emissions of the Group using a unified method, creating a roadmap toward the achievementof reduction targets based on measures to reduce emissions taken within each business segment
and other initiatives.

President andChief Executive
Officer of theCompany

2 times a month*FY2022: 33 times

As a body that assists the President and CEO in decision making, the Group Executive Committee
is comprised mainly of Directors (excluding Outside Directors), Officers and Auditors (excluding
Outside Auditors) of the Company. The Committee discusses and makes decisions on policies
related to NLM Group management and important items concerning management execution.
While matters that specifically require resolution of Board of Directors and other importantmanagement items are decided by the Board, the Group Executive Committee serves as a bodythat reviews matters before they are resolved by or reported to the Board. It determines theagenda and points for discussion, thus facilitating constructive debate and exchanges of opinions
among the Board of Directors. Particularly with regard to the acquisition or disposition of shares or
non-current assets, loans and guarantees, various risks such as credit risks or regional andmarket risks are taken into account, monetary standards are set for each type and the scope tobe resolved by the Board of Directors is clearly specified. Matters that fall below these monetaryamounts are delegated to the Group Executive Committee and other executive management,
enabling the Board of Directors to focus on the discussion of essential strategies aimed at
medium-to-long-term growth.

Accounting Auditor
Accounting auditing is handled by Ernst & Young ShinNihon LLC.
The Board of Auditors formulates standards governing the appointment, dismissal and reappointment of the accounting auditor,
considers the quality control, independence, expertise and size of theaccounting auditor, and evaluates the accounting auditor yearly.

Internal audit
Internal audits are performed by the internal auditing department
based on an annual auditing plan, and involve audits related tothe execution of business by subsidiaries and evaluations ofinternal control related to financial reporting. Recommendations
for improvements and corrective action are issued as needed
after verifying the appropriateness and effectiveness of internal
control. The status of improvement and evaluation of internal
control is reported to the Board of Directors twice a year.

To verify that the Board of Directors is functioning appropriately overall
and to take appropriate measures including improving upon issues basedon the results, the effectiveness of the Board of Directors is evaluatedeach year in an effort to ensure ongoing improvements to its functioning.
The effectiveness of the Board of Directors in FY2022 wasevaluated in the form of a self-evaluation, including a questionnaire survey of all Directors and Auditors that was conducted in
April 2023. The results of the questionnaire were discussed at
the Board of Directors meeting held in May 2023 before theeffectiveness evaluation for FY2022 was performed and thetasks to be done in FY2023 were shared.
The Nomination and Compensation Committee was also evaluated in addition to the Board of Directors.

Group CSR
Committee

President andChief Executive
Officer of theCompany

Group Quality
Committee

Group
Environmental
Committee

43

Integrated Report 2023

President andChief Executive
Officer of theCompany

President andChief Executive
Officer of theCompany

4 times a year
*FY2022: 5 times

2 times a year
*FY2022: 2 times

2 times a year
*FY2022: 2 times

2 times a year
*FY2022: 2 times

Details

Tasks to be donein FY2022

Consisting mainly of Directors (excluding Outside Directors) and Officers of NLM HD, the Compliance Committee examines tasks and problematic points related to overall compliance anddeliberates and determines measures for instilling and establishing compliance, including thedetermination of the Compliance Promotion Plan and the examination and correction of the statusof the implementation of the plan.
Composed mainly of NLM HD’s Directors (excluding Outside Directors) and Officers and thepresidents of major subsidiaries, the Committee deliberates a wide range of matters and makes
decisions regarding the NLM Group’s material issues.

Evaluation
Process

Reporting questionnaire
results to the Board of
Directors for discussion

Evaluation of the effectiveness and identificationof issues by the Board of Directors⃝Subjects:

All Directors and Auditors
5-point scale + Free description⃝Evaluation method:⃝Major evaluation items: Board of Directors’ operation, supervisory functions,risk management and decision-making functions,and matters it deliberated❶ IR activities, communication with investors, and trends in NLM HD’s share price were reported to and discussed by the Board of
Directors multiple times.
❷ and ❸ Members of the Board of Directors had opportunities to discuss the quality problems and other matters, outside Board of
Directors meetings, in addition to inspecting business sites, thus responding to the issues through close communication. (In FY2023,
opinions have begun to be exchanged with the goal of enhancing the communication between Outside Directors and the Board of Auditors.)
FY2022
initiatives

With the participation of people responsible for quality assurance and management from Group
companies (most of whom are presidents of the companies), the Quality Committee pushes
forward with quality management, including deliberations of the Group Quality Policy, analyzes thecause of serious quality problems, discusses how to prevent their recurrence, and share information about quality audits and other activities, to ensure that the NLM Group provides safe,
quality-assured products and services.
This Committee comprises mainly NLM HD’s Directors (excluding Outside Directors), Officers, andpresidents of major subsidiaries. It meets to discuss basic environmental policy and activity
promotion plans, report serious environmental problems and the results of environmental audits,and deliberate and propose initiatives related to environmental matters, with the goal of improving
the environmental management of the NLM Group.

Questionnaire survey ofeach Director and Auditor❶ Increasing the involvement of the Board of Directors in IR activities❷ Enhancing communications between the members of the Board of Directors❸ Enhancing the information provided to Outside Officers through inspections of business sites and other opportunities❸ Multiple business site inspection tours were organized for Outside Officers, thus deepening their understanding of a wide range of theGroup’s businesses. The tours were also used as opportunities to confirm the Group’s management issues, etc. through direct communication with people working on site.
Business sites thatwere inspectedGroup Compliance
Committee

President andChief Executive
Officer of theCompany

Number ofmeetings

Efforts for improvement

Evaluation ProcessK ambara Complex of Nippon Light Metal Co., Ltd. (a complex of plants of different divisions of the NLM Group), Nikkei Researchand Development Center (general research institute of the NLM Group)● Nagoya Plant of Nippon Light Metal Co., Ltd. (the only aluminum rolling plant of Nippon Light Metal Co., Ltd.)● Nikkei Niigata Co., Ltd. (businesses on large extruded shapes of aluminum alloys/various fabricated products of aluminum
extruded shapes/manufacturing of aluminum containers)●

Active and open constructive statements and discussions occur with the sharing of information and understanding as the premises fordiscussion. On the whole, the effectiveness of the Board of Directors is ensured.
FY2022
evaluation

Policy for initiatives
in FY2023

●

Issue

Chairperson

Auditors and accounting auditor maintain independence fromone another while periodically discussing matters such as
auditing targets and methods. They also coordinate to ensurethat audits are conducted efficiently, such as endeavoring to
exchange views and share information as needed.
In addition, Auditors and the internal auditing department
maintain independence from one another while coordinating toensure that audits are conducted efficiently, such as by exchanging views and sharing information as needed with regard
to auditing targets, auditing methods and the status of risks.
Additionally, twice a year Auditors, accounting auditor, and theinternal auditing department conduct three-way meetings to
exchange views on internal control issues associated with audits
and financial reporting.

Evaluation of the Effectiveness of the Board of Directors

Summary of evaluation results
Meeting structure

Coordination Between Auditors, Accounting Auditor
and the internal auditing department●●

 iscussion of IR activities by the Board of Directors (It was pointed out that there is still room for improvement.)
DCriteria for determining matters to be submitted to the Board of Directors and selection of topics to be discussed by the Board of
Directors, which will contribute to the enhancement of strategy discussions and the optimization of the provision of information to
Outside Officers

R eview matters to be submitted to the Board of Directors and increase opportunities to provide prior explanations to increase thesubstance of the discussions of the Board of Directors.

Integrated Report 2023

44

Basic Information

Value Creation

Foundations of Value Creation

Data

Governance

Design of Compensation Systems for Directors and Officers(1) Compensation of Directors

Fixed<Compensation Levels>❶Base●Compensation❷Performance●
based
Compensation

Performance-based compensation varies depending on business performance in the previous fiscal
year, the attainment level of management plans(operating profit, ROCE, etc.), and the level ofcontribution to Group management, etc.

❸Stock●
Remuneration

This is a restricted stock-based compensation,
which is aimed at increasing the incentive toenhance corporate value over the medium to longterm. It is paid depending on the position of
Directors.
The restricted stock-based compensation is
granted in the form of pre-issuance type commonshares with a restriction on transfer until theretirement of the Director in question. If, during theperiod of restriction on transfer, the Director
violates a law, enters into competition with NLM
HD, or otherwise acts in a manner that is contrary
to the purpose for which the restricted stock-based
compensation system was established, NLM HD
will acquire all the shares that have been granted
to the Director in question at no cost.

Compensation levels are set based on a Director’s duties and responsibilities,
the financial position of the Group and its operating results, with reference todirector compensation levels at other domestically listed companies in thesame industry with similar market capitalization and sales volume.

Ratios of Internal Director Compensation

Fixed❶Base●compensation Compensation

Variablecompensation

Payment method

Approximately
60%

Monetary payment❷Performance-based Approximately●
20%
Compensation

Monetary payment●Stock❸
Remuneration

Approximately
20%

Stock-based
payment

Variable<Structure of Compensation>⃝Internal Directors
Compensation is made up of ❶ Basic Compensation, ❷ Performancebased Compensation and ❸ Stock Remuneration, and as a standard,
the following compensation ratios make up compensation when
performance targets are met.
⃝Outside Director
In light of the role of Outside Directors to oversee
management from an independent standpoint, theircompensation comprises only ❶ Base Compensation

Overview
Base compensation of each Director is set as fixedcompensation based on their position, responsibilities and other factors.

Variable

Types of compensation, etc.

The Company has adopted the basic policy of ensuring that Director
compensation functions as a healthy incentive to sustainable growth.
An overview of the compensation system (policy on determining thedetails of compensation, etc. for individual Directors) is as follows.

Constituent ratio

Message from an Outside Director

FY2022 results■Basic compensation ■Performance-based compensation ■Stock remuneration
Chief Executive
Officer

73%

9%

18%

Internal Directors

75%

9%

16%

Outside Director

100%(2) Compensation of Auditors
The compensation of Auditors comprises only fixedcompensation, due to the role of auditors to conduct auditingfrom an independent standpoint. The compensation of Auditors
is determined and paid through consultation between auditors.

Group Governance
The Company sends its Directors, Auditors, Officers, and employees toGroup companies as their directors and auditors to strengthen its Group
governance and share information. Further, business plans and budgets ofGroup companies are formulated after discussion involving the Company’s
management team members. In addition, benchmark amounts are set under
the Group regulations for Group companies’ capital investment, acquisition/
disposal of shares and similar projects, and projects of a certain scalerequire the approval of the Company (of the Group Executive Committee
and the Board of Directors).
To develop appropriate management functions and managerial ability ofGroup companies and strengthen Group governance by NLM HD in the
future, detailed studies for rebuilding the Group management, including
review of management unit of each Group company, have been started, andreforms will be implemented under the supervision of the Board of Directors.

Cross-Shareholdings
NLM HD and NLM Group companies have adopted a basic policy of
reducing cross-held shares. They may acquire and hold shares of abusiness partner only where it is reasonably recognized that the acquisitionand holding of such shares will contribute to strengthening theirrelationship with the business partner and facilitating smooth business
operations. When shares of a business partner are to be newly acquired,
the appropriateness of the acquisition of shares is determined from theviewpoint of whether or not the stronger relationship with the business
partner will contribute to the development of the Group’s businesses.
Cross-held shares are reviewed every year by examining whether theGroup’s assets are being used efficiently, comprehensively considering thestatus of transactions and other matters. For stocks which are found tonot have a particularly compelling reason for holding them, the number of45

Integrated Report 2023

shares held is reduced by selling them. In light of the purpose of holding
these shares, voting rights pertaining to cross-held shares are exercised ina way that contributes to the improvement of the corporate value of thebusiness partner. Voting rights will not be exercised affirmatively withrespect to matters which will result in a significant loss of shareholder value
or which involves serious corporate governance concerns.
In FY2022, as a result of review of all the cross-held shares conductedin accordance with the above reduction policy, the Company reduced thenumber of shares of 4 cross-held stocks and sold all of the shares of 1 ofthese stocks. The results of review and the sale of stocks were reported to
the Board of Directors, and their validity was confirmed.
The ratio of listed shares held by Group companies as cross-heldshares to total assets is 1.7% and to shareholders’ equity it is 4.4%.

To recover the trust ofsociety and improve
capital efficiency
Toshihito Hayano
Outside Director

I was appointed to be an Outside Auditor in 2016 and an
Outside Director in 2018. I have been an Officer of NLM HD fora total of seven years. As a person with experience in two highlymeaningful positions, I would like to state frankly the challenges
faced by NLM HD, which has made a fresh start as the new
Team NLM under a new corporate philosophy, and what itshould be like in the future.
The role of the Outside Director is to fulfill their fiduciary
responsibility to shareholders as a member of management,
thus contributing to the economic development of the company.
To explain what we do to achieve this, one thing is monitoring
management. We supervise and monitor management to see if
any of the top managers have conflicts of interest, if they are
pursuing their own interests and, furthermore, if they are
engaged in any abusive acts using their position. This is whatcomes first. I often liken Auditors to physicians and Outside
Directors to surgeons. I am serving in this position with adetermination to boldly stick the knife into any management
problems that occur, not hesitating to do brain surgery — thatis, replacing top management — at times. The other task is toproactively give advice on what to do to enhance corporate
value toward sustainable development of the Group based onwhat I have learned in my own career.
This fiscal year, we reviewed the 2022 mid-term management
plan and formulated the 2023 mid-term management plan for
FY2023 to FY2025. Reasons for this include the changes insupply chain reflecting the increasing geopolitical risks, thedecision to transfer the shares of Toyo Aluminium, a Group
company, a massive change symbolized by the shift to EVs inthe automotive industry who are our major customers, and theradical change in the business environment mainly reflecting the
global call for carbon neutrality. How should we respond tothese drastic changes to develop sustainably? One of themeasures that I have suggested in meetings of the Board of
Directors is a fundamental shift of the management structure to
one oriented toward the creation of high added value.For
example, one of our breakthroughs for achieving the shift will be
the use of intellectual property, such as technologies, expertise,patents, and our brand power that the Group has cultivatedover many years, for example, the creation of complex alloys
and friction stir welding technologies, etc. Strategic investment
and the utilization of intellectual property should enhance thepotential that we have as a groundbreaking innovator ofaluminum and beyond.
Another point that I have been emphasizing is theenhancement of capital efficiency, which is represented by ROE.

Above all, I think it is important to monitor management and give
advice while considering the interest of minority shareholders,and as a result, contribute to the sustainable development ofcorporate value. During the 2023 mid-term management plan,we will review the business portfolio and work to optimally
allocate management resources.
NLM HD’s Board of Directors engages in open, unrestricteddiscussions, which I think is due largely to the chair of the Boardof Directors President Okamoto’s sincerity, ability to listen andopen mindedness. Ample measures are taken to enable Outside
Directors to fulfill their roles. They include informal opportunities
for the President and Outside Directors to exchange informationand opinions which are provided almost every month in addition
to the distribution of meeting materials before meetings andvisits to business sites aimed at understanding the work sites. I
think that similar opportunities for exchanges between the
Board of Auditors and Outside Directors would enable a deeper
understanding of management issues.
To secure the effectiveness of the Board of Directors, it isimportant to detect problems on the administrative side at an earlystage and respond to them quickly. I think that the epigram, “Badnews is good news, good news is no news, no news is bad
news,” should be valued as a principle for internal communication.
And the current top-priority task is structural reform to preventthe recurrence of quality-related incidents of misconduct. The
occurrence of as many as 214 incidents of misconduct was agreat surprise to me and a cause for regret.
While there are diverse interpretations of compliance andgovernance, they are actually very simple. They are summed up
in three points: do not lie, do not deceive people and do not put
only yourself in an advantageous position. I am determined topush forward with the drastic structural reforms while reviewing
the systematization of quality management and how the Groupshould be managed. I will steadily implement measures toprevent the recurrence of the quality-related issues and report
the progress on the measures as needed, to ensure the problem
never occurs again, which is the responsibility of top
management.
For the sustainable development of a company, it is necessary
to take on challenges to achieve development while
understanding the difference between growth and development.
I hope that this Integrated Report will help our stakeholders
understand the challenges taken on by the NLM Group as the
new Team NLM to overcome its management issues andachieve development to recover the trust of society and improve
capital efficiency.

Integrated Report 2023

46

Basic Information

List of Officers & Skills Matrix

Ichiro Okamoto

Yasunori Okamoto

Kaoru Kusumoto

Toshikazu Tanaka

Masahito Saotome

Toshihiro Matsuba

Shuichi Asakuno

Hiroyuki Matsudaira

Yoshiaki Ito

Masato Ono

Ryoichi Hayashi

Toshihito Hayano

Keiko Tsuchiya

Tatsuya Tanaka

Kotaro Yasuda

Value Creation

Hideo Hirosawa

Yoshiki Sato

Foundations of Value Creation

Shintaro Kawai

Data

Jinseki Kim

Auditors

Directors

Category

SkillsCorporate
management

Manufacturing
and engineering
Research anddevelopment
IT

Sales
Marketing
Product
development

32,287〇〇〇

17,692

〇

〇

〇

5,182

〇

〇

〇

〇

〇

Number ofshares held

Name

Title

ProfileIchiro Okamoto

Chief
Executive
Officer

April 1981 : Joined Nippon Light Metal Co., Ltd.
June 2006 : Officer of Nippon Light Metal Co., Ltd.
June 2009 : Director and Executive Officer of Nippon Light Metal Co., Ltd.

June 2012 : Director and Senior Executive Officer of Nippon Light Metal Co., Ltd.
October 2012 : Director of Nippon Light Metal Holdings Co., Ltd.
June 2013 : President and CEO of Nippon Light Metal Co., Ltd.

June 2015 : President and CEO of Nippon Light Metal Holdings Co., Ltd.

Yasunori Okamoto

Directors

April 1980 : Joined Nippon Light Metal Co., Ltd.
June 2008 : Officer of Nippon Light Metal Co., Ltd.
June 2012 : Executive Officer of Nippon Light Metal Co., Ltd.

October 2012 : Officer of Nippon Light Metal Holdings Co., Ltd.
June 2013 : Director of Nippon Light Metal Holdings Co., Ltd.
June 2013 : Director of Nippon Light Metal Co., Ltd.

June 2014 : Director and Senior Executive Officer of Nippon Light Metal Co., Ltd.
June 2020 : Director and Executive Vice President of Nippon Light Metal Co., Ltd.

Kaoru Kusumoto

April 1978 : Joined Toyo Aluminium K.K. (which merged with Nippon Light Metal Co., Ltd. in
October 1999)
June 2010 : Executive Officer of Toyo Aluminium K.K.

June 2016 : Managing Executive Officer of Toyo Aluminium K.K.
June 2019 : Senior Managing Executive Officer of Toyo Aluminium K.K.
June 2020 : President and COO of Toyo Aluminium K.K.

June 2020 : Director of Nippon Light Metal Holdings Co., Ltd.

Directors

Toshikazu Tanaka

Directors

April 1986 : Joined Nippon Light Metal Co., Ltd.
June 2014 : Officer of Nippon Light Metal Co., Ltd.
June 2018 : Director and Executive Officer of Nippon Light Metal Co., Ltd.

June 2018 : Director of Nippon Light Metal Holdings Co., Ltd.
June 2021 : President and CEO of Nippon Fruehauf Co., Ltd.

Masahito Saotome

Directors

April 1985 : Joined Nippon Light Metal Co., Ltd.
June 2015 : Officer of Nippon Light Metal Co., Ltd.
June 2018 : Executive Officer of Nippon Light Metal Co., Ltd.

June 2018 : Officer of Nippon Light Metal Holdings Co., Ltd.
June 2019 : Director of Nippon Light Metal Holdings Co., Ltd.
June 2019 : Director and Executive Officer of Nippon Light Metal Co., Ltd.

Toshihiro Matsuba

April 1985 : Joined Nikkei Kako Co., Ltd. (which merged with Nippon Light Metal Co., Ltd. in April 1989)
June 2017 : Officer of Nippon Light Metal Co., Ltd.
June 2021 : Director and Executive Officer of Nippon Light Metal Co., Ltd.

June 2021 : Director of Nippon Light Metal Holdings Co., Ltd.

Directors

Shuichi Asakuno

April 1988 : Joined Nippon Light Metal Co., Ltd.
June 2017 : President and CEO of Nikkei MC Aluminium Co., Ltd.
June 2021 : Director and Executive Officer of Nippon Light Metal Co., Ltd.

June 2021 : Director of Nippon Light Metal Holdings Co., Ltd.

Directors

Hiroyuki Matsudaira

Directors

April 1989 : Joined Shin Nikkei Co., Ltd.
June 2010 : Joined Nippon Light Metal Co., Ltd.
June 2018 : Officer of Nippon Light Metal Co., Ltd.

June 2021 : Officer of Nippon Light Metal Holdings Co., Ltd.
June 2021 : Executive Officer of Nippon Light Metal Co., Ltd.
June 2022 : Director of Nippon Light Metal Holdings Co., Ltd.

Yoshiaki Ito

Directors

April 1985 : Joined Nippon Light Metal Co., Ltd.
June 2019 : President and Chief Executive Officer of Nikkeikin Aluminium Core Technology Co., Ltd.
June 2021 : Officer of Nippon Light Metal Holdings Co., Ltd.

June 2021 : President and Chief Executive Officer of Nikkeikin Kakoh Kaihatsu Holdings
Co., Ltd.
June 2023 : Director of Nippon Light Metal Holdings Co., Ltd.

Masato Ono

OutsideDirector

April 1974 : Joined Dai-Ichi Kangyo Bank, Ltd.
March 2006 : Managing Executive Officer of Mizuno Bank, Ltd.
June 2007 : Director and Deputy President of Mizuho Financial Group, Inc.

June 2008 : Executive Officer and Vice President of Japan Hades Co., Ltd.
June 2012 : Outside Director of Nippon Light Metal Co., Ltd.
October 2012 : Outside Director of Nippon Light Metal Holdings Co., Ltd.

Ryoichi Hayashi

OutsideDirector

April 1974 : Joined Mitsubishi Corporation
April 2007 : Director of Mitsubishi Corporation
March 2012 : President and CEO of MMP K.K.

July 2012 : Energy Business Group Advisor at Mitsubishi Corporation
June 2013 : Outside Director of Nippon Light Metal Holdings Co., Ltd.
March 2014 : Director of Tokai Carbon Co., Ltd.

Toshihito Hayano

OutsideDirector

April 1969 : Joined Nomura Research Institute, Ltd.
May 1996 : Managing Director of Nomura Research Institute, Ltd.
June 1996 : Managing Director of KOKUSAI Securities Co., Ltd. (now Mitsubishi UFJ Securities Holdings Co., Ltd.)

June 1998 : Representative Director and Senior Managing Director of KOKUSAI Securities Co., Ltd.
June 2001 : President of KOKUSAI Capital Corporation (now AG Capital Co., Ltd.)
October 2012 : Substitute Auditor of Nippon Light Metal Holdings Co., Ltd.

May 2016 : Outside Auditor of Nippon Light Metal Holdings Co., Ltd.
June 2018 : Outside Director of Nippon Light Metal Holdings Co., Ltd.

Keiko Tsuchiya

OutsideDirector

April 1981 : Joined DENTSU INC.
October 2005 : Executive Officer, Head of HR Division, Asia-Pacific Region of GE Toshiba Silicones Co.,
Ltd. (now Momentive Performance Materials Japan LLC)

February 2011 : Vice President, Human Resources Division of Johnson & Johnson K.K.
August 2015 : Director of Adecco Ltd.
June 2020 : Outside Director of Nippon Light Metal Holdings Co., Ltd.

January 2022 : Director of Modis Ltd. (now AKKODiS Consulting Ltd.)

Tatsuya Tanaka

OutsideDirector

April 1980 : Joined Fujitsu Limited
April 2012 : Corporate Officer of Fujitsu Limited
April 2014 : Corporate Executive Officer of Fujitsu Limited
January 2015 : Vice President of Fujitsu Limited

June 2015 : Representative Director and CEO of Fujitsu Limited
June 2019 : Director, Chairman of Fujitsu Limited
April 2020 : Director, Chairman of Fujitsu Marketing Limited
October 2020 : Director, Chairman of Fujitsu Japan Limited

June 2021 : Outside Director of Nippon Light Metal Holdings Co., Ltd.
April 2022 : Senior Advisor to Fujitsu Japan Limited

Kotaro Yasuda

Full-time
Auditor

April 1980 : Joined Nippon Light Metal Co., Ltd.
June 2009 : Officer of Nippon Light Metal Co., Ltd.
June 2014 : Director and Officer of Nippon Light Metal Co., Ltd.

