Nippon Light Metal GroupNIPPON LIGHT METAL GROUPINTEGRATED REPORT 2022

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

Value Creation

Foundations of Value Creation

Data

NLM Group Management Policy (Revised on May 16, 2022)

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.

Revision of the NLM Group Management Policy
We revised the NLM Group Management Policy effective on May 16, 2022.
For the new Management Policy, we redefined our corporate philosophy

CONTENTS

Introduction
As in the previous year, the NLM Group will
publish an integrated report in 2022. The
report is designed to communicate theGroup’s vision for value creation in bothfinancial and non-financial terms to all
stakeholders, including shareholders andinvestors.
Integrated Report 2021, which we
published last year, included the Group’s
priority issues. The new mid-term
management plan that started in FY2022
reflects our strong consciousness of
initiatives to address these identified priority
issues. 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 ourstakeholders 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.

and customers associated with changes in the social environment, whileused in some sections of this report.

that the policy reflects the priority management issues (material issues) of

Scope of the report
This report describes the activities of andfacts about Nippon Light Metal Holdings
Co., Ltd. and its 79 consolidated
subsidiaries (a total of 80 companies)
unless otherwise specified.

the NLM Group and the specific initiatives for addressing each issue.
In addition, we kept the following points in mind while revising the policy
and made each sentence short and simple.
（1）That it is easy for employees to understand

Period of issuance
March 2023 (Previous issue: December
2021)（2）That it serves as guidelines for daily work
At the NLM Group, we will continue to work as one to achieve this new
Management Policy.

Integrated Report 2022

Value Creation
05
11
13
15
17
19
21
25
33

Message from CEO
Value Creation History
The Value Creation Process
Into a Groundbreaking Innovator of
Aluminum and Beyond
Material Issues of the NLM Group
Material Issue: Providing Sustainable
Value — Promoting a RecyclingOriented Economy and Society —Mid-term Management Plan
Segment Overview
Financial Strategy

Foundations of Value Creation
35
41
43
46

Governance
List of Officers & Skills Matrix
Compliance
Risk Management

Disclosure Based on the TCFD
Recommendations
Reduction of Environmental Impact
Quality
Human Resource Strategy
Developing a Fulfilling Workplace
Occupational Health and Safety
Supply Chain Management
Local Communities

53
55
57
58
63
65
67

Data
73 Financial and Non-Financial
Highlights

75 Operating Results and Financial

Analysis
Consolidated Financial Statements
Data
Independent Assurance Report
Announcement of the New
Management Policy
Company Information and ShareInformation
Global Network

79
81
85
86
87
88

Reporting Media
Further details and past initiatives are available on our website.
Financial information

Non-financial information● Integrated Report 2022

(Note) Data collected before or after this period is alsopreserving the spirit at the core of the previous policy, and then ensuring

Details➡Message from CEO (P. 05 to 10)

01 NLM Group Management Policy
03 At a Glance

47 Information Security
48 The Environment
50 Action on Climate Change —Period covered
Data for the report was collected between
April 2021 and March 2022.

and basic policies by understanding the changes in the needs of society

01

Editorial Policy

Ichiro Okamoto,President and CEO

Independent assurance
A ★ symbol indicates that a third party,
KPMG AZSA Sustainability Co., Ltd., hasprovided independent assurance regarding
the reliability of the data.

● Website	https://www.nikkeikinholdings.
co.jp/ir/ir-data/● FACT BOOK

● Website	https://www.nikkeikinholdings.co.
jp/sustainability/	https://www.nikkeikinholdings.
com/sustainability/（English）●	Shareholders’Newsletter

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Basic Information

Value Creation

Foundations of Value Creation

Data

At a glance
Consolidated Financial Results (FY2021)

The products we offer at the NLM Group range from aluminum tointermediate products and processed products. We operate businesses
widely and provide comprehensive solutions by providing products andservices with high quality and high added value, a unique strength of a

Net Salesby Segment

comprehensive aluminum manufacturer. Businesses of the Group are
categorized into four segments based on manufacturing methods.

26％

Aluminum Ingot and Chemicals

Net Sales & Operating Profit (million yen)

化成・地金■■Net Sales➡ P.25Business Summary
Light Metal Co., Ltd. provides aluminum hydroxide, alumina, andvarious other chemicals. These products are used in a range of

111,100

127,633

117,008
91,181

13,021
9,616

10,902

32％
加工関連

9,614

180,259

157,297

153,415

23％

2019

2020

leading role played by Nikkei MC Aluminium Co., Ltd., and is highly
evaluated for the development of highly-functional ingots that cater

2021(Fiscal year)

civil engineering and construction, from Nikkei Engineering Co., Ltd.
11,681
9,783

10,440We also supply anodized aluminum foil for aluminum electrolytic
8,892

capacitors, automotive parts, and carbon products, among others.
3,776

Net Sales & Operating Profit (million yen)
板押出■■Net Sales

106,955■■Operating Profit

107,835

113,876
101,193

97,850

9,767
7,152

5,950

7,518

3,556

2017

03

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2018

2019

2020

2021
(Fiscal year)

Major Products and Services
2017https://www.nikkeikinholdings.co.jp/group/chemical.html

Aluminum Sheet and Extrusions➡ P.27

Business Summary
The Sheet Products Div. of Nippon Light Metal Co., Ltd. And
Nikkeikin Aluminium Core Technology Co., Ltd. play central roles inthis business. Aluminum sheets and extrusion products are used in awide variety of fields, such as for automotive parts and railway carsin the transport industry, thick sheets and relevant parts forsemiconductor/ liquid-crystal manufacturing equipment, andfabricated sheets for PC/tablet bodies in the electrical andelectronics industry. The NLM Group makes use of its technologies
and expertise cultivated over many years to proactively develop
products that meet customers’ needs and to supply highly functional
sheets and extrusion products.

Major Products and Services
https://www.nikkeikinholdings.co.jp/group/extrusion.html

refrigerator and freezer panels from Nikkei Panel System Co., Ltd.,and fabricated aluminum products for infrastructure, including for

The Ingot Sector provides a variety of aluminum ingots, with the

Major Products and Services
2018

Business Summary

include truck bodies from Nippon Fruehauf Co., Ltd., commercial

172,975

fields, including as fire retardants, raw materials for ceramics and➡ P.29and services that are highly valued for their quality. These products

to customers’ needs.

2017

4.6%

In Fabricated Products and Others, we provide distinctive products■■Net Sales ■■Operating Profit

169,019

Ratio of Operating Profit
to Net Sales

Fabricated Products and Others

industrial materials for the manufacture of pulp and paper.

102,833

8,954

22,198 million yen

486,579 million yen

Net Sales & Operating Profit (million yen)In the Aluminum Chemical Sector, the Chemicals Div. of Nippon■■Operating Profit

Operating profit

Net sales

19％

2018

2019

2020

2021
(Fiscal year)

https://www.nikkeikinholdings.co.jp/group/process.html

Aluminum Foil, Powder and Paste

Net Sales & Operating Profit (million yen)箔粉末

➡ P.31Business Summary
Toyo Aluminium K.K. plays the leading role in the Aluminum Foil,■■Net Sales ■■Operating Profit

Powder and Paste. We have established our position as a leading
manufacturer by providing a wide range of products that incorporate
the special characteristics of aluminum and are useful in society,industry and everyday life. They include packaging materials for food

94,365

95,34988,94586,24091,655and medical products, products for electronics, aluminum powder
and aluminum paste products. We develop new fields by utilizing ourown technologies as the foundation and provide a range of highly

4,856

2017

functional materials and products in markets at home and abroad.

5,114
3,074

2018

2019

3,311

2020

1,570
2021
(Fiscal year)

Major Products and Services
https://www.nikkeikinholdings.co.jp/group/powder.html* The exclusion of Toyo Aluminium K.K. and the other companies constituting the Foil and Powder Products segment from the scope of consolidation is planned to occur on
March 31, 2023.
https://www.nikkeikinholdings.com/news/news/common/pdf/p2022090201hde.pdf

Integrated Report 202204

Basic Information

Value Creation

Foundations of Value Creation

Data

Message from CEO

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

Introduction
At the NLM Group, we have decided to publish the 2022
edition of Integrated Report as was done in the previous
fiscal year.
In this report, we hope to speak in detail about theexternal environment that surrounds the NLM Group and theGroup’s internal management resources, sharing our visionin terms of how we perceive these aspects, how we will
provide value as a member of society and how we wish totake part in the creation of a better future with a focus on
the so-called “value creation process,” as in the previous
year’s report.

Current status of the quality problem and future initiatives
Regarding the revocation of JIS certification and request that
we cease the use of the JIS mark (quality problem), which
has caused you inconvenience and concern, the Special

Investigation Committee established in June last year iscurrently investigating the situation. At the NLM Group, we
will cooperate fully with the investigation activities of thecommittee. In addition, when we have received the committee’s final report, which will contain a comprehensive pictureof the problem, an analysis of its cause, and recommendations regarding measures to prevent recurrence, we will
immediately disclose the report and implement otherinitiatives that will be necessary to restore trust.
Meanwhile, we have already initiated voluntary improvement activities prior to receiving the final report. I am also
visiting plants and telling employees that I am determined toensure the Group as a whole works as one to solve thequality problem, and making these improvements together
with them.

As Team NLM, we will work to be a groundbreaking innovator of aluminum and beyond.
Current situation of the GroupFirst, I would like to review the Group’s recent businessresults and describe our future direction.
As Figure 1 shows, the Group has maintained relatively
strong performance in the last several years. In FY2018, weposted a record-high ordinary profit exceeding 30.0 billion
yen. I believe this resulted from our strong efforts to pushforward with our growth strategies, such as the accelerationof overseas expansion and the increase of efforts to create

Figure 1. Consolidated Financial Results■●

Net sales

Ordinary profit(billion yen)(billion yen)
500

30

400

25

300

20

200

15

100

10

0

05

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2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022
(Fiscal year)

5

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06

Basic Information

new businesses and products, in addition to theimplementation of structural reforms including the review ofbusinesses with issues and the introduction of a pureholding company system.
This year, the external environment surrounding ourbusinesses has grown more difficult. Despite thisenvironment, we would like to continue the above initiatives
and ensure that they take root. Under the Mid-termManagement Plan (Fiscal 2022-2024) that we announced inMay, we aim to build a structure that enables us toconsistently generate a profit. We also aim to achievesustainable growth by both creating the value demanded bycustomers and addressing social issues including carbon
neutrality. Details➡P.21

Pursuing value instead of volume
Next, I would like to explain my own basic understanding
and ideas about which way the Group will go and which
direction it should take to continue its development.
Figure 2 shows changes in the demand for aluminum
globally from 1960 to 2020. It appears that demand has
remained on a growth path. However, we should note herethat the demand for aluminum has remained virtuallyunchanged since 2000 except in China. Above all, annual
demand in Japan has been around 4.0 million tons. From a
global perspective, the Japanese aluminum market is only aminor, low-growth market accounting for only around 5% of
the global market.
The materials business also has aspects of a processindustry, so it is definitely not viable without a certain volume
because fixed costs need to be absorbed. This is why somepeople think that we should proactively enter fast-growing
markets and start by increasing the volume of production
and sales by making capital investments.
However, I don’t want the Group to compete on volume ina so-called battle of attrition through repeated large-scale
capital investments and the emphasis of only size or volume
in low-cost, high-volume production. Instead, I would likethe Group to engage in businesses which are viable even at■ Japan ■ Countries other than Japan and China

At the NLM Group, we operate an array of aluminum-related
businesses. We used to describe ourselves as “a department
store of aluminum.” Upstream segments that are close to
raw materials and materials and downstream segments that
include processing, products, and related services co-exist ina single corporate group. We understand that this businessstructure has made us a corporate group that is unusualfrom a global perspective as well.
Because our businesses are diverse, the Group has within
itself diverse knowledge and points of contact withcustomers. This comprehensive capability is a feature of theGroup. It is also one of the strengths that we should leverage.
At the NLM Group, individual business segments,
including the chemicals segment and the sheet andextrusion products segment, compete with other companies
in their respective industries while internally they are
managed on a stand-alone basis under the divisional systemor as spin-offs. This is how we have been increasing thecompetitiveness and autonomous orientation of eachbusiness. On the other side of the coin is the fact that our
way of thinking tends to be oriented toward partial
optimization, which made it difficult to make a Group-wide
or bold leap forward.
Therefore, we have been pushing forward with an initiative
considering and implementing businesses not just in a siloedapproach based on the business or function, but as a teambeyond boundaries between divisions or companies, with

■ China

80,00060,00040,00020,000

1960

1970

1980

1990

2000

2005

* Source: Data from the Japan Aluminium Association

07

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2006

2007

2008

2009

Data

Demonstrating the Group’s comprehensive capability
as Team NLM(thousand tons)

0Foundations of Value Creation

low volume. In other worlds, I want the Group to compete
on the value it creates for the customers who demand it.
Since I became the president, our slogan has been
“becoming a groundbreaking innovator of aluminum andbeyond as Team NLM.” The phrase groundbreaking
innovator used in the slogan essentially indicates this stance
we have taken, the pursuit of value rather than of volume. At
the NLM Group, we would like to follow this path as wemove toward the future.

Figure 2. Changes in Demand for Aluminum in the World■ TotalValue Creation

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019 2020(Fiscal year)

our standard targets being customers from the automotive,
electrical and electronics, and other industries —organization-spanning cross-functional collaboration. We
have been strongly committed to promoting this, especiallyin the last 20 years.
Team NLM is an approach with which we go a stepbeyond the above initiative. I believe that if people andorganizations work together organically within the Group,
making it possible to demonstrate the Group’s
comprehensive capability leveraging the combined wisdomof individuals, we will be able to create and provide greater,
more useful value.
One example is the heat dissipation plate for eco-friendly
vehicles.* We leveraged all of the Group’s capabilities, suchas alloys and other materials, methods including die-casting
and forging, and processing such as bonding and press
fitting, which led directly to value for customers. We can say
that, at this point, the heat dissipation plate is exactly thetype of achievement that is made by Team NLM.
To accelerate moves like this, we consolidated Group
company sites, which had been geographically dispersed,
bringing as many of them as possible to Shimbashi when
we moved our head office functions to the district at the endof 2019. In addition, we abolished the traditional assigned
seating system almost entirely and introduced a complete
hot desking system. We built an environment (place) thatfacilitates collaborations within the Group beyond theboundaries between companies, divisions, positions, andother boundaries, or facilitates spontaneous collaboration.

Constant awareness of strengths
As I mentioned above, at the NLM Group we peruse value,
not volume. Our customers are the people who recognize
this value, not us. What value is currently demanded bycustomers, and what value will they demand in the future? It
is important to identify this value and think through it
exhaustively.
I always say that we should be alert to external informationand that information comes only from outside. At the NLMGroup, we have established the Tansaku Joho (search
information) database, on which crude information, such as
the problems faced by customers and other external people
and their tweets, is posted and shared within the Group.
Information like this is exactly the clue to the value
demanded by customers, so I check this information daily.
While the NLM Group is a manufacturer, I think that wedeliver Shohin (commercial goods) to customers and not
Seihin (finished goods) which may be mere objects. Of
course, I do not mean shohin as an accounting term
(merchandise, or goods purchased from external sources).
By shohin, I mean what we deliver to customers inpackages as comprehensive value including the processesof the sales activities, design, manufacturing, transportation,
and after-sales services. I think that because theachievements we have made as Team NLM are condensed
into these products they are shohin.
First, we need to share an understanding of what ourstrengths are as a prior condition before every businessactivity. To realize the value demanded by customers, weshould take advantage of our strengths and continue tohone them, which is also one of our missions. Details➡P.15* xEVs as a whole, including BEVs

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Toward the implementation of sustainable management
Corporate Philosophy that reflects a shift of our vision
to business
We revised the NLM Group Management Policy in May thisyear (Figure 3). The major point of the revision is that wehave greatly changed the Corporate Philosophy as theGroup’s raison d’etre.
Previously, it said “Be forever committed to thedevelopment of new applications for aluminum andaluminum-related materials.” The revised philosophy now
says “continuing to create business, focused on aluminum.”
We shifted from the previous thinking around of how we
could expand the area of the use of aluminum as a specificmaterial (development of new applications) to an approach
focused on value for customers (business). We can say that
this precisely reflects our image of what we should be, agroundbreaking innovator of aluminum and beyond.
In addition, the expression “business, focused onaluminum” is also used in the new Corporate Philosophy.
This implies that we will not necessarily focus solely on
aluminum in the operation of our businesses. It also meansthat we are determined to think more flexibly to realize thevalue demanded by customers.
In this revision of the Management Policy, we took time toconsider the measures for informing employees of this idea andensuring that it will take root and be followed as a guideline in
the operation of businesses and the making of decisions by
involving management team members of the Group companies.
We would like to deepen employees’ understanding of theCode of Conduct which embodies the Corporate Philosophy
and ensure that it becomes deeply entrenched by, forexample, considering it as company-wide activities.
Figure 3. NLM Group Management Policy (Revised on May 16, 2022)

Corporate Philosophy

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

Priority management issues (material issues)
In last year’s integrated report (2021 edition), we set thefollowing five themes as the priority management issues tobe addressed by the Group (material issues):● Protecting the global environment● Providing sustainable value● Happiness of employees● Responsible procurement, production

last day of work is the greatest responsibility I have as amanager. This is the happiness of employees that we should
achieve.
Generally, employees are described as 人材 (lit. humanmaterials). At the NLM Group, however, we use the term
人財 (lit. human resources) to describe our employees. In
corporate activities, people are not inorganic materials that
constitute a substance. They are the greatest assets thatcreate new value that is multiplied by their creativity — They
are our resources. When you get to the core of it, humanresources themselves also constitute the strength of
the Group.

Value Creation

Foundations of Value Creation

Data

This is why I think that my most important duty is tomotivate each individual employee to work in a positive
frame of mind — to turn a light on inside.
I value opportunities to engage in direct dialogue with
employees, such as the initiative commonly known as
Za-FIVE (photo), in which I invite about five young employees
from each company or plant and sit in a circle with them totalk about the present and the future, although this has beeninterrupted by the COVID-19 pandemic.

and supply● Corporate ethics and governance
From the current fiscal year onward, we will set specific
KPIs (targets) for each issue together with a process chart
showing a schedule and work aggressively to achieve the
KPIs. Details➡P.17

Happiness of employees and turning a light on inside
While we have not specifically prioritized the issues, I
personally believe that we should first achieve the happinessof employees or get as close as possible to the ideal
because that will lead to the improvement of the Group’s
value, such as the provision of the value demanded bycustomers and it contribution to solving social issues.
Just improving work conditions, such as salaries andbenefit programs, is not all that we mean by the happinessof employees. I think that being a corporate group where allof its employees share its raison d’etre and businesspurposes and intend to work proactively to achieve them isalso an important element of employee happiness.
Employees work every day, spending a significant part oftheir lifetime working for the company. Without exception, allemployees will eventually retire. I believe that making the
NLM Group a corporate group where all of the employees
feel really happy that they worked for the company on their

Conclusion
The business environment surrounding the NLM Group
continues to change drastically. Further, these changes are
not necessarily a tailwind for the Group.
Naturally, both people and companies change. For thatreason alone, it is natural that we should work to change
ourselves or make change happen. I even think that resistingchange from the start or making it an excuse to do nothingis neglectful.

Value for customers also changes with the trends ofsociety. This is why we, in the pursuit of value, have tocontinue flexibly taking on challenges.
“As Team NLM, we will work to be a groundbreaking
innovator of aluminum and beyond.”
We will continue our efforts to be a corporate group thatcan fulfill your expectations.

Basic Policies●T he Group will create healthy, safe workplaces, and achievezero-accident operations.

●T he Group will continuously provide diverse value tocustomers by deepening the level of collaboration andcoordination within and outside the Group.
●T he Group will work actively to achieve carbon neutrality, tohelp create a sustainable society.
●T he Group will engage in fair and honest business operations,with respect for human rights and an emphasis on ethics.
●T he Group will respect diverse values, and develop humanresources from a long-term global perspective.

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Value Creation

Foundations of Value Creation

Data

Value Creation History

As a corporate group that has beenaround for a century, Team NLM continues
to grow sustainably into a groundbreaking
innovator of aluminum and beyond.

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
Net salesa relatively new material. While it has diverse origins, the development of the NLM Group has progressed mainly(billion yen)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 withaluminum 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
600
in our business that forms our foundation as a “groundbreaking innovator of aluminum and beyond” that continues
to move forward in constant pursuit of new value for customers, without fearing change. By passing down thishistory while engaging in more sustainable business activities, the NLM Group will help improve people’s lives andprotect the environment going forward.

1939

1950s

1960s

1970s

1980s

1990s

2000s

∼ 2010s:

Nippon Light Metal Co., Ltd.
is established.
Aluminum smelting begins.

Rapid and widespread adoption ofdaily necessities made fromaluminum

Aluminum sashes,
truck mountings

Industrial refrigeration panels,
public landscaping productsElectrode foil, wheels andheat exchangers for vehicles,
memory disk substrates

Secondary alloy business (recycling)
Automotive parts

Foil, powder andpaste business

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

Development achieved as an aluminum smelting company
∼

1974:

Expansion into aluminum processing and aluminum-related products

Founding anddevelopment phase

1974 ∼:

Promotion of global expansion

Business expansion andtransformation phase2003 ∼:(billion yen)

600

500

500

400

400

Into a groundbreaking innovator of aluminum and beyond that pursues value for customers

Overseas businessexpansion2012 ∼:

Holding company
systemHistory and Significance of Business Activities

300

1939

1952

1974

1980s

2003

2012 ∼

Nippon Light Metal Co., Ltd. is establishedwith the aim of smelting aluminum throughjoint investment from Tokyo Dento Company(later known as TEPCO) and Furukawa
Electric Co., Ltd.

A capital and technological allianceis agreed to with Canada-based
Aluminium Limited(later known as Alcan)

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
the processing business

Full-scale operation of
the overseas business is started
by restructuring businesses
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 acrossindustry 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(the company then known as) Alcan and restructuring
the businesses in Southeast Asia and China.

■Nippon Light Metal Co., Ltd.

Net sales

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 more 200
sophisticated and detailed ways.

200

100

100

2021(Year)

2021(Year)■The NLM Group* Due to the lack of accurate data, figures prior to 1948 are not listed.

1939

11

1939

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1952

1952

1974

1974 1980

1980

2003

2003

2012

2012

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Value Creation

Foundations of Value Creation

Data

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

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

Corporate Philosophy

Protecting the
global environment

Material Issues

INPUT
●

Business Activities

Financial CapitalShareholders’ equity
195.0 billion yen● Interest-bearing debt
155.4 billion yen

FY2022-24 Mid-termManagement Plan

1

Powder production●

Employees
12,750
Annual expenditure on
education and training
17,800 yen/employee●Aluminum (importing)

Human Capital

High-purity aluminumSlabRollingS trong relationships that can
respond to customer needs● Wide variety of customer
groups through a broad rangeof business fields●

Natural CapitalElectrical energy usage
8.3 PJ● Water consumption
0.9 million m3●

13* The exclusion of Toyo Aluminium K.K. and othercompanies constituting the Foil and Powder
Products segment from the scope of consolidationis planned to occur on March 31, 2023.

Integrated Report 2022

Aluminum Ingot
and Chemicals

Aluminum hydroxide
Alumina

Billets

Extruded shapes
Extrusion

Melting andcasting
Secondary alloys

Caustic soda
Chlorine-related products

Value provided
directly to
stakeholders

Creating social
value

Recycling

Customers
Provision of solutions toproblems

Global environment

Improvementof people’squality of life

Environmental impact,
reducing CO2 emissions
Electrical machinery,electronics andtelecommunications

Various processed
products

Environment,
safety andenergyPublic facilities,
landscaping andarchitecture

Casting, forging, die-casting

Fabricated Products
and Others

Scrap and recycling

Market Sectors

Automotive

Aluminum Sheetand Extrusions

Casting

Alumina production

Social Capital

Aluminum hydroxide (importing)●Coils and sheets

RecoveryNumber of patents held
1,336
● Research and development
expenses
6,443 million yen

Foil and powder
products

Aluminum Foil,
Powder and Paste

Segregation●

Carbon neutrality
Circular economy● Technological innovation● Changing demographics● Advance of globalization● Respect for human rights/diversity & inclusion● Food issues

2

Reinforcing the management foundation

Fixed Capital
Production sites(49 domestic plants and fivecountries overseas)● Capital expenditures
23.2 billion yen

Intellectual Capital●

Providing products and businesses that contribute to
the creation of social value●●

External Environment

Corporate ethics
and governance

OUTCOME●

Foil rolling limate change risksC● Inter-material competitionrisks● Supply chain
fragmentation risks● Risks of initiatives being
inferior to those ofcompetitors

Responsible
procurement,
production and supply

Conversion into various types of capital through increased social value

Processing

Risks

Happiness of
employees

FY2021/
As of March 31, 2022

OpportunitiesA chieving the Corporate
Philosophy● Developing new markets
and expanding existing
businesses by responding
to the social structure andenvironment● Building a robust, safe
and secure supply chain

Providingsustainable value

Employees
Safe and secure workplaceand job fulfillment

Environmental
protection

Business partners andpartner companies
Co-existence andco-prosperity

Local communities
Transportation

Food and health,industrial
products

Coexisting with local
communities

Shareholders andinvestors
Improving corporate
valueStable dividends

Accumulation of various types ofcapital through business activities
Integrated Report 2022

14

Basic Information

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 developmentbase 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 anddevelopment related alumina, aluminumelectrolysis, and aluminum materials. Later,in 1984 it was integrated into Nikkei
Electronics
Techno-Research Co., Ltd., and it
Electricity
Telecommunications
accumulated academic knowledge
The
Automotive
related to various processing
environment
technologies in addition to its
Bonding
Bending
foundation of aluminummaterial technologies
Safetyduring the Group’s rapid
Having 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

Surface●Environment, safety

and energy

As a result of business operation in diverse
processing domains, the NLM Group has traderelationships with many diverse customers,
including world-leading companies in each sector.
At the NLM Group, we aim to evolve from ourprevious product-oriented research anddevelopment aimed at commercializing products
using new technologies to market-oriented
research and development creating new products
through the combination of new and existing

Drawing

processing

EnergyAluminummaterial
technologies

Publicfacilities

Ro

ting
DesignDiverse processing technologies

Landscaping

Cutting
Assembly
Industrial
products

Shearing

Aluminum material technologies

Diverse customer
needs

llin

g

Cas

Analysisshift of the focus of its business fromaluminum smelting to aluminum 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 of multiple
technologies (organization-spanningcross-functional collaboration), anddeveloping new elemental technologies,
which are the three pillars of its researchand development.

HealthArchitecture

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

Processing

BauxiteThe 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 ofaluminum processing. As a result, the NLMGroup has obtained many of its diverse
aluminum processing technologies throughvarious 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.

Foil rolling process

Aluminumhydroxide
SlabAlumina
production
process

Rolling process(coils, sheets)

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

Heat treatment

Alumina●Public facilities,

Cutting of productsElectrolytic
smelting
process

New aluminum
ingots

Molten aluminum

Billets

Extrusion process(extruded shaped
products)

Creation of new value

Aluminum material technologies

landscaping andarchitecture

Anodizing(surface processing)

Hot press
Casting process(cast and forgedproducts)

Secondary alloy
ingots

NLM’s business domain

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

15

Integrated Report 2022

Integrated Report 2022

16

Basic Information

Value Creation

Foundations of Value Creation

Data

Material Issues of the NLM Group
Approach and Promotion Framework

Identifying a Group of
Candidate Material Issues

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

Providing sustainable value

Happiness of employees●Reducing greenhouse gas emissions fromcompany activities (scope 1, 2)● Reducing greenhouse gas emissions inthe 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 and services● Promoting a recycling-oriented economy
and society● Developing and providing robust
infrastructure● Contributing to the stable supply of food● Shaping the future through innovation● Occupational health and safety● Developing a fulfilling workplace● Securing and cultivating human resources● Providing safe and secure products and services● Protecting and respecting human rights● Developing a stable supply chain● A resilient value chain that is flexible tochanges

Confirming Validity andComprehensiveness

Step4

Identifying the Material Issues

Key Performance Indicator (KPI)● Total scope 1 and 2 emissions (per unit of sales/Japan only) FY2021: 1.58 tons CO2/million yen● Total scope 3 emissions (per unit of sales/Japan only) FY2021: 4.51 tons CO2/million yen

Items important tothe corporate valueof the NLM Group

Identifying itemsof high importance

Horizontal Axis: NLM Group Importance● Strengthening governance● Reinforcing the compliance framework

Major Initiatives

Target *1● -30% compared to the FY2013 level, FY2050: Net zero● -30% compared to the FY2013 level, FY2050: Net zero● Number of environmental incidents and complaints FY2021: 3 environmental incidents and 7 environmental● 0, FY2050: Continue to achieve 0 incidents and complaints

complaints● Growth rate of sales of products for eco-friendly vehicles(Japan)● Continuing to implement energy-saving initiatives and promoting fuelconversion and electrification● Horizontal recycling of expanded aluminum materials and use of green

aluminum● Group-wide expansion of countermeasures and prevention of

occurrence and recurrence of similar incidents● Reinforcing the framework for the research and development of new

products for eco-friendly vehicles● Compared to FY2021: Up 300%

● Improving the comprehensive capability of the Group as a whole to

make suggestions to the automotive market● Rate of purchase of external scrap● Overall Group: Above 30%● Number of lost-time injuries● 0, FY2050: Continue to achieve 0 injuries

FY2021: 15 in Japan● Building a system for the stable procurement of scrap as raw materials● Promoting horizontal recycling by strengthening cooperation withexternal parties● Preventing injuries and similar injuries through the three principle(Genchi or real site, Genbutsu or real goods and Genjitsu or reality)● Percentage of childcare leave taken by male employees● FY2024: Above 30% (Japan)● Providing level-specific training themed on support for balancing work

● Percentage of managers that are women● FY2024: 7% (consolidated)● Motivating and helping employees to develop their careers through● Next-generation management: 10 or more trainees every year

● Developing core human resources in a well-planned manner throughFY2021: 18.5% (Japan)

FY2021: 5.4% (consolidated)● Number of employees who received next-generation
management training FY2021: 13 (Japan)
Percentage of managers who received managerial training
FY2021: 100% (Nippon Light Metal Co., Ltd.)● Percentage of major suppliers*2 that responded to aquestionnaire survey to check that they understand and haveapproved our CSR procurement policy FY2021: 35%● Number of prompt reports

FY2021: 15

Directors FY2021: 1● 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
FY2021: 46% of managers and 29% of general employees● Rate of provision of compliance training

FY2030: 50% or above (Japan)

and childcare

FY2030: 10% or above (consolidated)individual interviews

Managerial: 100% of newly appointed managers

FY2021: 11%

format● Ensuring thorough activities to prevent recurrence and establishing aframework for preventive activities● Maintaining a frequency of at least once a year

● Evaluating effectiveness regularly and making improvements based on

evaluation results● Providing Outside Officers with opportunities to inspect business● At least two times a year

locations, etc.

● Percentage of answers to anonymous employee surveys that are positive:

60% for managers, 50% for general employees● Annual percentage of officers and employees provided training:

80% or above

repeated training and practical experience● Conducting a CSR procurement questionnaire survey using a common● 100%● 0, FY2050: Continue to achieve 0 reports● Number of self-assessments conducted by the Board of

Corporate ethics andgovernance

Step3

Major KPIs/Targets/Major Initiatives

Material Issues● Diversity & inclusion

Responsible procurement,
production and supply

Assessing ImportanceItems ofparticularlyhigh 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

Protecting the global
environment

Step2

Vertical Axis: Social Importance

Steps to Identifying Material Issues● Implementing PDCA through promotion of compliance and surveys● 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 amount17

Integrated Report 2022

Integrated Report 2022

18

Basic Information

Material Issue: Providing Sustainable Value— Promoting a Recycling-Oriented Economy and Society —Reasons for the Selection of Material Issues
Since the smelting of new aluminum ingots consumes a lot of electricity, when fossil fuel-derived electricity is used, a large
amount of CO2 emissions are generated, causing major issues. On the other hand, CO2 emissions from secondary aluminumalloy ingots, which are manufactured through recycling, are much lower, being
AluminumCollection andaround 10% of the emissions of primary alloy ingots. Accordingly, theProducts
Sortingpromotion of aluminum recycling is a significant key to the achievement ofcarbon neutrality.
Aluminum recycling is broadly divided into two types. One is horizontal
recycling, in which aluminum is recycled back into alloys with the same degree
Recycling Routeof purity and alloy composition. The other is cascade recycling, in which
CO2 emissions during recycling:aluminum is reused as a general-purpose material while downgraded to a
low-purity material containing many impurities. Because the desired amount ofapprox.
scrap material is not supplied, the stable procurement of scrap which is the*Based on 100% emissions when
raw material for both types of recycling is an issue in either case. Accordingly,
manufacturing new aluminum ingots
building a system to collect the aluminum scrap produced as offcuts in the
production processes of our customers and general scrap available on themarket as waste after the completion of a product’s lifecycle to be used as raw
material — promoting a recycling-oriented economy and society (circular
Melting andSecondary Aluminum
Casting
economy) — is a material issue of the NLM Group.
Alloy Ingots
We believe that a social responsibility of the NLM Group is to contribute to
Reduction of CO2 emissions through recycling
the establishment of a sustainable ecosystem with aluminum as a low-carbon,
highly recyclable material.

(Illustration)

Car body structure

Higher percentage of aluminum recycled,
effective utilization of resources

Production technologies,
research and development

Purchase andprocurement

Creating social value

Product
development(Cross-section diagramof the car body)

Greater competitiveness in the supply chain

Financial and non-financial capital

Horizontal recycling of aluminum from car body structure to car body structure

Used for the bodystructure (roof) of
N700S bullet train cars

Data

Amid the global trend toward decarbonization, there is growing customer demand for a recycling-oriented supply chain, in
which used aluminum is reused as a material, in addition to the supply of low-carbon materials.
To respond to this demand, at the NLM Group, we will procure more aluminum materials using green primary alloy ingots
produced using power generated from natural sources of energy, as well as scrap and other materials. In addition, by using our
expertise in the recycling business, we will recirculate scrap from expanded materials generated by supply chains, within theGroup and expand the circle of this recirculation to include downstream processing domains and scrap collected after use.
This requires the establishment of production technologies for appropriately sorting and melting the collected scrap. We
believe that, applied in waste processing, these technologies will also contribute to increasing our capacity for processing
scrap from the market. In addition, we aim to develop an upgrading technology to recover only highly pure aluminum frommolten aluminum containing impurities using the Group’s aluminum material technologies.
We believe that by increasing the percentage of recycled materials we use in our domestic business through the abovemeasures we can not only improve the market value of aluminum as a low-carbon, recyclable material but also enable the useof aluminum in even more market domains.

10％

At the NLM Group, we worked with Central Japan Railway
Company and other entities to achieve the horizontal recycling ofaluminum from car body structure to car body structure, in which
the body structure of bullet train (Shinkansen) cars to be scrapped
are recycled into a part of the body structure of newly
manufactured cars. We have succeeded in making this method ofrecycling a reality. This initiative makes it possible to reduce CO2
emissions by approx. 50 tons per train.We aim to expand thescope of application of these technologies, use resources evenmore efficiently and further reduce CO2 emissions in the horizontal
recycling of aluminum from bullet trains.

Foundations of Value Creation

Initiatives for Creating Social ValueAt the NLM Group, we are working as Team NLM to establish a circular economy by leveraging the recycling (secondary
alloy ingot) business within the Group, which is a strength.

Case Example

Value Creation

Expanding the procurement of low-carbon aluminum materials
Green new ingots/recycled billet and slab/recycled alloy ingots
Promotion of horizontal recycling of expanded materials
Group ⇒ Supply chain ⇒ Lifecycle

Technology for sorting low-grade scrap
Pulverization and sorting technologies/technology forremoving impurities, and others
Technology for upgrading molten aluminum
Segregation process/centrifuge process, and others

Diverseprocessing
technologies

Supplying new materials andcomponents in growth fields
Automotive exterior material/
structural material
Lithium-ion battery case/cooling plate

Diverse market
sectors

Semiconductor manufacturing
equipment

Increasing therate of use ofrecycled
materials
Promotingrecycling

Increasing the added
value of aluminum as a
low-carbon material

InformationdeliverySustainableecosystem

Reducing CO2 emissions

Enabling the useof aluminummaterials andcomponents inmore domains
Contributing tomore domains

Flow of horizontal recycling (Information from Central Japan Railway Company)

Building a
recyclingoriented
supply chain

Building a
low-carbon
society andeconomyVisualizing CO2 reduction effect
Material traceability and carbon footprint

Creating economic value(Illustration)

A bullet train car to be
scrapped

19

Integrated Report 2022

Aluminum scrap

Billets

Increased sales resulting from greater added
value of and higher demand for products

Greater visibility of aluminum as a material
for the low-carbon era

Extruded shapes

Integrated Report 2022

20

Basic Information

Value Creation

Foundations of Value Creation

Data

Mid-term Management PlanAt the NLM Group, we formulate a mid-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 due in part to the tough external environment, but we were able to secure a certain level of profits.
During the 2022 mid-term management plan, we will work on measures to build a stable profit structure and strengthen
our management foundation under the theme of achieving growth by contributing to a sustainable society.

Review of the mid-term management plans

30.2

29.9

Exceeding
30.0 billion yen

30.1

26.8

24.6

Operating profit (billion yen)

24.2

22.2

20.0
(mid-term plan target)

19.3

12.5

(revised value that has
been announced)

12.6

What we want
to be

8.2

Corporate
Philosophy
2013

2014

2015

2016

2013 mid-term management plan

Position

Basic policies

Achievements
and challenges

21

Integrated Report 2022

2018

2019

2020

2021

2022

2023

2024 (Fiscal year)

2016 mid-term management plan2019 mid-term management plan

2022 mid-term management plan

Maximizing consolidated earnings
by strengthening cooperation
within the Group

Attempting to create value as a
new type of material manufacturer

Investing resources in new
products and new fields toachieve continued growth

Building a corporate structure thatenables continued sustainablegrowthAluminum is our foundation.
We will use it as a springboard to
new heights

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 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.	
Creating 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)

Plan

Business targets
and results

2017

Results

Plan

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

Results

Plan

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

Operating profit
ratio

5.7％

5.8％

Operating profit
ratio

6.4％

6.0％

Operating profit
ratio

6.9％

4.6％

ROCE

8.9％

9.0％

ROCE

10.0％

10.8％

ROCE

11.4％

8.7％

(Achievement)
Targets were achieved
through aggressive
overseas expansion
and the developmentof new products.

(Challenge)
Continuing to increase
the earning power ofoverseas sites
Improvement offinancial position(Achievement)
Cooperation within theGroup made it possible
for new products tocontribute to profits
Improvement offinancial position(Challenge)
Investing funds,
human resources andother resources
aggressively toachieve continued
growth

1.	Providing products and businesses that
contribute to the creation of social value
2.	Reinforcing the management foundation(Achievement)
A certain level ofprofit was secured
despite the toughenvironment.

(Challenge)
Responding to andaddressing thesedimentation
problem at the
Amehata Dam andinappropriate acts
related to JIS, among
other problems

Reference value
Operating Profit

30.0 billion yen

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

2012

During the period of the 2019 mid-term
management plan, the environment remained
tough mainly due to the impact of the COVID-19
pandemic and the semiconductor shortage. We
will build a revenue base which is less affected by
the external environment and aim to develop a
structure which enables us to secure stableprofits exceeding 30.0 billion yen.
Integrated Report 2022

22

Basic Information

Value Creation

Foundations of Value Creation

Data

2022 Mid-term Management Plan

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.

Basic Policies

Measures

Providing
products andbusinesses that
contribute to thecreation of social
value

Strengthening
the business ofcomponents for
eco-friendly vehicles

Actions

Connecting to value for customers
Goal of doubling the results(FY2021 results) of
the eco-friendly vehicle
component business

Accumulated strengths of Team NLM
Materials,
methods
andprocessing

DesignQuality functions(evaluation)and speed(integrated
production)

Value
neededbycustomers

The Environment Surrounding Us
Global market
expansion

We can say that the environment surrounding us is extremely uncertain at present, mainly due to the significant slow down ofsupply chains because of the semiconductor shortage, the volatility of the product markets, and the rapid depreciation of theyen. However, we believe that working steadily on the Group’s material issues will lead to sustainable growth over the medium
and long terms. Accordingly, we are positioning the 2022 mid-term management plan as a new start in addressing our material
issues based on the medium- to long-term business environment.

Promoting local production for local
consumption around the world, andfull-scale entry into the United States
as the third region following Japanand China● North America: Starting commercial productionof automotive parts

2050 carbon neutrality

Formation of a circular economy● Paying for the CO2 emissions from the

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● Attention being drawn to therecyclability of aluminum● Building a collection and circulation
system for recycling● Promoting horizontal recycling which
contributes to decarbonization andresource conservation● India: Starting commercial production ofTechnological innovation

secondary alloys for automobiles● Structural change attributed totechnological innovation in theautomotive industry● Growth in demand for semiconductors
attributed to the evolution ofcommunication technologies● Labor-saving and automation of
manufacturing process

Carbon neutrality(as an opportunity)

Nippon Light Metal Georgia, Inc.

Contributing to a sustainable society● Horizontal recycling and cascade recycling/creating eco-friendly products

Recycling

Products

Recycling implemented
by Team NLM
Materials, methods,
processing

Demographic change

Advance of globalization● 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 the demandcenter attributed to global population
growth● 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 Japan

Respect for human rights anddiversity & inclusion (D&I)● The currently low level of active

participation of women and the minority● Promoting D&I to secure humanresources● Supply chain risks related to humanrights problems

Reinforcing themanagementfoundation

Carbon neutrality(as risks)

Taking on the challenge of achieving carbon neutrality● Use of existing technologies andexternal technologies/energy-saving
activities/fuel conversion

Quality(restoring social trust)

2030

Target2050

30％ reduction

Zerofrom the 2013 level

Rebuilding a quality assurance system for voluntary, exhaustive
assurance/reform of organizational climate● Building a quality control system/creating a mechanism which ensures the inappropriate

acts will never be forgotten

SWOT analysis
SafetyAt the NLM Group, we believe that the broad base of our business domains makes understanding the SWOT of the Group asa whole even more important. We have set measures in the 2022 mid-term management plan to address medium- to longterm material issues based on the following SWOT and are advancing these initiatives.