June 2016 : Director and Executive Officer of Nippon Light Metal Co., Ltd.
June 2016 : Officer of Nippon Light Metal Holdings Co., Ltd.
June 2017 : Director of Nippon Light Metal Holdings Co., Ltd.

June 2019 : Full-time Auditor of Nippon Light Metal Holdings Co., Ltd.
June 2019 : Auditor of Nippon Light Metal Co., Ltd.

Hideo Hirosawa

Full-time
Auditor

April 1984 : Joined Nippon Light Metal Co., Ltd.
June 2016 : President and Chief Executive Officer of Nikkei Technology Center Co., Ltd.
June 2019 : President and Chief Executive Officer of Nikkei Extrusions Co., Ltd.

June 2021 : Full-time Auditor of Nippon Light Metal Holdings Co., Ltd.
June 2021 : Auditor of Nippon Light Metal Co., Ltd.

Yoshiki Sato

OutsideAuditor

April 1972 : Joined Asahi Mutual Life Insurance Company
April 2003 : Executive Officer of Asahi Mutual Life Insurance Company
April 2004 : Managing Executive Officer of Asahi Mutual Life Insurance Company

July 2004 : Director and Managing Executive Officer of Asahi Mutual Life Insurance Company
July 2008 : President and Representative Director of Asahi Mutual Life Insurance Company
April 2017 : Chairman and Representative Director of Asahi Mutual Life Insurance Company

Shintaro Kawai

OutsideAuditor

April 1993 : Registered as an attorney in Tokyo Bar Association
April 1993 : Joined Central Law Office
July 2008 : Partner of Clair Law Firm

December 2010 : Established Kawai Law Office
June 2017 : Substitute Outside Auditor of Nippon Light Metal Holdings Co., Ltd.
June 2018 : Outside Auditor of Nippon Light Metal Holdings Co., Ltd.

Jinseki Kim

OutsideAuditorDecember 1992 : Joined Tomono Tax Accounting Office
October 1994 : Joined Century Audit Corporation (now Ernst & Young ShinNihon LLC)
June 2003 : Joined Azsa Audit Corporation (now KPMG AZSA LLC)

July 2015 : Opened Jinseki Kim CPA Office as its representative
December 2015 : Chief Executive Officer of Accounting Workshop Co., Ltd.
June 2018 : Substitute Outside Auditor of Nippon Light Metal Holdings Co., Ltd.

13,163〇

5,353

Governance
Human
Risk
resources
Experience ofmanagement
Human resource global business
Legal affairs anddevelopment
compliance
〇
〇
〇

〇

〇

〇

〇

〇

4,387

〇

〇

〇
〇

4,301

September 2020 : Deputy Chairman of Gold Ribbon Network

4,743

〇

5,634

〇

806

〇

3,887

〇

1,264

〇

8,718

〇
〇

〇

〇

〇
〇

〇
〇

〇

〇

〇

〇

〇

〇

4,996

0

〇

〇

3,316

〇

〇

〇

〇

〇
〇

〇
〇

1,267
December 2018 : Representative Partner of Nozomy Audit Corporation
June 2020 : Outside Auditor of Nippon Light Metal Holdings Co., Ltd.

〇

4,614

June 2022 : Director of Nippon Light Metal Co., Ltd.

April 2019 : Chairman and Director of Asahi Mutual Life Insurance Company
June 2020 : Outside Auditor of Nippon Light Metal Holdings Co., Ltd.
July 2021 : Special Advisor to Asahi Mutual Life Insurance Company

Financialaccounting
Generalaccounting
Finance

〇

964

〇

〇

Officers

Masakazu Ichikawa General Manager of Central CSR and Audit OfficeKazuyoshi Sugiyama
47

Integrated Report 2023

Central CSR and Audit Office, in charge of Environment and
Safety General Manager of Green Growth Strategy Office

Isao Shikine

In charge of Nippon Light Metal Business GroupElectrode Foil Business

Haruhiko Takahashi Administration Dept., in charge of Accounting

Yuji Suzuki

General Manager of Technology & Development
Administration Dept.

Toshiharu Hatamoto

Personnel, General Affairs, Accounting & Finance

Hidetomo Shirai

Technology & Development Administration Dept.,in charge of Technology, in charge of NPS

In charge of Nippon Light Metal Business Group
Nikkeikin ALMO BusinessToshio Yanagimoto

In charge of Nippon Light Metal Business Group
Panel System Business

Integrated Report 2023

48

Risk Management

Information security

Policyour business as strategic risks, financial risks, operational risks andhazard risks, and establish and operate policies and systems that areappropriate for the probability and impact of each risk.

Framework
The basic framework for managing particularly important risks for overall
Group management and each area of business has been set forth in theGroup Risk Management Regulations. Risks are identified according toa process of identifying potential risks, assessing their likelihood, andassessing their impact. We develop risk management policies andsystems that include crisis response plans for the identified risks,
formulate an annual plan for each and manage risks based on the plans.
The department responsible for each risk recognizes each priority risk
as something affecting the entire NLM Group and engages inmanagement so that overall and individual risks are mitigated andavoided, and so that a response can be put into practice in the event arisk materializes. The risk management status at each Group company
is monitored through audits conducted by the risk management
department, including quality audits, environmental audits, labor audits,
and IT audits. The statuses determined from these audits are reportedby the risk management department to the President, who is the Risk
Management Officer, as reports on the status of individual issues orgeneral status reports. They are reported to the NLM Holdings Group
Executive Committee, and subsequently to the Board of Directors twicea year.

FY2022 Plan and Initiatives
What will be affectedRisk
category

Major risks

J IS certification violations, quality
misconduct● Emerging risks●●

Serious quality accidents caused by suppliers●Decline incompliance awareness

Naturaldisasters/
accidents

●
●

●
●

●

●

●
●

●

V iolation of environmental laws andregulations● Shortage of human resources in chargeof practical environmental tasks● Deterioration of environmental
equipment● Delays in progress towards
decarbonization targets● Floods in the area around Amehata Dam

●

●

●

●

Response

Financial
Customer
accounting Schedule Resource satisfactionP hysical injury caused by a product● Lack of understanding of quality
standards● Environmental mishaps●

Environmental
issues

●
●

●

●
●

●
●
●

●

●

●

●

Supplier audits●A compliance lecture meetingE stablishment of SDS● Group training, invitation of external lecturers, developmentof internal lecturers● Prompt delivery of information, sharing of information,
prevention of recurrence● Training sessions on laws and regulations, pointing out
problems in audits, improvement measures● Sharing practical management information, providing
information about past matters to the next generation● Regular inspections and replacement, installation of equipment
to prevent problems● Continuation of monitoring●Implementing a basic plan, sharing information about its
progress with related people● Building a structure for collecting and sharing information●●

S uspension of business resulting froma disaster, etc.

J IS audits, special audits, reinforcement of quality assurance
framework● Identification of high-risk projects and provision of support for them●

Information
systemissuesLeakage of
trade secretInjuries caused by being pinched orcaught in machinery or equipment● Violation of laws and regulations
during work
● Cyberattack●●S oftware license compliance● Abuse/defect of information system●●

Leakage of electronic information assets

●
●
●

●

●
●

Unauthorized exports●●

Internal software audits● Expanding the system for activating information technology
general control (ITGC), enhancing information technology
application control (ITAC)●

Exportsecurity●49

Violation of trade restrictions

Integrated Report 2023

●

●

●

〇

〇

△
〇

〇
〇
〇
〇
〇
〇
〇

〇

●

Diagnosing IT issues at all sites●

Training to address targeted email attacks

P erforming penetration tests at all sites
Checking the status of judgments regarding whether
restrictions apply or not, engaging in individual consultation● Regular meetings of the Export Management Committee,
confirmation of management status● Delivery of information about the revision of laws●●〇 onfirmations, training, and creation of work schedules atCsites where violations occurred● CSIRT training, collection of information, addition of security products
●

●

〇

〇

●

●

Evaluation

 CP training, safety confirmation trainingB● On-site inspection of lost-time injuries, etc.
●

Health andsafetyissuesValue Creation

Foundations of Value Creation

Data

PolicyThe NLM Group manages risks to its business strategy such as direct
and indirect losses, the suspension or shutdown of business, damage tocredibility or brand image, and so on. We classify the risks surrounding

Product andservice
defects

Basic Information

●

〇

〇
〇
〇
〇
〇
〇

The NLM Group has identified information security as one of its
priority risks. Matters related to the handling of information including
information security are set forth in the Group Information Management Regulations, and matters related to handling of information
systems for storing and using the information are stipulated in theGroup Information System Management Regulations. We implement
initiatives that help improve the reliability of the organization andFramework

corporate value in an ongoing fashion through the protection andutilization of information as an important management resource.
This policy along with plans and initiatives based on the policy aredeliberated on and decided by the Group Executive Committee andreported to the NLM Holdings Board of Directors. In response to thereport, the Board of Directors provides instruction as necessary.

FY2022 Initiatives

Comprehensive management of information security risks is
implemented by the Systems Department and the Internal
Control Department. The Internal Control Department is
responsible for non-physical aspects such as the developmentof information management rules and systems, and also
coordinates with various risk management departments
including Legal Affairs, Intellectual Property, General Affairs andHuman Resources. The Systems Department handles hardware
aspects such as the maintenance and upkeep of informationand communication system equipment. To discuss and solve
compound issues such as the security, maintenance andutilization of information, Risk Management Meetings (RMM)
involving the Internal Control, Systems, Legal Affairs, Intellectual
Property, General Affairs, Human Resources, Compliance andPublic Relations departments are held in alternate months.
Matters decided in RMMs are communicated to Group
companies and departments by the Information Management
Officers and Information Systems Personnel appointed by eachGroup company and department. To monitor the status of
implementation for all Group companies and departments, oncea year the Internal Control Department performs an inspection of
information management systems and their operational status,
and the Systems Department carries out IT audit. Information
security-related issues, inspection results, and other informationis reported to the NLM Holdings Group Executive Committee
and Board of Directors every six months.
Information security framework
Board of Directors

1. Strengthening system management and control (ITGC)
Measures

Details

Unification ofsystem change
procedures

System changes are implemented based on unified
change procedures to ensure consistency andtransparency.
We clarified procedures and responsibilities related to theprocess from the approval of drafts to the approval of theintroduction of systems, and using these procedures andresponsibilities, we will effectively manage changes while
minimizing the risk of changes.

Management ofusers

Regarding system users, we comprehensively managed
the creation and deletion of accounts, the granting andrevocation of access rights and other matters. We will
reduce the risk of unauthorized access to our information
assets by implementing initiatives such as the appropriate
granting of access rights based on position or businessassignment, monitoring to prevent the unauthorized useof accounts, and the appropriate deletion of the accountsof employees that have resigned or been transferred.

Systemvulnerability
management

We prevent malicious attacks and the unauthorized useof systems by identifying systems’ vulnerabilities throughregular vulnerability assessment and monitoring and bycorrecting the vulnerabilities. In addition, we apply
security patches and share vulnerability information to
manage whether prompt responses are made.

Business
continuity
planning (BCP)
initiatives

We have enhanced our BCP initiatives in preparation fordisasters and emergencies. We ensure our operations to
be continued by establishing appropriate data backup
and recovery process, utilizing alternative facilities andcloud services, and developing an emergency contact
system, among other initiatives.

Group Executive Committee

2. Strengthening user authentication
Risk Management Departments

Measures

Details

Introduction ofmulti-factor
authentication

We have reduced the risk of unauthorized access byintroducing multi-factor authentication, which ensures themore reliable authentication of the identity of users, inaddition to the existing ID and password authentication.
Multi-factor authentication increases security byrequesting an additional authentication factor.

Expanding the useof multi-factor
authentication andincreasing theawareness ofusers

When introducing multi-factor authentication, we
implemented appropriate activities to increase userawareness. We provided users with information about theadvantages of multi-factor authentication, how to use it
and steps for setting it up, helping them to properly utilize
multi-factor authentication.

Supervision andimprovement

In time with the rollout of multi-factor authentication, we
also implemented improvement activities forstrengthening password security. We engage in
improvement activities on an ongoing basis by reviewing
password strength and change cycles.

Risk Management Meetings
Internal Control

Systems

Legal Affairs

General Affairs Human resources Intellectual Property
Compliance

Public Relations

Information Management Officers andInformation Systems Personnel

Inspection

Internal
ControlGroup Companies / Departments

IT Audit

Systems〇〇〇〇：Complete/annual progress target was achieved.
△：Initiatives were taken but the target has yet to be achieved.

Integrated Report 2023

50

Basic Information

Compliance
PolicyOur basic policy on compliance is described in the NLM GroupManagement Policy as “The Group will engage in fair andhonest business operations, with respect for human rights andan emphasis on ethics.” Reinforcing the compliance frameworkhas been identified as one of the material issues in the
management of the Group. As a specific code of conduct foraddressing this material issue and achieving the basic policy oncompliance, we have established the NLM Group Compliance
Codes, which are shared by all officers and employees of theGroup.
The NLM Group Compliance Codes say, “The foundation of
the activities of all officers and employees is the trust of
stakeholders – especially customers.” and “We will comply withlaws, regulations, and Group and company rules, and create an

ethical corporate culture by striving to act in a fair and commonsense manner, in accordance with social norms, in all aspects of
our work.” We will observe the NLM Group Compliance Codes
and think and act from other people’s points of view to be fairand honest.
So that the Group Compliance Codes can be referenced by
all employees whenever they have difficulty making a decision in
their work, they are included in a handbook that compiles the
NLM Group Management Policy, the NLM Group BusinessConduct Guidelines, and the NLM Group Hotline Regulations(whistleblowing system). The handbook is translated into eightlanguages (English, Chinese, Thai, Vietnamese, Portuguese,Hindi, Spanish and French) and distributed to all Group officers
and employees.

Framework
Compliance framework

Board of Directors

Audit & Supervisory Board

Group Companies /Departments

Group Compliance
Committee

Group Hotline

CSR leaders (presidents/department managers)

Compliance meeting
Reporting line

HotlineGroup Compliance Committee
The Group Compliance Committee (chaired by the president of
NLM Holdings) handles the promotion of compliance in the NLMGroup. The committee deliberates and decides on measures toverify issues and problems related to compliance in general, as
well as measures ensuring that compliance is established andfirmly takes root in the organization. Regarding the ongoingissues of the Group as a whole and the measures to address
the issues, actions are being taken under a Compliance
Promotion Plan formulated for the Group as a whole, for eachGroup company, and for each department. The progress of themeasures is reported to the Group Compliance Committee on a

51

Integrated Report 2023

quarterly basis. For serious compliance issues that occur
suddenly, causes, corrective action, disciplinary action andmeasures to prevent recurrence, etc. are reported to the Group
Compliance Committee. The committee conducts additional
investigations as necessary and deliberates and decides onnecessary measures. Matters decided by the Group Compliance
Committee are communicated to and implemented by CSR
leaders, who are responsible people from Group companies anddepartments. The compliance meetings and the NLM Group
Hotline (hereafter, the “Group Hotline”) play essential roles in thispromotion of compliance.

Data

Whistleblower Protection

The NLM Group conducts compliance meetings that involve theparticipation of all personnel as grassroots compliance activities.
Compliance meetings are held twice a year at all workplaces togive employees an opportunity to talk about compliance. The
meetings are also used for compliance training. The information
discussed at the meetings is recorded and registered. The
meetings are an opportunity to monitor opinions within theworkplace and the actions being taken there.

⃝Confidentiality
Information about each whistleblower is disclosed only to the people incharge of the reporting hotline and some of the people in charge ofinvestigations (called “Tsuho Gyomu Jujisha,” or people engaged in thebusiness of handling whistleblowing disclosures). The identity of awhistleblower is never disclosed without the whistleblower’s consent to
the Group Compliance Committee or Directors of NLM Holdings, theperson who is the subject of the whistleblowing complaint, or relatedparties including the relevant workplace or company.
The whistleblowers themselves and people who are the subjects ofwhistleblowing complaints are also prohibited from leaking any facts
about the whistleblowing to other people.
Related electronic data is stored outside the NLM Group’s network in a
way that makes physical access by people other than those related tothe investigation impossible.
⃝Prohibition of Disadvantageous Treatment
The disadvantageous treatment of whistleblowers, such as harassment
or retaliation, is also strictly prohibited. When information about awhistleblower is disclosed to the subject of a whistleblower complaint in
the course of an investigation, the subject of the whistleblower complaintis prohibited from contacting the whistleblower except for business
communication. The Tsuho Gyomu Jujisha takes the proper steps tocheck to see if the subject of the whistleblower complaint has contacted
the whistleblower unnecessarily and to check for any harassment,
retaliation or similar disadvantageous treatment. If signs of such contact
or treatment are identified, the top officer in charge of the Group Hotline(president of NLM Holdings) orders relief and recovery measures to betaken. Any violations of these rules result in disciplinary action.

Whistleblowing System
The NLM Group has introduced a whistleblowing system to prevent
legal violations, misconduct, and improper actions and ensure theearly detection and correction of such actions. The NLM Group’s
whistleblowing system can be used by the employees of all of theconsolidated subsidiaries, offered through the Group Hotline. The
Group Hotline includes hotlines for receiving whistleblowing
complaints and requests in English, Chinese, Thai and Vietnamese tofacilitate employees’ use of the hotlines when their first language is
not Japanese. To enhance the independence of its operations, anexternal reporting hotline has also been established. In addition,
reporting hotlines have also been set up to enable users to contact
Audit & Supervisory Board Members, people in charge of legal affairs
and people in charge of personnel affairs, so that they can select the
hotline that is appropriate for matters they intend to report. All ofthese hotlines accept anonymous whistleblowing reports.

FY2022-2024 Compliance Promotion Plan
1. Compliance Promotion Framework

2. Initiatives for Compliance Promotion❶ Operation of the Group Compliance Committee⃝Revision of the Rules of the Group
Compliance Committee⃝Continuing to hold Compliance Promotion Meetings❶ Implementing PDCA for organizational culture
reforms
P: F ormulation of the Compliance Promotion Plan
D: Implementation of the plan
C: Anonymous employee survey
A: A nalysis of the result and correction of the plan

❸ NLM Group Compliance Codes⃝Revision⃝Initiatives for raising awareness of and ensuring
the Codes become entrenched within the Group❷ Enhancement of communications⃝Compliance meeting❷ Assignment of CSR leaders and CSR
promotion personnel

Employees

Foundations of Value Creation

Compliance meeting

Plan

President

Value Creation❹ Improvement and operation of thewhistleblowing system⃝Revision of the system, making the new
system known, and increasing awareness of it❹ Compliance awareness raising⃝Power harassment prevention training⃝Single-session training (tiered training,
expatriate training, etc.)⃝Development and delivery of awarenessraising tools (digital content, compliancelecture meeting, etc.)
3. Protecting and Respecting Human Rights⃝Establishment of a complaint mechanism⃝Formulation of relief procedures❸ Promotion of compliance at overseas sites⃝Making the Group Hotline known⃝Formulation and implementation of theCompliance Promotion Plan
⃝Holding compliance meetings❺ Coordination with related departments

FY2022 Initiatives
Reforms of Organizational Climate
At the NLM Group, we conducted an anonymous survey of all
officers and employees for the purpose of revealing potential
compliance-related risks. It was found in the survey that among
the three elements of the integrity of an organization,“organizational response” and “environment that may prompt
unethical activities” showed an unfavorable trend compared with“leaders’ attitudes,” giving rise to concerns over the reliability ofwhistleblowing systems, the tendency of personnel in the field tobecome overly specialized, and the tendency to rationalize
non-compliance. Based on these results, we are reforming ourorganizational climate, aiming to build a sound, open organization.

Reforms of organizational climate: Implementing PDCA
Correcting initiatives
which did not lead toreforms and adding
new initiatives

Compliance
Promotion
Plan

●	

A

Correcting
the plan

Assessing potential risks
through an anonymous
employee survey

●	

C

P

Promotion plan based ona consensus of members●	Implementationof the plan

EmployeequestionnaireD
Accumulating honest actions
and avoiding improper actions● Eliminating facts that differ
from the rules●Integrated Report 2023

52

Basic Information

Implementation items

Anonymous employee
surveyCompliance meeting

Plan/target

Results

Evaluation

The Group as a whole, eachGroup company and eachdepartment will implement PDCA
for the Compliance Promotion
Plan.

The Group as a whole, each Group company, and eachdepartment formulate (P) and implement (D) the Promotion Planfor the next fiscal year based on the review (C and A) of thePromotion Plan for the past fiscal year.
Example initiatives:● Visualization and standardization of operations● Countermeasures to prevent overworking and unpaid overtime● Identifying environments in which violations occur and taking
countermeasures● Identifying and addressing gaps between rules/manuals andpractical operations, etc.

△: Plan formulated (being
implemented)
Effective, specific plans and initiatives
based on the results of anonymous
employee surveys and various caseexamples have been increasing at
Group companies and departments.

Anonymous employee surveys are
conducted to reveal potential risks
related to quality, accounting andcompliance.

We implemented the second anonymous employee survey.
Subjects: 14,389 officers and employees
Responses received from: 12,969 subjects (Response rate: 90%(down 1 percentage point from the previous survey))〇: Implemented
In the Group as a whole, an improvement
trend was seen in the items of initiatives
for making the whistleblowing system
known and environment that may prompt
problems related to quality inspections.

We hold a compulsory biannualCompliance Meeting with the goalof engaging in dialogue between
employees on the theme ofcompliance.

In FY2022, the participation rate was 91%.
Recent themes:● Results confirmation and issues regarding the anonymous
employee survey● NLM Group Hotline● Making the NLM Group Compliance Code known and understood● Compliance Promotion Plan and sharing information about
its progress〇: Ongoing
In the PDCA for the Compliance
Promotion Plan, the meeting is an
important opportunity to check thecurrent status of workplaces.

Key points in the enhancement of initiatives in FY2022
Key points of initiatives

Implementation items

Plan/target

Power harassment
prevention training

We provide power harassment
prevention training for managers
and supervisors responsible for
production sites four times a year.

A total of approx. 300 managers and supervisors from 65
companies have participated in the training program as of
FY2022.

We provide compliance training
as part of tiered training.

Training that was given:
New employee training, mid-level employee training, managerial
training, next-generation manager training

Compliance lecture
meeting

We will introduce the Leaning
Management System (LMS).

We hold a compliance lecture
meeting for employees once a
year.

Results

Increasing the frequency of dialogue opportunities The frequency of briefings was increased from two times/year to six times/year.
Immediacy of results briefing
Held on the day financial results are announced
Giving a briefing for analysts from a medium- to
Focusing on the mid-term management plan and non-financial measures (two times/year)
long-term perspective
Organizing and disclosing key points in progress and quantitative information about consolidated financial
Clarifying the content
results and the mid-term management plan
Disclosing the content of dialogue
Disclosing summaries of Q&A sessions during analyst briefings on our website
Expanded the range of disclosure documents translated into English by adding results briefing materials,
Enhancing disclosures in English
analyst briefing materials and Q&As during the briefings in addition to consolidated financial results and theintegrated report.
Major dialogue events with shareholders and investors in FY2022
Individual interviews
Main responsible
peopleAnalyst briefing〇: Ongoing
We have resumed group training,facilitating communication between
groups.
〇: Ongoing
The training programs are used asopportunities to share compliancerelated knowledge and awareness
which are necessary in each tier.
×: Not in operation yet
Moving forward, we will expand thesystem to the whole Group andenhance its content.
〇: Implemented
Evaluation by attendants:
● Overall rating: 4.0● Level of understanding: 4.2● Utilization possibility: 3.8

In FY2022, approx. 1,680 employees attended the lecture
meeting.
Theme:● Psychology behind scandals● How to prevent the violation of rules● Poor communication leads to scandal.

*5-point-scale evaluation by questionnaire
respondents (772 persons) (1: Bad—5: Good)

Whistleblowing System

Plan/target
We will work to make theGroup Hotline known,
increase awareness of it,
and make it more reliable.

Whistleblowing
system(Group Hotline)

Results

Number of requests for consultation and whistleblowing complaints
lodged with the Group Hotline■Requests for consultation■ Whistleblowing complaints

Integrated Report 2023

19

17 16

2019

2020

20 24
2021

28
16

△: The system has been revised.
Activities for making therevision known are ongoing.
We will confirm the reliability
improvements using theanonymous employee survey
and other methods.