S: Strengths

W
T● Diverse aluminum-related knowledge and diverse points of● Vulnerability of the management foundation, including vulnerability

contact with customers● Power of cross-sectoral teams that transcend the divisionalframework

to quality problems● Insufficient ability to respond to supply chain slowdowns andmarket fluctuations

O: Opportunities

T: Threats● Achieving the Corporate Philosophy by solving social issues● Physical and transition risks of climate change● Developing new products and businesses in response to changes● Risks related to materials prices and competition between materials

in the environment and the structure of society.

23

S
O

W: Weakness

Integrated Report 2022

resulting from changing market trends

Making safety the top priority and ensuring compliance● Achieving zero injuries (continuing to achieve zero injuries and ensuring a zero injury

culture becomes entrenched)/eliminating accidents in which workers are pinched orcaught in machinery● Preventing and responding to misconduct/expanding initiatives to aspects other thanquality/strengthening IT-based accounting control
Operational andworkstyle reforms
through DX

Digitalization and efficiency improvement, standardization, optimization● Operational improvement/productivity improvement/prevention of injuries (labor

reduction and automation)● Improvement of the efficiency of administrative operations/minimizing routine work

Happiness of
employees

Health and safety, job satisfaction, diversity & inclusion, securing andcultivating human resources● Active participation of diverse human resources● Developing and recruiting digitally-minded human resources

Integrated Report 2022

24

Basic Information

Net Sales (million yen)Segment Overview

化成・地金

Aluminum Ingot
and Chemicals

117,008
111,100

Toshihiro Matsuba

Shuichi Asakuno

Director in charge of
the Chemicals BusinessDirector in charge of
the Nikkei MC Aluminium Business2017

Aluminum Chemical Sector

Analysis of Present State (SWOT Analysis)

SO

W: Weakness● A wide array of products and close relationships with many diverse

business partners● Use of renewable energy, with the source of much of our power
being hydroelectric.

● Growing demand for measures to address heat affecting materials

related to eco-friendly vehicles● Growth of domestic demand for high-performance semiconductors
associated with growing concerns about economic security● Aging of manufacturing equipment● Delay in expanding business domains

T: ThreatsWT ising prices of aluminum hydroxide, a raw material, and fuels and●R

the instability of their procurement● Downsizing of the domestic commodity market

Business Policies and Strategies in the 2022 Mid-term Management PlanAt the Alumina Sector of Chemicals Div. of Nippon Light Metal Co., Ltd., we will increase earning power by aggressively investing, including in new productdevelopment, 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 arevenue base based on our strong 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 Sector, we will build a stable supply system and protect the global environment by replacing some aging 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. We will also develop products, such as hydrogen carriers made using hydrogengenerated in soda electrolysis, in our efforts to provide sustainable value.

High-Purity Microfine Alumina That Contributes to the Decarbonization of Society

Integrated Report 2022

TOPICS

4.0
Sintered bulk density [g/cm3]

At the Alumina Sector of Chemicals Div. of Nippon Light Metal Co., Ltd., we launch newly developed
products onto the market to contribute to the decarbonization of society. For example, in the n-alvance™
series (NAH150) of products developed as a material for ceramic products, we succeeded in achieving ahigh degree of purity (low Na content) that we were not able to achieve with previous products. Further,another feature of the series is ultrafine particles less than half the size of the particles of our existingproducts. As a result, the sintering temperature of the alumina particles is approx. 250°C lower thanordinary alumina. That enables this product to reduce the energy cost of customers’ manufacturing
processes and also helps reduce CO2 emissions. It is expected that sales of NAH150 will increase mainly
as a product for semiconductor materials.

25

102,833

2019

Data

Operating Profit (million yen)

化成・地金

■■売上高

■■営業利益127,633
91,1812020

2021(Fiscal year)

8,954

9,616

10,902

9,614

2017

2018

2019

2020

13,0212021(Fiscal year)

Business Environment

The Alumina Sector enjoys brisk demand 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, as well as low soda alumina for semiconductor manufacturing equipment. However,
the rising price of imported aluminum hydroxide, a raw material, and energy prices are squeezing profit. In the Chemicals Sector, stable demand that
supports industrial infrastructure is expected in the field of basic chemicals in the soda electrolysis business, which are used mainly for iron and steel,papermaking and industrial chemicals. However, the rising cost of manufacturing, logistics and other expenses are pressuring profit due to rising raw
materials and fuel prices. Further, movement toward decarbonization is increasing both in Japan 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.

O: Opportunities

2018■■営業利益Foundations of Value Creation

Ingot Sector

Business Environment

S: Strengths■■売上高

Value Creation

3.9
3.8
3.7
3.6

NAH 150
Our existing product

3.5
1150

1200

1250

1300

1350

1400

1450

1500

1550

Sintering temperature [ºC]

1600

1650

1700

The sector of secondary alloys for automobiles slowed down due to supply constraints resulting mainly from the COVID-19 pandemic and thesemiconductor shortage. However, as a result of a surge in the market price of primary aluminum ingots, the cost benefit of scrap, etc. increased, and it
remained easy to generate profits. Amid the growing social demand for the reduction of CO2 emissions, it is expected that the 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 the establishment of a recyclingoriented supply chain that switches from using primary aluminum ingots to recycled aluminum ingots and the generated scrap is reused.

Analysis of Present State (SWOT Analysis)
S: Strengths● Ability to develop aluminum alloys● Global operations

O: Opportunities

SO● Growing demand for materials for eco-friendly vehicles● Attention focused on recycled aluminum as a low-carbon material

W: Weakness● Insufficient ability to process scrap

W
T● High degree of dependence on the automotive sector

T: Threats● Decrease in demand for internal combustion engine parts resulting

from the switch to eco-friendly vehicles● Scrap supply shortage attributed to the promotion of horizontal

recycling

Business Policies and Strategies under the 2022 Mid-term Management Plan
In its medium-term strategy, Nikkei MC Aluminium Co., Ltd. aims to establish structures for developing, producing and selling products, and further, tobuild a framework for purchasing scrap as a material in major automotive markets in the world. In India, a market whose growth has been remarkable, wewill build and begin operating a plant under a new company (registered in FY2019) and move into the black as quickly as possible, in our efforts toachieve market penetration. We will expand sales by providing alloys developed by the NLM Group as products for eco-friendly vehicles and for nonautomotive 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.

Joint Development of High-Performance Aluminum Alloys for High-Pressure
Die-Casting with NanoAL LLC of North America
Nikkei MC Aluminium Co., Ltd. signed a tripartite joint development agreement with NanoAL LLC of North America
and Mitsubishi Corporation RtM Japan Ltd., expanding the business alliance aimed at developing andcommercializing high-performance aluminum alloys for high-pressure die-casting to respond to demand in multiple
growth markets including automobiles and consumer electronics. High-pressure die-casting is a process of shaping
net shape components by die-casting molten metal at a high pressure. It is attracting a lot of attention because
Tesla, Inc. has adopted it as a method for manufacturing large automotive aluminum components using a castingmachine called a Giga Press. High-pressure die-casting enables high-speed casting at a low cost. It enables die-cast
objects to be complex shapes because it creates smooth surfaces with superior dimensional precision.

TOPICS

Examples of large die-cast components
for automobiles
Integrated Report 2022

26

Basic Information

Net Sales

Segment Overview(million yen)
板押出 ■■売上高 ■■営業利益
107,835
113,876
101,193
106,955
97,850

Aluminum Sheetand Extrusions

Masahito Saotome

Yoshiaki Ito

Director in charge of
the Sheet Business

Executive Officer in charge of
the Nikkeikin Kakoh Kaihatsu Business

Sheet Product Sector

Operating Profit
9,767

7,152

2020

2021(Fiscal year)

2017

2018

Analysis of Present State (SWOT Analysis)

SO

W: Weakness

W
T

S: Strengths

SO● Delay in the establishment of a production system for expanding● Development, manufacturing and sales through cooperation

the processing business● Insufficient profitability of overseas business● Extrusion technologies for large, long extrusion materials and integrated● Expansion of thick sheets for semiconductor manufacturing

equipment● Expansion of demand related to batteries for eco-friendly vehicles

T: Threats● Price volatility and unstable procurement of raw materials and fuels● Paradigm shift in secondary batteries for eco-friendly vehicles

Business Policies and Strategies under the 2022 Mid-term Management PlanAt the Sheet Products Div. of Nippon Light Metal Co., Ltd., we are working on the development of new fabricated products in addition to the expansion ofsales in sectors where we have competitive advantages related to technology and manufacturing aspects of the business and which are expected to grow.
Specifically, we will increase sales by increasing our capacity for producing thick sheets for semiconductor manufacturing equipment in response to thecontinuous growth of demand in the semiconductor sector. In the field of battery materials, an area where we excel, we will strive to increase sales in the
expanding market by leveraging our ability to develop alloys that fulfill the needs of customers. Regarding the development of fabricated products, oursales and manufacturing teams are doing a market search mobilizing all resources, with the goal of launching new products following the components ofsemiconductor manufacturing equipment and bus bars (conductors for conducting large amounts of electrical current used in distribution boards, control
boards, batteries and other devices) that have already been launched onto market. Thus, we are steadily commercializing products.
In addition, for the achievement of carbon neutrality, we strive to reduce the CO2 emitted by the entire supply chain by working to switch the main raw
materials for slabs from new aluminum ingots to scrap-derived materials leveraging our many years of recycling experience in the secondary aluminumalloy business and our cooperation inside the Group based on our experience-based knowledge.

Expansion of aluminum sheets for automotive batteries

TOPICS

Regarding aluminum sheets for the battery sector, more than 20 years ago we began to develop products including the LB Series and MFX2 alloys, whichwere designed to cater to customer needs, at a time when lithium ion batteries were used for mobile phones and digital cameras, and those products
have been adopted by customers. The main required property of the alloys used as battery materials is a balance
between formability, strength and weldability. Having a research and development base enables us to develop alloys
with properties appropriate for the purposes of use of the batteries, which is a strength of the NLM Group. In recent
years, demand for aluminum sheets for automotive batteries has grown significantly due to the expansion of theelectric vehicle market. This has resulted in a shift in the main application of battery materials to automotive
batteries. Due to our ability to develop alloys and the high level of customer trust we have earned through our
products they have used for many years, which are strengths we can leverage, our aluminum sheets have been
Lithium ion battery cases
chosen to be used as products for automotive batteries in an increasing number of cases.

Integrated Report 2022

2021(Fiscal year)

Analysis of Present State (SWOT Analysis)● Customer convenience ensured through the small-lot production

O: Opportunities

2020

7,518

The global semiconductor shortage that has continued since 2021, the COVID-19 lockdown in Shanghai and other events have greatly affected a wide
range of sectors including our automotive parts business and truck mounting business. In addition, the business environment has remained tough due tothe soaring prices of aluminum ingots, additive elements and fuels. On the other hand, actions to reduce environmental impact have accelerated, and the
expansion of the eco-friendly vehicle market has led to a growing need for radiation performance and weight reduction. It is therefore expected that
opportunities for the adoption of aluminum parts will increase and there will be progress in their horizontal recycling.

● Ability to develop alloys intended for high value-added sectorsof many products and quick delivery

2019

5,950

Business Environment

The Sheet Product Sector saw demand begin to recover in FY2021, and products for semiconductor, battery, machinery and automotive sectors
remained strong during that year. In FY2022, however, sales of products related to automobiles and trucks and other products have been declining, mainly
due to the semiconductor shortage and the COVID-19 pandemic disrupting the supply chain. We have responded to the soaring costs of additive elements
and energy mainly by revising prices. However, because it takes time for the revised prices to propagate in the market, the environment has remained
extremely difficult in terms of profit.

27

2019

Data

Extruded Product Sector

Business Environment

S: Strengths

2018Foundations of Value Creation(million yen)
板押出 ■■売上高 ■■営業利益

3,556
2017

Value Creation

within the Group
production line from materials to processing
O: Opportunities● Expansion of the eco-friendly vehicle market● Relationships with customers strengthened through the promotionof horizontal recycling

W: Weakness● Declining competitiveness of overseas business

W
T● Low profitability of businesses, including generic product businesses

T: Threats● Rising prices and procurement instability impacting raw materials● Geopolitical risks in China

Business Policies and Strategies under the 2022 Mid-term Management Plan

In its medium-term strategy, Nikkeikin Aluminium Core Technology Co., Ltd. aims to have more of its products adopted as battery cooling products for
eco-friendly vehicles, a market that is expected to grow amid the trend toward carbon neutrality, and also as underbody parts and body structural parts
reflecting the demand for lighter-weight vehicles. 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.
For the reduction of CO2 emissions, we will proactively promote initiatives including switching the main raw materials for billets from new aluminum
ingots to scrap-derived materials, introducing high-efficiency equipment in production processes, and converting fuels. In addition, we will work withcustomers to accelerate initiatives for the realization of horizontal recycling, in which used products are dismantled and segregated and then melted, castand extruded again by the Group to produce the same products. Details➡P.19 Case Example

Commencement of operation of an automotive parts production site in North America
Nippon Light Metal Georgia, which was established in 2019 with the goal of increasing sales of ourautomotive underbody parts in North America, is preparing to meet its goal of starting production within
FY2022. Demand for aluminum products is expected to increase in North America as well, reflecting tighter
environmental regulations in countries around the world and growing need for lighter-weight vehicles. Thisinitiative will also result in the establishment of three operating bases in Japan, China and the United States.
By reinforcing our global supply structure, we will further strengthen our relationships with customers. We will
aim to achieve the continued growth and expansion of our automotive business by proactively developing
products that leverage the characteristics of aluminum, with a focus on the rapidly expanding eco-friendly
vehicle market.

TOPICS

Nippon Light Metal Georgia, Inc.

Integrated Report 2022

28

Basic Information

Net Sales (million yen)Segment Overview

加工関連Fabricated Products
and Others

Toshikazu Tanaka

Minoru Sotoike

Director in charge of
the Nippon Fruehauf Business

Executive Officer in charge of
the Panel System Business

加工関連

■■売上高

9,783

11,681 10,440

Analysis of Present State (SWOT Analysis)

157,297

153,415

2017

2018

2019

2020

2021(Fiscal year)

2017

2018

2019

2020

2021(Fiscal year)

S
O

W: WeaknessWT

We saw the prices of steel sheet materials, foaming agents, and other materials rise, reflecting the soaring prices of crude oil and other commodities andthe movement toward decarbonization, in addition to the global increase of demand for raw materials and transportation costs. In addition, the supply
shortage of the raw materials for manufacturing panel cores became serious at the end of last year, mainly reflecting the suspension of production of
foaming agents due to the damage that a hurricane did to suppliers in the United States last summer and the recovery of the global economy. While wewere able to continue production, we were forced to limit the orders we accepted related to new properties and orders that required quick delivery,
postpone deliveries, and take other measures. On the other hand, domestic semiconductor-related demand has increased steadily, supported by thenational government’s subsidy policies. It is expected that demand will increase in the clean room sector.

Analysis of Present State (SWOT Analysis)
S: Strengths

SO● Delay in the reflecting of the soaring prices of materials and parts in● Largest market share in the domestic industry

the Isuzu Group● Largest share of the market in Japan (in terms of quantity)

sales prices● Delay in the expansion of business in overseas markets● Comprehensive capabilities with expertise in sales, design,

T: Threats● Expansion of service businesses reflecting the diversification of logistics

 ntry of overseas competitors and competitors from other industries●E● Cooperation within the Group regarding decarbonization and cold

into the commercial EV market● Long-term downsizing of the domestic market

Business Policies and Strategies in the 2022 Mid-term Management Plan

Nippon Fruehauf Co., Ltd. will proactively develop differentiated products for the realization of sustainable logistics, by seeing the changes in the logistics
environment that will occur over the next 10 years as opportunities.
Specifically, we will provide services that contribute to the improvement of the efficiency of logistics by delivering logistics that never 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 themodal shift that will eliminate the driver shortage. Further, to meet the demand related to the decarbonization of the logistics industry, we will also leverage
the Group’s strengths to reduce the CO2 emitted throughout the lifecycle of the products we offer. Outside Japan, we will strive to ubiquitize cold chain
logistics which are more necessary than ever due to lifestyle changes. 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.

FRUEHAUF CONNECT Contributing to the Safety and Security of Truck Drivers
To help solve social issues faced by transportation providers using many trailers such as the shortage of drivers
and the reform of workstyles, Nippon Fruehauf Co., Ltd. Provides FRUEHAUF CONNECT, a service of providing
location information and other information using IoT technologies. With this service, the company improves theefficiency of vehicle dispatch tasks and the quality of maintenance to support customers’ operations.
In July 2022, a service was added to enable users to prepare for the natural disasters that have been
occurring frequently in recent years. This service uses official data provided by the Japan Meteorological
Agency and other organizations about earthquakes, heavy rains and other disasters to identify customers’
vehicles in areas affected by disasters. The information is provided to customers so that they can confirm thesafety of their drivers and vehicles.

Integrated Report 2022

8,892

3,776

● Ability to develop products in collaboration with the NLM Group andchain logistics■■営業利益Business Environment

We expect that steady demand will remain in the truck market in Japan despite a temporary decline attributed in part to supply chain disruptions. In
addition, COP21 has resulted in the acceleration of the movement toward decarbonization, and there is also growing demand for low-carbon vehicles
such as EVs in the commercial vehicle market. Further, the driver shortage has become serious, so the improvement of the efficiency of logistics and thereform of drivers’ workstyles are urgent tasks that the logistics industry needs to address as it moves towards the application of an upper limit on work
hours in the logistics sector in 2024. From a global perspective, the reduction of food loss in logistics has been set as a task for addressing foodshortages and poverty. Thus, the logistics industry has entered a once-in-a-century great transformation towards the achievement of sustainable logistics.
A response to these changes is also required for truck mountings and trailers, which support logistics.

O: Opportunities

Data

Panel System Sector

Business Environment

29

172,975

169,019

Foundations of Value Creation

Operating Profit (million yen)■■営業利益180,259

Truck Mounting Sector

S: Strengths■■売上高

Value Creation

TOPICSFRUEHAUF CONNECT trailer positioning
management systemproduction, logistics and installation
O: Opportunities● Expansion of semiconductor-related market● Growing demand for fireproof insulation panels

W: Weakness

WT● Shortage of human resources and inefficient operations● Limited points of contact with end users

T: Threats● Rising raw materials prices and instability of procurement● Labor shortage in the construction industry

Business Policies and Strategies in the 2022 Mid-term Management Plan

Nikkei Panel System Co., Ltd. positions ESG-management-based business activities as its key medium-term policy. In society where decarbonization isnecessary, insulation panels play an important role in conserving energy. However, warehouse fires caused by the ignition of insulation have occurred
frequently in recent years, which has led to growing demand for fireproof insulation. To meet this demand, Nikkei Panel System is striving to ensure thestable supply of non-CFC fireproof insulation panels through the pursuit of unique technologies. Further, the company holds a dominant share of the clean
room sector of the semiconductor-related market in Japan, which is positioned as a key sector under Japan’s economic security policy. It will continue tofulfill its supply responsibilities by fully demonstrating the design and installation capabilities that it has cultivated through its many practical operations.
The company will invest aggressively in the automation of production and reduction of labor in its production processes and improve operational efficiency
by using many digital technologies.

TOPICS

To Accelerate Product Development and Ensure High Quality
In August 2020, Nikkei Panel System opened the Tec Lab at Shiga Plant as its core facility for thedevelopment of the human resources that will be future leaders and for product development and research,aiming to leap forward to being a space engineering company that creates new spaces and new value. To
further add to its strengths, Nikkei Panel System Co., Ltd. established a Standard Installation Workshop with
its partner companies engaged in installation with the goal of sharing knowledge and skills assuring
worksite safety and the high quality of work. Specific activities include safety training using VR videos, thestandardization of methods of installing new products, the development of installation jigs to ensure safety
and efficiency, the development of new panel materials, and testing and verification done using actual-size
panels.

Exterior of Tec Lab

Integrated Report 2022

30

Basic Information

Net Sales (million yen)Segment Overview

94,365 95,349 88,945 86,240

箔粉末 ■■売上高 ■■営業利益

Aluminum Foil Division

Analysis of Present State (SWOT Analysis)● Significant technology development capabilities

O: Opportunities

3,311

2019

2020

1,570

2018

2019

2020

2021(Fiscal year)

2017

2018

2021(Fiscal year)

Business Environment

The environment surrounding the foil business has remained tough due in part to the soaring prices of aluminum ingots and other raw materials, risingenergy costs, and an increase in the inflow of low-priced aluminum foil manufactured overseas. 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 indemand for aluminum foils used as the outer material of automotive lithium ion batteries.
Further, currently, demand for aluminum foil as a pharmaceutical packaging material, the aluminum foil for what is called PTP packaging sheets, hasremained strong.

● Largest share of the domestic aluminum foil market

3,074

Daily Necessities Division

Business Environment

S: Strengths

5,114

Kaoru Kusumoto
2017

Data

91,655
4,856

Director in charge of
the Toyo Aluminium Business Group

Foundations of Value Creation

Operating Profit (million yen)

箔粉末 ■■売上高 ■■営業利益

Aluminum Foil,
Powder and Paste

Value Creation

SO● Expansion of the EV market
 xpansion of the market for electronic components related to 5G●E

and autonomous driving● Expansion of the market for pharmaceutical double-sided aluminum
PTP sheets in India and other countries

W: Weakness● Aging of production facilities

W
T● Low cost competitiveness against aluminum foil manufactured

overseas
T: Threats● Soaring raw materials prices● Inflow of aluminum foil manufactured overseas

Business Policies and Strategies in the 2022 Mid-term Management Plan

Toyo Aluminium K.K. will focus its efforts on expanding the aluminum foil for outer materials business by steadily tapping into the growing demand forlithium ion batteries. At present, the market has been declining, 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 to establish a supply capacity andproduction system that fulfills the demand from customers in terms of quantity. At the same time, we will continue to work to reduce costs with a focus on
the improvement of production efficiency.
Regarding aluminum foil for pharmaceutical packaging, we will step up efforts to expand to the market in India in addition to supplying the foils inJapan. The Indian market is expected to continue growing, and demand for pharmaceutical packaging materials is anticipated to remain strong in Indiaand surrounding countries. In August 2021, we made Svam Toyal Packaging Industries Private Limited our subsidiary through additional investment. We
will strengthen Svam Toyal’s business management and production control system to improve its competitiveness. At the same time, we will aim to launch
newly developed products to expand the business.

For the Establishment of the Powder Laminated Foil Business

TOPICS

Powder laminated foil is a porous material that is produced by laminating aluminum powder on the surface of aluminum foil and sintering it. Unlike thecurrent foil for aluminum electrolytic capacitors, the powder laminated foil does not require an etching process, which enables the reduction of the impact
of its manufacturing on the environment and humans. It is deemed to be a promising new foil for capacitors at
a time when demand for capacitors is expected to increase due to telecommunications infrastructure shifting to
Aluminum powder part
5G and the expansion of the EV market.
In October 2018, Toyo Aluminium established a joint venture with Guangdong HEC Technology Holding Co.,
Ltd., which holds the largest share of the global chemical foil market. We have since been working on the
Aluminum foil partdevelopment of powder laminated foil. We are working to realize the commercial production of powder laminatedfoil, aiming to launch it onto the market as a high-capacity, eco-friendly product.

People’s lifestyles have been changing due to the COVID-19 pandemic. There was significant demand from people staying home last year and the year
before last. While this has been tapering off, trends such as people spending more time at home remain, which has led to more time spent cleaning
homes, and an increasing awareness of ventilation. These trends are influencing the purchasing behaviors of consumers.
In addition, environmental awareness, which is reflected in people avoiding the use of plastics, the movement towards decarbonization and othermovements, is increasing globally. These trends are also remarkable in Japan, where chilled food containers and frozen food containers used byconvenience stores and supermarkets are being replaced with eco-friendly products.

Analysis of Present State (SWOT Analysis)
S: Strengths● High product development capability● Strong brand power in the everyday goods sector

O: Opportunities

SO● Lifestyle changes reflecting increased time spent at home

● Increasing awareness of air purification and ventilation as a resultof the COVID-19 pandemic● Increasing environmental awareness reflected in the avoiding of theuse of plastics and other actions

W: Weakness● Aging of production facilities● Low cost competitiveness of commodities

T: Threats● Soaring raw materials prices

WT hrinking of the market reflecting the decreasing population of
●S

Japan

Business Policies and Strategies in the 2022 Mid-term Management Plan

The Toyo Aluminium Group will focus its efforts on expanding its filter products. The filter product market has been growing significantly due to lifestylechanges. Because this product has a high repeat purchase rate, we can expect stable sales from continual purchases, and the expectation is that there isa lot of room to expand sales. We will strive to establish a framework for increasing production, including the expansion of the filter plant. We will also stepup our efforts to approach customers who have yet to learn about our products and expand sales channels using e-commerce.
We will also work to expand sales of food containers, with a focus on containers made of paper. While demand for food containers is growing due tothe increased demand for takeaway food, the overall consumption of food containers has been trending downward due mainly to the reduction of orders
from convenience stores, which resulted from their efforts to address food loss. We will tap into demand from customers who intend to switch from plastic
containers by leveraging our lineup of eco-friendly products that are not available from our competitors (heat-resistant paper cups, EC-Ware, pulp molds).

Participation in a Circulation System Demonstration Experiment

TOPICS

Switching to paper products to avoid the use of plastics is environmentally friendly in that it prevents marine and soil
pollution caused by plastics. However, the use of paper products also has an environmental impact which includes
deforestation, and we cannot ignore this. Toyo Aluminium Ekco Products Co., Ltd. participates in a paper cup
recycling demonstration experiment as one of its environmental initiatives. In this experiment, paper cups with abiodegradable resin lining are used for the drinks sold in a football stadium. The used paper cups are composted
through primary fermentation in composting equipment installed in the stadium, secondary fermentation, and tertiary
fermentation, and then used to grow crops on farms. The company is implementing this circulation systemdemonstration experiment together with related companies and organizations.

* The exclusion of Toyo Aluminium K.K. and other companies constituting the Foil and Powder Products segment from the scope of consolidation is planned to occur on March 31, 2023.
https://www.nikkeikinholdings.com/news/news/common/pdf/p2022090201hde.pdf

31Integrated Report 2022

Integrated Report 2022

32

Basic Information

Value Creation

Foundations of Value Creation

Data

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 38.1% in FY2021,
which is the most recent figure. In parallel with this, the D/E ratio has also improved, settling at a level below 1.0. While wehave not presently issued bonds, etc. in Japan, our long-term credit rating has also improved, and is currently maintained at
the A- level. We understand that our tasks for the future is increasing shareholder returns and aggressively investing for future
growth in a well-balanced manner while continuing to reinforce our financial foundation.
●Equity ratio (%)●D/E ratio ■Long-term credit rating (JCR)

25.0

25.5

1.8

1.8

26.6

37.2

0.9

0.8

39.6

0.7

0.7

37.6

38.1

0.8

0.8

1.4

BBB+
2013

39.0

28.8

1.6

BBB
2012

35.6

2014

2016

2017

2018

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 2022 mid-term
management plan, we will continue to aggressively invest at a level that exceeds depreciation, as we did during the previous
mid-term management plan. Regarding the content of investments, we will increase the ratio of investments for ensuring safety
and reducing labor and environmental investments in line with the Group’s material issue themes, instead of investing simply inmaintenance and replacement. We will also increase research and development expenses which are the source of our new
future products.
Our Cash Allocation (diagram)If surplus funds are generated
2016 mid-term management plan2019 mid-term management plan
2022 mid-term management planunder these policies, we will use
them to improve our financial
standing, in activities such as therepayment of interest-bearing
Depreciation
Investing CF
Depreciation
debt and the increase of our
67.0 billion yen
51.0 billion yen -49.6 billion yen
Depreciation
Investing CF
cash position. Further, if a
Investing CF
57.9 billion yen-88.0 billion yen
promising large-scale investment-73.4 billion yen
Shareholder returns
project occurs, we will consider-15.5 billion yen
it flexibly on the condition that
Reinforcing
Operating CF
Operating CF
we maintain our financial
the financial
Operating CF
97.0 billion yen
106.0 billion yen Shareholder returns
foundation
Shareholder
returnsbillionyen
91.9
discipline (D/E ratio at 1.0 or-31.9 billion yen-15.2 billion yen-16.7 billion yen
below) and long-term credit
Reinforcing
Reinforcing
rating.
the financial
Research
investment

A-

2015

Cash Allocation

2019

2020

2021

2022

15.6 billion yen(Fiscal year)

foundation-3.3 billion yen

Research
investment

18.2 billion yen

the financial
foundation-1.3 billion yen

Research
investment

20.0 billion yen

Shareholder Return Policy
Basic Financial Policy
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 affected byleverage, as the investment efficiency indicator.
The financial figure of the NLM Group may fluctuate greatly according to the condition of the aluminum ingot market.
Therefore, in the 2022 mid-term management plan, we have disclosed reference targets in light of the current trends in themarket environment, but we aim to achieve operating profit exceeding 30.0 billion yen to increase dividends.
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.
(Unit: billion yen)

FY2019 results

FY2020 results

Net sales

465.9

432.6

486.6

515.0

Operating profit

24.6

24.2

22.2

12.5

Ordinary profit

23.5

24.0

22.9

15.0

Profit attributable toowners of parent

7.5

3.4

16.8

10.0

ROCE*

8.0%

8.4%

8.7%

—

Total payout ratio

74.6%

119.6%

31.4%

52.6%

* ROCE = Ordinary profit before interest / Capital employed at the beginning of the fiscal year

33

Integrated Report 2022

FY2021 Results

FY2022 forecasts

FY2024 references

Operating profit
exceeding 30.0
billion yen
Dividend
per share:
100 yen

Our basic shareholder return policy is to provide dividends to our shareholders by comprehensively considering theconsolidated financial results and other factors from a medium- to long-term perspective while striving to strengthen our
financial standing and management foundation. A total payout ratio of 30% is the benchmark indicator for profit allocation,
while we also consider■ Dividend per share (yen)● Total payout ratio (%)■ Dividend per share (yen)balancing this with the
Before reverse stock split
After reverse stock split
investments needed to
100
119.6
(Reference)100
10.0
achieve sustainable85
99(Target)85
growth. We select
8
8
80
8.0
methods of returning
74.6
65
6
60
6.0
profits to shareholders
552.6
4
by comprehensively
48.6
40
4.0
42.4
considering our cash
31.4
3
28.2
27.5
27.1
23.1
21.0
position, equity ratio and20
2.0
other factors, aiming to00sustainably and stably
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2024 (Fiscal year)
provide shareholder* On October 1, 2020, we conducted a one-for-ten reverse stock split.
returns.

Dialogue with Shareholders and Investors
We are engaged in various initiatives that strengthen investor relations, aiming to more actively engage in dialogue withshareholders and investors than ever before. Specifically, we have made improvements such as the holding of a results
briefings every quarter on the date of the announcement of quarterly financial results. We have begun to post a video ofthe results briefing including explanations of the progress of the mid-term management plan, which we hold every six
months, and a summary of the Q&A session on our official website. Other initiatives include the enhancement of theinformation we disclose, such as the disclosure of profit-and-loss analyses, and the English translations of earnings
presentation materials. We will continue to improve to address the needs of shareholders and investors.
Integrated Report 2022

34

Basic Information

Value Creation

Foundations of Value Creation

Data

Governance
Framework

General Meeting of Shareholders
Appointment/Removal

Appointment/Removal

AdviceNomination andCompensation Committee

Appointment/Removal

AdviceConsulting

President and CEOGroup Executive Committee

Officers

Compliance Committee
CSR Committee
Quality Committee
Environmental Committee
and others

Departments, subsidiaries and affiliates
Internal audit

Opinion exchange

Opinion exchange

Central CSR and Audit Office

Progress of Enhanced Corporate Governance

Audit reports/Opinion exchange
Male

Organization

Composition

Initiatives for Enhancing Corporate Governance2012

2013～2015

2016

2017

2018

2019

2020

2021

Ensuring the diversity of
the Board of Directors
Appointment of Outside
Directors

2 peopleappointed

Increased
to 3

Appointment of female
Directors

Increased
to 4

1 person
appointed●Skills matrix created

Skills matrix
Improving the effectiveness of the Board of Directors



Evaluation of the effectiveness of the Board of Directors

●Questionnaire survey of officers

●Introduction of an executive officer system

●Introduction of stock remuneration

Executive officer system
Stock remuneration
Nomination andCompensation Committee●Introduction of an executive

officer system

based on delegation agreements●E stablishment of the Nomination andCompensation Committee

Integrated Report 2022

Board of Auditors(Percent that are outside members: 36%)

(Percent that are outside members: 83%)

(Percent that are outside members: 50%)

So that the Company can make appropriate and flexible
decisions and supervise the execution of thosedecisions, the Board of Directors as a whole shall becomposed of internal Directors who have the requisite
skills and knowledge for management and Outside
Directors who are able to actively share their views andraise issues regarding growth strategy and theenhancement of governance from the standpoints of adiverse range of stakeholders and society.

The Committee shall comprise at least 3 members
including the President, and the majority of its members
shall be Independent Outside Directors. In addition, theBoard 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 thatmaintain an independence from management by
securing the participation of Outside Auditors withexperience and insight into many fields. In addition, theAuditing Office that supports auditing operations ofAuditors is assigned dedicated employees not subject
to the direction or orders of Directors.

The Board of Directors makes decisions on the basic
and important management matters of the NLM Group,and supervises the status of Directors in the executionof their duties.

The Committee discusses and reports on mattersdetermining nomination and compensation in response
to a request for consultation from the Board of Directors
and President. In considering particularly importantmatters such as appointment of officers and theircompensation, NLM HD seeks the appropriate
involvement of and advice from the Committee, whose
main members are Independent Outside Directors, inan effort to ensure the independence and objectivity of
the Board of Directors’ functions and strengthen its
accountability.

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

Chairperson

Chairperson

Authorities andresponsibilities

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

Frequency of meetings

Every month *FY2021: 13 times

3 times a year *FY2021: 5 times

Regularly *FY2021: 15 times

Major mattersdeliberated(discussed) in
FY2021

Non-JapaneseNomination and Compensation Committee

conducted

Strengthening internal control
Environmental protection⃝2012: Establishment of the Environmental Committee
Information security⃝2020: Introduction of CSIRT
Corporate ethics⃝2012: Establishment of the Compliance Committee
Establishment of the NLM Group Compliance CodeInternal control and risk management ⃝2012: Establishment of the Basic Policy on the Development of the Internal Control System⃝2013: Establishment of the CSR Committee
Quality⃝2012: Establishment of the Quality Committee

35

Basic policy

Increased
to 5

FemaleBoard of Directors

Internal
members

Corporate Governance Code and other guidance. In June 2021,
the executive officer system was changed from a system basedon employment agreements to one based on delegationagreements to clarify the responsibilities of the Officers andenhance their roles.

Outsidemembers

Since the pure holding company system was introduced in 2012,
NLM HD has been gradually strengthening its governancesystem, considering that corporate governance is one of its mostimportant management challenges. NLM HD will continue torevise its governance system in line with the intent of the

Auditors
Outside Auditors

Consulting

Audit reports

Directors
Outside Directors

Board of Directors

Statutory
auditor audits

Audit reports

Board of Auditors

Appointment/Removal●Corporate Governance Report (Japanese only)

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

In addition, by separating the supervisory functions ofmanagement 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.

Governance Structure

Reports andproposals(1) NLM HD shall respect the rights of shareholders andensure their substantial equality.
(2) NLM HD shall endeavor to appropriately cooperatewith shareholders and many other stakeholders. The
Board of Directors and top management shall exercise
leadership to foster a corporate culture that respects
the rights and standpoints of stakeholders, as well as
corporate ethics.
(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.
(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.
(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.

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.

Appointment/Removal

Basic Policy on Corporate GovernanceAccounting audit

The NLM Group has introduced a pure holding company systemand operates under Nippon Light Metal Holdings Co., Ltd. (“NLMHD”), the holding company. NLM HD aims to improve corporate
value by working to achieve sustainable growth and enhance its
competitiveness through the formulation and determination ofGroup-wide strategy, strategic allocation of management
resources, and the supervision of operating company
management.
The Board of Directors consists of 14 Directors (5 Directors,
36% of the board, are Independent Outside Directors). NLM HD
has adopted an executive officer (executive officer as “Officer”)
system (based on delegation agreements), enabling the Board of
Directors to flexibly operate and substantively deliberate. In
addition, to clarify the missions and responsibilities of Directors
and Officers, each Director or Officer’s term of office is 1 year.
NLM HD has also adopted a corporate auditor and Board ofAuditors system. There are 6 Auditors (including 3 Independent
Outside Auditors, 50% of the Board of Auditors). The Auditors
constitute the Board of Auditors. As an independent body thatplays a part in corporate governance, the Board of Auditors
attend important internal meetings such as Board of Directors
meetings, monitoring the execution of duties by Directors inaccordance with audit policies and audit plans that comply withthe standards for audits by Auditors.

Accounting Auditor

PolicyRevision of the Management Policy
Identification of material issues● Formulation of the new mid-term managementplan● Quality problems at the NLM Group● Publication of Integrated Report 2021
● Review of overseas investment allocations
●

●

●

●

Deliberation regarding the skills matrix
Deliberation regarding the presidential
succession plan onfirmation of the handling of the quality
C
problems and submission of written opinions● Confirmation of initiatives taken to strengthen
compliance● Confirmation of key audit matters (KAM) withthe accounting auditor● Promotion of IT control●

Integrated Report 2022

36

Basic Information

Value Creation

Foundations of Value Creation

Data

Governance
Board of Directors
The Company has 14 Directors, 5 of whom are Independent
Outside Directors.
The Board of Directors meets once a month in principle, where
it makes decisions on the basic and important management
matters of the NLM Group, and supervises the status of Directors
in the execution of their duties.
The economic environment in FY2021 saw stagnant economic
activities which were attributed mainly to the COVID-19
pandemic, the soaring prices of raw materials and fuels, and theshortage of semiconductors and other components. FY2021 wasalso the final year of the mid-term management plan that started
in FY2019, and the Board of Directors was engaged in monitoring
to ensure the steady implementation of the plan. In particular, theBoard of Directors identified material issues of the NLM Groupand organized and identified sustainable value creation processes
to push forward with sustainability management and increase its
value. It also intensively discussed the tasks for achieving the shift
to sustainability management, including decarbonization, theactive participation of women and supporting and employing
people with disabilities.

Nomination and Compensation Committee
The Committee is composed of 6 committee members including
all 5 of the Outside Directors.
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 appropriate
involvement and advice from the Committee, whose main
members are Independent Outside Directors, in an effort toensure the independence and objectivity of the Board of Directors
and strengthen its accountability.
In FY2021, the Committee deliberated on the creation of askills matrix for NLM HD’s Board of Directors in response to arequest. (See the skills matrix on page 42.) In the creation of NLM
HD’s Board of Directors, diverse human resources with a range ofskills were selected to enable the Board of Directors toappropriately fulfill its decision-making functions and its
management supervisory functions in light of the direction of NLM
HD’s medium- to long-term management and business strategy
and thereby maintain a highly transparent governance system.

Board of Auditors
Three of the 6 Auditors of the Company are Outside Auditors.
The Board of Auditors meets at least once a month, andconducts auditing operations with each Auditor maintaining
independence from management, by securing the participation of
Outside Auditors with experience and insight in various fields.
Auditors audit the status of internal control including
compliance, risk management and the timely disclosure of
information from the perspective of enhancing the effectivenessof corporate governance.
In FY2021, regarding the series of quality-related misconduct
incidents that were revealed at several of the NLM Group’s
operating companies, the Board of Auditors examined theeffectiveness of NLM HD’s internal control and its risk scenarios
based on results of the investigations of the Special Investigation
Committee, from a perspective that is different from that of theBoard of Directors, and expressed its opinions to the Board of
Directors. Further, it coordinated with the accounting auditor andexchanged opinions about key audit matters (KAM) and IT
control.

37

Integrated Report 2022

Other bodies including the following work to ensure theappropriate management of the Company.

Group Executive Committee
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 meets twice amonth in principle, discussing and making 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 important management items are decided by
the Board, the Group Executive Committee serves as a body that
reviews matters before they are resolved by or reported to theBoard. It determines the agenda 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 andguarantees, various risks such as credit risks or regional andmarket risks are taken into account, monetary standards are set
for each type and the scope to be resolved by the Board of
Directors is clearly specified. Matters that fall below thesemonetary amounts are delegated to the Group Executive
Committee and other executive management, enabling the Boardof Directors to focus on the discussion of essential strategies
aimed at medium-to-long-term growth.

Compliance Committee
Chaired by the president of NLM HD, the Compliance Committee
meets 4 times a year as a body that examines tasks andproblematic points related to overall compliance and it deliberates
and determines measures for instilling and establishingcompliance, including the determination of the Compliance
Promotion Plan and the examination and correction of the statusof the implementation of the plan.

CSR Committee
The CSR Committee meets 2 times a year, in principle, as a bodythat deliberates a wide range of matters and makes necessary
decisions related to the NLM Group’s material issues. It is chairedby the President of NLM HD and is composed mainly of NLM
HD’s Directors (excluding Outside Directors) and Officers and thepresidents of major subsidiaries.

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

Coordination Between Auditors, Accounting Auditor
and the Internal Auditing Department
Auditors and accounting auditor maintain independence from one
another while periodically discussing matters such as auditingtargets and methods. They also coordinate to ensure that 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 byexchanging 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
To verify that the Board of Directors is functioning appropriately
overall and to take appropriate measures including improving
upon issues based on the results, the effectiveness of the Boardof Directors is evaluated each year in an effort to ensure ongoing
improvements to its functioning.