Institutional investors Overseas institutional Securities companies
in Japaninvestors

May

4 companies

0

6 companies

November

4 companies

1 company

7 companies

AugustDirector and General
Manager of Planning
October
Administration Dept., Headof Accounting — Personnel, January
General Affairs, Accounting &Finance Administration Dept. September

3 companies

0

5 companies

3 companies

1 company

8 companies

4 companies

1 company

8 companies

3 companies

0

8 companies

Main responsible
peopleInstitutional Overseas
investors in institutionalJapan
investors

Securities
companies

Head of PR and IR— Planning
Administration Dept.
(President and CEO,and Director andGeneral Manager ofPlanning Administration
Dept. depending on
the theme and uponrequest)38 times 17 times 20 times

Share price
Share price (yen)Traded volume (thousand shares)

3,500
3,000
2,500
2,000
1,500

18,0001,000

12,000500

6,000
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 92018

Evaluation

We have revised our whistleblowing system to make it more reliable, in
response to the revision to the Whistleblower Protection Act.

29

53

Briefing on revision of
earnings forecasts

0

At the NLM Group, we are implementing initiatives to make our whistleblowing system more reliable.
Implementation items

Quarterly results
briefing

Attendees

Date

President and CEO

Evaluation

It has been decided that LMS will be introduced sequentially in
FY2023. The first will be Nippon Light Metal Co., Ltd.

Contents of the enhancement

Briefing

At the NLM Group, we provide compliance training to increase employees’ compliance awareness.

Development anddelivery of awarenessraising tools

Data

performance forecasts related to products for automobiles andtruck body, progress in the Special Investigation Committee’s
investigations into the quality-related incidents of misconduct
and the timing of reports, the Group’s growth strategy andgrowth drivers, and the shareholder return policy.

We are engaged in various initiatives that strengthen investor
relations, aiming to more actively engage in dialogue withshareholders and investors than ever before.
In FY2022, the themes of the dialogue which attracted theinterest of many shareholders and investors included

Compliance awareness raising

Tiered training(single-session
training)

Foundations of Value Creation

FY2022 Initiatives

Reforms of Organizational Climate

Compliance Promotion
Plan

Value Creation

Dialogue with Shareholders and Investors

Compliance

2019

2020

2021

2022

0

(Year)

2023(Note) On October 1, 2020, we conducted a one-for-ten reverse stock split. Accordingly, the share price and traded volume for FY2019 (fiscal year ended March
2020) and earlier years are calculated in consideration of the impact of the reverse stock split.

TOPIC

Initiatives for increasing people’s understanding of the NLM GroupAs an initiative to increase people’s understanding of the Group’s broad range of businessfields, we held a business briefing and a tour of the Shimizu Plant (Shizuoka-shi,
Shizuoka) of Nippon Light Metal Co., Ltd. for the Aluminum Chemical Sector (Chemicals
Div. of Nippon Light Metal Co., Ltd.,), the main division of the alumina ingot andchemicals segment. The business briefing was held in a hybrid format, with people also
participating online, so that both domestic and overseas investors could participate.
Plant tour

Business briefing

2022 (Fiscal year)
Integrated Report 2023

54

Basic Information

Environmental
PolicyValue Creation

Foundations of Value Creation

Data

Action Plan and Initiatives That Were Taken

Basic Environmental Policy

Action Guidelines

Environmental issues are not just regional problems; they havespread and become serious to the point that they could affect
the global environment and the very basis for humanity’s
existence. Accordingly, efforts to build a society that coexists
with the global environment and a sustainable, recyclingoriented economic society are the responsibility of nations, local
governments, citizens and companies alike. Based on thisrecognition, the NLM Group proactively aims to achieve
harmony with the environment across every area of its corporate
conduct.
This will lead to the protection of our shareholders, business
partners, employees and local communities - the foundation forour existence - and translate into sound business activities. In
addition, through socially responsible activities related to theenvironment, we will endeavor to create a truly prosperous
society as a good corporate citizen.

⃝Compliance with environmental laws and regulations, etc.
We will comply with laws, regulations and other requirements
related to the environment.
⃝Improving the efficiency of energy usage and curbing CO2 emissions
We will aim to improve energy efficiency and control CO2 emissions
by improving the efficiency of manufacturing processes andequipment, boosting production efficiency, optimizing distribution
and so on.
⃝Promoting resource conservation and the 3Rs
We will pursue the efficient use of aluminum and all resources we
handle, and work to promote the three Rs (reduce, reuse and recycle).
⃝Corporate activities that consider the impact on the environment
With regard to the location of production facilities, the developmentof new products and similar considerations, we will use scientificmethods to assess the impact on the environment in advance, andtake necessary measures such as efforts to preserve biodiversity.
We will also do our utmost to reduce the impact on the environment
through our regular business activities.
⃝Developing technologies that contribute to the environment
We actively develop products utilizing the properties of aluminum whichhave a minimal impact on the environment, and technologies such asprocesses that minimize environmental impact. The effects gained aredisclosed and provided to society to aid in environmental conservation.

Action Plan

FY2022 Plan

FY2022 Results

1Reducing environmental mishaps

Zero environmental mishaps

Six incidents, seven complaints, 13 abnormalities

2

Conducting environmental audits

Conducting environmental audits at 16 sites

Conducted at 16 sites

Ensuring that employees hold qualifications underenvironmental laws

Fulfilled at all the 47 sites

Conducting training sessions on laws

Training sessions on laws (Offensive Odor Control Act
and laws related to chemicals) conducted

Having environmental managers take part inenvironmental audits of other sites

A total of 21 environmental managers participated3

Development of environmental
human resources

4Greenhouse gas emission reduction
and carbon neutrality initiatives

Activities for reducing greenhouse gas emissions

5

PCB processing

Continuing the processing of high-density PCB andcontent analysis and processing of low-density PCB

6

Environmental management at
major overseas production sites

7

Compliance with laws andregulations

Environmental audits at 3 sites(1 site in China, 2 sites in Thailand)
Holding of the 7th meeting of environmental managers
in Thailand
Disseminating information on revised laws andregulations

8

Conservation of biodiversity

Promotion of biodiversity conservation activities

CO2 emissions per unit of sales Decreased 13%
compared with the previous fiscal year (Japan).
High-density: 96% achieved
Low-density: 89% achieved
Conducted at 1 site in China(conducted at 2 sites in Thailand in June 2023)(held in June 2023)
Conducted
Ongoing activities underway at all 47 sites

Framework
Environmental Management System
The Group Environmental Committee deliberates and decides on
the core measures related to the Group’s environment
management. The committee is chaired by the president of
Nippon Light Metal Holdings Co., Ltd., and consists of its officers,
presidents of major NLM Group companies, and other members.
Matters determined by the Group Environmental Committee
are fleshed out by the person in charge of environmental
protection from the CSR & Auditing Administration Dept., which
serves as the committee’s secretariat (hereinafter, the “person in
charge of environmental protection”). They are made known atmeetings of environmental managers from 47 sites* of 25
domestic companies before actions are taken. Meetings ofenvironmental personnel are also held overseas (5 sites of 3
companies in Thailand, 7 sites of 7 companies in China, 2 sites of
2 companies in North America, 1 site of 1 company in Europe,and 1 site of 1 company in India) to share information.

Environmental Targets and Results (Japan only)*1
Environmental Management System
Board of Directors
President
Person in charge ofenvironmental protection
from the CSR & Auditing
Administration Dept.

Group Executive Committee

Operation

Group Environmental
Committee(Chairperson: President)

Wastewater amount (Japan)■ Energy consumption (PJ)*2● Energy consumption intensity per unit of sales (GJ/million yen)

■ Total amount of discharged water (million m3)● Total wastewater per unit of sales (10-5 million m3/million yen)

35.1
14.1

29.7

31.3

31.5

31.9

11.8

11.0

12.3

11.3

2019

2020

2021

2022

28.0

Target

5.6

5.6

5.8

22.2

21.0

2018

2019

5.3

5.2

20.4

20.2

20.9

2020

2021

2022

5.0

TargetControlGroup companies’ sites

Meetings of environmental
managers

20182024 (Fiscal year)

2024 (Fiscal year)*“Site” is the unit at which the environmental management system is applied.

Action Plan
Group Environmental Committee

Energy consumption (Japan)

The NLM Group’s plan

⃝The committee strengths the environmental risk management stance of the NLM Group as a whole through coordination between sites.
⃝The committee engages in activities to protect the global environment to help build a sustainable society and resolve social issues.

Waste emissions (Japan)

Amount of landfill waste (Japan)■ Total waste emissions (thousand tons)● Total waste generated per unit of sales (10-5 thousand tons/million yen)

■ Amount of landfill waste (thousand tons)● Amount of landfill waste per unit of sales (10-6 thousand tons/million yen)

10.8
43.3

10.0
37.7

10.5

8.8

8.7

8.7
40.3
30.5

Target

35.0

8.6

9.9

10.2

6.5

6.1

2.6

2.3

3.0

3.8

4.1

2018

2019

2020

2021

2022

5.4

TargetMeetings of environmental managers
To enhance the Group’s environmental risk management stance, the meeting:⃝Takes preventive measures and also takes permanent measures to prevent the recurrence of trouble that has occurred in the past
⃝Conducts environmental audits with a focus on field locations⃝Strives to develop human resources and improve capabilities through environmental management education and having site managers conduct
environmental audits of other sites

2018

2019

2020

2021

2022

2024 (Fiscal year)

2024 (Fiscal year)*1 Regarding air quality control (SOx, NOx emissions) and water quality control (COD), we stopped setting targets in FY2021 but we continue to perform monitoring.
*2 1 PJ = 1 × 1015 J, 1 GJ = 1 × 109 J

To help realize a sustainable society and solve social issues, the meeting:⃝Promotes greenhouse gas reduction and contributes to the achievement of carbon neutrality⃝Considers the preservation of biodiversity

55

Integrated Report 2023

Integrated Report 2023

56

Basic Information

Value Creation

Foundations of Value Creation

Data

Environmental

FY2022 Initiatives

Environment-related public qualifications held by employees (number of people)

Environmental mishaps

Environmental Audits

At the NLM Group, we operate a quick reporting system in Japan andoverseas to respond promptly to environmental problems.
In terms of environmental incidents, there were six incidents (five inJapan, one overseas), including oil or chemical leaks and an administrative
disposition that resulted from a failure in transmission of exhaust gas data,
and there were seven complaints related to the environment, including
smoke and odor complaints (two in Japan, five overseas). The number ofenvironmental incidents increased and the number of environmental
complaints remained almost unchanged from FY2021.
For each incident that takes place, the site where the incident
occurred and the person in charge of environmental protection work
together to communicate with external parties while taking measures toprevent recurrence.
To prevent similar incidents, we share measures to prevent therecurrence of incidents with all of the sites of the Group via a quick
reporting system. In addition, we collect and share information about
preventive measures that were implemented at meetings ofenvironmental managers and other opportunities, as a part of ourefforts to reduce risk.
In FY2022, we increased the frequency of the meetings ofenvironmental managers from two times a year to four, to share
information on a timely basis and further reduce risk. We will continue
this initiative in FY2023.
In FY2022, regarding lawsuits, fines or forfeits related to theenvironment, there were two cases overseas where we paid fines.

At the NLM Group, the person in charge of environmental
protection conduct regular environmental audits of 60 sites inJapan and other countries.
The environmental audits involve checking compliance withlaws and regulations, emergency response readiness, thelikelihood that mishaps similar to past environmental mishaps will
occur, and the status of countermeasures that have been put inplace. The audits are conducted for the following purposes.

Nikkei MC Aluminium (Kunshan) Co., Ltd.
⃝A fine imposed for the violation of rules regarding the management ofpollution emission permits
NIKKEI MC ALUMINUM AMERICA, INC⃝A fine imposed for the violation of the Clean Air Act*The number of environmental mishaps is based on reporting dates in the quick
reporting system while the number of lawsuits, fines or forfeits is based on dates of
their occurrence. Accordingly, the number of environmental incidents and the numberof lawsuits, fines or forfeits in each fiscal year may be inconsistent with each other.

Number of environmental mishaps that occurred■Accidents(cases)■Complaints

16
10

6

0

3

3

2018

2019

2020

3

7

2021

6

7

2022 (Fiscal year)*Incidents: Environmental mishaps that affect external parties, environmental mishaps that were
subject to administrative disposition, penalty or similar actions, and other incidents.
Complaints: Environmental complaints lodged by external parties⃝Checking the status of compliance with environmental laws and regulations
and the status of the environmental management of the NLM Group⃝Improving environmental management capabilities

In FY2022, environmental audits were conducted at 16 sites in Japanand one overseas (1 site in China) and 63 problems were identified.
The number of identified problems increased from theprevious fiscal year. This is because the audits were conducted
remotely in the previous fiscal year due to the COVID-19
pandemic. Environmental audits conducted by visiting sites
were resumed in FY2022, resulting in the identification ofmatters that were not noticed in remote audits.
Regarding compliance with laws and regulations, the numberof problems related to industrial waste disposal increased. There
was an increase in insufficiencies pointed out regarding
standards for the storage of industrial waste in addition to
insufficiencies regarding the provision of waste information to,
and on-site confirmation by, waste disposal contractors. We willcontinue to point out problems, take corrective actions and holdtraining sessions on the Waste Management and Public
Cleansing Act held within the Group.
However, there was a slight decrease in the number ofidentified problems related to emergency response readiness,
which had been trending upward until the previous year. This is
the result of our repeated pointing out of problems and taking
corrective actions to address insufficiencies in measures toprevent oil or chemicals from splashing in the event of pipe
fracture and in the placement of sandbags or absorbent mats inplaces for storing or feeding oil to prevent the outflow of oil inthe event of a leak, and other situations, and sharing theseexamples at meetings of environmental managers.
After the environmental audits have been conducted, thecorrective actions are supported by the person in charge ofenvironmental protection as needed, and monitoring continues
until all corrections are complete.

57

Integrated Report 2023

Qualified Person for
Energy Management
Certified Environmental
Measurer

2017
●

2019

2020

24

105

Air Pollution Control Act

Water

30

139

Noise Regulation Act

●

Noise

16

56

16

58

Vibration Regulation Act

Vibrations●

Dioxins

14

47

General dust

4

6

2

6

Waste other thaninfectious waste

32

166

Infectious waste

412Heat and electricity

19

100

Density03Noise and vibrations

0

1○Plan to be implemented

2021

2022

○

●

Offensive Odor Control Act
Act on Special Measuresagainst Dioxins
Water Pollution Prevention Act

2023

●
●

Soil Contamination
Countermeasures Act
Waste Management andPublic Cleansing Act

●
●

●

●

●

●

●
●

Fire Service Act
Chemical Substances
Control Law, PRTR Law(Information about
revisions of laws)

●
●

●

●

●

●

●

●

Processing of polychlorinated biphenyls (PCBs)
At the NLM Group, we process electric equipment and other goods
containing PCBs in accordance with the Act on Special Measuresconcerning Promotion of Proper Treatment of PCB Wastes.
Regarding equipment containing high-density PCBs, astabilizer containing high-density PCBs was discovered in
FY2022. We therefore conducted an equipment survey again at
all sites. As a result, similar stabilizers were discovered at
multiple sites, which resulted in an increase in the storage
quantity. We have completed the registration of all of thesepieces of equipment for processing by the Japan Environmental
Storage & Safety Corporation (JESCO), which engages in the

PCB waste treatment business and other businesses. The
equipment is being processed individually. We store themproperly to prevent PCBs from splashing, leaking, or seeping
underground before processing is completed.
We are also sequentially processing equipment found tocontain low-density PCBs. While there is significant time before
the deadline for the processing of low-concentration PCB
waste, we will steadily check for and process this waste, taking
advantage of the lessons we learned from the experience of
having discovered equipment containing high-density PCBs
shortly before the processing deadline.

Changes in the quantity of stored equipment containing high-density PCBs
■ Transformers ■ Capacitors ■ Oil containing PCBs ■ Stabilizers

Weight (tons)
60

55.5

53.2

49.0

45.0

48.9
39.7

40

43.3

40.1
30.9

20

16.4

2005

⃝Training sessions on laws and regulations
We regularly hold training sessions on the environmental laws andregulations that apply to the NLM Group. In FY2022, 151 employees
participated in training sessions that were held on the Act on theRegulation of Manufacture and Evaluation of Chemical Substances(Chemical Substances Control Law), the Act on the Assessment of
Releases of Specified Chemical Substances in the Environment and thePromotion of Management Improvement (PRTR Law) and the Poisonousand Deleterious Substances Control Act, which are related to chemical
substances, as well as the Offensive Odor Control Act. We also shared
information about revisions to environmental laws and regulations.
In FY2023, we plan to hold training sessions on the Air Pollution
Control Act and the Act on Special Measures against Dioxins.

2018●Implemented

Air

Engineering Manager ofIndustrial Waste
Treatment Facilities
Manager of Industrial
Waste Requiring Special
Management

Environmental laws andregulations

14.6

13.7

11.4

0

Development of Environmental Human Resources⃝Encouragement to acquire public qualifications related tothe environment
At the NLM Group, we believe that learning about laws throughacquisition of public qualifications related to the environment isan effective means of developing human resources who can
respond promptly to changes in environmental laws and others.
Based on this belief, we encourage employees to acquirevarious qualifications. To facilitate smooth generational change,
we are committed to the education and development of younger
generations and strive to secure human resources.

Required Number of
number holders

Qualification

Pollution Control
ManagerTraining sessions on laws that were held/are planned

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2.9

2.0

2.6

2018

2019

2020

1.1

2.4

2021

2022 (Fiscal year)

Conservation of biodiversity
The NLM Group Biodiversity Guidelines
The NLM Group will take the following initiatives for the preservation and sustainable use of components of biological diversity.
⃝Striving to understand the impact of business activities on biodiversity⃝Engaging in biodiversity-friendly business activities to reduce the impact of business activities on biodiversity, to ensure thesustainable use of components of biological diversity⃝Striving to develop a system for promoting these initiatives
At the NLM Group, we have formulated Biodiversity Guidelines
and are advancing activities to preserve biodiversity at our sites
in Japan and other countries. To give examples of the activities
in FY2022, Nikkei Siam Aluminium Limited in Thailand built

artificial reefs and planted mangrove trees, thus helping preserve
marine ecosystems. We also collaborate with companies on the
supply chain in supporting the prevention of wildfires, thus
helping prevent wildfires’ destruction of ecosystems.
Integrated Report 2023

58

Basic Information

Action on Climate Change — Disclosure Based on the TCFD Recommendations
Basic Approachcomplying with related laws and regulations. We have identified
action on climate change as one of the NLM Group’s material
issues. We will strive to enhance the content of the information
we disclose in accordance with the TCFD recommendations.

Governanceestablished the Green Growth Strategy Office, which integrates
authorities and responsibilities. With this, we are taking an
integrated approach to pursuing the Group’s initiatives toachieve carbon neutrality, through steps such as securing green
aluminum, customer demand for which has been increasing,and the establishment of a circular supply chain in which usedaluminum is reused as a material, in addition to engaging inexisting energy-saving and recycling activities.

Changes in CO2 Emissions (Scopes 1, 2 and 3), Indicators, and Targets
At the NLM Group, we have added Scope 3 emissions to Scopes
1 and 2 and are pushing forward with initiatives to ensure thatgreenhouse gas emissions (emissions per unit of sales) in 2030
will be 30% lower than the level in FY2013 (Scopes 1 + 2: 2.07

tons CO2/million yen, Scope 3: 5.60 tons CO2/million yen), withthe goal of achieving carbon neutrality by 2050.
In FY2022, total emissions and CO2 emissions per unit of sales decreased
from the previous fiscal year for both Scopes 1 + 2 and Scope 3.

CO2 emissions (Scopes 1, 2 and 3)
Changes in CO2 emissions per unit of sales (Scopes 1 and 2) (Japan)

Changes in CO2 emissions per unit of sales (Scope 3) (Japan)

6.0 (Tons CO2/million yen)

6.0 (Tons CO2/million yen)

4.0

4.0

2.0

2.0

2015

2020

2025

2030

2035

2040

2045

year) 年2050 (Fiscal2050

2005

2010

2015

2020

2025

2030

2035

2040

2045

(Thousand tons CO2) ■ Scope 1 (Japan)(Thousand tons CO2) ■ Scope 1

748
606

548

328
278 125

2018

2019

62
63

246

116
60
56

2020

266

■ Scope 2

665

553

339

302

286 137
70
67

605

704

363

377

302

328

2020

2021

307

96
36
60

246

102
40
62

2022 (Fiscal year)

2021*The left bar for each year indicates emissions in Japan (April to March) and the rightone indicates the value for other countries (January to December).

2018

2019

★ 649

★ 308

Category 2 to 7

Scope 2
14%

Scope 3

2,536

Thousand tons
-CO2

1,887

Scope 374%

Thousand tons
-CO2

Category 1

97%[Basis for Calculations]
Boundary: 31 manufacturing subsidiaries of the consolidated■Category 1: Purchased goods and services
subsidiaries in Japan / 12 manufacturing subsidiaries of■Category 2: Capital goods
the overseas consolidated subsidiaries■Category 3: Fuel and energy related activities*Greenhouse gas emissions (Scopes 1 and 2) are calculated in(not included in Scope 1 or 2)
accordance with the Act on the Rational Use of Energy and the Act■Category 4: Upstream transportation and distribution on Promotion of Global Warming Countermeasures, and the■Category 5: Waste generated in operation
following CO2 emission factors are used. / Electricity in Japan: The■Category 6: Business travel
CO2 emission factor with T&D losses of each previous fiscal year
■Category 7: Employee commuting
announced by the Electric Power Council for a Low Carbon Society /■Scope 1: Direct CO2 emissions (such as from the combustion of kerosene or heavy oil)
■Scope 2: Indirect CO2 emissions attributed to the use of energy including electricity■Scope 3: Indirect CO2 emissions from the supply chain

59

Integrated Report 2023

Electricity overseas: Emission factors of the respective countries
shown in CO2 FCOMB 2017 from the IEA for FY2021 and before
and those shown in CO2 FCOMB 2020 from the IEA for FY2022/
Fuel: The CO2 emission factor for each fuel is set by a ministerial
ordinance from the Ministry of the Environment (The CO2 emission
factor for electricity in Japan was used for the hydroelectric power
generated at the Kambara Complex of Nippon Light Metal Co., Ltd.)*Actual values only relate to energy-derived CO2 emissions.

Core Technology Co., Ltd., Nippon Fruehauf Co., Ltd., and Nikkei Panel
System Co., Ltd., in addition to the Chemicals Div. and Sheet Products
Div. of Nippon Light Metal Co., Ltd. that were included in the scope of
calculation last fiscal year. However, all segments have yet to be includedin the calculation because we work in a wide range of business fields.
At present, we have projected what the world will be like in FY2030
based on reference materials from external sources and listed risks andopportunities that may occur there. We evaluated the level of impact ofeach item in each predicted scenario from two perspectives, theprobability of occurrence and the level of impact if the event occurs, andmapped them. The major items are as follows.

Degree of impact

Description of the risk/opportunity in the scenario

4.0°C scenario

1.5°C scenario

Policy andregulatory
risks

There is a risk that the introduction of a carbon tax or an increase in carbon prices will increase
the cost of procuring raw materials and components, and manufacturing costs related to thecompany’s products, pressuring profit.

Low

High

Transition

Policy andregulatory
risks

There is a possibility that the costs of procuring raw materials and components will increase due
to changes in the regional balance of the supply chain, which may result from differences in the
reduction targets of countries, in addition to the possibility of the occurrence of direct costs
related to CO2 emissions trading.

Low

Medium- HighTransition

Technologicalrisks

There is a possibility that our competitive advantage in the market will be reduced due to delaysin the development of new technologies, in addition to the possibility that investment costs will
increase to achieve decarbonization and develop new technologies to facilitate recycling.

MediumMedium- HighTransition

Market risks

If action on climate change is delayed, businesses could be negatively affected by a failure tomeet the standards required by customers. It could also lead to an increase in financing costs
reflecting the decarbonization policies of financial institutions.

Low

Medium- HighPhysicalAcute

The frequent occurrence of giant typhoons and torrential rains will result in the risk of damage toequipment and other property, incurring costs to repair them, and an increase in non-life
insurance premiums, in addition to the risk of production suspensions and supply chain
disruptions in the Group, which could result from floods.

MediumMediumTransition

Products andservices

It is expected that more aluminum-related products will be used in eco-friendly vehicles andother law-carbon products, which will result in an increase in sales through the promotion ofsales and the contribution to a low-carbon society that is possible throughout the product’s
lifecycle.