Evaluation Process
In FY2021, the effectiveness evaluation process was improved.
Specifically, an internal questionnaire of Directors and Auditors
regarding the effectiveness evaluation was conducted before
performing the effectiveness evaluation for FY2021 andidentifying the tasks to be done moving toward FY2022.

(1) Effectiveness evaluation questionnaire
Effectiveness evaluation questionnaire⃝Survey period: March 2022
⃝Subjects: All Directors and Auditors⃝Evaluation method: 5-point scale⃝Major evaluation items:
Board of Directors’ composition, operation, supervisory functions, risk
management, decision-making functions, and culture (including
evaluations of the Nomination and Compensation Committee)(3) Evaluation of effectiveness for FY2021 andidentification of tasks to be done in FY2022
Through the above process, effectiveness in FY2021 was evaluatedand the tasks to be done in FY2022 were identified at the meeting of
the Board of Directors held in June 2022. The details of the following
decisions are disclosed in the Corporate Governance Report.

Major Initiatives in FY2021 and Evaluation
Under the FY2021 policy of enhancing discussions related to
management issues and sustainability management from medium
and long-term perspectives, the Board of Directors passed
resolutions regarding the identification of the NLM Group’smaterial issues, the formulation of a mid-term management planthat attaches importance to the sustainability management
perspective, the revision of the Management Policy reflecting thematerial issues and the perspective of sustainability management
and other matters after deliberating the matters multiple times.
In its comprehensive evaluation based on the questionnaire
results, the Board of Directors confirmed that lively discussions
took place and the recommendations and issues raised by
Outside Directors and Auditors in particular significantly
contributed to discussions, and Board of Directors overall has
been evaluated as maintaining its effectiveness.

Quality Committee(2) Questionnaire results shared by the Board of Directors

Tasks to be done in FY2022

Chaired by the President of NLM HD, the Quality Committee
meets 2 times a year, in principle, and responsible people from
quality assurance departments of Group companies participate in
the Committee. In the Committee’s meetings, participants pushforward with quality management, including deliberations of theGroup Quality Policy, analyze the cause of serious quality
problems, discuss how to prevent their recurrence, and share
information about quality audits and other activities, to ensurethat the NLM Group provides safe, quality-assured products andservices.

The results of the questionnaire were reported at the Board of
Directors meeting held in April 2022 before the effectivenessevaluation for FY2021 was performed and the tasks to be donein FY2022 were shared.

In FY2022, the Board of Directors will work on the following tasks
based on the results of the effectiveness evaluation questionnaire,in its efforts to improve its effectiveness.

Environmental Committee
This Committee is chaired by the President of NLM HD andcomprises mainly NLM HD’s Directors (excluding Outside
Directors), Officers, and presidents of major subsidiaries. It meets
2 times a year to discuss basic environmental policy and activity
promotion plans, report serious environmental problems and theresults of environmental audits, and deliberate and propose
initiatives related to environmental matters, with the goal of
improving the environmental management of the NLM Group.

FY2022 Tasks of the Board of Directors⃝Increasing the involvement of the Board of Directors in IR activities⃝Enhancing communications between the members of the Board of Directors⃝Enhancing the information provided to Outside Officers throughinspections of business sites and other opportunities

Design of Compensation Systems for Directors and Officers
The Nomination and Compensation Committee discussed thecompensation system for Directors and Officers, which was
newly introduced in FY2021, and reported to the Board of
Directors that the same compensation system should continue tobe used in FY2022. Based on the report from the Committee
regarding this compensation system, the Board of Directors
passed a resolution regarding the delegation of the authority tomake decisions regarding the compensation system andamounts of compensation for FY2022.

(1) Compensation of Directors
The Company has adopted the basic policy of ensuring that
Director compensation functions as a healthy incentive tosustainable growth.
An overview of the compensation system (policy on
determining the details of compensation, etc. for individual
Directors) is as follows.
Integrated Report 2022

38

Basic Information

Value Creation

Foundations of Value Creation

Data

GovernanceCompensation Levels

Ratios of Internal Director Compensation

Compensation levels are set based on a person’s duties andresponsibilities, the financial position of the Group and its
operating results, with reference to the compensation levels ofother domestically listed companies in the same industry withsimilar market capitalization and sales volume.

Structure of Compensation⃝Internal Directors
Compensation is made up of ❶ Basic Compensation,❷ Performance-based Compensation and ❸ StockRemuneration, 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 managementfrom an independent standpoint, their compensation
comprises only ❶ Base Compensation
Overview❶ Base●compensation

Base compensation is set as fixed compensation
based on an officer’s position, responsibilities andother factors.

❷ 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 of contribution toGroup management, etc.

❸ Stock●
Remuneration

・This is a restricted stock-based compensation
scheme paid depending on the position of Directors.
・The compensation is in the form of pre-issuancetype common shares with a restriction on transfer
until the retirement of the officer in question.
・If, during the period of restriction on transfer, theDirector violates a law or otherwise acts in amanner that is contrary to the purpose for which
the system was established, the Company will
acquire the shares in question at no cost.

Variable

FixedTypes ofcompensation, etc.

Fixedcompensation 60%
Constituent
ratio

Message from an Outside Director

Variable compensation 40%❶ Base❷ Performance❸ Stockcompensation based compensation
Remuneration
Approximately 60% Approximately 20% Approximately 20%

Payment
methodMonetary
payment

Monetary
payment

Stock-based
payment

FY2021 Results■ Basic compensation ■ Performance-based compensation ■ Stock Remuneration
Chief
Executive
Officer

74%

Internal
Directors

77%

OutsideDirector

7%

19%

8% 15%
100%(Reference) Performance indicators for FY2020: Operating profit of 24,194 million yen and ROCE of 8.4%
Amount paid for shares for subscription: 1,864 yen/share

Forthcoming Issues
The Nomination and Compensation Committee and Board of
Directors have confirmed that they will continually examine thesystem design of ❸ Stock Remuneration, and the details andratios of the variable compensation combining ❷ Performancebased Compensation and ❸ Stock Remuneration. Based on thispolicy, the Company will study the overall compensation system
on an ongoing basis.

(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 isdetermined and paid through consultation between auditors.

members. In addition, benchmark amounts are set under theGroup regulations for Group companies’ capital investment,
acquisition/disposal of shares and similar projects, and projectsof a certain scale require the approval of the Company (of theGroup Executive Committee and the Board of Directors).

Cross-Shareholdings
The Company and Group companies may acquire and holdshares of a business partner to strengthen their relationship withthe business partner and facilitate smooth business operations.
When shares of a business partner are to be newly acquired, theappropriateness of the acquisition of shares is determined fromthe viewpoint of how much the stronger relationship with thebusiness partner will contribute to the development of theGroup’s businesses.
Cross-held shares are reviewed on a stock-by-stock basis
each year to determine the reasonability of continuing to holdthem and of the number of shares held, applying core evaluation
criteria including the purpose of holding them, unrealized loss andgain and trade volume. For stocks which are found to not have aparticularly compelling reason for holding them, the number of39

Integrated Report 2022

Keiko Tsuchiya
Outside Director

Group Governance
The Company sends its Directors, Auditors, Officers, andemployees to Group companies as their directors and auditors tostrengthen its Group governance and share information. Further,business plans and budgets of Group companies are formulated
after discussion involving the Company’s management team

Striving for best
governance as a pureholding company!

shares held is reduced by selling them as appropriate according
to the share price and market trends.
In light of the purpose of holding these shares, voting rights
pertaining to cross-held shares are exercised in a way that
contributes to the improvement of the corporate value of thebusiness partner. Voting rights will not be exercised affirmatively
with respect to matters which will result in a significant loss ofshareholder value or which involves serious corporate governanceconcerns. In FY2021, as a result of review of all the cross-heldshares conducted in accordance with the above policy, theCompany reduced the number of shares of 6 cross-held stocks
and sold all of the shares of 4 of these stocks. The contents of
the review and the results of the sale of stocks were reported to
the Board of Directors, and their validity was confirmed.

As the company overseeing the overall NLM Group, Nippon Light
Metal Holdings Co., Ltd. made a fresh start under its Corporate
Philosophy, revised in 2022, which says “Contribute to improving
people’s quality of life and environmental protection by continuing
to create business, focused on aluminum.” The important point of
this revision is that the “profit-first approach” was replaced with“value provision.” This shows precisely that the NLM Group’s
consistent, valuable policy of value provision has been reflected
more clearly and firmly in the Corporate Philosophy and the Basic
Policies. In addition, it is fair to say that this is a highly meaningful
step from the viewpoint of sustainable management, in that thecompany has adopted a Management Policy aimed at providing
value to its stakeholders in the broader sense of the term,
including its business partners, employees, and local
communities, as a leading company.
Moreover, the NLM Group has expressed in the value creation
process and announced internally and externally how it will
coordinate and provide value in its business activities for thecapital it invests, with the aim of achieving its Corporate
Philosophy. This shows a stance of communicating the initiativesof the NLM Group as a member of society in a way that is easy
for more people to understand and from medium- and long-term
perspectives, within a rapidly changing environment. I think we
can evaluate this highly as the start of communication, with which
the overall Group and management clearly expressed theirdetermination to be committed to the creation of a better futureand sustainability after discussion by various bodies, including theGroup Executive Committee. It is hoped that the NLM Group willcontinue to deliver information about its unique value provision
initiatives to both internal and external stakeholders.
The NLM Group has also adopted a slogan, “As Team NLM,
we will work to be a groundbreaking innovator of aluminum andbeyond.” This is a great challenge for the future. In addition, theGroup has an urgent task of developing next-generation leadersand diverse human resources, who will take on this challenge toachieve the Corporate Philosophy. In response, regarding thedevelopment of next-generation leaders, a specific training
program for a select group of employees has been instituted as aGroup-wide initiative, and more than 100 members have alreadyparticipated in the program. It is hoped that next-generation
leaders will work actively in various ways and that the program
will evolve to give them organizational support.

With respect to diversity, it is clearly stated in the Basic Policies
that the Group will “respect diverse values” and “develop humanresources from a long-term and global perspective.” We havebegun to see cases where young human resources with diverse
values, experience, and ideas gain opportunities to interact witheach other or take the initiatives in a cross-sectoral manner in theGroup, leading to the provision of new products or services. On
the other hand, concerning the promotion of active participationof women, the number of female leaders working successfullyhas been increasing in various divisions, which is encouraging.
However, I believe that there is still room for growth in the numberof female officers. From the viewpoint of global operations, it ishoped that while initiatives to develop next-generation leaders are
systematized, more opportunities than ever before to take onchallenges leading to growth will be provided to diverse humanresources inside and outside the Group, by leveraging the global
footprint as its foundation (sites around the world).
On the other hand, it is most regrettable that incidents
concerning inappropriate conduct relating to quality control
occurred, starting in 2021. While waiting for the results ofinvestigations into the true cause by the Special Investigation
Committee, I hereby express my apology as a Director. At thesame time, I believe that my duty is to lead the overall Group in
improving its corporate culture further in the right way, in addition
to continuing to review compliance and governance aspects.
It will be increasingly important to perform management withsustainability as a pillar, develop next-generation leaders, enable
the active participation of diverse individuals and teams, andcontinue to provide value to customers, society, and diverse
stakeholders, in response to the expectations of society. We are
required to perform a high level of management for these
purposes, by improving the organizational capability of the overall
Group, developing the right corporate culture, and thus achieving
our Corporate Philosophy, while implementing constant reforms
from medium- and long-term perspectives. I believe that the NLMGroup, which has continued to grow throughout its history byconstantly responding to changes in the market and customer
expectations, will have increasingly significant responsibilities insociety. As such, I am convinced that it is vital that the NLMGroup, as a leading company, should use the revision of
Corporate Philosophy and Basic Policies as an opportunity tostart working as Team NLM to contribute to society through value
creation for society.
Integrated Report 2022

40

Basic Information

Value Creation

Foundations of Value Creation

Data

List of Officers & Skills Matrix

Category

IchiroOkamotoToshihide
Murakami

Name

Kaoru
Kusumoto

Toshikazu
TanakaMasahito
SaotomeHiroyukiMatsudaira

MasatoOno

RyoichiHayashiToshihito
HayanoKeiko
Tsuchiya

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.

Toshihide Murakami Director

April 1980 : Joined Nippon Light Metal Co., Ltd.
June 2007 : Officer of Nippon Light Metal Co., Ltd.
June 2011 : Executive Officer of Nippon Light Metal Co., Ltd.

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

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

Directors

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.

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

Directors

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.

Shuichi Asakuno

Directors

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.

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.

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

April 1974 : Joined Dai-Ichi Kangyo Bank, Ltd. (now Mizuho Bank, Ltd.)

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.

September 2020 : Deputy Chairman of Gold Ribbon Network

Chief Executive
Officer

Masato Ono

Outside Director March 2006 : Managing Executive Officer of Mizuno Bank, Ltd.

Ryoichi Hayashi

Outside Director April 2007 : Director of Mitsubishi Corporation

Toshihito Hayano

Outside Director June 1996 : Managing Director of KOKUSAI Securities Co., Ltd.

June 2007 : Director and Deputy President of Mizuho Financial Group, Inc.
April 1974 : Joined Mitsubishi Corporation

March 2012 : President and CEO of MMP K.K.

April 1969 : Joined Nomura Research Institute, Ltd.
May 1996 : Managing Director of Nomura Research Institute, Ltd.

April 1981 : Joined DENTSU INC.

Keiko Tsuchiya

Outside Director October 2005 : Executive Officer, Head of HR Division, Asia-Pacific Region of GE Toshiba

Tatsuya Tanaka

Outside Director April 2014 : Corporate Executive Officer of Fujitsu Limited

Silicones Co., Ltd. (now Momentive Performance Materials Japan LLC)

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

April 1980 : Joined Nippon Light Metal Co., Ltd.

Kotaro Yasuda

Full-time Auditor June 2009 : Officer of Nippon Light Metal Co., Ltd.

Hideo Hirosawa

Full-time Auditor June 2016 : President and Chief Executive Officer of Nikkei Technology Center Co., Ltd.

Masahiro Yoshida

Auditors

Yoshiki Sato

Outside Auditor

Shintaro Kawai
Jinseki Kim

June 2014 : Director and Officer of Nippon Light Metal Co., Ltd.
April 1984 : Joined Nippon Light Metal Co., Ltd.

June 2019 : President and Chief Executive Officer of Nikkei Extrusions Co., Ltd.

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

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.

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

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.

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

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 ofAsahi 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

Outside Auditor

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.

Outside Auditor

December 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.

Hideo
Hirosawa

Masahiro
YoshidaYoshiki
Sato

SkillsFinancialaccounting
Generalaccounting
Finance

Corporate
management

Manufacturing
and engineering
Research anddevelopment
IT

Sales
Marketing
Product
development

25,517〇〇〇〇

15,476〇〇〇〇

14,715

〇

〇

〇

3,149

〇

〇

〇

〇

〇

〇

3,342

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.

June 2016 : Managing Executive Officer of Toyo Aluminium K.K.
June 2019 : Auditor of Nippon Light Metal Holdings Co., Ltd.
June 2019 : Full-time Auditor of Toyo Aluminium K.K.

KotaroYasuda9,772

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.

April 1979 : Joined Toyo Aluminium K.K.
(which merged with Nippon Light Metal Co., Ltd. in October 1999)
June 2011 : Executive Officer of Toyo Aluminium K.K.

TatsuyaTanakaNumber ofshares held

Profile(now Mitsubishi UFJ Securities Holdings Co., Ltd.)

Auditors

Shuichi
AsakunoTitle

Hiroyuki Matsudaira Directors

41

Toshihiro
Matsuba

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.

Ichiro Okamoto

Directors

YasunoriOkamotoGovernance/
Humanrisk management/
resources
Experience oflegal affairs and Human resource global businesscompliancedevelopment
〇

〇

〇

〇

〇

〇

〇

〇

2,357

〇

〇

〇

2,241
3,858

〇

4,773

〇

634

〇

2,241

〇

484

〇

7,936

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

0

〇

〇

〇

〇

921
〇

556

〇

〇

Officer

Officer

Officer

Officer

Officer

Officer

Minoru Sotoike

Masakazu Ichikawa

Kazuyoshi Sugiyama

Masayoshi Tsujino

Yoshiaki Ito

Isao Shikine

In charge of Nippon Light Metal Business Group
Panel System Business

General Manager of Central CSR and Audit Office

Deputy Manager of Central Product Safety & Quality
Assurance Division, in charge of Central CSR and Audit Office

In charge of the Toyo Aluminium Business GroupIn charge of Nippon Light Metal Business Group
Nikkeikin Kakoh Kaihatsu BusinessIn charge of Nippon Light Metal Business GroupElectrode Foil Business

Integrated Report 2022

〇

〇

600

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

Jinseki
Kim

2,603

4,585

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

Shintaro
Kawai

Integrated Report 2022

42Basic Information

Value Creation

Foundations of Value Creation

Data

Compliance
Compliance meeting

PolicyOur basic policy on compliance is described in the NLM GroupManagement Policy as “The Group will engage in fair and honest
business operations, with respect for human rights and anemphasis on ethics.” Reinforcing the compliance framework has
been identified as one of the material issues in the managementof the Group.
As a specific code of conduct for addressing this material issue
and achieving the policy, we have established the NLM Group
Compliance Codes, which are shared by all officers andemployees of the Group. The NLM Group Compliance Codes

stipulate that being fair and honest means to “think and act fromother people’s points of view.” We value empathy and aim to
execute business in a fair and honest manner with
communication and teamwork.
So that the Group Compliance Codes can be referenced
whenever needed, they are included in a handbook that compiles
the NLM Group Management Policy and other important Groupregulations. The handbook is also translated into eight languages(English, Chinese, Thai, Vietnamese, Portuguese, Hindi, Spanish,and French) and distributed to all Group officers and employees.

In addition to the Group Hotline, major Group companies haveestablished and operate their own whistleblowing systems. Thesesystems are used in parallel with the Group Hotline as systems
that are more familiar to employees. Compliance personnel at
NLM Holdings inspect the systems in place at each Group
company and the regulations that govern them from theperspectives of legal compliance and the protection ofwhistleblowers, and ensure that any necessary corrective actions
are taken in consultation with each Group company.

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 in the formof memoranda. The meetings are an opportunity to monitor
opinions within the workplace and the actions being taken there.
At most workplaces, 95% of employees participate in thesemeetings.

Whistleblower Protection

Recent meeting themes⃝The new Management Policy⃝The new Group Hotline⃝Progress of the company/department’s Compliance Promotion Plan
⃝Sharing the results of the anonymous employee survey and theissues identified by the survey⃝Fraudulent financial accounting⃝Basic working rules (overtime work, annual paid leave, etc.)

Framework
Compliance framework
Board of Directors

Board of Auditors

Whistleblowing System
President and CEO
Compliance Committee

Group Hotline

Group Companies/Departments

CSR leaders (presidents/department managers)
Employees

Compliance meeting
Reporting line

HotlineCompliance Committee
The 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 ongoing issues of the Group as a whole and themeasures to address the issues, actions are being taken under aCompliance Promotion Plan formulated for the Group as a whole,for each Group company, and for each department.
The progress of the measures is reported to the Compliance
Committee on a quarterly basis.
During each fiscal year, an anonymous survey of employees isconducted to examine their awareness of the organizational

climate and various risks. The results of the survey are reflected in
the next Compliance Promotion Plan.
For serious compliance issues that occur suddenly, causes,
corrective action, disciplinary action and measures to prevent
recurrence, etc. are reported to the Compliance Committee. The
Committee conducts additional investigations as necessary anddeliberates and decides on necessary measures. Matters
decided by the Compliance Committee are communicated toand implemented by CSR leaders, who are responsible people
from Group companies and departments.
The compliance meetings and the NLM Group Hotline(hereafter, the “Group Hotline”) play essential roles in thispromotion of compliance.

The NLM Group’s whistleblowing system covers all of theconsolidated subsidiaries. The system has been established as
the Group Hotline and is operated based on the NLM Group
Hotline Regulations that were established by the Board of
Directors of NLM Holdings. The Group Hotline includes hotlines
for receiving whistleblowing complaints and requests in English,
Chinese, Thai, and Vietnamese to facilitate employees’ use of the
hotlines when their first language is not Japanese.
To enhance the independence of its operations, an externalreporting hotline operated by a dedicated contractor has been
available since 2018. In addition, reporting hotlines have also
been set up to enable users to contact Auditors, people incharge of legal affairs and people in charge of personnel affairs,
so that they can select the hotline that is appropriate for mattersthey intend to report. These hotlines receive approximately 40
whistleblowing complaints and requests for consultation every
year.

Plan
FY2021 Compliance Promotion Plan
Compliance
Promotion
Framework

Integrated Report 2022●●

Operation of the Compliance CommitteeA ssignment and training of CSR leaders andCSR promotion personnelF ormulation and implementation of theCompliance Promotion Plan
● Compliance meeting● Anti-bribery● Response to the establishment of a law
related to power harassment
Power harassment prevention training●

Initiatives forCompliance
Promotion

43⃝Confidentiality
Information about each whistleblower is disclosed only to thepeople in charge of the reporting hotline and some of the people
in charge of investigations (called “Gyomu Jujisha,” or people
engaged in the business of handling whistleblowing disclosures).
The identity of a whistleblower is never disclosed without thewhistleblower’s consent to the Compliance Committee or
Directors of NLM Holdings, the person who is the subject of thewhistleblowing complaint, or related parties including the relevant
workplace or company. The whistleblowers themselves andpeople who are the subjects of whistleblowing complaints arealso prohibited from leaking any facts about the whistleblowing toother people.
Related electronic data is stored outside the NLM Group’s
network in a way that makes physical access by people otherthan those related to the investigation impossible.
⃝Prohibition of Disadvantageous Treatment
The disadvantageous treatment of whistleblowers, such as
harassment or retaliation, is also strictly prohibited. When
information about a whistleblower is disclosed to the subject of awhistleblower complaint in the course of an investigation, thesubject of the whistleblower complaint is prohibited fromcontacting the whistleblower except for business communication.
The Group Hotline Office takes the proper steps to check to see
if the subject of the whistleblower complaint has contacted thewhistleblower unnecessarily and to check for any harassment,
retaliation or similar disadvantageous treatment. If signs of suchcontact or treatment are identified, the top officer in charge of theGroup Hotline (president of NLM Holdings) orders relief andrecovery measures to be taken. Any violations of these rules
result in disciplinary action.

●

Improvement and operation of thewhistleblowing system
Inspection of the whistleblowing system ineach Group company●

Coordination with related departments●P romotion of compliance at overseas sites
Compliance awareness raising
Tiered training
Development and delivery of awarenessraising tools●F raud prevention measures
Anonymous employee survey
Updating the Compliance Promotion
Plan
Compliance workshop●

Integrated Report 2022

44

Basic Information

Compliance

Data

PolicyIn FY2021, we set the prevention of misconduct as the main task
in response to the multiple instances of embezzlement that cameto light in the previous fiscal year. We planned an anonymous
employee survey to take corrective and preventive actions foreach instance of embezzlement, and also to enable companies
and departments other than those involved in the instances tolearn lessons from them and further promote compliance. While
preparations for the survey were being made, JIS certification
violations came to light at multiple business sites. Therefore, we
reorganized the survey based on these events and conducted it.
Regarding the JIS certification violations, a Special Investigation
Committee was later established, and investigations into theviolations are being conducted. Moving forward, we will
investigate to identify the facts and causes of the events and thematters pointed out by the investigation report and takecorrective actions and measures to prevent their recurrence.
Reported below are major initiatives taken by the Group in the
period from May 2021, when the JIS certification violations cameto light, to the present.
Month and year

Initiatives

May 2021

Revelation of the JIS certification violations

June

Establishment of the Special Investigation Committee

AugustAnonymous employee survey (subjects: all officers
and employees of the Group/16,000 persons)

A compliance lecture meeting
November to December A session for reporting results of analysis of theanonymous employee survey
April 2022

Reinforcement of the Group’s quality assurance
framework
Formulation of a Mid-term Compliance Promotion
Plan (FY2022 to FY2024)

May

Revision of the NLM Group Management Policy

June

Revision of the whistleblowing system

July-

Visits by the president and other management
team members to work sites to engage in dialogue
with employeesmaterial issues related to the Group’s management, which wereidentified by the Board of Directors of NLM Holdings in theprevious year. Another goal of the revision was simplification to
enable people to refer to it daily.
At present, we are striving to promote people’s understandingof this new Management Policy and ensure that it takes root. We
are also revising the Principle of Conduct and code of conduct for
putting this policy into practice.

Survey Results: Organizational Climate
For the survey, we defined elements of integrity of an organization
as “leaders’ attitude,” “organizational response” and “environmentthat may prompt unethical activities.”
As a result, we received the following evaluation. “For ‘leaders’attitude,’ ‘organizational response’ and ‘environment that may
prompt unethical activities,’ which affect integrity awareness on
the part of members, ‘leaders’ attitude’ showed a relatively
favorable trend, and at each level of HD president,* subsidiarypresidents and workplace supervisors, the attitude thatcompliance should be prioritized over business performanceappears to be recognized to some extent by members. On theother hand, compared to such ‘leaders’ attitude,’ an unfavorable
trend is seen in ‘organizational response’ and ‘environment thatmay prompt unethical activities,’ and there is concern over the
reliability of the whistleblowing system, dependence on individual
skills in work sites, and existence of the tendency to justify
incompliance. While each individual member has strong
awareness that they are responsible for compliance (which is afavorable trend), the level of their understanding of the NLMGroup Compliance Codes and the frequency of application ofthese codes as behavior standards are low (which is unfavorable),so there are concerns that the NLM Group Compliance Codes
have not necessarily taken root as a communication tool.”(Source: Report on survey analysis results) * President of NLM Holdings
Organizational reforms based on the results are being
implemented in a Group-wide manner and at each company anddepartment.

In response to the revelation of misconduct and quality problems,
we conducted an anonymous employee survey to reveal potential
risks. The survey focused on risks including quality, accounting,and compliance risks. All Group officers and employees (including
temporary staff and employees of our contractors and suppliersand excluding Directors of NLM Holdings) were surveyed, totaling
more than 16,000 people (in 11 languages). Of the subjects
surveyed, 15,333 responded to the survey. Response rate (91%)
Results of the survey for the Group as a whole, each businessgroup, and each company were analyzed and shared. We haveformulated and implemented a Compliance Promotion Plan in
response to the risks and issues revealed by the analysis of theGroup as a whole and of the individual companies.

Score 58-64

The basic framework for managing particularly important risks foroverall Group management and each area of business has been
set forth in the Group Risk Management Regulations. Risks are
identified according to a process of identifying potential risks,assessing their likelihood, and assessing their impact. We
develop risk management policies and systems that include crisis
response plans for the identified risks, formulate an annual planfor each and manage risks based on the plans.
The department responsible for each risk (second line ofdefense) recognizes each priority risk as something affecting theentire NLM Group and engages in management so that overall
and individual risks are mitigated and avoided and so that a
response can be put into practice in the event a risk materializes.
The risk management status at each Group company ismonitored 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 reported by the risk management departments to the NLM
Holdings Group Executive Committee and subsequently to theBoard of Directors as reports on the status of individual issues orEnvironmental issues
Score 64-86

Score 49-72

Natural disasters/accidents
Environment that may prompt unethical activities
Score 38-92

Health and safety issues

Number of requests for consultation and whistleblowing
complaints lodged with the Group Hotline（件） ■ Requests for consultation

29

28
19

15
4
2017

Information system issues■ Whistleblowing complaints

Leakage of trade secret
17 16

20

24

2018

2019

2020

2021

Board of Directors

Supervision

Reporting

ReportingGroup Executive Committee

Reporting

Risk Management Officer (President)

Management
Risk
Management
Departments

Central Product
Safety & Quality
Assurance Division

ReportingCentralPlanning OfficeCentral HR,
General Affairs andAccounting OfficeCentral CSR
and Audit
OfficeAuditing

Group Companies

Major risks

Subsidiaries

Initiatives and results

Evaluation

JIS certification violations

Special audits, reinforcement of quality assurance framework, JIS training〇

Emerging risks

Strengthening assessment of emerging risks○

Leakages of chemicals, etc.

Investigating, correcting and following up on individual incidents〇

Delay in decarbonization initiatives

Setting goals for carbon neutrality〇

Floods in the area around Amehata Dam

Implementing a basic plan, sharing information about its progress withrelated people Details ➡ P.67〇

Suspension of business resulting from adisaster, etc.

All-hazards BCP

×

Injuries caused by being pinched or caught
in machinery or equipment

Overhaul, follow-up, monitoring〇

Targeted email attacks

Repeating training to address targeted email attacks〇

Cyberattack

Establishing CSIRT, providing training〇

System failure caused by a disaster, etc.

Implementing disaster recovery plans and training〇

Loss of electronic information assets

Clarifying and systematizing the process of destroying electronic information〇

Unauthorized exports

Checking the status of judgments regarding whether restrictions apply or not,engaging in individual consultation〇

Trade restrictions

Informing employees of restricted trades and checking measures taken in
response〇

Security trade control

8

Risk Management System
NLM Holdings

Priority risks and major initiatives taken

Response to honest action Response to improper activities

Integrity awarenessgeneral status reports twice a year. The Board of Directors of
NLM Holdings oversees the risk management system based onthese individual or general reports, and the Risk Management
Officer manages the status of risks while giving instructions asnecessary.

FY2021 Plan and Initiatives

Product and service defects

Leaders’ attitude

financial risks, operational risks and hazard risks, and establish
and operate policies and systems that are appropriate for the
probability and impact of each risk.

Framework

Category

Revision of the NLM Group Management Policy
In May 2022, we revised the Group’s Management Policy.
The main parts of the previous NLM Group Management Policy
had been formulated before the establishment of NLM Holdings,
when the business performance of the Group was unfavorable.
Therefore, the policy strongly reflected an emphasis on profit. We
revised this based mainly on the changes of the times and the

The NLM Group manages risks to its business strategy such as
direct and indirect losses, the suspension or shutdown ofbusiness, damage to credibility or brand image, and so on. We
classify the risks surrounding our business as strategic risks,

Organizational response

Anonymous employee survey

Integrated Report 2022

Foundations of Value Creation

Risk Management

FY2021 Initiatives

45

Value Creation(Fiscal year)

Integrated Report 2022

46

Basic Information

Information Security

Data

Policyprotection and utilization of information as an importantmanagement resource.
This policy along with plans and initiatives based on the policy
are deliberated on and decided by the Group Executive
Committee and reported to the NLM Holdings Board of Directors.
In response to the report, the Board of Directors provides
instruction as necessary.

Framework
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 development of
information management rules and systems, and also
coordinates with various risk management departments including
Legal Affairs, Intellectual Property, General Affairs and Human
Resources. The Systems Department handles hardware aspects
such as the maintenance and upkeep of information andcommunication 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, IntellectualFoundations of Value Creation

The Environment

PolicyThe 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 tohandling of information systems for storing and using theinformation are stipulated in the Group Information System
Management Regulations. We implement initiatives that help
improve corporate value in an ongoing fashion through theValue Creation

Property, General Affairs, Human Resources and Compliancedepartments 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.

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, recycling-oriented economic
society are the responsibility of nations, local governments,
citizens and companies alike. Based on this recognition, the NLMGroup 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 and equipment, 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, thedevelopment of new products and similar considerations, we willuse chemical methods to assess the impact on the environment
in advance, and take necessary measures such as efforts topreserve biodiversity. We will also do our utmost to reduce theimpact on the environment through our regular business activities.
⃝Developing technologies that contribute to the environment
We actively develop products utilizing the properties ofaluminum which have a minimal impact on the environment,
and technologies such as processes that minimize
environmental impact. The effects gained are disclosed andprovided to society to aid in environmental conservation.

Framework
FY2021 Initiatives

Formulation of rules

Diagnosis, visualization and analysis

Education and training

Incident response

3. Response

Monitoring
system

2. Detection

Log management

1. Prevention

Information
protection

Measures to Strengthen Security
Anti-virus measures

In FY2021, we worked to strengthen information security while
improving the convenience of remote work, such as byexpanding the use of cloud computing. We have beenstrengthening information security at each step - prevention,
detection, and incident response. We have now shifted our focus
from the prevention to detection stages to the enhancement ofmonitoring and detection functions in the detection to incident
response stages and the ability to respond swiftly to incidents.
Measures from the detection to response stages are based on
the initiatives to ensure the integrity and safety of key information
assets and access to systems on the assumption that no users,
devices or connection sources can be trusted (zero-trust
security). In addition, we address measures to protect important
information assets from threats of natural disasters. We also
conduct disaster recovery training (DRT) to prepare for actuallyexperiencing a disaster and take other initiatives in a well-planned
manner.
To strengthen the ability to respond when an incident occurs,
we organized a Computer Security Incident Response Team(CSIRT) as a dedicated group handling information security
issues within the Group, and developed a framework forcoordination between the Group’s risk management departments
and outside organizations in the event of an emergency. We
formulate emergency response plans and conduct exercises
based on those plans.

Environmental Management System

In addition to the above, we are continually implementing thefollowing initiatives through the IT diagnosis of all sites, etc.
⃝Strengthening the security of terminals⃝Server-intrusion testing⃝Training to address targeted email attacks⃝IT asset management and inventory⃝License investigations⃝Strengthening IT development, operations, maintenance, etc.
⃝Disaster recovery plan and training (improving preparedness)⃝Monitoring important information

The NLM Group Environmental Committee deliberates anddecides 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 Environmental Committee are fleshedout by the person in charge of environmental protection from theCentral CSR and Audit Office, which serves as the committee’s
secretariat (hereinafter, the “person in charge of environmental
protection”). They are made known at meetings of environmental
managers from 47 sites* of 25 domestic companies before actions
are taken. Meetings of environmental personnel are also held
overseas (5 sites of 3 companies in Thailand, 8 sites of 8 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 Management System

Board of Directors
President
Person in charge of environmental Operation
protection from the Central CSR
and Audit OfficeGroup Executive Committee
Environmental Committee(Chairperson: President)

ControlGroup companies’ sites

Meetings of environmental
managers* “Site” is the unit at which the environmental management system is applied.

Action Plan
Environmental Committee

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.
Meetings 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 locations⃝Strives to develop human resources and improve capabilities through environmental management education and having site managers conduct
environmental audits of other sites
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

47

Integrated Report 2022

Integrated Report 2022

48

Basic Information

The Environment

FY2021 Plan

FY2021 Results

1Reducing environmental mishaps

Zero environmental mishaps

Three incidents, seven complaints, nine abnormalities

2

Conducting environmental audits

Conducting environmental audits at 19 sites

Conducted at 19 sites

Development of environmental
human resources

Ensuring that employees hold qualifications underenvironmental laws
Conducting training sessions on laws (Water
Pollution Prevention Act, Waste Management andPublic Cleansing Act and Fire Service Act)
Having environmental managers take part inenvironmental audits of other sites

5Greenhouse gas emission
reduction and carbon neutrality
initiatives
PCB processing

Training sessions on laws (Water Pollution Prevention Act,
Waste Management and Public Cleansing Act andFire Service Act) conducted
A total of 39 environmental managers participated
CO2 emissions per unit of sales
Increased 0.6% compared with the previous fiscal year (Japan)

Setting carbon neutrality targets

2030 and 2050 targets set

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

High-density: 98% achieved
Low-density: 90% achieved
Conducted at 7 sites(Could not be conducted at 1 site due to business liquidation)

7

Compliance with laws andregulations

8

Conservation of biodiversity

Promotion of biodiversity conservation activities

Environmental management at
major overseas production sites

Fulfilled at all the 47 sites

Energy saving activities

Environmental audits at 8 sites(5 sites in China, 3 sites in Thailand)
Holding of the 6th meeting of environmental
managers in Thailand
Disseminating information on revised laws andregulations

6

Data

Basic Approach
Action Plan

4

Foundations of Value Creation

Action on Climate Change — Disclosure Based on the TCFD Recommendations

Plan

3

Value Creation

6th meeting of environmental managers in Thailand held
Conducted
Ongoing activities underway at all 47 sites

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 complying

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 disclosein accordance with the TCFD recommendations.

GovernanceTo build a structure for taking action on climate change, wehave set up the Environmental Committee and the CSR
Committee, which are chaired by the president. Guided bythese committees, we formulate plans of action to promotesustainability, including action on climate change. In addition, ataskforce consisting of members selected widely from within the
NLM Group engage in activities themed on achieving carbon
neutrality by 2050 and the promotion of recycling.
Details on page 36

Changes in CO2 Emissions (Scopes 1, 2 and 3), Indicators, and Targets
In FY2021, total emissions increased from the previous fiscal year
due to the increase of production. However, we achieved the
FY2021 target for CO2 emissions per unit of sales.
Moving forward, we will set a new Scope 3 emissions target in
addition to the Scopes 1 + 2 target and push forward withinitiatives to ensure that greenhouse gas emissions (emissions perunit 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), with the goal of achieving carbon neutrality by 2050.

⃝CO2 emissions (Scopes 1, 2 and 3)

Environmental Targets and FY2021 Results (Japan only)
Environmental Targets and FY2021 Results*1
Item
Climate change
countermeasures(Energy saving andglobal warming)
Water preservation
Waste reduction
and recycling

TargetBase
Target (Greenhouse Gas Emissions
Fiscal Year Fiscal Year
per Unit of Sales)

FY2021 Results

2005

1.82*2

1.58

tons CO2/million yen

Energy consumption

2024

2019

29.7*2

31.9

GJ/million yen

Total amount ofdischarged water

2024

2019

5.0*3

5.3

x10-5 million m3/million yen

Emissions

2024

2019

8.8

10.5

x10 thousand tons/million yen

Disposed (landfill)

2024

2019

5.4

9.9

x10-6 thousand tons/million yen

2019

Number of PRTR substances
at 24 or less*4*5

22

Substances

Chemical management2024■ Scope 2 (Japan)(Thousand tons CO2) ■ Scope 1 (Japan)■ Scope 1 (Overseas) ■ Scope 2 (Overseas)

2.09

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 biodiversity⃝Engaging in biodiversity-friendly business activities to reduce the impact of business activities on biodiversity,
to ensure the sustainable use of components of biological diversity⃝Striving to develop a system for promoting these initiatives

Integrated Report 2022

513

748
462

606
328

1.60

1.57

55
70
2017
2016

2017

2018

2019

2020

2021

2030 (Fiscal year)

CO2 emissions including Scope 3 emissions (FY2021)

286 13770
67
2018

278 12562
63
2019

246 11660
56
2020(Thousand tons CO2) ■ Scope 1

36602021 (Fiscal year)

363

★ 704
★ 377

1,845

72%
■ Scope 1■ Scope 2■ Scope 3

96■ Scope 2

Scope 3

2,549

266

* 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).
* Values for 2020 were corrected to improve accuracy.

665
15%

339

302

(Japan and overseas)

Category 2 to 7

13%

605

548

1.58
291 125

Preservation of Biodiversity
The NLM Group Biodiversity Guidelines

804

Target-5*1 Regarding air quality control (SOx, NOx emissions) and water quality control (COD emissions), we stopped setting targets in FY2021 but we continue to perform monitoring.
*2 Calculated based on an annual 1% reduction from the base fiscal year. *3 Emissions per unit of sales is calculated by dividing FY2019 emissions by forecast net sales in FY2024.
*4 Reporting under the Pollutant Release and Transfer Register (PRTR) System *5 Number of reported substances

49

1.82

1.87

Unit

2030

*3

Changes in CO2 emissions (Scopes 1 and 2) (Japan and overseas)(Tons CO2/million yen)

2.19

Greenhouse gas
emissions*3

Change in CO2 emissions per unit of sales (Scopes 1 and 2) (Japan)

97%

302

Category 1■ Category 1 (Purchased goods and services)■ Category 2 ■ Category 4 ■ Category 6■ Category 3 ■ Category 5 ■ Category 7

2017

2018

2019

2020

★ 328

2021 (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 above graph.

[Basis for Calculations]* Boundary: 31 domestic consolidated subsidiaries (manufacturing) 13 overseas consolidated subsidiaries (manufacturing)* Greenhouse gas emissions (Scopes 1 and 2) are calculated based on the Act on the Rational Use of Energy and the Act on Promotion of Global Warming Countermeasures, and thefollowing CO2 emission factors are used./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/Electricity overseas: CO2 emission factors of the respective countries shown in CO2 FCOMB 2017 from the IEA/Fuel: The CO2 emission factor for each fuel is set by aministerial 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 Complexof Nippon Light Metal Co., Ltd.)* Actual values only relate to energy-derived CO2 emissions.

Integrated Report 2022

50

Basic Information

Value Creation

Foundations of Value Creation

Data

Action on Climate Change — Disclosure Based on the TCFD Recommendations
Percentage of the number of new vehicles sold in Japan (%)

Risk Management■ Electric vehicles (BEV) ■ Plug-in hybrid vehicles (PHEV) ■ Hybrid vehicles (HEV) ■ Diesel vehicles ■ Mild hybrid vehicles (MHEV) ■ Gasoline vehicles

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 forward withinitiatives to achieve our targets. While only Nippon Light Metal
Co., Ltd. is the subject of analysis at present, we plan to expand
the scope to analyze the impact on the Group as a whole as wemove toward the next fiscal year. Following this, we aim to
conduct scenario analyses from a longer perspective for theperiod until 2050.
We will report details of the analyses to the Environmental
Committee and the CSR Committee for the formulation of risk
management plans. At the same time, we will regularly report to
the Board of Directors, thus strengthening the measures foraddressing climate change risks.