High

High

Transition

Resource
efficiency

With an increase in the recycling rate and the promotion of horizontal recycling, it will bereaffirmed that aluminum is a material with high resource efficiency, resulting in an increase in
the demand for and visibility of aluminum-related products.

Low- Medium

Medium- High2022 (Fiscal year)*In FY2020, we began to combine values in Japan and overseas (for April to March).
Accordingly, the values may differ from the sum of the values for Japan and overseas
in the left graph.

degree of impact climate change will have on major segments of
the Group as well. Going forward, we plan to conduct scenario
analyses from a longer perspective for the period until 2050.
We will report details of the analyses to the Group
Environmental Committee and the Group CSR Committee andformulate risk management plans by working together with theGreen Growth Strategy Office. At the same time, we will
regularly report to the Board of Directors, thus strengthening themeasures for addressing climate change risks.

Transition★ 341

CO2 emissions including Scope 3 emissions (FY2022)
Scope 1
12%

Category

2050 (Fiscal year)

Changes in CO2 emissions (Scopes 1 and 2) (Japan and overseas)■ Scope 2 (Japan)■ Scope 1 (Overseas) ■ Scope 2 (Overseas)

To disclose information in accordance with the TCFD recommendations,
the NLM Group conducts analyses based on two scenarios to clarify thedifference in the impact between the scenarios. One is the 4.0°C
scenario which assumes that climate change will not be addressed. The
other is the 1.5°C scenario, which assumes that the strongest regulations
will be imposed. We have set FY2030 as the target year to ensure thatthe analysis results will be sufficiently persuasive. We also plan to
conduct analyses with the target year being FY2050, when the impact ofclimate change is expected to be more remarkable.
Further, we are calculating the degree of impact of the risks andopportunities by expanding the scope of the calculation to major Group
companies including Nikkei MC Aluminium Co., Ltd., Nikkeikin Aluminium

0.0

Changes in CO2 emissions (Scopes 1 and 2) (Japan and overseas)

462

Data

Strategy

Risks

0.0

At the NLM Group, we regard climate change risks as one of themost important sets of managerial risks. To manage these risks,
we conduct scenario analyses regarding the risks andopportunities for the period until 2030. For the risk items that are
determined to be highly important, we will conduct quantitative
analyses before enhancing disclosures and will push forwardwith initiatives to achieve our targets. While only Nippon Light
Metal Co., Ltd. was the subject of analysis last fiscal year, thisfiscal year we are gradually expanding the scope to analyze theOpportunities

To build a structure for taking action on climate change, we have
set up the Group Environmental Committee and the Group CSR
Committee, which are chaired by the president. Guided by thesecommittees, we formulate plans of action to promotesustainability, including action on climate change. In addition, toenable the NLM Group to further solidify its growth strategy byplanning and executing an optimal decarbonization strategy
amid the global trend toward decarbonization, we have

2010

Foundations of Value Creation

Risk Management

At the NLM Group, we fully recognize the impact that ourbusiness activities may have on the environment. We haveestablished a basic environmental policy, under which we aretaking initiatives to realize sustainable businesses and asustainable society voluntarily and proactively, beyond

2005

Value Creation

It is expected that, toward 2030, the ratio of eco-friendly vehicles in
automotive sales and manufacturing will increase in not only the 1.5°C
scenario but also in the 4.0°C scenario, which assumes that climatechange will not be addressed.
We expect an increase in the demand for aluminum products
resulting from an increase in eco-friendly vehicles, including demand formaterials for batteries to be installed in these vehicles and materials forheat dissipation for cooling, in addition to the need to decrease vehicle

weight to increase travel distance. At the NLM Group, we have set thegrowth rate of sales of products for eco-friendly vehicles as one of ourmaterial issues. Our target is to increase the rate by 300% compared to
the FY2021 level by FY2030. We aim to achieve the target throughinitiatives such as improving the comprehensive capability of the Group
as a whole to make suggestions to the automotive market.
Establishment of Nikkeikin ALMO Co., Ltd.➡P.26

Integrated Report 2023

60

Basic Information

Quality
PolicyFurther, the NLM Group has established Quality Assurance andManagement Regulations, positioned customer satisfaction as thebasic operating principle of its business activities, and strives tothoroughly ensure quality assurance and management activities.

FY2022 Quality Policy
1. We will re-establish the social credibility that we have lost by
strengthening legal compliance and quality risk management.
2. We will ensure safety and quality at every stage from product and service
development to mass production and after-sales services based on sites
and actual goods and the thorough implementation of rules and principles.
3. We will accurately ascertain customers’ requirements and provide safety
and quality that exceeds them to satisfy and win the loyalty of customers.
4. We will cultivate human resources with the quality assurance skills
required to establish social credibility and reduce global expansion risks.

Framework
Quality Assurance Structure
President

Presidents/general managers
of business divisions ofsubsidiaries/affiliates

Central Product Safety &Quality Assurance
Administration Dept.
Operation

Sales departments

Administrative departments

Quality assurance departments

Plant managers

Ensuring the Independence of the Quality Assurance
Framework
To ensure the independence of quality assurance departments,
the NLM Group has established the Central Product Safety &Quality Assurance Administration Dept. under the direct controlof the president. The department has overall control of the quality
assurance departments of all Group companies and segments in
the NLM Group. The Central Product Safety & Quality Assurance
Administration Dept. is able to make decisions independently
and has the authority to issue work orders (such as orders for
quality audits and full quality checks), among other authorities. In
addition, the quality assurance departments of each Group
company and segment are also independent of production
departments, thus ensuring independent operations.

Group Quality
Committee

Manufacturing departments

The Group Quality Committee meets two times a year to propel
the Group’s quality assurance and management activities. The
Group Quality Committee is chaired by the president of NLM HD,
and presidents of subsidiaries and general managers of businessdivisions participate in the meeting as members of the Committee.
In addition, the Personnel Meeting, which is attended by generalmanagers of quality assurance departments from Group
companies, is held four times a year. Information about issues andimprovement activities are shared at this meeting to improve thelevel of personnel in charge of practical quality assurance tasks.

Personnel Meeting

Sharing and Utilizing Complaint Information

The Central Product Safety & Quality Assurance Administration Dept.
conducts quality audits of all business sites once a year, including
overseas sites.
In FY2022, we audited 48 facilities in Japan. The quality audits
involved various checks, including the management status ofcomplaints, the new product launch process, delivery specifications
exchanged with customers, and the process for creating and issuinginspection certificates provided to customers. While no serious issues
were uncovered, 86 matters were pointed out. For example, it waspointed out that in responding to complaints regarding defects
attributed to outsourcing contractors, communication paths with theoutsourcing contractors had not been made clear. In response, thesites concerned created draft plans for corrective action, and theCentral Product Safety & Quality Assurance Administration Dept.
checked the validity and appropriateness of the corrective action before
it was taken. We also verified that corrective action regarding all of theidentified issues was complete.
In addition, proposals were also made to raise the level of quality
management at each site and establish better management standards.
For example, while the number of complaints was kept at a low level,
our target is zero complaints. To achieve this target, we proposed theimplementation of not only recurrence prevention measures but also
preventive measures, including the horizontal development of therecurrence prevention measures.

In the NLM Group, the Central Product Safety & Quality Assurance
Administration Dept. monitors complaints by collecting information
about complaints from Group companies and segments. In addition,
the causes of all complaints are analyzed. The results of the analyses
are provided to the Group Quality Committee to ensure theinformation is shared.
We have established and enforce a rule requiring that, in the eventof a serious quality problem such as a recall or a defect that may
cause physical injury, information about the problem shall be provided
promptly to the overall Group regardless of who is responsible for it.
Further, in FY2022, the provision of information began to be requiredat the stage where such a problem is likely to occur.
And the definition of serious quality problem was expanded in
FY2022 with the addition of a rule requiring that the discovery of anon-conformity to public standards such as JIS violations shall also
be reported. As a result, in FY2022, 21 serious quality problems werereported as alerts, including 12 serious quality problems of nonconformity to public standards such as JIS violations.

Confirmation of Issues
Identified in Previous Audits

7%

6%

36%

Integrated Report 2023

9

7

5

3

2018

2019

3

2020

2021

2
2022 (Fiscal year)

Contest to showcase success stories

Goal Management 17%

19%
Independence of the quality
assurance departments

Manufacturing Process
Management

Steps of Quality Audits
Central Product Safety & Quality
Assurance Administration Dept.

Audited Sites

We organized a contest to showcase success stories with thegoal of sharing success stories about improvements madewithin business segments and by affiliates and exploring thepossibility of their horizontal development. We have thus pushedforward with the improvement of quality skills through specificimprovement examples.
Looking at the categories of stories submitted, stories about
the promotion of IoT have been increasing, and the automatedimporting of inspection results and the enhancement of qualityrelated systems were recognized.
Number of examples as entries in FY2022: 32
Categorization of stories as entries to the contest to showcase
success stories

Quality Audits●

Establishment of a quality assurance framework for new businesses●S upport for the launch of new products at Group companies●Conducting quality audits
Verification of full quality check results from the previous fiscal year and following up on issues●C onducting individual and group training●O rganizing contest to showcase success stories●Q uality Jishunken (independent studies of quality (program for improving quality assurance capabilities))

Reporting of Audit Results

Formulation of Corrective Action Plans

7

Effectiveness andAppropriateness Checks

●

61

8

Complaint Management
and Response toComplaints

Participation

●

21

15

4

FY2022 Action Plan

4. We will cultivate human resources with
the quality assurance skills required toreduce global expansion risks.

■Number of prompt reports■Number of product recalls (of the number of alerts)

Product Creation

86 matters

Awareness-raising activities by the Group Quality Committee, etc.
Confirming products covered by legal standards●P romoting operation of a management system for harmful chemicals contained in products●C onducting full quality checks●S wiftly handling of serious quality problems in response to alerts

Number of serious quality problems

Classification of Issues Identified in Quality Audits

Creation of Audit Plan

3. We will satisfy and win the loyalty ofcustomers.

Data

Quality Audits

Lot Tracing 15%

Plan

2. We will ensure safety and quality of
products.

Foundations of Value Creation

Initiatives in FY2022 and Evaluation

At the NLM Group, we have set a policy that is a part of ourManagement Policy, which states, “The Group will continuously
provide diverse value to customers by deepening the level ofcollaboration and coordination within and outside the Group.”
And we have adopted the NLM Group’s Quality Policy, whichstates that “The Group will earn the satisfaction and trust of its
customers by providing distinctive products and services withreliable quality and safety.”
We determine our quality policy for each fiscal year based on
this NLM Group’s Quality Policy and in light of the issues thatemerge each year. The Quality Policy is considered by the Central
Product Safety & Quality Assurance Administration Dept. anddecided on by the Group Quality Committee.
The Quality Policy is aimed at “providing safe and secure
products and services,” a material issue that was identified based
on “responsible procurement, production and supply” as a key
material issue theme of the NLM Group.

1. We will establish social credibility bystrengthening legal compliance andquality risk management.

Value Creation

Initiatives to make improvements at key overseas sites●S upport from the mother factory in Japan for overseas factories

6

4

3

2 2 11

25

30

Corrective Measures
0

●

●

6

Receipt of Reports on Corrective
Action Completion

Submission of Reports on Corrective
Action Completion

5

10

15

20

■Improvement of in-process defects ■Promotion of IoT■Other activities

35■Workability environment■Recurrence prevention measures ■Customer satisfaction improvement■Human Resource Development ■Variation improvement■Prevention of quality-related fraud

Completion

Integrated Report 2023

62

Basic Information

Human Resource Strategy
PolicyValue Creation

Foundations of Value Creation

Data

Happiness of Employees, a Material Issue ThemeAt the NLM Group, we believe that human resources form thefoundation for the creation of social value and the enhancementof corporate value. We strive to improve employee engagement
through the creation of workplaces which are both fulfilling andcomfortable. We enable highly diverse individuals todemonstrate their capabilities in their workplaces, so that thepersonal development of individuals leads to the growth of
unique, autonomous organizations and builds a cycle ofindividual and organizational growth in our efforts to achieve thesustainable improvement of the Group’s capabilities. Further, we
will enhance engagement within the Group by reinforcing theGroup’s cooperative structure and work to enhance ourcorporate value by creating social value as Team NLM.
Regarding the establishment of a workplace environment thatis the foundation of comfortable working conditions, in FY2021
we set, “The Group will build its workplace environment in awell-planned manner under the philosophy, ‘Employees areassets,’ to increase the sense of unity of companies andemployees,” as the Group’s basic policy on employment welfare.
In addition, the state in which the safety and health of every
individual employee is maintained is a prerequisite for fulfillingand comfortable workplaces. We are planning initiatives toensure employees’ safety and help them maintain and improvetheir good health, which is a step ahead of safety, in accordancewith the Group’s basic policy: The Group will create healthy, safe
workplaces, and achieve zero-accident operations.
To strengthen engagement, multidimensionally deepening
communication is essential. The initiatives to improve the Group’s
capabilities through the relocation and consolidation of the Group’s
head office in 2019 were at a standstill due to the prolonged
impact of COVID-19, but the Group is gradually beginning toresume them. We understand that our future task is to achieveboth the continued improvement of productivity and the deeper
communication with new workstyles leveraging teleworking.

At the NLM Group, we have set the happiness of employees as
one of the material issue themes. We believe that humanresources are important assets of the Group and protecting andpursuing the happiness of employees and their families is a basicpart of human resource strategy. We have set occupational healthand safety, developing a fulfilling workplace, diversity & inclusionand securing and cultivating human resources as materials issues
to be addressed to achieve the happiness of employees.

G: The Group’s initiative, NLM: Initiative implemented solely by NLM

Material Issues

Occupational
health and safety

Reason for selection and main measures (including planned measures)
As stated in the Group Safety and Health Policy, “Safety and health come before anything else,” ensuring employees’ safety and healthforms the foundation of corporate activities. In addition, it is necessary to promote further measures to protect the smiles of employees
and their families and achieve zero accidents, which is why we have selected this as a material issue.
● Preventing injuries and the recurrence of similar injuries using the five gen principle (Genchi or onsite, Genbutsu or
Main measures 	●

Developing afulfilling
workplaceproducts, Genjitsu or reality, Genri or principles, and Gensoku or rules)/ G
Soliciting safety slogans and safety posters/ G ● Commending business sites with zero accidents/ G

To enhance the Group’s corporate value, we need to enable the employees working for the Group to experience happiness and improve
employee engagement in a sustainable manner. To improve employee engagement and strengthen group engagement, it is important thateach Group company work proactively to create workplaces which are both fulfilling and comfortable, which is why we have selected thisas a material issue.
● Social contribution activities (support for wheelchair rugby)/ G
Main measures 	

Being recognized under the Certified Health & Productivity Management Outstanding Organizations Recognition Program/ G
Giving workplace tours for employees’ families/ G ● Introduction of a remote work program/ G●●Enhancing corporate value by creating social value as Team NLMDiversity &inclusion

The NLM Group consists of diverse business entities. For the Group to enhance its corporate value through cooperation, it is essential thateach Group company create workplaces where diverse values are respected and every employee can demonstrate their personal qualities
and capabilities, which is why we have selected this as a material issue.
● Introduction of extension of the mandatory retirement age/ NLM
Main measures 	●●

Securing andcultivating humanresources
Growth oforganizations withuniqueness andautonomy

Measures to improve
collaboration andcoordination within
the Group and increase
the unity of the Group

Group engagement

Group company

Providing a fulfillingand comfortableworkplaceOccupational healthand safety

63

Integrated Report 2023

Enhancement of
the Group’s
capabilities

Group company

Group company

Employee engagement

Developing a fulfilling
workplace

Diversity & Inclusion

Personal
development of
individuals
Highly diverse
individuals
demonstrating theircapabilities

Securing and cultivating
human resources

Acquisition of Eruboshi and Kurumin certifications/ G
Fortuna training for women/ G ● Establishment of the Group D&I Subcommittee/ G

Securing and developing the human resources that are the foundation for everything is essential for the Group to create new value forcustomers as Team NLM. Developing a structure and a climate that enables a company to secure diverse human resources, develop appropriate leaders, and enhance the capabilities of individual employees is important for sustainable growth of the company, which is why wehave selected this as a material issue.
● Joint recruitment by the Group/ G (3 companies)
Main measures 	●

Tiered training of Group employees/ G●

Overseas training/ NLM

Establishment of the NLM Group Business Conduct Guideline
At the NLM Group, we have newly established the NLM Group
Business Conduct Guideline. (See page 1 and page 90.) When werevised our Management Policy in May 2022, we shifted from a
policy that emphasized the provision of profit to one that focuseson provision of value and made a fresh start as a corporate entity
determined to preserve the value of our stakeholders, including
employees, business partners, and local communities, as well as
our own value. Our plan was also to formulate the BusinessConduct Guideline in a bottom-up manner, aiming to create adocument that employees could understand and connect with.
The new Business Conduct Guideline stipulates a set of values
and a code of conduct that employees value in their work for the
NLM Group. The values and code of conduct are based on stories
about “My experience of the NLM Group’ uniqueness” submitted
by Group employees (period for submission: October 31, 2022 toNovember 13, 2022, total number of submitted stories: 239) andthe experiences of 36 members of the project to formulate theBusiness Conduct Guideline who are Group employees. After
formulating the Business Conduct Guideline, we planned initiatives
to disseminate the Business Conduct Guideline and put it into
practice within the Group. At present, each meeting body is
working to ensure the Business Conduct Guideline is understood
deeply through discussion of the contents of the BusinessConduct Guideline and the creation of its design.

Project to formulate the Business Conduct Guideline

Members

36 employees from 16 Group companies (average age 38)
Nippon Light Metal, Nikkei Logistics, Nikkei Panel System,
Toyo Rikagaku Kenkyusho, Nikkei Sangyo, Nikkei MC
Aluminum, Nikkei Matsuo, Nikkei Engineering, Nippon
Electrode, Nikkei Information Systems, Nippon Fruehauf,
Nikkei Technology Center, Nikkei Kambara, Nikkeikin
Aluminum Core Technology, Nikkei Niigata, Riken Light Metal
Industry

Active period

November 2022 to April 2023

Details ofactivities

Held orientation workshops (6 times in total)
Discussions with the Group’s management (twice in total)
Editorial meetings by core members (3 times in total)

Project members

A workshop

Integrated Report 2023

64

Basic Information

Occupational health and safety
PolicyValue Creation

Foundations of Value Creation

Data

Workplace Injury Trends
Safety and health come before anything else.

The Group Safety and Health Policy has been formulated asfollows in accordance with the basic principle of the NLM GroupManagement Policy, namely to create a safe and healthy
workplace and achieve zero accidents.

⃝Make it a basic principle to work every day in good
physical and mental health, without injury, and with asense of security and job satisfaction.
⃝Continue to improve the work environment and ensure that eachother observe the basics (behaviors) by being attentive to each other.
⃝All employees shall play a leading role in creating a safeand healthy workplace and achieving zero accidents.

Number of lost-time injuries(cases) ■ Japan

Frequency rate of lost-time injuries■ Overseas

23
16

19

1.05
16

15 14

12
7

0.91

16

0.58

0.81

0.73

6

Framework
2018

The Group Safety and Health Committee is the highest decisionmaking body responsible for safety and health management at the
NLM Group. This committee is chaired by the president of NLM
Holdings, and the top individuals representing labor andmanagement, including presidents of major Group companies andlabor union representatives, meet in February each year as part of thecommittee to verify the results of activities in the current fiscal year,
determine the Group Safety and Health Policy for the following fiscal
year on the basis of those results and revise or abolish the Group
Safety and Health Regulations.
In addition, Safety and Health Committees are put in place at eachGroup company and business site as prescribed by the Industrial
Safety and Health Act. The following two meeting bodies have been
established to facilitate coordination with these committees.
⃝Group Safety & Health Manager Meeting
This meeting mainly comprises the business site managers and plant
managers who serve as the safety and health committee chairpersons
at each business site. Their job is to disseminate and roll out thepolicies decided on by the Group Safety and Health Committee.

⃝Group Safety & Health Coordinator Meeting
This meeting mainly comprises the safety & health coordinators of eachbusiness site, who work as the managers of safety and health committee
administrative sections at each business site. This meeting convenes fourtimes a year to verify operations at each business site and share information.
Safety and Health Management Framework
Group Safety and Health Committee

NLM Holdings President and Top
Top Management
Management of Major Group Companies of Labor Unions

Group Safety & Health Manager MeetingGroup Safety & Health Coordinator Meeting

Participation

Safety andhealthcommittees at
Participation each business
site

Plan
FY2022 Action Plan n-site inspection of lost-time injuriesOGroup-wide roll out of measures to deal with similar
accidents● Support for priority business sites● Improvement of the Safety & Health Coordinator
Meeting● Disaster information sharing (monthly report)●●

1. Preventing
Accidents

2. Improving Field
Capabilities●

Safety and health education

 ompliance with laws and regulationsC● Promoting internal accreditation for safety andhealth management systems (SMS)● Developing SMS promoters and safety managers,
rolling out in-house training●

3. Enhancing
Management
Capabilities
4. Improving
Technical
Capabilities
5. Managing
Health roup-wide roll out of equipment safety standards
GRisk assessment education and training● Development of safety engineers (SE) and safety
foremen (SF)●● OVID-19 control measures
C● Influenza control measures●

To realize the Group Safety and Health Policy, we systematicallypursue initiatives aimed at preventing accidents, improving field
capabilities, enhancing management capabilities, improving technicalcapabilities and managing health.
Regarding the prevention of accidents, we increased the frequencyof the Safety & Health Coordinator Meeting from two times year to four

65

Integrated Report 2023

times a year. While the meetings are held remotely due to COVID-19,
we have strengthened the sharing of information to expand measures.
We also distribute a monthly newsletter to enhance the sharing of
information, including accident information, and help share information
with each business site. The newsletter reports details of accidents
that have occurred and the status of accidents, promotes awarenessand provides other information.
To enhance management capabilities, we confirm the laws andregulations which apply to each business site and hold training
sessions on safety-related laws and regulations (including the Industrial
Safety and Health Act) to ensure compliance with the law. Moreover,three business sites in Japan have obtained certification for ISO
45001, an international standard for occupational safety and healthmanagement systems. Twenty other business sites in Japan havereceived in-house accreditation for our own Safety Management
System (SMS), which utilizes the JISHA* style OSHMS. This accreditation system was started in 2013 as part of efforts to build appropriate
safety management capabilities.
In terms of improving technical capabilities, in 2000 we createdequipment safety standards based on international safety standards
and have since promoted the improved safety of machinery and equipment. We introduced risk assessments in 1998 as a risk mitigation
approach and have fostered the development of safety practitioners
through widespread training.
Since 2011, we have been focusing on the development of skilled
safety personnel by providing Safety Engineer and Safety Foreman
training to facilitate a deeper understanding of general machinery
safety.
*JISHA: Japan Industrial Safety & Health Association

2019

2020

2021

2022

(Year)

2018

2019

2020

2021

2022

(Year)FY2022 Initiatives
Investigations of workplace injuries and the preventionof their recurrence from a third-party perspective
When a workplace injury has occurred, the first thing we do is to havethe people in charge and other people from the business location,
including the safety and health manager, investigate into the cause.
This is followed by the consideration and implementation of measures
to prevent the recurrence of the injury. Employees who are mostfamiliar with the work site are expected to consider and implement
reliable measures. On the other hand, familiarity may also cause themto overlook something, make an incorrect assumption, or make someother error. There is also the concern that, because those people workin the same site daily, they may protect each other or hesitate to takemore severe measures. Accordingly, as the second line of defense, theSafety and Health Control Department of NLM Holdings inspects thesite from a third-party perspective, separately from the people from thebusiness location in question. They inspect the site three times, oneweek, one month and six months after the workplace injury, to verify
the effectiveness of the countermeasures that were implemented andwhether they have taken root firmly, among other points. Further, thisinitiative enables countermeasures based on specialized knowledge,
such as the incorporation of best practices from other businesslocations. In addition, activities to prevent workplace injuries atbusiness locations where workplace injuries occurred were supported
by giving instructions on how to streamline processes of analyzing thecauses of workplace injuries and formulating countermeasures,
explaining legal regulations, advising them to receive training fromexternal institutions and taking other measures.

Percent of business locations where workplace
injuries occurred that are visited
Percent of business locations where workplace injuries
occurred that are visited

100%

100%

100%

100%

22 22
17 17
11 11

2018

2019

2020

15 15
8

8

2021

2022

Safety and health education
FY2018FY2019FY2020

FY2021

FY2022

Number of times
56 times 31 times 19 times 23 times 19 times
the training was held
Trainees (total)

985

622

291

372

266

To expand safety and health activities throughout the entire Group,
safety and health education covers a wide range of areas, fromtraining on the safety and health management system to legal
education and training about machinery safety.
⃝OSHMS leader training⃝OSHMS internal auditor training⃝Training for newly appointed
safety managers⃝Foreman training⃝Special training for workers
handling dust⃝Special training for workers
handling low voltage electricity⃝Equipment safety training⃝Risk assessment training⃝Safety engineer (SE) training⃝Safety foreman (SF) training

2022 evaluation■ Number of workplace injuries judged to require visitation■ Number of visits ●Percent visited

100%

site in question and dedicated themselves to implementing
countermeasures, preventing recurrence and improving healthand safety.
In addition, there are some business locations where injuries
have not decreased despite safety activities (including the 2Ss,
safety education, and risk assessments). Members of the Safety
and Health Control Department continually visit those sites toinvestigate the causes and consider improvements.

(Year)

Support for priority business sites

Although we implemented a range of initiatives in 2022, we wereunable to achieve a reduction in workplace injuries in Japan.
One reason is that we were not able to reduce the injuries due
to workers being pinched or caught in machinery or equipment,
which we worked intensively to reduce through activities
including comprehensive inspections. (Five lost-time injuries in
2021 --> Five in 2022) The number of falls, which increased (tofour) in 2021, decreased to two in 2022 due in part to theenhancement of initiatives to prevent falls.
How to prevent injuries due to workers being pinched orcaught in machinery or equipment remains an issue.

In 2022, there was one fatal injury. We deeply regret thisirreparable accident.
Therefore, members of the Safety and Health Control
Department of NLM Holdings proactively visited the business
Integrated Report 2023

66

Basic Information

Developing a fulfilling workplace
PolicyAt the NLM Group, we have established a policy related to theimprovement of internal environment (Internal Environment Improvement
Policy), aiming to make the workplace more fulfilling and comfortable.
Further, we included the slogans, “Go-an-zen-ni! (Work safely!)” and We will create workplaces with good communication
where people can have peace of mind and job satisfaction.

““May I” and “Give it a try”” in the NLM Group Business Conduct
Guideline, encouraging employees to take advantage of opportunities tobe aware of safety and the creation of workplaces where we can take onchallenges and put our awareness into practice in our everyday work.

NLM Group Business Conduct Guideline Go-an-zen-ni!
We never let our team members get hurt. “Show up
smiling, go home smiling” is our goal.

●● We will create workplaces where diverse values arerespected and all employees can work vibrantly.

● “May I” and “Give it a try”
We encourage the mindsets of “May I” and “Give it a try”
to keep us willing to take on new challenges.
(Excerpt)●

Framework
Structure for developing a fulfilling workplace

Meetings of generalmanagers of the HR
departments in the Group
Group HR Personnel
Meeting
Participation

NLM Pride

Health and productivity
management

Each workplace

Group companies

Improvement of
workplace environments

Management

While a fulfilling workplace is created mostly through initiatives
taken within each workplace of each Group company, the NLMGroup also implements initiatives which lead to the happiness of
employees from the perspective of the Group as a whole. The
improvement of the workplace environment and health andproductivity management are considered at regular meetings of thegeneral managers of the HR departments of major Group
companies. Further, plans and achievements are shared at theGroup HR Personnel Meeting held once a year. We areencouraging voluntary participation in NLM Pride and Social
Contribution Project activities by continuing to call on Group
companies proactively and reporting activities via the internal
newsletter and intranet. Group employees and senior management
participate in these activities. Through frank interactions beyond
the boundaries between companies and positions, they arecommitted to building a structure for widening and deepening therelationships between the people working for the Group.

Each workplace
Each workplace
ReportingSocial Contribution Project

Plan
Improvement of workplace environments and healthand productivity management
At the NLM Group, we began to consolidate and share
information about each Group company’s plans for investing in
employee welfare in FY2020 to drive the creation of a comfortableworkplace environment through enhancement of employee
welfare. Persons in charge mutually confirm the progress of theplans through on-site observation of good examples within theGroup and tours of other companies’ facilities, in their efforts todrive the improvement of the Group’s workplace environments.
For the creation of comfortable, fulfilling workplaces, each Group
company plans to introduce health and productivity management
because the physical and mental health of employees working
there form the foundation of their workplaces.

NLM Pride and Social Contribution Project
We planned NLM Pride and the Social Contribution Project as
activities to enhance engagement with employees across theentire Group. We launched NLM Pride in 2020 to enable
employees to feel happy to work for the NLM Group anddevelop pride in their working for the NLM Group and an
attachment to the Group. We intend to plan activities to enable

67

Integrated Report 2023

Foundations of Value Creation

Data

FY2022 Initiatives

Internal Environment Improvement Policy We will create workplaces where all human resources canwork safely in good health.

●

Value Creation

employees and their families to learn about the attraction of theGroup, such as workplace tours for Group employees’ families
and supporting the Group team’s participation in the Fuji Tozan
Ekiden, a long-distance relay race. In addition, we plan toquantify how fulfilling workplaces are using an engagement
survey in 2023. We will promote the creation of fulfilling
workplaces based on KPIs across the Group.
In the Social Contribution Project, in April 2020 the NLMGroup signed an official sponsorship agreement with the Japan
Wheelchair Rugby Federation. Through activities supporting
wheelchair rugby, Group employees participate in sports forpeople with disabilities in our efforts to strengthen groupengagement and increase understanding of diversity andinclusion.
Investment in employee welfare*

Improvement of workplace environments
Regarding each company’s investment plans, we consolidated andshared information from 18 major Group companies in Japan regarding
three points: (1) progress against the FY2022 plan, (2) investment planfor FY2023 and (3) medium- to long-term investment plans. Regarding(1) progress against the FY2022 plan, the actual amount invested was
544 million yen, compared to the 487 million yen in the investment planfor the 18 Group companies, despite problems including delays insome projects that resulted from the COVID-19 pandemic. The amountexceeded the planned amount due to an increase in projects toimprove workplace environments in response to the needs of
employees, which reflected the labor shortage, in addition to thefront-loaded implementation of plans. Regarding (2) investment plan for
FY2023, a total of 644 million yen is planned for 18 Group companies.
In addition, looking at (3) medium- to long-term investment plans,Group companies’ awareness and improvement initiatives are
increasing steadily, partly reflecting that we have set “Developing afulfilling workplace” as a material issue, as well as issues to overcome
to recruit and retain human resources. Therefore, we expect thatinvestments will continue on their increasing trend. On the other hand,
we also understand that we will need to take actions, such as
improving environments in anticipation of the increased employment ofdiverse human resources, which will result from measures to address
the aging of buildings constructed during the postwar economic boom
as well as the promotion of diversity and inclusion. We are also studying
new issues.
The tour of employee welfare facilities held in November 2022
attracted 24 people from 11 Group companies. They toured thefacilities and had a session to exchange views. They toured thecafeteria, bachelors’ dormitory, and tennis court of the Nagoya Plant of
Nippon Light Metal Co., Ltd., which was fully renovated in FY2019, andexchanged views as members of different Group companies. The tour
was an opportunity to share good examples, become aware of andlearn things related to the improvement of the workplace environmentof each Group company.
One example of improvements related to employees’ work
environment is the introduction of a molten metal supply robot in theprocess of delivering molten metal from the furnace and pouring it into
the die-casting machine at Nikkei Matsuo Co., Ltd., which
manufactures forged aluminum alloy products. Using this technology,
the company also built a line in which robots work in coordination witheach other. Thus, Nikkei Matsuo has automated the series of tasks
from shearing todeburring and X-ray
inspection. This has
enabled Nikkei Matsuo
to reduce the workloadof its workers and thenumber of works thatare required, resulting in
the reduction of theamount of human work.
It has also led toincreased production
efficiency, including
shorter cycles and stable
quality.
The line in which robots work in coordination

Unit: million yen

FY2021

FY2022

FY2023

Plan

599

487

644

Results

266

544

—

*Total of the major projects of 18 major Group companies in Japan

Health and productivity management
In March 2023, Toyo Rikagaku Kenkyusho Co., Ltd. wasrecognized under the Certified Health & Productivity

Management Outstanding Organizations Recognition Program(Small and Medium-Sized Enterprise Category).
The company was certified in recognition of its major
initiatives for health and productivity management, specifically,
for the payment of the full amount of expenses for complete
medical checkups (for employees 35 years old or older), thepayment of the full amount of the expenses for influenza
vaccinations (for all employees), and measures to encourage
employees to take paid leave (the granting of 20 days of paid
leave to employees at the time they join the company, hourly
paid leave and online application). Moving forward, we will
position health and productivity management as a management
strategy, including promoting Group companies’ acquisition of
the certification, and improve employee engagement andproductivity aiming to enhance our corporate value.

NLM PrideIn FY2022, the activities remained suspended due to the
COVID-19 pandemic, but we considered new initiatives, aiming
to resume the activities in FY2023. Regarding the workplace
tours organized for Group employees’ family members(children), we planned the first tour of the head office after its
relocation and consolidation, as well as initiatives linked to theSocial Contribution Project. Regarding the activities supporting
the NLM Group team in the Fuji Tozan Ekiden long-distance
relay race, we will enhance the content of tours of the Group’sbusiness sites and facilities that we hold for employees who
participate in the activities, thus attracting more participants, inour efforts to achieve the further development of NLM Prideactivities within the Group.

Social Contribution Project
During the COVID-19 pandemic, we were forced to cancel
many activities. In FY2022, however, we resumed activities
gradually at smaller scales.
For 2022 SHIBUYA CUP, an international wheelchair rugby
competition that was held in November 2022, hosted by theJapan Wheelchair Rugby Federation, we asked employees ofGroup companies to join our group of spectators, and 32
people (Group employees and members of their families)
watched the games. We asked for volunteers for thecompetition, and six Group employees participated. The
spectators and volunteers said many things, including, “Having
worked on social contribution activities as a part of the Group, I
was able to feel that we are Team NLM.” Further, in March 2023,
Nippon Light Metal Co., Ltd. signed a sponsorship agreementwith Mr. Daisuke
Ikezaki, a wheelchairrugby player, andbecame an Ikezaki
Daisuke Official
Partner. We plan tocollaborate with Mr.
Ikezaki in theprovision of training
for Group employees,
participation in local
events and other2022 SHIBUYA CUP, an international
wheelchair rugby competition
initiatives.
Through these activities, we will ensure the importance ofdeveloping a fulfilling workplace is understood throughout theGroup and pursue the happiness of employees, which
contributes to Group management.
Integrated Report 2023

68

Basic Information

Diversity & Inclusion
PolicyWe recognize that leveraging diversity as a strength of the Group isimportant for enabling the Group to continue to create new value.
This makes it essential that the personal qualities and values ofevery employee are respected and it is essential for the Group to
be a business entity comprised of diverse human resources andfilled with vitality. Further, in the NLM Group Business Conduct
Guideline, the code of conduct of “Team Nikkeikin(Team NLM)”
states, “We count our team members’ issues as “our own issues”
and work together as a team to achieve our goals.” We believethat the mutual respect and acceptance of all employees and theself-directed actions they take as members of Team NLM will leadto the greater creativity and increased productivity of Group
companies and the NLM Group as a whole.

NLM Group Business Conduct Guideline● eam Nikkeikin(Team NLM)
T
We count our team members’ issues as “our own issues” andwork together as a team to achieve our goals.
(Excerpt)

office. The company is expanding its operations every year. Nikkeikin
OhLiS plays a role in the accumulation of expertise in the creation of
workplace environments where people with disabilities are able to work
vibrantly leveraging the abilities of each individual and the expansion ofthis expertise to Group companies, as well as in expanding andpromoting the employment of people with disabilities.
In FY2023, we plan to establish a Group D&I promotion team tofurther promote diversity and inclusion, and we will enhance initiatives ina Group-wide manner.

Meetings of generalmanagers of the HR
departments in
the GroupGroup HR Personnel
Meeting

Personnel in charge of human resources
The active participation of women, support for a healthy
work-life balance, utilization of older employees

Group companies

The Group’s D&I
promotion teamManagement

Diversity & Inclusion Framework

Personnel in charge of recruitment
Recruitment of women, people with disabilities, andnon-Japanese nationals

Nikkeikin OhLiS
Recruitment of people with disabilities

Employment of people with disabilities
At the NLM Group, we have proactively employed people withdisabilities, aiming to increase the organization’s diversity. As aresult, the employment rate of people with disabilities at the Group(among Group companies obliged to employ people withdisabilities) was 2.48% as of June 1, 2023, exceeding the previous
fiscal year’s 2.38%. The employment rate exceeds the statutory
rate and has continued to rise. This is a result of initiatives including
recruitment via more diverse routes and the development of newjob categories, which facilitated Group companies’ recruitment
efforts. Nikkeikin OhLiS Co., Ltd., a special-purpose subsidiary,
continues to expand its operations due to progress in thedevelopment of new job categories, such as gradually beginningmore difficult operations. The company also focuses its efforts oncreating activities outside the workplace, such as participation in
local sporting events with Group employees.
We provided diversity training intended for new career track
employees as in previous years. In addition, in FY2023, we will
strive to increase
Group employees’
understanding ofdiversity and inclusion,
through activities suchas the planning of
lectures by Mr. Daisuke
Ikezaki, a wheelchairrugby player who hassigned a sponsorshipagreement with Nippon
Nikkeikin OhLiS Soccer Team
Light Metal Co., Ltd.
Changes in the number of employees with disabilities and net
sales of Nikkeikin OhLiS Co., Ltd.
■Number of employees with disabilities

Plan
Employment of people with disabilities⃝Continuing to recruit employees of Nikkeikin OhLiS Co.,
Ltd. and expand its job categories⃝Supporting the employment of people with disabilities byGroup companies
Diverse individuals working vibrantly and displaying their individuality
increases the vitality of an organization. While it is growing
increasingly difficult to secure human resources regardless of thepresence or absence of disabilities, we aim to recruit humanresources in a well-planned manner from a longer-term perspective.
In addition to expanding job categories to increase the operationsof Nikkeikin OhLiS Co., Ltd., we are encouraging Group companies
to employ human resources with disabilities and consider the use of
the special-purpose subsidiary system within the Group.

The active participation of women and a healthy
work-life balance*⃝Increasing the percentage of employees that are women (as candidates
for managers) by continuing to recruit female career track workers⃝Continuing to support women when they return to work after
a career interruption⃝Encouraging the use of childcare leave using internal newsletters
We aim to continue improving the percentage of managers that are
women as an indicator of the active participation of women. To increase
the percentage of employees that are women, we revised the target
percentage of newly hired career-track workers that are women that we
set in FY2019, which was 10% or more, to 20% or more for FY2022 andonward, and are expanding the employment of career-track women.
Regarding our support for a healthy work-life balance, we set the target

69

Integrated Report 2023

Foundations of Value Creation

Data

FY2022 Initiatives

Framework
The NLM Group consists of diverse business entities. Because theirwork environments are also diverse, it was difficult to take across-theboard initiatives to increase diversity. While each Group company took
initiatives independently, they were insufficient from the viewpoint of theoverall Group.
At present, the tasks to be implemented to increase the diversity of
the Group’s human resources and promote their active participation areshared and relevant polices are discussed at regular meetings of generalmanagers of the HR departments in the Group. Indicators for the entire
Group, such as the employment rate of people with disabilities, thepercentage of new employees that are women, and the percentage ofmanagers that are women, are monitored, and plans for future job
development are shared at the annual Group HR Personnel Meeting.
New initiatives and good examples from Group companies are also
shared at this meeting to increase the diversity of the Group as a whole.
Regarding the employment of people with disabilities, Nikkeikin OhLiS
Co., Ltd. was established in October 2015 and certified as a specialpurpose subsidiary in January 2016. This company has its businessestablishments in Kambara, Shimizu Ward, Shizuoka City, where there isa cluster of the Group’s major business sites, and at the Tokyo head

Value Creation

percentage of childcare leave taken by male employees at 30% or morefor FY2024, aiming to acquire Platinum Kurumin Certification. The
percentage was 54.0% in FY2022, and we achieved the plan. Moving
forward, we will review the target and aim to achieve 100% by FY2030.

54,55958,828

17

18

2018

2019

●Net sales (Thousand yen)

75,65367,31370,456

21

23

23

2021

2022 (Fiscal year)*Nippon Light Metal Co., Ltd.

Changes in the number and percentage of regularly hired career
track workers at Nippon Light Metal Co., Ltd. that are women■Number●Percent

23%
18%

19%

8
11%

6

4
3%

0%
0

2019

2020

1
2018

2021

2022

5

2023 (Fiscal year)

Utilization of older employees*⃝Revision of the mandatory retirement system
In FY2022, Nippon Light Metal Co., Ltd. revised its mandatory
retirement system and extended the mandatory retirement age
from 60 to 65 from the viewpoint of improving workplace
productivity by making workplaces more fulfilling for older
employees. Moving forward, the company will work together
with Group companies which are considering an increase of themandatory retirement age, aiming to improve their own systems.
*Nippon Light Metal Co., Ltd.

2020

*Number of employees as of April 1 of each fiscal year

The active participation of women and a healthy
work-life balance
At the NLM Group, we have been striving to build an environment
where it is possible to balance work and life events, such as
childbirth and childcare, believing that active participation of womenbrings new perspectives and vitality to the organization. Nippon Light
Metal Co., Ltd. has established a childcare leave system, shortened
working hour system for childcare, and nursing leave system, which
exceed the statutory levels. This has dramatically improved the
comfort of work for women. At the same time, it is important to makearrangements to ensure that career interruptions resulting from life
events do not disrupt women’s active participation as aconsequence. In FY2021 we began individually interviewing female
employees who are considered our next managers to learn their
future career plans, their expectations and hopes for the company’ssystems and other information, and took initiatives such as planninginternal training aimed at facilitating the active participation of
women, to develop a better environment. The percentage ofmanagers that are women increased to 5.7% in FY2022 from 5.4%
in the previous fiscal year. However, we understand that greater
initiatives are needed to promote the active participation of women.
In FY2023, we plan not only recruitment and human resource
development as initiatives to improve the environment but also theprovision of training which will lead to the development of themindsets employees and managers that are women. We also
encourage male employees to participate in childcare so as toprevent career interruptions only affecting women. In FY2022, we
implemented initiatives to encourage male employees to takechildcare leave, such as the introduction of stories about male
employees’ experiences taking childcare leave in the internal
newsletter. As a result, the percentage of childcare leave taken bymale employees was 40.6%, far exceeding the previous fiscal year’s
18.5%. Nippon Light Metal Co., Ltd. acquired Kurumin Markcertification and Grade 2 Eruboshi certification in FY2021, and we areencouraging the Group companies to also acquire the certifications.
Change in the percentage of childcare leave taken by male employees(Began to be calculated in 2021)■Nippon Light Metal Co., Ltd.

■Group

54.0%
40.6%
18.5%
17.5%

2021

2022

(Fiscal year)

The Fortuna training for women was started in FY2012 to facilitate
women’s active participation and FY2022 was its eleventh year.
During those 11 years, 164 female employees (trainees andmentors) from 16 companies completed the training. Provided intandem with training of female employees’ superiors, this training
enables the development of managers who support the active
participation of women, which is also an achievement of the training
program. Regarding the gap between men’s and women’s wages,
the ratio of women’s wages to men’s wages at Nippon Light Metal
Co., Ltd. was 68.7% in FY2022. Major factors for the gap are theratio of female managers to male managers and difference in thetypes of employmentthat men and women
have within the Group.
We understand that our
future task is todevelop even more
female leaders toeliminate the gap
between men’s and
A Fortuna training session
women’s wages.

Utilization of older employees*
Nippon Light Metal Co., Ltd. completed its shift to the new system in
FY2022 to extend the mandatory retirement age to 65 as planned. Asof April 1, 2023, 49 employees were working because of this increaseof the mandatory retirement age. Under the previous system, the ageof mandatory retirement and reemployment was 60. This was basedon the concurrent payment of pensions. This had made it difficult tolink performance to the amount of compensation. After the mandatory
retirement age was increased, a personnel and wage system that is
not premised on the payment of public pensions was introduced, andthis has made it possible to evaluate the performance of each
employee more fairly. Connecting the demonstration of the skills andexperience cultivated over many years to high evaluations, this systemincreases the motivation of older employees. We plan to introduce theincreased mandatory retirement age within the Group companies, one
by one, in consideration of business strategies of each company. We
will also advance initiatives related to promotion of good health inresponse to the increase in the number of older employees.
*Nippon Light Metal Co., Ltd.

Integrated Report 2023

70

Basic Information

Securing and cultivating human resources
PolicyAt the NLM Group, we have set a basic management policy, whichstates, “The Group will respect diverse values, and develop humanresources from a long-term global perspective.” In our joint
recruitment activities for employing career track workers, we
describe our desired human resources as people who canunderstand diverse values and express them in their own words,
who take interest in and are able to take on challenges in a wide

range of fields and who are able to innovate by connecting people
and information. Regarding human resource development, wehave set a policy related to the development of human resources
including ensuring the diversity of our human resources (humanresource development policy). We have also including “Picture yourown evolution” in the NLM Group Business Conduct Guideline,
promoting employee’s autonomous growth and learning.

Human resource development policy

Required qualities⃝Based on the understanding that human resources form the foundationof everything, we will develop the Group’s core human resources who
fulfill the following three requirements in a well-planned manner.
Human resources who create new value throughcooperation with parties inside and outside the GroupHuman resources who are strongly oriented towardachievement and have a strong sense of ethics
Human resources who take a healthy interest in the humanresources around them and support their personal development⃝We will develop and provide diverse training programs forwell-planned human resource development.
⃝We will respect the autonomy of employees and strengthen thecapabilities of individuals with career paths reflecting their intentions.
⃝We will evaluate efforts to develop younger employees equally withmaking achievements, to continue to develop human resources.

1. People who can understand diverse values and express
them in their own words
2. People who take interest in and are able to take onchallenges in a wide range of fields
3. People who are able to innovate by connecting people and information⃝⃝

NLM Group Business Conduct Guideline⃝Picture your own evolution
At all times, we approach our jobs with the broad perspective of “whatam I capable of?” along with open minds and curiosity.
(Excerpt)

Framework
Securing human resources

Human resource development

At the NLM Group, we switched from the recruitment of career
track workers by Nippon Light Metal Co., Ltd. alone to their joint
recruitment by major Group companies in FY2014. At present,
Nippon Light Metal Co., Ltd., Nikkeikin Aluminium CoreTechnology Co., Ltd., and Nikkei MC Aluminium Co., Ltd. jointly
engage in recruitment efforts. The pre-assignment group trainingof new employees, which is given during an employee’s first threemonths in the companies, is provided jointly by four companies,
with new employees of Nikkei Information Systems Co., Ltd. also
joining the training program. The goal of this training program isfostering a sense of unity beyond the boundaries between
companies by having them live together for an extended period.
This sense of unity is one of the pillars supporting Team NLM.

For the development of employees, we have recently been committed inparticular to Group-wide training and education along with the training
programs provided by each Group company. At present, a total of approx.
30 Group companies participate in a diverse array of training programs.
Previously, Group companies voluntarily participated in the training
programs of Nippon Light Metal Co., Ltd. For career track
employees, we are planning to shift to a unified mandatory training
program intended for all Group companies in Japan in FY2025. By
shifting to unified training, we will strive to improve the training
system of the Group as a whole. At the same time, we will encourageGroup employees to share and understand the Management Policy
and drive the development of a human network through the training
opportunities, aiming to further strengthen Team NLM.

Education and Training System

Integrated Report 2023

New adult members
New employees

OthersCoaching training

NPS Trainer education

Foreign languages
and global literacy

Production and technology

Production technology
and basics seminar

Jr. power-up

Dispatch to Universityof Technology

Power-up

Foreign language training
in JapanManagement seminars

Top management
seminars

Power-up mentors
Dispatch for outside training

Team leaders

By Theme and Job Function (Partially)

Management

New employees

Mid-level and junior staff

Mid-career employees

Staff

Assistantmangers

Newly appointed managers

Power-up senior mentors

Fortuna

Existing managers

Task leaders

Third generation

Supervisory positions

Managers

Next-generation managers

Sectionmanagers

Managerial staff

Generalmanagers

Officers

ForemenLevel-specific Training (Regular Employees/Regional)

Operators

Level-specific Training (Career Track/National)

Mid-level and junior staff

Foundations of Value Creation

Data

Plan

⃝

71

Value Creation

Securing human resources

Human resource development

For the periodic recruitment of career track employees who will join us in
April 2023, we planned to conduct joint recruitment by the threecompanies as has been done previously. While it was difficult to predict
the impact of the COVID-19 pandemic on recruitment activities as in theprevious year, we focused our efforts on enhancing internship programs
and also increased opportunities to contact women and non-Japanese
students in our efforts to increase the number of employees. In midcareer recruitment, the level of difficulty of recruitment differs according
to the job type, place of work and other factors. We therefore plan to
introduce measures and systems to utilize diverse recruitment tools andpromote referral recruitment and alumni recruitment.