Risks

Category

Opportunities

21％

5％

Transition

Policy andregulatory
risks

Transition

Policy andregulatory
risksTechnologicalrisks

Transition

Market risks

Physical

AcuteTransition

Products andservices

Transition

Resource
efficiency

Integrated Report 2022

1％
1％
22％

10％
4％

1％
1％
22％

10％
3％

1％
1％
22％

1％
2％
22％

2％
2％
22％

11％

11％

12％

2％

2％

2％

3％
3％

2％
2％

23％

23％

12％

13％

1％

1％

Importance of risks and opportunities

5％
3％

23％

13％
1％

Medium- High

7％
3％

23％

14％
1％

10％

12％

13％

4％

4％

23％

23％

14％

15％

4％

23％

14％
1％

0％

0％

High
63％

MediumMediumLow Medium

MediumMedium- High

Small

Large

■High ■Medium ■Low

Level of impact

To disclose information in accordance with the TCFD
recommendations, the NLM Group conducts analyses based on
two scenarios to clarify the difference in the impact between the
scenarios. One is the 4.0°C scenario which assumes that climatechange 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 that theanalysis results will be sufficiently persuasive.
Further, because we work in a wide range of business fields,
we started with the analysis of Nippon Light Metal Co., Ltd. thisfiscal year. We are calculating the degree of impact that risks andopportunities will have on Nippon Light Metal Co., Ltd. with afocus on the chemicals business and rolled products business,
which are major segments of the company.
At present, we have projected what the world will be like in
FY2030 based on reference materials from external sources andlisted risks and opportunities that may occur there. Then, we
evaluated the level of impact of each item in each predictedscenario from two perspectives, the probability of occurrence andthe level of impact if the event occurs, and mapped them. The
major items are as follows.

51

0％
0％

9％

Strategy

Transition

Results

Low

Low- Medium

MediumLow

Medium

High

2018

63％

2019

63％

2020

63％

2021

62％

2022

61％

2023

60％

58％

2024

2025

55％

2026

52％

2027

49％

2028

46％

44％

2029

2030

(Year)

Source: Boston Consulting Group

Forecast number of passenger vehicles sold in Japan (thousand vehicles)

Probability of occurrence

Description of the risk/opportunity in the scenario
There is a risk that the introduction of a carbon tax or an increase in carbon prices will increase thecost of procuring raw materials and manufacturing costs related to the company’s products,
pressuring profit.
There is a possibility that raw material costs will increase due to changes in the regional balance ofthe 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.
There is a possibility that our competitive advantage in the market will be reduced due to delays inthe development of new technologies, in addition to the possibility that investment costs will
increase to achieve decarbonization and develop new recycling technologies.
If action on climate change is delayed, businesses could be negatively affected by a failure to meetthe standards required by customers. It could also lead to an increase in financing costs reflecting
the decarbonization policies of financial institutions.
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, which
could result from floods.
It is expected that more aluminum components will be used in eco-friendly vehicles and otherlaw-carbon products, which will result in an increase in sales through the promotion of sales andcontribution to a low-carbon society that can be made throughout the product’s lifecycle.
With an increase in the recycling rate and the promotion of horizontal recycling, it will be reaffirmedthat aluminum is a material with high resource efficiency, resulting in an increase in the demand forand visibility of aluminum products.

4,755

Degree ofimpact
4.0°C
scenario

Degree ofimpact1.5°C
scenario

Low

High

Low

Medium- High3,880

Medium- HighLow

Medium- HighMediumMediumHigh

High

MediumMedium- High

3,831

3,879
3,415
3,016

2005

Low
- Medium

4,115

2010

2015

2020

2030

2040

2050

(Year)

Source: Mitsubishi Research Institute, Inc.

It is expected that, toward 2030, the ratio of eco-friendly vehicles
in automotive sales 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.
The number of vehicles sold will begin to decline gradually in
2030 in Japan but is expected to increase globally. It is believedthat both the number of eco-friendly vehicles sold globally andthe percentage of all vehicles that are eco-friendly vehicles willcontinue to increase.

At the NLM Group, we expect an increase in the demand foraluminum products resulting from an increase in eco-friendly
vehicles, including demand for materials for batteries to beinstalled in these vehicles and materials for heat dissipation forcooling, in addition to the need to decrease vehicle weight toincrease travel distance.

Integrated Report 2022

52

Basic Information

Value Creation

Foundations of Value Creation

Data

Reduction of Environmental Impact

Environmental Mishaps

Environmental Audits

At the NLM Group, we have developed and operate a quick
reporting system in Japan and overseas to respond promptly toenvironmental problems.
In terms of environmental incidents, three oil or chemical leaks(three in Japan) occurred, and there were seven complaints
related to the environment such as odor or noise (four in Japan,
three overseas) fielded. The numbers remained almost
unchanged from FY2020.
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 to prevent recurrence. Examples include complaints
about smoke and odor.

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.

⃝Complaints about smoke and odor
- Cause: Odor from combustion- Countermeasures:(Immediate measures) Suspension of operation and fact-finding(Permanent measures) C onfirmation of operating conditions, materials
and other factors, introduction of deodorizing
devices, etc.

In FY2021, environmental audits were conducted at 19 sites inJapan and seven overseas (4 sites in China and 3 sites inThailand) and 58 problems were identified.
Regarding compliance with laws and regulations, the numberof problems related to industrial waste disposal decreased. This
was a result of repeated pointing out and corrective actions
taken for insufficiencies in standards for the storage of industrial
waste and insufficient waste information provided to waste
disposal contractors, as well as training sessions on the Waste
Management and Public Cleansing Act held within the Group.
On the other hand, the number of identified problems related toemergency response readiness have been increasing. In FY2021
audits, we found several cases where measures to prevent oil orchemicals from splashing in the event of pipe fracture wereinsufficient, and we requested that partitions or covers be used asa corrective action. The placement of sandbags or absorbent
mats in places for storing or feeding oil was requested as acorrective action to prevent the outflow of oil in the event of a leak.
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.
We will continue to conduct environmental audits by visiting sites.

We collect information about measures taken at all sites of theGroup to prevent similar incidents, at meetings of environmental
managers and other opportunities, and share the measures taken ateach site across the Group, as a part of our efforts 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.
In FY2021, there were no lawsuits, fines, or forfeits related tothe environment.
Number of environmental mishaps that occurred(cases) ■ Accidents ■ Complaints

16
10

10

6

0

0

3

3

2017

2018

2019

2020

3

⃝Checking the status of compliance with environmental laws andregulations and the status of the environmental management of
the NLM Group⃝Improving environmental management capabilities

2017

Air Pollution Control Act

●

2018

2019

2020

2021

2022

2023*
○

Noise Regulation Act●

Vibration Regulation Act●●

Offensive Odor Control Act
Act on Special Measures against
Dioxins○●

Water Pollution Prevention Act●

Soil Contamination
Countermeasures Act●●

Waste Management and Public
Cleansing Act

●

●

●

●
●

Fire Service Act
Laws related to chemical substances●(Chemical substance control law (PRTR System)and others)●(Information about revisions of laws)

●

●

●

●

●

○

* The plans may change due to internal circumstances.

Results on Indicators
Energy consumption (Japan)

Wastewater amount (Japan)■ Energy consumption (PJ)
● 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)

38.4
14.8

2017

2021 (Fiscal year)

35.1
14.1

31.3

31.5

31.9

11.8

11.0

12.3

2019

2020

29.7
Target

5.5

5.6

5.6

5.8

21.2

22.2

21.0

20.4

20.2

2017

2018

2019

2020

2021

5.3

5.0
Target⃝Encouragement to acquire public qualifications related tothe environment
To prevent shortages of personnel who have acquired public
qualifications into the future, we encourage sites with few suchqualification holders to increase the number of qualified
employees. In FY2021, 11 employees newly obtained
qualifications, including employees that became a Qualified
Person for Energy Management or a Pollution Control Manager.

2018

2021

2024 (Fiscal year)

2024 (Fiscal year)* 1 PJ = 1 × 1015 J, 1 GJ = 1 × 109 J

Development of Environmental Human Resources

Integrated Report 2022

Environmental laws and regulations

7* Incidents: Environmental mishaps that affect external parties, such as oil or chemical leaks
Complaints: Complaints (about odor, noise, etc.) lodged by external parties

53●Implemented ○Plan to be implemented

Training sessions on laws that were held/are planned

FY2021 Initiatives⃝Training sessions on laws and regulations
We regularly hold training sessions on the environmental laws andregulations that apply to the NLM Group. In FY2021, 68
employees participated in training sessions that were held on the
Water Pollution Prevention Act, Waste Management and Public
Cleansing Act and the Fire Service Act. In FY2022, we plan tohold training sessions on laws related to chemical substances
and the Offensive Odor Control Act in light of social trends andour environmental mishaps.

■ 廃棄物埋立量売上高原単位（10-6千㌧/百万円）

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

9.0

43.3

34.6

2017

2018

10.0
37.7

2019

10.5
8.7

40.3

8.8
Target2021

2024 (Fiscal year)

9.9
5.4

6.5

6.1

2.3

2.6

2.3

3.0

3.8

2017

2018

2019

2020

2021

5.7

30.5

2020

8.6

Target2024 (Fiscal year)

Integrated Report 2022

54

Basic Information

Value Creation

Foundations of Value Creation

Data

Quality
PolicyInitiatives in FY2021 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 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.

Further, 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.

FY2021 Quality Policy
1.	We will ensure safety and quality at every stage from productand service development to mass production based on sites
and actual goods and the thorough implementation of rules
and principles.
2.	We will accurately ascertain customers’ requirements andprovide safety and quality that exceeds them to satisfy andwin the loyalty of customers.
3.	We will establish social credibility by strengthening legal
compliance and quality risk management.
4.	We will cultivate human resources with the quality assurance
skills required to reduce global expansion risks.

Framework
Quality Assurance Structure
President

Presidents/general managers
of business divisions ofsubsidiaries/affiliates

Plant managers

Ensuring the Independence of the Quality Assurance Framework

Central Product Safety &Quality Assurance Division

Quality Assurance Personnel Meeting

Sharing and Utilizing Complaint Information

The Central Product Safety & Quality Assurance Division
conducts quality audits of all business sites once a year, including
overseas sites.
We reviewed the quality audit standards to further improve thelevel of audits in FY2021. We audited 45 facilities in Japan during
the fiscal year. The quality audits involved various checks,
including the management status of complaints, the new productlaunch process, delivery specifications exchanged withcustomers, and the process for creating and issuing inspection
certificates provided to customers. While no serious issues were
uncovered, 73 matters were identified. This includes 53 minor
issues which would not have been identified before the newstandards were introduced in FY2021. For example, concerninga rule stating that equipment for measuring length shall becalibrated using standard samples, it was identified that themethod for managing the standard samples themselves had notbeen determined. In response, the sites concerned created draft
plans for corrective action, and the Central Product Safety &Quality Assurance Division checked the validity andappropriateness of the corrective action before it was taken. We
also verified that corrective action regarding all of the identified
issues was complete.
In addition, 44 proposals were also made to raise the level ofquality management at each site and establish better
management standards. For example, to fulfill all quality-related
requirements when developing a new product, we proposed
clarifying specific measures to be implemented in the design anddevelopment stages and reflecting the measures in the system.

In the NLM Group, the Central Product Safety & Quality
Assurance Division 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 Quality Committee to ensure theinformation is shared.
We have established and enforce a rule requiring that, in theevent of a serious quality problem such as a recall or a defectthat may cause physical injury, information about the problem
shall be provided promptly to the overall Group regardless of who
is responsible for it.
In FY2021, 15 problems were reported as quality alerts,
including four serious quality problems of non-conformity to
public standards such as JIS violations. In one example, we
received a complaint that a device delivered for specificequipment cracked. As a result of our investigation into thisdevice, we learned that the device cracked because of thestructure of the equipment. In the equipment, the device issubjected to more stress than it can endure due to the behaviorof the equipment during use. While the delivered device fulfilled
the requirements of the specifications as a unit, the customer
determined the device to have a design defect because it did not
fulfill its basic functions. There are cases like this where our
product does not work as intended in the customer’s system. We
have therefore decided to examine the points deemed necessary
in the development phase even if these examinations are notspecifically required.
Number of Quality Alerts

Classification of Issues Identified in Quality Audits

Quality assurance
departments

Sales departments

Manufacturing Process Management 6%
Administrative
departments

To ensure the independence of quality assurance departments, the
NLM Group has established the Central Product Safety & Quality
Assurance Division under the direct control of the president. The
division has overall control of the quality assurance departments of
all Group companies and segments in the NLM Group. The
Central Product Safety & Quality Assurance Division 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.

Quality
Committee

Operation

Manufacturing
departments

The Quality Committee meets two times a year to propel theGroup’s quality assurance and management activities. The Quality
Committee is chaired by the president of NLM HD, and presidents
of subsidiaries and general managers of business divisions
participate in the meeting as members of the Committee.
In addition, the Quality Assurance Personnel Meeting, which is
attended by general managers of quality assurance departmentsfrom Group companies, is held four times a year. Issues andinformation about improvement activities are shared at thismeeting to improve the level of personnel in charge of practicalquality assurance tasks.

Quality Audits

Participation

Product Creation 15%

73

Plan

Inspection
Management Framework 17%

55

Integrated Report 2022

4

2018

3
2019

5

2020

3
2021

(Fiscal year)

Audited Sites

Quality Audits

Establishment of a quality assurance framework for new businesses● Support 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● Conducting individual and group training ● Organizing
contest to showcase success stories● Implementationof program for improving quality assurance capabilities (independent studies ofquality (Hinshitsu Jishuken))
Awareness-raising activities by Quality Committee, etc.
● Confirming
products covered by legal standards
● Promoting
operation of a management system for harmful chemicals contained in products● Conducting
full quality checks ● Swiftly handling of serious quality problems in response to alerts

Reporting of Audit Results

Formulation of Corrective Action Plans

Effectiveness and Appropriateness Checks

Corrective Measures● 

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

2017

9

7

Creation of Audit Plan● 

3. We will establish social credibility by strengthening legal
compliance and quality risk management.

6

15

Steps of Quality Audits

FY2021 Action Plan

2. We will satisfy and win the loyalty of customers.

8
2

Central Product Safety & Quality Assurance Division

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

46% Complaint Management

Goal Management 16%
Independence of the quality
assurance departments■ Number of accidents■ Number of product recalls (out of the total number of accidents)

Initiatives to make improvements at key overseas sites
Support from the mother factory in Japan for overseas factories

Receipt of Reports on Corrective Action Completion

Submission of Reports on Corrective Action Completion

● 
● 

Completion
Integrated Report 2022

56

Basic Information

Human Resource Strategy

Data

Framework

At the NLM Group, a basic policy established within ourManagement Policy states, “The Group will continuously provide
diverse value to customers by deepening the level ofcollaboration and coordination within and outside the Group.”Strengthening group engagement is essential for collaborationand coordination within the Group which is a prerequisite for theprovision of value to customers. We understand that theprerequisite for group engagement, which leads to value creation,is strong engagement between each Group company and eachindividual employee. At the NLM Group, our basic policies are to
strive to strengthen engagement by improving the level ofhappiness of employees through the creation of workplaces
which are both fulfilling and comfortable, and at the same timeendeavoring to strengthen group engagement by holding Groupwide events and other activities.
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 fulfilling andcomfortable workplaces. Our goal is to create a culture of nevergetting injured and never allowing others to get injured and aworkplace environment where everyone is energetic and in good
physical and mental health.
To strengthen engagement, multidimensionally deepening
communication is essential. Using the relocation of the Group’s
head office to Shimbashi as a starting point, we intended todeepen communication to induce a chemical reaction. However,the prolonged impact of the COVID-19 pandemic means that weare only halfway to our goal. We understand that achieving bothincreased productivity and deeper communication leveraging newworkstyles is the task we face after the end of the COVID-19
pandemic.

Measures to improve
collaboration andcoordination within theGroup and increase theunity of the Group

Group engagement

Group companies

Providing a fulfilling andcomfortable workplace

Group companies

Individual companies
with uniqueness andautonomyGroup companies

Occupational Health and
SafetyEmployees

Employees

Employees

Developing a Fulfilling
Workplace

Employees

Employees

general managers of the HR departments of major Group
companies. Further, plans and achievements are shared at theGroup HR Personnel Meeting held once a year.

Plan
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 acomfortable workplace environment through enhancement of
employee welfare. In FY2021, we continued with this initiative andplanned the on-site observation of good examples within theGroup and tours of other companies’ facilities.
We also planned the Social Contribution Project and NLM
Pride as activities to enhance engagement with employees
across the entire Group.
Regarding the happiness that lies ahead of a fulfilling
workplace, we participated in the Minna-de Shiawase-de

Regarding each Group company’s investment plans related tothe improvement of the workplace environment, we consolidated
and shared information from 18 major Group companies in Japan
regarding three points: (1) progress against the FY2020 plan,(2) investment plan for FY2021 and (3) medium- to long-term
investment plans. For projects which have been implemented,
we also share photos taken before and after improvements, sothat they can be used as reference materials when making similar
improvements.
To share good examples, we organized a tour of employee
welfare facilities in October. We toured cafeterias of the Kambara
Complex and the Shimizu Plant of Nippon Light Metal Co., Ltd.
which were fully renovated in FY2019, and the Shimizu Plant's
newly built bachelors' dormitory and exchanged views. In thecafeteria, explanations were given about the importance ofimproving not only tangible aspects, such as the eating environment,
but also intangible matters including the enhancement of themenu. At the bachelors’ dormitory, explanations were givenon the creative measures that could be devised in the facility
to strengthen communication between employees living in thedormitory, which is designed to enable residents to furnish theirprivate rooms in pursuit of comfort. These explanations were
followed by a lively exchange of views.

High level of engagement

Employee engagement

Employees

While a fulfilling workplace is created mostly through initiatives
taken within each workplace of each Group company, the NLMGroup considers initiatives which lead to the happiness of
employees from a macro perspective at regular meetings of theItsuzukeru Keiei Kenkyu-kai (business management workshop forremaining happy together) run chiefly by Professor Takashi
Maeno of the Keio University Graduate School, in October 2019
and we have continued to participate in its monthly workshops.
We plan to apply the theories and practices of well-being
management learned in the workshop to the Group’s measures.
We participate in sports for people with disabilities in connection
with “let’s try it!,” one of the four factors of happiness that
Professor Maeno advocates: let’s try it! thank you! it will turn out
all right! and be yourself!. We planned to participate in this andvarious other activities that we have never experienced before,
with the goal of contributing to society.

FY2021 Initiatives

Creating new social value asTeam NLM

Integrated Report 2022

Foundations of Value Creation

Developing a Fulfilling Workplace

Policy57

Value Creation➡ High productivity

Employees

Employees

Diversity & Inclusion

Employees

Highly diverse
individuals

Securing and Cultivating
Human Resources

people with disabilities through these activities, we were able toprovide Group employees with opportunities to increase theirfamiliarity with these sports. These activities also led to NLM
Pride partly because Nikkei Metal Co., Ltd. provided Japan’snational wheelchair rugby team with enhanced performancealuminum rims the company created in collaboration with
Nikkeikin Aluminium Core Technology Co., Ltd. Further, the range
of users of Nikkei Arena, the gymnasium in the Nippon Light
Metal Co., Ltd. Tomakomai Complex, has been growing wider
every year partly because it was fully renovated in 2020 in waysthat anticipated its use for sports for people with disabilities. At
present, Nikkei Arena is essential for the activities of wheelchairbasketball teams, wheelchair rugby teams and club teams forchildren with disabilities in Hokkaido.
Knowledge acquired by participating in the Minna-de
Shiawase-de Itsuzukeru Keiei Kenkyu-kai began to be introduced
to employees in FY2021 in a series of articles published in theinternal newsletter and via internal signage. Our participationin sports for people with disabilities, which started from “let’s
try it!,” one of the four factors of happiness, not only increases
employees’ sense of contribution to society but is also connected
to another of the factors, “thank you!” (ties with other people
based on gratitude), thus leading to the improvement ofhappiness.
The understanding that pursuing employee happiness throughthese activities contributes to Group management is being
gradually developed.

A tour of employee welfare facilities

Activities under the Social Contribution Project and NLM
Pride were greatly affected by the COVID-19 pandemic. We
were forced to cancel all of the planned activities involving thegathering of large groups of Group employees. A few events
that we were able to implement included the viewing of thewheelchair rugby games of Japan’s national team in the Tokyo
Paralympics at the Group head office’s cafeteria and theprovision of menu items related to the countries of the opposing
teams at the cafeteria. By attracting attention to sports for

Nikkei Arena being used by a teamIntegrated Report 2022

58

Basic Information

Value Creation

Foundations of Value Creation

Data

Diversity & Inclusion
PolicyAt the NLM Group, we have set the happiness of employees as
one of the material issue themes and identified diversity andinclusion (D&I) as one of the material issues within this theme.
Team NLM should be a vibrant corporate group consisting ofdiverse human resources which are essential for the continuous

FY2021 Initiatives
creation of new value. We believe that the creation of workplaces
where all employees, including specific groups of people such as
people with disabilities, women and older employees, arerespected and needed improves employee engagement andserves as the foundation of the companies and the Group.