Regarding training, we continue to utilize remote and online learning
programs that took root due to the COVID-19 pandemic, thus
pursuing efficient learning using new methods, such as blended
learning and flipped learning. We decided to introduce the Learning
Management System (LMS) in FY2023 as the Group’s learning
management platform, in our ongoing efforts to improve the effectsof learning and build a system for managing these effects. Further,at the NLM Group, group training contributes to increased
cooperation and the sense of unity within the Group. Therefore, we
regularly provide group training, which serves as an opportunity forhuman resources from Group companies to get together.

FY2022 Initiatives
Securing human resources

Human resource development

Nippon Light Metal Co., Ltd. hired 26 career track workers in FY2023
through its regular recruitment activities. This includes 5 women,
meaning that 19% of the newly hired career track workers were
women. The percentage of newly hired career track workers thatwere women fell a little short of the target of 20% or more, which
was newly set in FY2022. However, we recognize that initiatives tostrengthen the recruitment of women, including a women-onlyinternship program, led to a certain level of achievement. Regarding
the recruitment of non-Japanese people, we have continued to
employ one or more non-Japanese people since FY2020. To recruiteven more of these employees, we plan to do recruitment activities
locally in overseas countries in FY2023. To recruit high-school
graduates as skilled workers, who have been growing more difficult
to recruit every year partly due to the declining birthrate, we havelaunched initiatives to recruit more women. Recruitment staff frombusiness sites share their recruitment plans. Measures they areplanning include measures linked to the improvement of workplaceenvironments, such as new construction and addition of toilets andrest areas, as well as the expansion of job categories.

For the total optimization of training within the Group, we
prepared to introduce the Learning Management System (LMS),
which covers all training other than HR-related training. The
preparations were completed, and the LMS was launched in
FY2023. Regarding tiered training, we introduced a new NLM
Management Seminar aimed at updating the knowledge andskills of existing managers who have few opportunities toreceive training after being assigned to their positions. In
FY2022, a total of 565 managers from the whole Group received
this training. We will continue to hold this seminar as a regularlearning opportunity for managers, changing its theme every
year. Moving forward, we will shift to the Unified Group Training,which we plan to begin providing in FY2025, aiming to build a
training system for the continued development and productionof human resources who are appropriate as leaders. In addition,
we resumed overseas training, which had been suspended dueto the COVID-19 pandemic. In July 2022, one employee of
Nippon Light Metal Co., Ltd. was seconded to an aluminum
processing research center in Canada. In addition to working on
research projects with local staff, the trainee also interacts withpeople in a different culture. The goal of this training is todevelop globally competitive human resources.
The NLM Group aims to create new value from Group
coordination. Therefore, we also attach importance to the roles
played by group training and Group events that are held inperson, which lead to the strengthening of Group engagement.
In FY2022, the NLM Group Conference for Presentation of
Improvement Cases, in which improvement cases from Group
companies are presented, was held in-person for the first time inthree years. This led to the development of a sense of belonging
to Team NLM. In FY2022, the amount of expenditure for training
per Group employee,
which had been on a
downward trend dueto the COVID-19
pandemic, increased,
mainly reflecting theorganization of new
training programsand the resumptionof in-person training.
Conference for Presentation of Improvement Cases

Participants in the Group’s Major Training Programs in FY2022
Training program

Main target
participants

Number ofparticipating Number ofcompanies trainees

Next-generation manager
training

Senior managers

13

16

NLM Management Seminar

Existing managers

18

565

Managerial training

Newly appointed
managers

13

63Mid-level employee training

Manager candidates

14

52

New employee training

New employees

442

NPS Trainer education

Plant engineers

13

38

Production technology andbasics seminar*1

Development personnel
and engineers

16

904

Fortuna*2

Female employees

610Power-up*2

Next plant supervisors

739

Jr. power-up training

Young skilled workers
and clerical workers

1372

Coaching training

All mid-career orhigher-level employees

19

122

Changes in the amount of expenditure for training

Average annual amount ofexpenditure for education/
training per employee

Unit: Thousand yen

2018

2019

2020

2021

2022

24.9

25.0

16.2

17.8

31.1

*1 The figure for the production technology and basics seminar is the total number oftrainees who attended any one of a total of 10 courses.
*2 Trainees of Power-up and Fortuna includes mentors.

Integrated Report 2023

72

Basic Information

Protecting and respecting human rights
Background Behind the Revision of the Policy
We formulated the NLM Group’s Human Rights Policy in 2016 andhave been pushing forward with measures to protect and respect
the human rights of Group employees and reporting anddisclosing the status of our initiatives upon request. However, in
response to the growing social awareness of the protection of andrespect for human rights, we have decided to proactively work topromote measures to protect and respect the human rights of our
stakeholders including employees and disclose the status of theinitiatives voluntarily. In 2020, we identified “Protecting andrespecting human rights” as a material issue, and in 2022, we
included respect for human rights in our new Management Policy.
We found it necessary to reflect new perspectives andmeasures in the policy in taking proactive initiatives forprotecting and respecting human rights, which is why we haverevised the policy.

1. Development of international human rights standards: In recent
years, international society has widely recognized the importance ofinternational human rights standards, labor standards, and otherinternational standards on human rights protection that have been
adopted by the United Nations, International Labour Organization (ILO),
and other organizations. These standards also place responsibilities oncompanies, requiring that they respect human rights.
2. Globalization of businesses: At the NLM Group, we have begun tooperate our businesses on a global scale. Due to overseas
expansion and the formation of global supply chains, now morethan ever, we need to pay attention to the status of human rights incountries and regions other than Japan.
3. Growing expectations of stakeholders: In recent years,
stakeholders’ expectations regarding the ethical values and social
responsibilities of companies have been increasing. Now more thanever, it is necessary for us to proactively address social issues andhuman rights infringements.

Before revision

After revision

1.	Compliance with relevant laws and regulations
and respect for international standards
2. Non-discrimination
3. Growth of corporate culture
4. Creating a rewarding workplace
5. Remedy and correction
6.	Measures to the conflict minerals issues
7. Sharing of the policy		Preamble
6. Dialogue/discussion with stakeholders
1.	Compliance with laws and7.	Human rights due diligence
regulations of each country and 8. Complaint processing mechanism
respect for international norms
9. Redress
2. Scope of application
10. Education
3.	Prohibition of discrimination
11. Sharing of the Policy
4. Creation of satisfying workplaces
5. Addressing responsible procurement

Data

Commitment
under thepolicyAssessment of impacts onhuman rights

Initiatives regarding
internal environment/
systems

Supply chain
management

4Q

1Q

2Q

2024
3Q

4Q

1Q

2Q

3Q

4Q

Revision of the human rights policy
Describing our human rights management
framework in the integrated report
Implementing human rights due
diligence

Supply chain human rights due diligenceFor centrally procured products

Human rights due diligence in relation to foreign technical interns

Changing internal systems(HR, assessment, workstyles) andintroducing barrier-free equipment

Formulation of the Suppliers Codeof Conduct
Sustainable, responsible
procurement
Conducting anonymous employee
surveys
Checking employees’ duty status,
exchanging views with the labor union
Describing the results of human rights risk
assessments in the integrated report

External disclosure
Establishment of a complainthandling mechanism (forresponding to the negative
impact on human rights thathas occurred)

New initiatives

3Q

2023

Incorporating the contents of human rights and
Implementation of
education and training diversity training programs into the LMS menu

Implementation of monitoring(follow-up investigation)

Remedial
measures(Fiscal year)2022

Our action

Formulation of a human rights
policyImplementationof preventive
and corrective
measures (toaddress theapparent andlatent negative
impacts onhuman rights)

initiatives and eight categories of measures described in Businessand Response to Human Rights (Digest Version), which was
published by the Human Rights Bureau of the Ministry of Justice.

Considering the establishment of a contact
for human rights consultations
Considering the establishment of a
supplier hotline
Customer support contact

Existing initiatives

We also formulated the FY2022 Sustainability Promotion Plan in FY2022 and managed its progress.

https://www.nikkeikinholdings.co.jp/csr/human-rights/0402.html

Framework

Integrated Report 2023

Category

Further, during the revision process we received advice from a
law firm with extensive knowledge of sustainability and ESG. The
previous policy, which consisted of seven items, was revised intoa policy with a preamble and 11 items.

●NLM Group Human Rights Policy73

In response to the launch of the Human Rights Subcommittee,
the NLM Group formulated a plan for its initiatives for protecting
and respecting human rights for FY2022 to FY2024. Regarding
items of initiatives, we formulated our plan based on the three

Implementing
human rights
due diligence

At the NLM Group, we established the Human Rights
Subcommittee in November 2022 to further promote initiatives
for protecting and respecting human rights. The neworganization consists of people in charge of HR andprocurement from the Personnel, General Affairs, Accounting &Finance Administration Dept., which is deeply involved in humanrights, and people in charge of CSR and compliance from the
CSR & Auditing Administration Dept.
The Human Rights Subcommittee meets once a month, inprinciple. Progress in the action plan is reported, and information
about trends related to protection and respect for human rights
is shared in the meetings. Results of activities are reported to
the Group CSR Committee, the Group Executive Committee
and the Board of Directors.

Foundations of Value Creation

Plan and Initiatives

Key Points of the Revision of the Policy
In revising the policy, we reviewed the requirements of the policy
in consideration of stakeholders’ expectations for the Group’s
initiatives protecting and respecting human rights, as well as theGroup’s framework.

Value Creation

Board of Directors
Supervision

ReportingGroup Executive Committee
Management

ReportingGroup CSR Committee
Management

Reporting

Human Rights Subcommittee

Participating departments
Personnel, General Affairs, Accounting &Finance Administration Dept.
(HR/Procurement)
CSR & Auditing Administration Dept.
(CSR/Compliance)
Responsibilities of each department
Personnel, General Affairs, Accounting &Finance Administration Dept.
HR: Protecting and respecting human rights
Procurement: Protecting and respecting
human rights in supply chains
Central CSR and Audit OfficeCompliance:
Taking remedial measures where an infringementon human rights has been identified
CSR: Progress management and coordinationof initiatives, response to external parties, etc.

Plan

Results

Evaluation

Building a structure for promoting the respect and protection of human rights
Formulating an action plan for promoting the respect and protection of human rights
Reviewing human rights policy
Formulating guidelines and a plan for the implementation of human rights due diligence
Conducting a CSR procurement questionnaire survey of suppliers and giving
them feedback
Implementing human rights due diligence in the virgin ingot supply chain(updating information)
Conducting a survey on the status of the implementation of CSR procurementin purchases by plants and building a monitoring structure
Conducting human rights due diligence in the supply chain

Established the Human Rights Subcommittee
Formulated a medium-term action plan (FY2022-FY2024)
Completed the revision of the policy
Developed the implementation guidelines and plan
Conducted a survey of more than 400 business partners
using a common format
Requested that major suppliers (six companies) update
information
Conducted a CSR procurement questionnaire survey andrequested feedback
Conducted a survey using a self-check sheet in a common
formatConducted a questionnaire survey on the employment of
non-Japanese workers
Prepared to describe them in the integrated report

Progress made as planned
Progress made as planned
Progress made as planned
Progress made as plannedMore progress made thanplanned
Progress was made but
the plan was not achieved.
Progress made as planned

Implementing human rights due diligence within the Group
Disclosing the results of human rights due diligence

Progress was made but
the plan was not achieved.
Progress made as planned
Progress made as planned

A Questionnaire Survey of Group Companies Regarding the Employment of Non-Japanese Workers
During February and March 2023, we conducted a questionnaire
survey of 39 Group companies in Japan regarding their employment of non-Japanese workers to identify human rights risks
related to non-Japanese workers working for the NLM Groupand preventing and alleviating such risks.
No serious human rights risks were found by the survey.
However, the survey revealed the lack of full knowledge of thestatuses of employment and work of non-Japanese workers who
are not directly employed by the Group, such as dispatchedemployees and employees of outsourcing contractors, and theexistence of issues in the translation of explanatory documents
which need to be understood fully into their first languages.
Moving forward, we will establish a subcommittee consistingof people in charge of HR from Group companies and implement
initiatives such as the organization of issues related to practicaltasks involved in the employment of non-Japanese workers
including technical interns and the sharing of good examples.
Integrated Report 2023

74

Basic Information

Supply Chain Management
PolicyAt the NLM Group, we have set a basic policy that is a part of ourManagement Policy, which states, “The Group will continuously
provide diverse value to customers by deepening the level of collaboration and coordination within and outside the Group.” To continue toprovide value to customers it is necessary to respond immediately
and flexibly to daily changes in the environment. We have therefore

set developing a stable supply chain and a resilient value chain that is
flexible to changes as material issues, aiming to achieve responsible
procurement, production and supply. To achieve the above, we will
work with suppliers to promote procurement activities in consideration of CSR, including legal compliance, respect for human rights,
environmental protection and the safety of products and services.

CSR Procurement Policy
The purchasing departments of the NLM Group engage inprocurement activities under the CSR procurement policy
shown on the right. To ensure this policy becomes entrenched,
we hold a meeting of purchasing personnel every six months. In
these meetings, purchasing personnel from 27 Group
companies gather to share procurement information and issues
and information about matters related to CSR procurement. In
addition, we hold workshops to prevent misconduct in ourefforts to improve procurement compliance.
We also conduct questionnaire surveys of suppliers and fact
finding in the supply chain to increase supplier awareness andstrengthen our supply chains.

1．
Fair and good-faith procurement
2．
Elimination of antisocial forces
3．
Procurement compliance4．
Control of chemical substances in products
Consideration of human rights, the labor5．
environment, safety and health6．
Business continuity planning (BCP) initiatives
7．
SDG-related Initiatives
CSR Procurement Policy: https://www.nikkeikinholdings.co.jp/csr/fair-practice/0702.html

Framework
The NLM Group runs a wide range of businesses and also purchasesa broad array of items. For this reason, our purchasing system has
adopted the basic policy of giving autonomy to each field of businesswhile engaging in moderate Group coordination. In addition to
sharing information, we are also strengthening cooperation in

operations through the exchange of human resources. We plan andimplement procurement strategies from diverse perspectives andtake measures to manage and hedge risks as well as reduce costs.
We are trying to anticipate and solve a range of issues to achieve
responsible procurement through Group coordination.

For the FY2022 questionnaire surveys of the NLM Group’s
suppliers of centrally procured products, we adopted the online
questionnaire. We sent out questionnaires to approx. 400
suppliers as in preceding years. In FY2022, we received
responses from 78% of suppliers.
To a question about the progress of their initiatives forachieving the SDGs, 50% of respondents answered, “We arepromoting initiatives,” up approx. 19 percentage points from
31% in the previous survey, showing that many suppliers haveentered the phase of promoting initiatives to achieve the SDGs.
To the question about whether they have formulated BCPs
anticipating the occurrence of a major disaster, 48% of thecompanies that responded answered “BCPs are alreadyestablished,” up approx. 9 percentage points from 39% in theprevious fiscal year. In addition, companies that have yet tobegin formulating BCPs at present answered, “We plan toformulate them roughly within one year,” showing that many
suppliers are about to take countermeasures to address majordisasters.
The purchasing departments of the NLM Group will continue
to encourage suppliers to develop countermeasures to address
the things that may occur in the environments surrounding
them. On the other hand, as a result of the questionnaire, theGroup found that further measures need to be taken regardingsome suppliers. We will increase the awareness of these
suppliers so that they understand the Group’s CSR procurement
policy.

■We are promoting initiatives■We plan to promote initiatives in the future

16%
25%

FY2022 Initiatives
Developing a stable supply chain
The procurement environment surrounding the NLM Group has
been changing rapidly, with the COVID-19 pandemic, theRussian invasion of Ukraine and other events.
The supply of metallic materials has been unstable due toelectricity regulations in China, and since last fiscal year it hasremained absolutely imperative that we prepare for the predictedrisks in China and soaring market prices. In response to this, wereduced risks by increasing the ratio of metallic materials
procured from suppliers other than suppliers in China. At thesame time, we established purchasing routes with stable, fair
prices by creating a formula for determining prices for the items
we purchase.
We procure aluminum ingots, which are our main raw
material, from several countries and regions from the viewpointof purchasing from multiple sources. At the same time, we arealso building a procurement system in Japan in consideration of
the risks of procurement from overseas suppliers. Further, wehave gotten ready to respond flexibly to rapid changes indemand by preparing multiple supplier options, including
domestic and overseas suppliers, and multiple contract options,
including long-term and short-term contracts, aiming for
operations that enable us to reduce inventory risk.
Large-scale disasters, geopolitical risks and resource inflation
are all elements of the instability of the supply chain. At the NLMGroup, we take the following measures to minimize these risks.

75

Integrated Report 2023

15%
⃝Reducing geopolitical risks by procuring items from new
production regions in addition to items from existingproduction regions⃝Building stable supply systems under annual contracts with“suppliers whose faces we can see”
⃝Shifting from purchasing from a single source to purchasingfrom multiple sources⃝Creating a formula for determining prices of items we purchase.
With these measures, we are developing a stable supply
chain to minimize the damage when a risk is actualized.

50%

26%

31%

2020

2021

(Fiscal year)

Have you formulated business continuity plans (BCPs),
including plans on functions such as raw material procurement, production, transportation and purchasing, in anticipation of a major disaster occurring?
■BCPs are already established■BCPs are currently being formulated*Questionnaire implemented since FY2021

A resilient value chain that is flexible to changes⃝Results of the supplier questionnaire survey in FY2022
The purchasing environment surrounding us is expected tocontinue to undergo major change. At present, we predict awide range of risks including global warming, major disasters
and geopolitical risks. We need to learn about the current factsof the countermeasures taken by suppliers to address thesesurrounding circumstances. Accordingly, we conductedquestionnaire surveys of suppliers again in FY2022.
From the viewpoint of quality, the environment and social
responsibility, the NLM Group needs to provide suppliers withsupport to maintain customers’ satisfaction and trust, and thepurchasing departments need to work to increase theawareness of suppliers and strengthen cooperation with them.

2022

20%
18%
39%
2021

48%
2022

Foundations of Value Creation

Data⃝Regarding human rights due diligence initiatives
For human rights due diligence, it is necessary to understandthe situation from an objective point of view. At the NLM Group,
we have been demonstrating our efforts on human rights byobserving our Human Rights Policy, responding to the surveys
conducted by our customers by collecting information about our
supply chains and conducting questionnaire surveys of our
suppliers.
In FY2022, we identified and assessed risks by targetingsome suppliers and experimentally using the CSR/Sustainable
Procurement Self-assessment Tool Set from the Global
Compact Network Japan. Moving forward, we will take thefollowing steps to advance human rights due diligence.
Contents of initiatives taken in FY2022 and steps we plan totake in FY2023 are shaded in red.
Steps for human rights due diligence
1

2

Formulation of a
Declaration of commitment to responsibility
human rights policy to respect human rights

Implementing
human rights due
diligence❶●

Identification and evaluation of negative
impacts❷

Prevention and mitigation of negative
impacts❸ Evaluation of effectiveness of initiatives❹ Explanation and information disclosure3
Do you promote initiatives aimed at achieving the SDGs?

Value Creation

MeasuresResponding to the damage caused by thenegative impact on human rights

The goal of the FY2022 survey was to identify and assess thenegative impact on human rights. We experimentally requested
that 22 suppliers, which account for approx. 70% of the Group’spurchases in monetary terms, respond to the CSR/Sustainable
Procurement Self-assessment Tool Set, thus identifying risks.
Regarding items related to human rights, the average score washigh but some suppliers answered that they have no systems
for redressing considerations for local communities orindigenous people. This means that suppliers’ consideration of
local communities or indigenous people are prerequisite for the
production of products, and we believe that one factor is that a
clear-cut system for redressing issues has yet to be established.
Assessment scores were high for items related to information
security, quality and safety and labor.The score regarding local
communities was high, but the score rate was low compared tothe other major items. One suspected factor is that because
many of the subject suppliers have plants in industrial districts,
many of the companies selected answers with low scores, suchas “We have not taken any initiatives for local communities atpresent.”
We plan to increase the number of companies that werequest to respond to this questionnaire to the companies
responsible for 80% of the overall Group’s purchases inmonetary terms by FY2030.

(Fiscal year)

Integrated Report 2023

76

Basic Information

Local communities
Policy⃝The NLM Group respects local culture and customs and contributes
to the development of local communities in harmony with them. In
addition, through activities to protect biodiversity we contribute to
the conservation of local environments.
⃝The NLM Group contributes to the development of next-generation
human resources through education on manufacturing and support
for academic research.
⃝The NLM Group strives to enhance its support system so that employees
can voluntarily take part in activities that contribute to local communities.

At the Amehata Dam (Hayakawa-cho, Minamikoma-gun, Yamanashi
Prefecture) which is maintained by Nippon Light Metal Co., Ltd., a major
subsidiary of the NLM Group, Typhoon Krosa in August 2019 and Typhoon
Hagibis in October 2019 caused flooding damage across the region. In
response, Nippon Light Metal established the Amehata Area SedimentPlan

regional development by engaging in dialogue with people from each
community. These initiatives are shared at Group General Affairs Liaison
Meetings attended by the general affairs personnel of Group companies
and business sites, to facilitate solutions to each local issue.

Social Contribution Accounting

FY2022 Plan⃝Understanding and considering the promotion of employees’social contribution activities⃝Supporting cultural and sports projects and educational andresearch institution in each local area
⃝Active engagement with local communities⃝Cooperating with the police and other external organizations
and collecting information⃝Preparations for publishing social contribution activity website posts

In FY2022, we participated in 319 local programs, and our expenses
were 280 million yen.
Social Contribution Accounting(Million yen)

280
168

113

2018

2019

2020

118

2021

2022 (Fiscal year)

FY2022 Initiatives

Business site
Nikkei Research and Development Center of Nippon Light
Metal Co., Ltd.

June

Toyo Rikagaku Kenkyusho Co., Ltd.

June

Shimizu Plant of Nippon Light Metal Co., Ltd.
Toyo Aluminium K.K.
Riken Light Metal Industry Co., Ltd.
Nikkei Logistics

July

Nagoya Plant of Nippon Light Metal Co., Ltd.

October

Nikkei Niigata Co., Ltd.

NovemberKambara Complex of Nippon Light Metal Co., Ltd.

December

Nippon Light Metal Holdings Co., Ltd.

Integrated Report 2023

Participants in the
Mihomasaki Beach clean up

Short Term

Medium Term

Issue

Construction of a temporary
embankment

ーConstruction complete in November 2020

Securing a river channel

Securing a sufficient river channel to prepare forthe largest ever inflow of earth and sandContinuing to excavate the river channel

Construction work in the inside of the damlake and temporary storage in the dam lake
Increased sedimenttransportation capacity
Aggregate resources
Amehata Rivertransportation route
Hayakawa Rivertransportation route

Ongoing countermeasures
addressing sedimentation
Amount of sediment removed
and transported

FY2020

FY2021

Construction Work
Operation

FY2022

FY2023

Long Term
FY2024FY2025 ~ーProtecting existing structures and riverside roads, constructing temporary storage yards, etc.

ーCompleted in March 2021

Making adjustments to prepare for the
expansion of demand for aggregateー
Detours near narrow sections and rivercrossing structures
Considering use of soil in response to wide
area needs
Consideration for a shift to a long-term plan, etc.
and coordination with relevant organizations

Continuing to use soil as aggregate resources
Construction complete in May 2022
Construction underway

Construction of embankments in candidate soil disposal sites and studying new candidate sites
Under continual consideration
3.0 million m3(complete)

3.0 million to 4.0 million m3(target)Progress Report

Major Social Contribution Activities

Tsunami evacuation drill

Surveying and Design
Discussion and Coordination

Item

Securing a disposal site

180

Countermeasures Investigative Commission in September 2019 together with
the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), theYamanashi prefectural government, and the Hayakawa municipal government.
The Basic Plan for Measures Addressing Amehata Dam Sediment (“the Basic
Plan,” hereafter) was compiled in April 2020 and submitted to the MLIT.

Roadmap of the Basic Plan for Measures Addressing Amehata Dam Sediment

Soilutilization

The NLM Group has adopted the basic policy of allowing eachbusiness site to play a central role in voluntary community engagement
activities while engaging in moderate Group coordination. We pursue
solutions to issues such as engagement with local communities and

77

Data

(Note) For details, please refer to the Basic Plan for Measures Addressing Amehata Dam Sediment (https://www.nikkeikin.co.jp/news/news/common/pdf/p202005070202.pdf)

Framework

May 2022

Foundations of Value Creation

Measures to Address Sedimentation in Amehata Dam

The NLM Group works to contribute to local communities inaccordance with its Social Contribution Policy (established July22, 2016) described at right, so that it can effectively utilize theresources of the Group to contribute to the development of local
communities through social contribution activities that are
unique to the Group.

PeriodValue Creation

Plant tour at the Nagoya Plant

Contents
Cooperation in tsunami evacuation drill conducted by Kambara Tobu Kodomo-en(certified childcare center) operated by the Shizuoka City government
Released a video showing the initiatives the company is implementing as acompany recognized under the Ministry of Health, Labour and Welfare’s YouthYell company certification program
Participation in a clean-up activity at Mihomasaki Beach in Shizuoka City
A plant tour given to third grade students from Inazawa Higashi Elementary
School operated by the Inazawa City government
Weeding and clean-up of the Tarodai Amazarashi Kannon (official name:
Kinryuan) temple grounds in Niigata City
Plant tours given to fifth grade students from Yui Elementary School and Yui Kita
Elementary School, local schools operated by the Shizuoka City government
Watched the MITSUI FUDOSAN 2022 Wheelchair Rugby SHIBUYA CUP as agroup and participated in the event as a corporate volunteer

Participants in the weeding
and clean-up of the Tarodai
Amazarashi Kannon temple
grounds

Plant tour at the Kambara
Complex

Participation in a wheelchairrugby competition as acorporate volunteer

Since FY2020, Nippon Light Metal Co., Ltd. has been working diligently to
implement the Basic Plan. The targets of the short-term plan that ended
at the end of FY2021 were achieved. At present, which is within the
period of the medium-term plan, progress is being made as scheduled.

In implementing the countermeasures, we have recorded an
extraordinary loss of 27,200 million yen in sediment control costs for theperiod up to the fiscal year ending March 2025.

Recurrence prevention measures related to the use of water at hydroelectric power generation
facilities and the renewal of water rights at Hakii Power Plant
Nippon Light Metal Co., Ltd., a major subsidiary of the NLM Group,
investigated the (five) hydroelectric power generation facilities it
owns and permitted by the government in accordance with therequest for Investigations into Water Intake Quantity, etc. of Hakii
Power Plant, etc. of Nippon Light Metal Co., Ltd., which wasreceived from MLIT on April 8, 2022. (Subject period: 1987 to 2021)
As a result of the investigations, it was revealed that the water
intake quantity had been excessive until December 2004 (until
January 2007 if estimated values are included) and the quantity ofwater discharged was insufficient until August 2001 (until September
2003 if estimated values are included). It was also revealed that thequantities of water taken in and discharged in those periods had notbeen reported correctly to MLIT. The company summarized theresults of the investigations and reported them to MLIT on October
6, 2022, and received a notification from the MLIT pursuant to theprovisions of Article 78 of the River Act.
In response, based on the notification pursuant to the above
article, the company submitted a Report on Recurrence Prevention
Measures Related to Water Use and FY2022 Action Plan toThoroughly Raise Awareness of Compliance with River-related Laws
and Regulations to MLIT on November 30, 2022. The company also
submitted the FY2023 Action Plan to Thoroughly Raise Awarenessof Compliance with River-related Laws and Regulations on February
27, 2023 and the Report on FY2022 Self-inspections as Recurrence
Prevention Measures Related to Water Use and Report on Initiatives
Taken in FY2022 to Thoroughly Raise Awareness of Compliancewith River-related Laws and Regulations on May 31, 2023.
(Note) For details, please refer to the Report on Recurrence Prevention Measure
Related to Water Use (https://www.nikkeikin.co.jp/news/news/common/pdf/
p2022113002.pdf) (Japanese only) and the FY2022 Action Plan to Thoroughly
Raise Awareness of Compliance with River-related Laws and Regulations(https://www.nikkeikin.co.jp/news/news/common/pdf/p2022113003.pdf)(Japanese only).

Further, regarding the renewal of water rights at Hakii power
plant, which was under review, a permit to use water pursuant to
the provisions of Article 23 of the River Act was received from MLIT
on March 9, 2023, with the period of the permit shortened to five
years from the date of the renewal.
NLM Holdings and Nippon Light Metal Co., Ltd. will strive toensure appropriate management by further enhancing measures toprevent recurrence, in addition to implementing existing measures
to improve the equipment and the management framework.
Integrated Report 2023

78

Basic Information

Financial and Non-Financial Highlights

Financial H ighlights
Net Sales
売上高

Operating Profit / Ratio of Operating
営業利益／営業利益率
Profit to Net Sales

■■売上高
（百万円）
(Million yen)

500,451465,946■■ Operating Profit (million yen)●● Ratio of Operating Profit to Net Sales (%)

516,954486,579

24,607 24,194
6.0

Return on Capital Employed (ROCE)
使用総資本利益率（ ROCE ）●●使用総資本利益率（ROCE）
（％）
（%）

10.8
22,198
8.0

5.3

8.4

Number of Violations of Laws orRegulations■■ Number of Directors■■ Number of Auditors●● Percentage that are Outside Officers (%)(cases) ■■ Environmental■■ In the Provision of Products or Services■■ Others

19

19

6

6

20

20

20

6

6

6

2020

2021

2022
(Fiscal year)

Net sales increased year on year mainly due torevisions to the sales prices reflecting thecondition of the aluminum ingot market and theprices of raw materials and fuels.

Cash Flows (From Operating/
Investing/Financing Activities)

2018

2019

5.6
4.6

2020

2021

2022
(Fiscal year)

Operating profit declined year on year with profit
squeezed by rising costs resulting from thesoaring prices of raw materials and fuels in
addition to a decrease in sales in the automotive
and truck body business and a slump in the
shipment of thick sheets for semiconductor
manufacturing equipment.

Net Assets / D/E Ratio
純資産／ D/E レシオ(Million yen) ■■ Cash flows from operating activities■■ Cash flows from investing activities■■ Cash flows from financing activities

13

13

36.8

36.8

14

14

14

40.0

40.0

40.0

202,735 201,198 207,104

48,676
41,942

5.3
5.3
13*

3.2

2018

2019

2020

2021

2022
(Fiscal year)

To measure the profitability and growth potentialof our businesses, one of the management
indicators for each business segment we use isreturn on capital employed (ROCE), whichindicates how much profit (ordinary profit before
interest) has been earned as compared to thecapital employed (shareholders’ equity +interest-bearing debt - cash and deposits). ROCE
for FY2022 was 3.2%, mainly reflecting theyear-on-year decline of operating profit.

2018

2020

2021

2022
(Fiscal year)

000

000

0

0

2018

2019

2020

2021

2

73.9

0

2022
(Fiscal year)*Percentage of employees who responded when asked who they
believed was responsible for practicing compliance*All of the above are related to Japanese Industrial Standards (JIS)

Water consumption
水使用量(thousand tons CO2)●● Scope 1 ●● Scope 2■■ Water Consumption (million m3)

Percentage of Raw Materials Used
使用原料の再生地金率
That Are Recycled Ingots●●使用原料の再生地金率
（％）
(%)

1.3

33.3

532

390

●● Payout Ratio (%)

340

362

302

377

328

32.6
27.8

1.0

353

■■ Dividend Per Share (yen)

2019

000

CO2 Emissions
CO2 排出量Dividend Per Share / Total Payout Ratio■■ Net Assets (million yen)●● D/E Ratio (times)

44*(%) ■ Top Management■ Legal Affairs and Compliance Department■ HR department■ Each One of Us

15.5

1.5
2019

Data

Ownership Regarding the Practice ofCompliance*
コンプライアンスの実践に関する当事者

Number of Officers /Percentage
That Are Outside Officers
役員数／社外役員比率

8.7

7,539

2018

Foundations of Value Creation

No n - F i n a n c i a l Hi g h l i g h t s

30,052432,568

Value Creation

0.9

0.9

2021

2022
(Fiscal year)

25.6

25.2

2020

2021

341
308

119.6

220,907 220,758
90.00

90.00

85.00

34,644
74.6

8,194

695

1,487
-8,904-15,745

-626

85

0.7

0.7

0.8

0.8

2018

65.00

2018

-29,684-25,674

2019

2020

-18,0212021

43.0-15,123

2022(Fiscal year)

The decrease in cash flows from operating
activities resulted mainly from an increase intrade receivables and other working capital andthe use of allowance for sediment control
measures for the specified purpose. Net cash wasprovided by financing activities mainly due to adecrease in the payment of dividends.

79

Integrated Report 2023

31.4

2018

2019

2020

2021

2022
(Fiscal year)

We will strive to maintain the D/E ratio at a level
below 1.0. It is the indicator for measuring thesafety of our financial foundation. We will strive toimprove our corporate value by investing for the
future, including in measures to strengthen ourmanagement foundation, R&D, human resource
development, and initiatives to achieve carbon
neutrality, in addition to investing to expand
business in growth areas, such as areas related
to automobiles and semiconductors, and creating
demand and increasing earning power in the areaof infrastructure business. We will continue toinvest in growth and provide shareholder returns
in a well-balanced manner.

2020

2021

2022
(Fiscal year)

2018

2019

2020

2021

2022
(Fiscal year)

Our basic profit allocation policy is to provide
dividends to our shareholders by comprehensively
considering the consolidated financial results andother factors from a medium- to long-term
perspective while striving to strengthen our
financial standing and management foundation.
Regarding the indicator for the return of profits, we
determine the amount of dividends and otherreturns based on a total payout ratio of 30% or
higher, including the acquisition of treasury shares.
(Note) On October 1, 2020, we conducted a one-for-ten reverse
stock split. Accordingly, the impact of the reverse stock split
was considered for the amounts of dividend per share for
FY2019 (fiscal year ended March 2020) and before.

2018

2019

2020

2018

2019

2022
(Fiscal year)*Began to be calculated in FY2019.

50.00

0.8
27.1

-22,7772019

Frequency rate of lost-time injuries
休業災害度数率

Percentage of Female Employees /Average Annual Amount of
平均年間教育・研修費用
Percentage
of Female Managers
Expenditure for Education/Training
女性従業員比率／女性管理職比率■■平均年間教育・研修費用（千円／人）●● Group-wide●● Nippon Light Metal（%）●● Percentage of Female Employees●● Percentage of managers that are women(thousand yen/person)

1.05
19.4

0.91

19.1

0.81

31.1

18.3
15.5

0.73

16.4

24.9

25.0

0.58

0.52

0.52

16.2

0.52
0.27

2018

2019

5.5

5.4

5.5

5.4

5.6

2018

2019

2020

2021

2022
(Fiscal year)

17.8

0.26

2020

2021

2022
(Year)

2018

2019

2020

2021

2022
(Fiscal year)

Integrated Report 2023

80

Basic Information

Operating Results and Financial Analysis
Overview of Operating Results
Regarding the performance of our business, net sales increased year
on year due to the revision of the sales prices to reflect aluminum ingot
market conditions and the prices of raw materials and fuels. However,operating profit, ordinary profit and profit attributable to owners of parent
declined significantly year on year. Profit was squeezed by rising costs
resulting from the soaring prices of raw materials and fuels in addition toa decrease in sales in the automotive and truck mounting businesses
and a slump in the shipment of thick sheets for semiconductor
manufacturing equipment.

FY2019FY2020

FY2021

FY2022Net Sales

465.9

432.6

486.6

517.0

Operating Profit

24.6

24.2

22.2

7.5

Ordinary profit

23.5

24.0

22.9

8.9

Profit attributable to owners of parent

7.5

3.4

16.8

7.2

8.0%

8.4%

8.7%

3.2%

(Results)

Basic Policy on Profit Distribution

We aim to develop a structure which enables us to secure stable ordinary
profit exceeding 30.0 billion yen, to enable the sustainable growth of the
NLM Group. During the 2023 Mid-term Plan, we will create value throughthe growth strategies of the individual business segments. At the sametime, we will build a revenue base that is less susceptible to the external
environment by addressing the Group’s issues.

Our basic policy is to provide dividends to our shareholders bycomprehensively considering the consolidated financial results
and other factors from a medium- to long-term perspective while
striving to strengthen our financial standing and managementfoundation. Regarding the profit return indicator, we determine theamount of dividends and other returns based on a total payout
ratio of 30% or higher, including the acquisition of treasury shares.

(billion yen)(Results)(Results)

FY2025

FY2021

FY2022

FY2023(Results)(Results)(Forecast)(Target underthe 2023
Mid-term Plan)

486.6

517.0

550.0

530.0

(Results)

Net Sales

22.2

7.5

17.0

30.0

*ROCE (return on capital employed): Ordinary profit before interest / Capital employed at the beginning of the fiscal year

Ordinary
profit

22.9

8.9

16.0

30.0

Changes in Consolidated Ordinary Profit

Profit

16.8

7.2

7.5

20.0

ROCE*

8.7%

3.2%

5.2%

10.3%

ROCE*

26.3

24.5

29.5

31.1
23.5

20.6

24.0

22.9

12.7

2014

2015

2016

2013 mid-term management plan

2017

2018

2016 mid-term management plan

Amid these significant, complicated changes in the businessenvironment, we revised the 2022 mid-term management plan,a three-year plan that started in April 2022, in light of thechanges in the Group’s business structure and strategic

2019

2020

2021

2019 mid-term management plan

2022 (Fiscal year)
2022 mid-term
management plan

initiatives during FY2022, and formulated the new 2023 midterm management plan, a three-year plan that started in FY2023(hereafter, the “2023 Mid-term Plan”), aiming to enhance theGroup’s corporate value.

We expect profit to grow year on year in FY2023 due to the effectof the revision of sales prices, which more than offset the soaring
prices of raw materials and fuels, in addition to recovery of sales(billion yen)sediment control measures, which resulted from theimplementation of the sediment control plan, as well as thecontinued efforts to enhance our financial foundation, despite theposting of net loss at a consolidated subsidiary in which we held anon-controlling interest and a decrease in non-controlling interest
reflecting liquidation of another subsidiary, among other events.

● Equity Ratio (%)

1.8

FY2022 results

Net Sales
Operating Profit

Equity Ratio and D/E Ratio

FY2023 forecast(May 15)

1.6

1.4

25.0

25.5

26.6

28.8

2012

2013

2014

2015

35.6

37.2

0.9

0.8

39.0

39.6

0.7

0.7

2018

2019

Change

517.0

550.0

+33.0
（+6.4%）

7.5

17.0

+9.5
（＋125.5%）● D/E Ratio (times)

1.8

100 yenAnnualdividend paid

Annualdividend forecast

50 yenYear-end
dividend paid Year-end
dividend
10 yenInterim
forecast
dividend paid
40 yen2022

Interimdividend
forecast

10 yenFinal year of (Fiscal year)
the 2023 Mid-term Plan
2025

2023

We will strive to improve our corporate value by investing for the future,including in measures to strengthen our management foundation, R&D,
human resource development, and initiatives to achieve carbon neutrality,
in addition to investing to expand business in growth areas, such as areas
related to automobiles and semiconductors, and creating demand andincreasing earning power in the area of infrastructure business.
We will increase earning power by implementing measures guided by
the 2023 Mid-term Plan and then review our business structure andimprove capital efficiency. We will thus strive to ensure management with
an awareness of the improvement of the price-to-book ratio.

FY2023 Earnings Forecasts

Financial Position
In conjunction with various measures built into its mid-term
management plan aimed at establishing a healthier and firmer
management position, the NLM Group concentrated on reducing
interest-bearing debt and enhancing shareholders’ equity to
improve its financial strength. In FY2022, the financial position
remained stable mainly due to a decrease in allowance for

Annual target

40 yen*ROCE (return on capital employed): Ordinary profit before interest / capital
employed (shareholders’ equity + interest-bearing debt - cash and deposits)

8.9

6.9

Dividend Per Share

50 yenOperating
Profit2013

Data

Financial Indicator(billion yen)

2012

Foundations of Value Creation

Management Indicators (2023 Mid-term Management Plan)

During FY2022, in our business environment there was widespread
concern about the economic slowdown in Japan and also in othercountries, mainly reflecting the global credit crunch, in addition to supply
chain disruptions that resulted chiefly from the prolonged Russian
invasion of Ukraine, persistently high prices of raw materials and fuels,
and the semiconductor shortage, more than offsetting the progress inthe mitigation of the impact of COVID-19. In addition, there was a
downward turn in the aluminum ingot price, which had continually risen
up to the previous fiscal year. However, it still remained at a high level.

(billion yen)

Value Creation

Ordinary profit

8.9

16.0

+7.1
（＋52.4%）+0.3（＋4.1%）

37.6

38.1

39.0

Profit attributableto owners of parent

7.2

7.5

0.8

0.8

0.8

Dividend per share

50 yen50 yen*

2020

2021

2022

±0

in products related to automobiles and truck mountings in Japan,
despite uncertainties such as declines in semiconductor-related
products and automotive products in China.
Factors for Changes in Ordinary Profit
Sales Purchased
pricesitems(billion yen)

+11.9

-5.4

Others-5.7
New
Sales products
quantity +0.9

+5.4

16.0

8.9

+7.1 billion yen
FY2022 results

FY2023 forecast(May 15)*Interim dividend of 10 yen/share and year-end dividend of 40 yen/share

81

Integrated Report 2023

2016

2017

(Fiscal year)

Integrated Report 2023

82

Basic Information

Value Creation

Foundations of Value Creation

Data

Operating Results and Financial Analysis

Key Financial Data for the Past 11 Years

(Unit: million yen)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Operating Results
Net Sales
Gross profit margin (%)
Operating Profit
Ordinary profit
Profit attributable to owners of parent

371,887
16.9
8,154
6,873
3,355

402,82917.1
12,617
12,7305,128

431,477
17.8
19,30520,6009,645

464,405
19.2
26,821
24,526
15,533448,38120.4
30,22526,252
19,520481,439
19.5
29,89329,53318,012500,451
19.4
30,05231,084
20,560465,946
20.1
24,60723,475
7,476

432,568
20.8
24,19424,0303,366

486,579
18.8
22,19822,92816,759516,954
14.9
7,539
8,859
7,203

Segment Information
Net Sales
Alumina, Chemicals and Ingot Business
Sheet and Extruded Products Business
Fabricated Products and Other Businesses
Foil and powder products

93,902
63,161
126,218
88,606

105,488
71,274132,261
93,806

114,339
82,823138,088
96,227

109,844
103,340
149,220
102,001

101,840
98,165
154,684
93,692

111,100
106,955
169,019
94,365

117,008
107,835
180,259
95,349102,833
101,193
172,975
88,94591,18197,850157,297
86,240127,633
113,876
153,415
91,655

155,981
107,399
153,167
100,407

Operating Profit
Alumina, Chemicals and Ingot Business
Sheet and Extruded Products Business
Fabricated Products and Other Businesses
Foil and powder products
Elimination or corporate

3,273
1,675
6,974
(771)
(2,997)

2,917
2,668
7,224
2,889
(3,081)

6,069
4,230
7,704
4,183
(2,881)

9,138
3,058
10,958
6,829(3,162)

10,126
7,775
10,245
5,478(3,399)

8,954
9,767
9,783
4,856
(3,467)

9,616
7,152
11,681
5,114(3,511)

10,902
3,556
10,4403,074(3,365)

9,614
5,950
8,892
3,311
(3,573)13,021
7,518
3,776
1,570
(3,687)

10,201
(541)
59
1,518
(3,698)Financial Position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Shareholders’ equity
Accumulated other comprehensive income
Non-controlling interests
Balance of interest-bearing debt

217,648
202,138
182,173
122,989
102,297
2,851
9,476
188,844

226,807
205,731
181,520
129,824
105,787
4,629
10,778
198,668

248,906
208,371
202,220
117,672
111,791
9,631
15,963
188,990

247,363
204,831
186,881
120,894
124,884
5,300
14,235
182,207

246,394
202,229
184,277
90,722
154,600
5,053
13,971
149,835

262,671
204,528
191,729
86,148167,115
6,842
15,365
139,997

267,238
214,065
184,364
94,204
183,163
4,691
14,881
139,570

246,374
223,630
162,341
106,465
184,547
1,728
14,923
132,622

270,781
236,174
166,116
133,735
184,763
5,949
16,392
146,229296,727
235,874
190,542
121,152
194,967
8,122
17,818155,406

292,333
233,868
196,479
108,964
196,455
9,020
15,283
163,570

Cash Flows
Cash flows from operating activities
Depreciation
Cash flows from investing activities
Capital expenditures
Cash flows from financing activities

18,030
16,259(14,025)
17,121(5,175)

18,14816,435(18,998)
14,001
5,762

11,78016,406(7,119)15,869(17,581)

37,77016,356(19,419)
18,861(10,708)

36,48816,602(11,887)
19,908(24,432)

25,86817,126(14,948)
21,077(17,040)

34,644
17,294(22,777)
29,926(8,904)

48,676
18,694(29,684)
29,978(15,745)

41,942
19,157(25,674)
25,9338,194

1,487
20,063(18,021)
23,222(626)

695
19,732(15,123)
18,25385

Per-Share Information (yen) (Note)
ProfitDiluted profit
Net assets
Amount of dividends

61.69―
1,933.30
30.0

94.29
90.43
2,030.30
40.0

177.35155.862,232.72
50.0

285.62251.012,393.87
60.0

345.79314.65
2,578.24
80.0

290.88―2,809.28
80.0

332.03―
3,033.74
90.0

120.73―3,008.26
90.0

54.37
―
3,081.54
65.0

270.77—
3,281.17
85.0

116.33—
3,318.17
50.0

3.7
3.3
25.0

5.9
4.8
25.5

8.2
8.3
26.6

9.0
12.3
28.8

9.6
13.5
35.6

10.7
10.8
37.2

10.8
11.4
39.0

8.0
4.0
39.6

8.4
1.8
37.6

8.7
8.5
38.1

3.2
3.5
39.0

545,126
5,063
10,392545,126
4,984
10,438545,126
4,495
13,335545,126
4,794
12,961

619,938
4,939
13,126

619,938
5,177
12,855619,938
5,447
13,316

619,938
5,867
13,611

61,994
5,935
13,162

61,994
6,443
12,75061,994
6,391
12,633(Fiscal year)

Indicators (%)
Return on capital employed (ROCE)
Return on equity
Equity ratio
OthersNumber of shares issued (thousand shares)(Note)
Research and development expenses
Number of employees(Note) On October 1, 2020, we conducted a one-for-ten reverse stock split. Accordingly, the impact of the reverse stock split was considered when calculating thedividend per share for FY2019 (fiscal year ended March 2020) and before.

83

Integrated Report 2023

Integrated Report 2023

84

Basic Information

Data

Boundary

FY2018FY2019FY2020

FY2021

FY2022Unit

Full-time directors

Consolidated
Consolidated

Number of employees*1Managerial staff

General

Japan

Asia

U.S. and Europe

Number of employees
in each age group*2

Under 15

15 to 19 years old

20 to 29

30 to 39

40 to 49

50 to 59

60 or older

1

223
1

217
1

person(s)

217

210

224

218

person(s)Consolidated

Male

1,640

1,666

1,712

1,674

1,680

person(s)Consolidated

Female

95

96

100

95

99

person(s)Consolidated

Total

1,735

1,762

1,812

1,769

1,779

person(s)Consolidated

Male

9,087

9,345

9,040

8,486

8,398

person(s)Female

2,494

2,504

2,310

1,775

1,773

FY2019FY2020

FY2021

FY2022

Unit

490

490

427

515

541

person(s)Percentage to employees Consolidated (Japan)

5.3

5.1

4.4

5.3

5.5

%

Three-year retention rate

Consolidated (Japan)

83.8

89.1

87.8

82.3

79.8

%

Number of those who werere-employed after retirement

Non-consolidated (Nippon
Light Metal Co., Ltd.)

8

12

1

8

4

person(s)Labor Union participation rate

Non-consolidated (Nippon
Light Metal Co., Ltd.)

100

100

100

100

100

%

Average age

Consolidated

Male

39.9

39.4

40.7

41.3

42.1

years old

Consolidated

Female

37.4

37.0

38.4

39.8

40.5

years old

Consolidated

Total

39.4

39.0

40.3

41.0

41.9

years old

Consolidated

Male

11.8

11.8

12.7

13.4

13.4

years

Consolidated

Female

8.0

7.6

8.6

10.4

10.3

years

Consolidated

Total

11.1

11.0

12.0

12.9

12.9

years

Consolidated (Japan)

Male

2,157

2,076

2,085

2,119

2,137

Hours/person

Consolidated (Japan)

Female

1,871

1,867

1,919

2,003

2,036

Hours/person

Consolidated (Japan)

Total

2,120

2,047

2,062

2,103

2,122

Hours/person*4

Average duration of service

Consolidated

Total

11,581

11,84911,35010,261

10,171

person(s)Consolidated (Japan)

Male

―

―

―

―

483

person(s)

―

―

―

―

200

―

―

―

―

683

person(s)Total

13,316

13,611

13,162

12,03012,633

person(s)Consolidated

Male

8,399

8,568

8,668

8,621

9,028

person(s)Consolidated (Japan)

Male

302

284

255

257

237

Hours/person

Consolidated

Female

1,271

1,323

1,384

1,431

1,660

person(s)Consolidated (Japan)

Female

150

148

130

153

145

Hours/person

Consolidated

Total

9,670

9,891

10,052

10,052

10,688person(s)Consolidated (Japan)

Total

282

266

238

243

224

Hours/person

Consolidated

Male

2,282

2,221

1,858

1,317

1,289

person(s)Consolidated

Male

1,095

1,239

985

400

371

11.0

10.8

12.7

13.6

days

Female9.9

Consolidated

person(s)Consolidated

Total

3,377

3,460

2,843

1,717

1,660

person(s)Consolidated

Female

9.6

9.6

9.9

12.9

14.2

days

Consolidated

Male

229

222

226

222

243

person(s)Consolidated

Total

9.8

10.7

10.6

12.7

13.7

days

Consolidated

Female

40

38

41

39

42

person(s)Consolidated

Male

57.8

63.9

56.4

59.5

67.6

%

Consolidated

Total

269

260

267

261

285

person(s)Consolidated

Female

73.4

74.3

64.3

67.2

73.4

%

person(s)Consolidated

Total

60.0

65.4

57.6

60.6

68.5

%

Consolidated (Japan)

Male

6

12

12

50

40.6

person(s)Consolidated (Japan)

Female

66

52

42

74

108.3

person(s)Consolidated (Japan)

Total

72

64

54

124

50.8

person(s)Consolidated (Japan)

Male

4

0

2

1

1

person(s)Consolidated (Japan)

Female

2

2

2

1

2

person(s)Consolidated (Japan)

Total

6

2

4

2

3

person(s)Consolidated (Japan)

Male

1

3

5

5

6

person(s)Consolidated

Consolidated

Female
Total

Male

0

0

0

0

0

person(s)Average annual hours worked

Average annual overtime work hours

Average number of days ofannual paid leave taken

Average rate of acquisition of annual
paid leave

Percentage of newly taken childcare
leave*5

Consolidated

Female

0

0

0

0

0

person(s)Consolidated

Total

0

0

0

0

0

person(s)Consolidated

Male

108

108

89

112

98

person(s)Consolidated

Female

15

21

20

13

20

person(s)Consolidated

Total

123

129

109

125

118

person(s)Consolidated

Male

2,153

2,124

1,925

1,691

1,648

person(s)Consolidated

Female

559

600

444

351

361

person(s)Consolidated

Total

2,712

2,724

2,369

2,042

2,009

person(s)Consolidated

Male

3,150

3,164

3,038

2,745

2,716

person(s)Consolidated (Japan)

Female

66

85

96

100

110

person(s)Consolidated

Female

833

894

826

530

552

person(s)Consolidated (Japan)

Total

67

88

101

105

116

person(s)Consolidated (Japan)

Male

59

51

45

43

40

person(s)Consolidated (Japan)

Female

9

8

5

8

11

person(s)Consolidated (Japan)

Total

68

59

50

51

51

person(s)Consolidated

Total

3,983

4,058

3,864

3,275

3,268

person(s)Consolidated

Male

2,878

2,919

2,798

2,641

2,743

person(s)Consolidated

Female

671

741

738

564

600

person(s)Consolidated

Total

3,549

3,660

3,536

3,205

3,343

person(s)Consolidated

Male

1,975

2,010

2,252

2,290

2,467

person(s)Consolidated

Female

276

284

319

351

418

person(s)Consolidated

Total

2,251

2,294

2,571

2,641

2,885

person(s)Consolidated

Male

646

686

650

681

888

person(s)Consolidated

Female

52

60

63

61

122

person(s)Consolidated

Total

698

746

713

742

1,010

person(s)Consolidated

19.4

19.1

18.3

15.5

16.4

%

Consolidated

5.5

5.4

5.5

5.4

5.6

%

Total

Consolidated (Japan)

692

617

486

459

470

person(s)Percentage toemployees

Consolidated (Japan)

7.8

6.8

5.3

5.0

5.1

%

Consolidated (Japan)

211

210

196

205

185

person(s)Integrated Report 2023

FY2018Total

person(s)Percentage of female managers*3

Number of new graduates who
were recruited

Data

Boundary

person(s)Percentage of female employees*3

Number of new hires

85

1

209

208

Consolidated

Number of employees
by country/region

0

216

Total

Consolidated (Japan)

Total employees

Female208

Consolidated

Consolidated

Temporary

MaleFoundations of Value Creation

Consolidated (Japan)

Number of employees who left

Employees, etc.
Number of directors

Value Creation

Number of employees who newly took
nursing care leave

Number of users of the shorter working
hour program

Number of employees who were absent
from work due to mental health problems

Average Annual Amount of Expenditure
for Education/Training

Consolidated

24.9

25.0

16.2

17.8

31.1

thousand yen/personEmployment rate of people withdisabilities*6

Non-consolidated(Nippon Light Metal Co., Ltd.)

2.63

2.57

2.60

2.57

2.68

%

Non-consolidated(Toyo Aluminium K.K.)

1.93

2.55

2.63

2.30

2.52

%

―

―

―

―

68.7

%

Ratio of women’s wages to men’s
wages*7

Non-consolidated(Nippon Light Metal Co., Ltd.)*1 Fixed-term (full-time) employees are included. Temporary employees began to be included in FY2022.
*2 Consolidated figures have been reported since FY2018.
*3 Began to include the number of temporary employees in 2022.
*4 Percentage of employees who are still at the company as of April 1 in the year that is three years after they joined the company.
*5 The number of employees was reported in FY2021 and before. The percentage began to be reported in FY2022.
*6 As of June 1 immediately after the end of each fiscal year. The statutory employment rate is 2.3%.
*7 Began to be calculated in FY2022.

Integrated Report 2023

86

Basic Information

Value Creation

Foundations of Value Creation

Data

Data

Boundary

FY2018FY2019FY2020

FY2021

FY2022

Unit

Boundary

Consolidated

885

731

665

704

★649

thousand tons-CO2

Consolidated(Japan only)*2

748

606

548

605

553

thousand tons-CO2

Consolidated(overseas only)*3

137

Environmental

Greenhouse gas emissions per unitof sales*1

Energy consumption

117

100

96

Consolidated(Japan only)

1.87

1.60

1.57

1.58

1.37

Category 1: Purchased
goods and services*5

Consolidated

1,947

1,690

1,644

1,781

★1,823thousand tons-CO2

Category 2: Capital goods

Consolidated

35

42

39

23

25

thousand tons-CO2

Category 3: Fuel and energy
related activities (notincluded in Scope 1 or 2)

Consolidated

34

34

31

33

32

thousand tons-CO2

Category 4: Upstream
transportation anddistribution

Consolidated

Category 5: Waste
generated in operation

Consolidated

5

4

3

4

4

thousand tons-CO2

Category 6: Business travel

Consolidated

0

0

0

0

0

thousand tons-CO2

tons-CO2/
million yen

0

0

0

0

0

FY2021

FY2022

Unit

23

19

12

15

16

case(s)Consolidated (Japan only)
Consolidated (overseas only)

16

16

7

14

6

case(s)Non-lost-time injuries

Consolidated (Japan only)

64

53

58

46

51

case(s)Consolidated (overseas only)

5

7

3

4

6

case(s)Consolidated

1.05

0.91

0.58

0.73

0.81

Non-consolidated (Nippon
Light Metal Co., Ltd.)

0.54

0.27

0.52

0.26

0.52

Consolidated

28

29

16

24

16

case(s)Number of times
the training was held

Consolidated

2,066

2,156

2,517

2,416

2,319

times

Number of participants

23,05922,307

21,529

total number

Compliance
Number of cases that were reported to Group Hotline

Consolidated

20,972

21,404*12*14

Number of patent publications

Consolidated

167

160

140

213

132

case(s)Number of patent registrations*12*14

Consolidated

92

81

131

88

97

case(s)Consolidated

0

0

0

13

44

case(s)thousand tons-CO2

Consolidated

3

4

4

4

4

thousand tons-CO2

Electricity

Consolidated

10.4

8.1

7.8

8.3

7.7

PJ

Fuels

Consolidated

6.2

6.0

5.5

5.8

5.5

PJ

33.2

30.1

30.4

29.0

25.5

GJ/million yen

Weight of raw materials used in
production

Consolidated

601

523

426

456

555

thousand tons

SOx emissions

Consolidated

379

365

330

350

293

tons

NOx emissions

Consolidated

560

449

380

507

414

tons

Quality assurance
Number of violations of laws or
regulations in the provision of
products/services
Number of prompt reports

Consolidated

8

7

9

15

21

case(s)Number of recalls

Consolidated

4

3

5

3

2

case(s)Consolidated

168

180

113

119

280

million yen

Consolidated

90

90

65

85

50

yen

Community
Expenditure related to social
contribution

Governance

Quantity of water intake*6

Consolidated

23.9

22.6

21.7

21.2

★21.3

million m3

Total amount of discharged water

Consolidated

22.5

21.3

20.7

20.4

20.4

million m

Interim and year-end dividend pershare*15

3

Total wastewater per unit of sales

Consolidated

4.6

4.6

4.8

4.2

3.9

10-5 million m3/
million yen

Water consumption*7

Consolidated

－

1.3

1.0

0.9

0.9

million m3

COD emissions

Consolidated

105

106

90

77

99

tons

Consolidated

51.9

45.6

37.1

44.2

38.1

thousand tons
10 thousand tons/
million yen

Total emissions per unit ofsales

Consolidated

10.3

9.8

8.6

9.1

7.4

Disposed (landfill)

Consolidated

3.5

3.4

3.5

4.8

5.1

thousand tons

Amount of income taxes paid by country*16
Fiscal
year

Japan

China

(Unit) Amount paid: Million yen, Number of employees: People

ThailandU.S.

Indonesia

India

Vietnam

FranceAmountpaid

Number of
employees

Amountpaid

Number of
employees

Amountpaid

Number of
employees

Amountpaid

Number of
employees

Amountpaid

Number of
employees

Amountpaid

Number of
employees

Amountpaid

Number of
employees

Amountpaid

Number of
employees

2020

3,915

10,062

526

1,976

59

785

81

158

1

2

0

46

10

31

0

109

2021

5,725

10,784

450

742

58

758

147

152

1

2

135

181

-4

31

16

109

-5

Disposed (landfill) per unitof salesConsolidated

7.0

7.3

8.2

9.9

9.9

10-6 thousand tons/
million yen

Environmental conservation
expenditure: Investment

Consolidated(Japan)

2,218

1,580

995

1,359

1,972

million yen

Environmental conservation
expenditure: Expenditure

Consolidated(Japan)

6,210

6,248

5,746

5,688

6,498

million yen

Economic effect ofenvironmental conservation
activities: Earnings

Consolidated(Japan)

554

370

334

603

634

million yen

Economic effect ofenvironmental conservation
activities: Changes in
expenditure*8*9

Consolidated(Japan)

-982

1,027

2,098

-1,849-3,625

million yen

Number of cases of lawsuits, penalties, or forfeitures related to theenvironment

Consolidated

0

0

0

0

2

case(s)Number of accidents related to the environment*10

Consolidated

0

3

3

3

6

case(s)Number of complaints related to the environment*11

Consolidated

16

10

6

7

7

case(s)Integrated Report 2023

FY2020Lost-time injuries

Frequency rate of lost-time
injuries*12*13

Compliance meeting

Category 7: Employee
commutingTotal emissions

Number of workplace injuries*12

thousand tons-CO2

Consolidated

Environmental accounting

87

125

Energy consumption intensity per unitof salesEmissions and disposal of waste andwaste byproducts

FY2019SafetyGreenhouse gas emissions (Scope 1, Scope 2)*1

Breakdown of Scope 3 emissions*4

FY2018★ We have received independent assurance by KPMG AZSA Sustainability Co., Ltd. regarding the reliability of the data.
*1 In FY2018, we began to compile statistics on greenhouse gas emissions from our main offices. The sum of Japan only and overseas only figures may not match the consolidated figures due to rounding.
*2 The following CO2 emission factors were used for the calculations.
Electricity in Japan: The CO2 emission factor with T&D losses of each previous fiscal year announced by the Electric Power Council for a Low Carbon Society
Fuel in Japan: The CO2 emission factor for each fuel is set by a ministerial ordinance from the Ministry of the Environment*3 The following CO2 emission factors were used for the calculations.
Electricity overseas: Emission factors of the respective countries shown in CO2FCOMB 2017 from the IEA for FY2021 and before and those shown in CO2FCOMB 2020 from the IEA for FY2022
Fuel overseas: Same as fuel in Japan above *2
The subject period is January to December for FY2018 to FY2019 and April to March for FY2020 to FY2022.
*4 Calculated based on the Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain issued by the Ministry of the Environment and the Ministry of Economy, Trade and Industry.
Figures for FY2022 were calculated using the emission intensity specified in the Inventory Database for Environmental Analysis (IDEA) database Ver 2.3 (for calculating greenhouse gas emissions from the supply chain).
*5 The Scope 3 Category 1 emissions are calculated based on aluminum ingots, aluminum hydroxide, and raw salt as raw materials. Of the items, the aluminum ingots are those purchased by Nippon Light Metal Co.,
Ltd. Purchasing Department.
*6 Only the intake of water used in the manufacturing process is subject to calculation.
*7 Began to be calculated in FY2019.
*8 Changes in expenditure are calculated using the following formula:
Changes in expenditure = expenditure incurred during a base period (FY2021) – expenditure incurred during the current year (FY2022)*9 - (minus) indicates an increase in expenditure.
*10 Environmental problems that affect external parties (such as the leakage of oil or chemicals)*11 Number of petitions from external parties (such as those regarding smell and noise)*12 The subject period is the calendar year (January to December).
*13 Injuries that resulted in one or more days’ absence from work (excluding commuting injuries)*14 Companies subject to calculation were added from FY2020.
*15 On October 1, 2020, we conducted a one-for-ten reverse stock split. Accordingly, the impact of the reverse stock split was considered when calculating the dividend per share for FY2019 (fiscal year ended March
2020) and before.
*16 The amount of taxes paid was 1 yen or more and less than 1 million yen in Singapore, Taiwan and Hong Kong.

Integrated Report 2023

88Independent Assurance Report

Business Conduct Guideline

Independent Assurance Report
To President and Chief Executive Officer of Nippon Light Metal Holdings Company, Ltd.
We were engaged by Nippon Light Metal Holdings Company, Ltd. (the “Company”) to undertake a limited
assurance engagement of the environmental performance indicators marked with(the “Indicators”) forthe period from April 1, 2022 to March 31, 2023 included in its Integrated Report 2023 (the “Report”) for
the fiscal year ended March 31, 2023.

Conclusion
Based on the procedures performed, as described above, nothing has come to our attention that causes
us to believe that the Indicators in the Report are not prepared, in all material respects, in accordance with
the Company’s reporting criteria as described in the Report.
Our Independence and Quality Management
We have complied with the Code of Ethics for Professional Accountants issued by the International Ethics
Standards Board for Accountants, which includes independence and other requirements founded on
fundamental principles of integrity, objectivity, professional competence and due care, confidentiality andprofessional behavior. In accordance with International Standard on Quality Management 1, we design,
implement and operate a system of quality management including policies or procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory
requirements.
/s/ Kazuhiko Saito
Kazuhiko Saito, Partner, Representative Director
KPMG AZSA Sustainability Co., Ltd.
Tokyo, Japan
February 22, 2024

Value Creation

Foundations of Value Creation

Data

NLM Group

Business Conduct Guidelines

The Company’s Responsibility
The Company is responsible for the preparation of the Indicators in accordance with its own reporting
criteria (the “Company’s reporting criteria”), as described in the Report.
Our Responsibility
Our responsibility is to express a limited assurance conclusion on the Indicators based on the procedures
we have performed. We conducted our engagement in accordance with the ‘International Standard on
Assurance Engagements (ISAE) 3000, Assurance Engagements other than Audits or Reviews of Historical
Financial Information’ and the ‘ISAE 3410, Assurance Engagements on Greenhouse Gas Statements’issued by the International Auditing and Assurance Standards Board. The limited assurance engagement
consisted of making inquiries, primarily of persons responsible for the preparation of information presented
in the Report, and applying analytical and other procedures, and the procedures performed vary in nature
from, and are less in extent than for, a reasonable assurance engagement. The level of assurance provided
is thus not as high as that provided by a reasonable assurance engagement. Our assurance procedures
included:Interviewing the Company’s responsible personnel to obtain an understanding of its policy for preparing
the Report and reviewing the Company’s reporting criteria.
Inquiring about the design of the systems and methods used to collect and process the Indicators.
Performing analytical procedures on the Indicators.
Examining, on a test basis, evidence supporting the generation, aggregation and reporting of the
Indicators in conformity with the Company’s reporting criteria, and recalculating the Indicators.
Visiting Nikkei Niigata Co., Ltd. selected on the basis of a risk analysis.
Evaluating the overall presentation of the Indicators.

Basic Information

To become a trustworthy
and reliable company
We accurately understand andcomply with any rules and codes.
We work according to the dictatesof conscience and learnings fromthe history of our business.

Go-an-zen-ni!
We never let our team members get
hurt. “Show up smiling, go homesmiling” is our goal.

Picture yourown evolution

Working with ourcommunity

At all times, we approach our jobs
with the broad perspective of “whatam I capable of?” along with open
minds and curiosity.

We actively engage with local andenvironmental issues to create asustainable and prosperous society.

Creating thefuture together“May I” and“Give it a try”

We create a future that goes aboveand beyond by working throughthe whole process from researchand development to engineering,production, and supply as a team.

Beyond whatcustomers demand
We communicate sincerely with ourcustomers to provide value beyond
what they demand.

We encourage the mindsets of “MayI” and “Give it a try” to keep us
willing to take on new challenges.

Gogen Shugi(three actuals + principles)

Team Nikkeikin

We take Gogen Shugi (Onsite, Products,
Reality, Principles and Rules) seriously
so that we can be proud of what we
produce and provide.

We count our team member’s
issues as “our own issues” andwork together as a team to achieve
our goals.

Nippon Light Metal Group
Notes to the Reader of Independent Assurance Report:
This is a copy of the Independent Assurance Report and the original copies are kept separately by the Company and KPMG AZSA Sustainability Co., Ltd.

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90

Company and Share Information

Basic Information

Global Network

Value Creation

Foundations of Value Creation

Data●Aluminum Ingot and Chemicals ●Aluminum Sheet and Extrusions●Fabricated Products and Others ●Aluminum Foil, Powder and Paste

Corporate Overview (as of March 31, 2023)

Share Information (as of March 31, 2023)

Company Name

Nippon Light Metal Holdings Company., Ltd.

Total Number of Authorized Shares

200,000,000 shares

Head Office Location

Urbannet Uchisaiwai-cho Building,
1-1-13 Shinbashi, Minato-ku, Tokyo

Total Number of Issued Shares

61,993,750 shares

Share Capital

46,525,000,014 yen

President and CEO

Ichiro Okamoto

Number of employees

12,633 (consolidated)

Established

October 1, 2012

Stock Exchange
Listings

Tokyo Stock Exchange Prime Market(Securities code: 5703)

Number of Shareholders

58,694

Major Shareholders (top ten)
Number of
Ratio of
Shares Held Shareholding(in thousands)(%)

Name of Shareholder

The Master Trust Bank of Japan, Ltd.
(Trust Account)

10,088

16.3

Custody Bank of Japan, Ltd. (Trust Account)

3,341

5.4

The Dai-ichi Life Insurance Company, Limited

2,000

3.2

Nikkei-Keiyu-Kai

1,959

3.2

The Light Metal Educational Foundation, Inc.

1,491

2.4

Asahi Mutual Life Insurance Company

1,275

2.1

SMBC Nikko Securities Inc.

1,250

2.0

DFA INTL SMALL CAP VALUE PORTFOLIO

1,199

1.9

Mizuho Bank, Ltd.

1,126

1.8

968

1.6

STATE STREET BANK WEST
CLIENT - TREATY 505234

Nippon Light Metal Holdings● ● ● Nippon Light Metal● ● ● Nikkei Sangyo● Nikkei MC Aluminium● Aluminium Wire Rod● Shizuoka Kosan● Kinki Kenmazai Kogyo● Nikkeikin Kakoh Kaihatsu Holdings● Nikkeikin Aluminium Core Technology● Toyo Rikagaku Kenkyusho● Nikkei Niigata● Nikkei Kambara● Riken Light Metal Industry● Nikkei Inazawa● Nikkei Metal● Nisshin● Nikkei Technology Center● Nikkei Extrusions● Nikkei Panel System● Nikkei Engineering● Nikkei Information Systems● Nikkei New Business● Shiga Nikkei● Shimonoseki Nikkei● Nikkei Matsuo● Nikkei Fujioka● Nikkei Logistics● Nikkei Hokkaido● Nippon Fruehauf● NLM ECAL

● Arumi Reinetsu● Keinara● Fruehauf Industries●Fruehauf Hokkaido● Nippon Electrode● Nikkan● Fruehauf Okayama● Fruehauf Kyushu● NKS● Fruehauf Shiga● Nikkei Kenzai Kogyo● Nikkei Heat Exchanger*● Fruehauf Service● Toyo Aluminium● Nikkei Partners● Nikkeikin OhLiS*Effective on October 1, 2023, the tradename of this company was changed to
Nikkeikin ALMO Co., Ltd.

● Toyo Aluminium Ekco Products● Toyo Tokai Aluminium Hanbai● ALP● Toyo Aluminium Kosan● ALPHAMIC

Note: Ratio of shareholding is calculated after excluding treasury shares (68,163 shares).

Nippon Light Metal Group Management Structure (as of March 31, 2023)
Nippon Light Metal Holdings Co., Ltd.

Nippon Light Metal Co., Ltd.

Toyo Aluminium K.K.

Nippon Fruehauf Co., Ltd.

Nikkeikin Kakoh Kaihatsu
Holdings Co., Ltd.

● Toyal Europe● Nikkei MC Aluminum America

Nikkei MC Aluminium
Co., Ltd.

Toyo Aluminium Ekco
Products Co., Ltd.

Nippon Fruehauf domestic
regional companies

Nikkeikin Aluminium CoreTechnology Co., Ltd.

Nikkei Panel System
Co., Ltd.

Toyo Tokai Aluminium Hanbai
Co., Ltd.

Shandong Conglin Fruehauf
Automobile Co., Ltd.

Riken Light Metal Industry
Co., Ltd.

Nikkei Siam Aluminium Ltd.

Toyal America, Inc.

Fruehauf Mahajak Co., Ltd.

Nikkei Extrusions Co., Ltd.

Toyo Rikagaku Kenkyusho
Co., Ltd.

OthersOthersOthersNippon Electrode Co., Ltd.

Others● Nippon Light Metal Georgia● Nippon Light Metal North America● Toyal America● Nikkei MC Aluminum (Kunshan)● Nikkei MC Aluminum (Thailand)● Nikkei CMR Aluminium India● ● ● Nikkei Singapore Aluminium● NI Nikkei Shenzhen● Nikkei (Suzhou) Precision Parts● Nikkei (Shanghai) International Trading● ● Nikkei Siam Aluminium● Nikkei Trading Indonesia● Nikkei Panel System Vietnam● Fruehauf Mahajak● Toyo Aluminium (Shanghai) Management● Toyo Tokai Aluminium Hanbai (Shanghai)● Suzhou Toyo Aluminium Ekco Household Products● Toyo Aluminium Ekco Trading (Suzhou)● Hunan NingXiang JiWeiXin Metal Powder● Toyal Zhaoqing● Toyal (Thailand)● Toyal MMP India● Svam Toyal

Note: Two dormant companies are excluded.

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