Framework
The NLM Group consists of diverse business entities. Because
their work environments are also diverse, it was difficult to takeacross-the-board initiatives to increase diversity. While eachGroup company took initiatives independently, they wereinsufficient from the viewpoint of the overall Group.
At present, the tasks to be implemented to increase thediversity of the Group’s human resources and promote theiractive participation are shared and relevant polices are discussed
at regular meetings of general managers of the HR departmentsin the Group. Indicators for the entire Group, such as theemployment rate of people with disabilities, the percentage 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 thediversity of the Group as a whole.
Regarding the employment of people with disabilities, Nikkeikin
OhLiS Co., Ltd. was established in October 2015 and certified asa special-purpose subsidiary in January 2016. This company has

its business establishments in Kambara, Shimizu Ward, Shizuoka
City, where there is a cluster of the Group’s major business sites,
and at the Tokyo head office. The company is expanding its
operations every year. Nikkeikin OhLiS plays a role in theaccumulation of expertise in the creation of workplaceenvironments where people with disabilities are able to work
vibrantly leveraging the abilities of each individual and the
expansion of this expertise to Group companies, as well as inexpanding and promoting the employment of people withdisabilities.
D&I Promotion Framework
Meetings of generalmanagers of the HR
departments in the GroupThe Group’s D&I
promotion team

Employment of people with disabilities

Number of female employees in each age group (FY2021, consolidated)

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 theGroup (among Group companies obliged to employ people withdisabilities) was 2.38% as of June 1, 2022, exceeding theprevious fiscal year’s 2.36%. The employment rate exceeds thestatutory rate and has continued to rise. This is a result of
initiatives including recruitment via more diverse routes and thedevelopment of new job categories, which facilitated Group
companies’ recruitment efforts. The number of employees at
Nikkeikin OhLiS Co., Ltd., a special-purpose subsidiary,
increased to 24 as of April 1, 2022 due to progress in thedevelopment of new job categories, such as gradually beginningmore difficult operations. Nikkeikin OhLiS continues to expand its
operations.
In addition, we provided diversity training intended for new
career track employees as in previous years in our efforts todeepen their understanding of diversity.
Changes in the number of employees with disabilities and net
sales of Nikkeikin OhLiS Co., Ltd.

Personnel in charge of
people with disabilities

Active participation of people withdisabilities

Personnel in chargeof human resources

Active participation of women,
utilization of older employees

Personnel in chargeof recruitment

Recruitment of women, people withdisabilities, and non-Japanese nationals.

Plan■ Number of employees with disabilities

45,716
14

2017

530

564
351

351

0

13

Under 15

15 to 19
years old61
20 to 29

30 to 39

40 to 49

50 to 59

60 or older(Age group)

The Fortuna training for women was started in FY2012 tofacilitate women’s active participation and FY2021 was its tenthyear. During those ten years, 154 female employees (as trainees
and mentors) from 16 companies completed the training.
Provided in tandem with training of female employees’ superiors,
this training promoted their understanding of the roles of theirsuperiors in supporting the active participation of women, which
is an achievement of the training program.

● Net sales (Thousand yen)

54,55958,828

17

18

2018

2019

67,31370,456

21

23

2020

2021

(Fiscal year)* Number of employees as of April 1 of each fiscal year

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 theirindividuality increases the vitality of an organization. While it is
growing increasingly difficult to secure human resources
regardless of the presence or absence of disabilities, we haveplanned to recruit human resources in a well-planned mannerfrom a longer-term perspective and expand job categories toincrease operations of Nikkeikin OhLiS 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

Active participation of women*

23%
18%
8

9%
3

11%

6

4
3%

0%
0

2019

2020

1
2017

2018

2021

2022

(Fiscal year)

Active participation of women*

Utilization of older employees*⃝Increasing the percentage of employees that are women (ascandidates for managers) by continuing to recruit female career
track workers⃝Continuing to support women when their careers areinterrupted and after they return to work
We aim to continue improving the percentage of managers thatare women as an indicator of the active participation of women.
To increase the percentage of employees that are women, we set
a target regarding newly hired female career track workers for the
first time in FY2019. That year, we set the target of 10% or moreof the career track workers we hire being women as a part of ourplan to expand the employment of female career track workers.

⃝Extension of the mandatory retirement age
For the utilization of older employees, Nippon Light Metal Co.,
Ltd. decided to extend the mandatory retirement age from theviewpoint of improving workplace productivity by making
workplaces more fulfilling for these employees. The company
determined the framework of the new system in FY2020, finalized
it through the exchange of opinions with the labor union regarding
the details of the system and its operation in FY2021, andplanned to introduce it in FY2022.

* Nippon Light Metal Co., Ltd.

* Nippon Light Metal Co., Ltd.

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
women brings new perspectives and vitality to the organization.
Nippon Light Metal Co., Ltd. has established a childcare leavesystem, shortened working hour system for childcare, andnursing leave system, which exceed the statutory levels. This has
dramatically improved the comfort of work for women. At thesame time, we understand that it is important to makearrangements to ensure that career interruptions resulting fromlife events do not disrupt women’s active participation as aconsequence. For this purpose, in FY2021 we began individuallyinterviewing female employees who are considered our nextmanagers to learn their future career plans, their expectations
and hopes for the company’s systems and other information, todevelop an environment that is even better at facilitating theactive participation of women. We also encourage male
employees to participate in childcare so as to prevent careerinterruptions only affecting women. We converted part of thechildcare leave into paid leave and implemented other initiatives
to encourage male employees to use this leave. As a result,
percentage of childcare leave taken by male employees was
17.5% in FY2021, exceeding the national average (13.9%, which
was announced by the Ministry of Health, Labour and Welfare).
Nippon Light Metal Co., Ltd. acquired Kurumin Mark certification
and Grade 2 Eruboshi certification in FY2021.

A Fortuna training session

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. Under the previous system, the age of mandatory
retirement and reemployment was 60. This was based on the
concurrent payment of pensions. This had made it difficult to link
performance to the amount of compensation. Under the new
system with an extended mandatory retirement age, a personnel
and wage system that is not premised on the payment of public
pensions has been introduced, which has made it possible toevaluate the performance of each more fairly. Connecting thedemonstration of the skills and experience cultivated over many
years to high evaluations, this system increases the motivation ofolder employees. In addition, roles and duties which were partiallyunclear under the previous reemployment system have beenclarified, to leverage the excellent knowledge and skills of older
employees in each organization without hampering generationalchange.
It is planned to introduce the extended mandatory retirement
age which was introduced at Nippon Light Metal Co., Ltd. in
FY2022 at each Group company, one by one, based on thebusiness strategies of each company.
* Nippon Light Metal Co., Ltd.

* Nippon Light Metal Co., Ltd.

59

Integrated Report 2022

Integrated Report 2022

60

Basic Information

Value Creation

Foundations of Value Creation

Data

Securing and Cultivating Human Resources
PolicyPlan

At the NLM Group, we have set a basic management policy,
which states, “The Group will respect diverse values, and develop
human resources 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:⃝listen closely to others and are able to understand what they
think and want⃝take interest in and are able to take on challenges in a wide
range of fields⃝are able to innovate by connecting people and information.
Regarding human resource development, we have set a humanresource development policy, which states, “The company will
support the personal development of its employees which are its
assets. For this purpose, the company will spare no effort in its
creation of systems and a culture that facilitate the personal
development of its people.” At the same time, we are determined
to work on the following tasks through cooperation between
workplaces, the HR department and employees as parties
involved in human resource development.

Workplaces

Securing human resources⃝Developing human resources through practical operations bysetting challenging goals⃝Clearly specifying and sharing the knowledge, skills andmindsets required in the workplace

For the periodic recruitment of career track employees who will
join us in April 2022, we planned to conduct joint recruitment by
the three companies as has been done previously. While it wasdifficult to predict the impact of the COVID-19 pandemic on
recruitment activities, we focused our efforts on enhancing
internship programs in particular in our efforts to increase thenumber of employees.

HR department⃝Providing training that is appropriate to help employees achieve
personal development through practical operations⃝Clearly specifying and sharing the standard knowledge, skills
and mindsets required across different workplaces and job
categories

Employees⃝Endeavoring to develop their own capabilities, taking theposition of learning from those around us, and striving to create
an environment for mutual learning as members of thecompany

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 beencommitted in particular 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 encourage Group employees to share and understand theManagement Policy and drive the development of a human
network through the training opportunities, aiming to further
strengthen Team NLM.

Human resource development
For FY2021, we planned to provide the same level of training thatwas provided in previous years. Regarding the forms of training,

FY2021 Initiatives
Securing human resources

Human resource development

The company hired 34 career track workers who will join Nippon
Light Metal Co., Ltd. in FY2022 through its regular recruitment
activities, nearly achieving its plan. This includes 6 women,
meaning that 18% of the newly hired career track workers were
women. The target percentage, which is higher than 10%, wasachieved as in the previous fiscal year, when 23% of the newly
hired career track workers were women. This is a result of
initiatives to strengthen the recruitment of women, including awomen-only internship program. We also expanded the remoteinternship program for STEM students in cooperation with the
Nikkei Research and Development Center. As a result, theprogram attracted 137 students, almost double the number inthe previous fiscal year, which resulted in the successful hiring of
STEM students.
To recruit skilled workers consisting mainly of high-school
graduates, who have been growing more difficult to recruit every
year partly due to the declining birthrate, Nippon Light Metal Co.
Ltd. created new pages for high school students on its
recruitment website. Videos showing employees working,interviews with employees, and other materials are available forviewing on the website. They have been received well, and wehave received comments such as, “I can feel the atmosphere of
the workplaces well, and this has reduced my anxiety about
joining the company.”

In the aspect of training, we improved programs which showedchanges in the trainees, such as the increase in the percentageof trainees that are women, to ensure the curricula are alignedwith the times. This has resulted in higher scores given bytrainees. In addition, in response to the opinion that theincreasing frequency of remote work has resulted in theperception that organizational management is more difficult than
before, we began to provide the Remote Work Management
Seminar, a remote seminar intended for managers, and a total of
215 managers have attended it.
Every time a remote training program was held, we learned
skills for increasing the efficiency of remote learning. As a result,in the latter half of the fiscal year, trainees began giving scoresthat were comparable to group training. Now the increased
utilization of remote seminars will potentially enable efficientlearning unconstrained by time or location. We can say that this isan achievement.
Regarding existing training programs, we were able toimplement almost all of the programs that were planned at the
beginning of the fiscal year, despite the impact of the COVID-19
pandemic. This has enabled us to avoid any lapses in training. At
the same time, the NLM Group aims to create new value fromGroup coordination. Therefore, we also attach importance to theroles that group training plays in the strengthening of Group
engagement. In FY2021, when we were forced to implement
many training programs remotely, we were able to expand thepossibilities of efficient learning. At the same time, issues
remained in terms of the enhancement of Group coordination
created through interactions between the employees of theGroup companies.

Participants in the Group’s Major Training Programs in FY2021

Education and Training System

61

Integrated Report 2022

New adult members
New employees

Number oftrainees

Next-generation manager training

11

13

Managerial training

14

43

Mid-level employee training

1038

New employee training

4

46

14

25

Production technology basics seminar*

15

662

Fortuna*2

9

21

8

30

Jr. power-up training*

853

Coaching training

20

109

NPS Trainer education
Theme exploration

Putting commercialization Others
into practice

Coaching

NPS Trainer education

Production and technology

Foreign languages and global literacy

Overseas
language study

Dispatch to Nagaoka
University of Technology

Jr. power-up

Dispatch foroutside training

Power-up

FortunaTeam leaders
Task leaders

Power-up mentors

Production technology
basics seminar

New employees

Power-up senior mentors

Management

Mid-career employees

Operators

Managerial staff
Mid-level andjunior staff

Assistantmangers

Managerial staff

Third generation

Sectionmanagers

GeneralManagers managers

Next-generation managers

Staff

Mid-level andjunior staff

Managerial staff

Officers

Number ofparticipatingcompanies

Training program

By Theme and Job Function (Partially)
Top management
seminars

Level-specific Training (Regular Employees/Regional)
ForemenLevel-specific Training (Career Track/National)

we looked for appropriate training programs by once again
scrutinizing the content of the training which would previously beprovided as group training because of the unpredictable impactof the COVID-19 pandemic. For training programs theeffectiveness of which will not change markedly by providing thetraining remotely, we planned to be proactive in providing themremotely from the viewpoint of efficiency. At the same time, the
NLM Group emphasizes the contributions of group training
programs, which are opportunities for human resources fromGroup companies to get together to increase cooperation andthe sense of unity within the Group. Therefore, we planned toprovide group training at pivotal points.

1

Power-up*2
2*1 The figure for the production technology basics seminar is the total number oftrainees who attended any one of a total of 13 courses.
*2 Trainees of Fortuna and Power-up include mentors.

Remote ceremony towelcome prospective
employees who havereceived job offers

Scene from next-generation manager training
Integrated Report 2022

62Basic Information

Value Creation

Foundations of Value Creation

Data

Occupational Health and Safety
PolicySafety 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 andmental health, without injury, and with a sense 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 safe andhealthy workplace and achieving zero accidents.

Workplace Injury Trends
Number of lost-time injuries(cases) ■ Japan

Frequency rate of lost-time injuries■ Overseas

23
16
12

19

1.05
16

15 14

12

9

0.91
0.73

0.58

0.56

7

Framework
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
and labor union representatives, meet in February each year aspart of the committee to verify the results of activities in thecurrent fiscal year, determine the Group Safety and Health Policy
for the following fiscal year on the basis of those results andrevise or abolish the Group Safety and Health Regulations.
In addition, Safety and Health Committees are put in place ateach Group company and business site as prescribed by theIndustrial Safety and Health Act. The following two meetingbodies have been established to facilitate coordination with thesecommittees.
⃝Group Safety & Health Manager Meeting
This meeting mainly comprises the business site managers andplant managers who serve as the safety and health committee
chairpersons at each business site. Their job is to disseminate
and roll out the policies decided on by the Group Safety and
Health Committee.

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

NLM Holdings President andTop Management of Major
Group Companies

Top Managementof Labor Unions

Group Safety & HealthManager MeetingGroup Safety & Health
Coordinator Meeting

Participation

Safety andhealthcommittees at
Participation each business
site

Plan
FY2021 Action PlanOn-siteinspection of lost-time injuries
Group-wide roll out of measures to deal withsimilar accidents● Support for priority business sites● Promoting activities for observing the basics● Sharing information among senior management
and instructions from the president●●

1. Preventing
Accidents

2. Improving Field
Capabilities
3. Enhancing
Management
Capabilities
4. Improving
Technical
Capabilities●

Safety and health education

Promotinginternal accreditation for safety andhealth management systems (SMS)● Developing SMS promoters and safety managers,
rolling out in-house training●Group-wideroll out of equipment safety standards
Risk assessment education and training● Development of safety engineers (SE) and safety
foremen (SF)●●To realize the Group Safety and Health Policy, we systematicallypursue initiatives aimed at preventing accidents, improving field
capabilities, enhancing management capabilities and improving
technical capabilities.
On preventing accidents, members of the Safety and HealthControl Department take part in local accident review meetingsand Safety and Health Committee meetings at business sites
experiencing frequent accidents as a priority business site
support measure, in an effort to improve the level of recurrence
prevention measures at the affected sites through advice andguidance.
On improving field capabilities, safety and health education isprovided in a wide range of areas, from training on the safety andhealth management system to legal education and training aboutmachinery safety, to expand education as a part of safety andhealth activities throughout the entire Group.
On enhancing management capabilities, three business sites inJapan have obtained ISO 45001 certification. Twenty otherbusiness sites in Japan have received in-house accreditation for
their own safety and health management systems utilizing the
JISHA* style OSHMS. This voluntary accreditation system wasstarted in 2013 as part of efforts to build appropriate safety
management capabilities.
In terms of improving technical capabilities, we createdequipment safety standards based on international safety
standards and have since promoted the improved safety ofmachinery and equipment. In addition, we have introduced risk
assessments as a risk mitigation approach and foster thedevelopment of safety practitioners through widespread training.
Further, we focus 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

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Integrated Report 2022

2017

2018

2019

2020

2021

(Year)

2017

2018

2019

2020

2021

(Year)FY2021 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 tohave the people in charge and other people from the businesslocation, including the safety and health manager, investigate into
the cause. This is followed by the consideration andimplementation of measures to prevent the recurrence of the injury.
Employees who are most familiar with the work site are expected
to consider and implement reliable measures. On the other hand,familiarity may also cause them to overlook something, make anincorrect assumption, or make some other error. There is also theconcern that, because those people work in the same site daily,
they may protect each other or hesitate to take more severe
measures. Accordingly, as the second line of defense, the Safety
and Health Control Department of NLM Holdings inspects the sitefrom a third-party perspective, separately from the people from thebusiness location in question. They inspect the site three times,
one week, one month and six months after the workplace injury, toverify the effectiveness of the countermeasures that were
implemented and whether they have taken root firmly, among otherpoints. Further, this initiative enables countermeasures based on
specialized knowledge, such as the incorporation of best practices
from other business locations. In addition, activities to prevent
workplace injuries at business locations where workplace injuries
occurred were supported by giving instructions on how tostreamline processes of analyzing the causes of workplace injuries
and formulating countermeasures, explaining legal regulations,advising them to receive training from external institutions andtaking other measures.

Promoting activities for observing the basics
In FY2021, we pushed forward with activities to ensure the basics
are observed as a new measure.
To do this, every month we selected noteworthy workplace
injuries from among the injuries that occurred in the previous
month, summarized how they occurred in an easy-to-understandmanner, and delivered information about basic countermeasures to
all Group companies to share information about workplace injuries.
Further, we also requested inspections and reviews of safety
rules to reconfirm basic matters at each business site.
To expand safety and health activities throughout the entire
Group, safety and health education covers a wide range of areas,from training on the safety and health management system tolegal education and training about machinery safety.
⃝Special training for workers⃝OSHMS leader training
handling low voltage electricity⃝OSHMS internal auditor training⃝Training for newly appointed ⃝Equipment safety training⃝Risk assessment training
safety managers⃝Safety engineer (SE) training⃝Foreman training⃝Safety foreman (SF) training⃝Special training for workers
handling dust

Safety and health education
FY2018FY2019FY2020

FY2021

Number of times thetraining was held

56 times

31 times

19 times

23 times

Trainees (total)

985

622

291

372

We have been developing materials with the aim of creating asystem enabling each business site to conduct training on its
own. However, there has been an increasing number ofoccasions where training has had to be cancelled due to
COVID-19. Therefore, we switched training to remote training
programs whenever possible.

2021 evaluation
Although we implemented a range of initiatives in 2021, we wereunable to achieve a reduction in workplace injuries.
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. The number of lost-time injuries inJapan increased by three. This partly reflects the number of fallscaused by frozen road surfaces, etc., which was one in 2020 andincreased to four in 2021 because of the frequent snow. As aresult, the number of visits to business locations where workplace
injuries occurred decreased as shown in the following section. In
2022, we are implementing initiatives to reduce the number of
injuries due to workers being pinched or caught in machinery or
equipment as well as the number of falls.

Percent of business locations where workplace
injuries occurred that are visited
Percent of business locations where workplace injuries
occurred that are visited■ Number of workplace injuries judged to require visitation● Percent visited

100%

100%

100%

■ Number of visits

100%

22 22
17 17
11 11

2018

2019

2020

8

8

2021

(Year)

Integrated Report 2022

64

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Value Creation

Foundations of Value Creation

Data

Supply Chain Management
Evaluation of suppliers (conducting questionnaire surveys)

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

For the FY2021 questionnaire surveys of the NLM Group’s
suppliers of centrally procured products, we adopted the online
questionnaire method which we began in FY2020. We sent out
questionnaires to approx. 400 suppliers as in preceding years. In
FY2021, we received responses from 35% of suppliers.
In the questionnaire results, it was notable that, whenanswering a question about the level of their understanding of theSDGs, the 67% of respondents answered “We can give a
detailed explanation of them” or “We can explain them to acertain degree,” which was an approx. nine-point increase overthe 58% last year, indicating that more of them have a deeper
understanding of the SDGs.
Further, when asked about their initiatives to achieve the SDGs,
56% of respondents answered, “We are promoting them,” or “We
will promote them in the future,” which was an approx. 15-point
increase over the 41% last year, indicating that more suppliers are
implementing initiatives to achieve the SDGs as a part of theircorporate activities.

When asked about their human rights considerations, 56% ofsuppliers said they have formulated human rights policies andengage in activities to increase employee awareness of humanrights, an approximately 15-point increase over the 41% from lastyear.
However, when asked about the status of their acquisition ofcertifications, such as environmental management system (EMS)
certifications, which was included in the questions related to theenvironment that were added this year, nearly half of the suppliers
responded, “We have already acquired a third-party certification,”or “We plan to acquire a third-party certification within one year,”indicating that they are at a high level.
We also asked about their green procurement initiatives. Hereagain, nearly half of the suppliers responded, “We haveformulated and implemented a policy,” or “We plan to formulate apolicy within one year,” showing that they also take environmental
initiatives at a high level.
We will continue to share the NLM Group’s procurement policy
and promote CSR procurement in cooperation with our suppliers.

How well do you know the SDGs?

Are you promoting initiatives forachieving the SDGs?

Do you consider human rights?

■ We can give a detailed explanation of them
■ We can explain them to a certain degree■ We are promoting initiatives■ We plan to promote initiatives in the future■ We have formulated a human rights policy and engage inactivities to increase employee awareness of human rights.

Framework
The NLM Group runs a wide range of businesses and alsopurchases a broad array of items. For this reason, our purchasingsystem has adopted the basic policy of giving autonomy to eachfield of business while engaging in moderate Group coordination.
We are trying to anticipate and solve a range of issues to achieve

responsible procurement through Group coordination. Every six
months, we hold a Group Procurement Personnel Meeting toshare information about matters related to CSR procurement inaddition to information, issues and solutions related to
procurement.

FY2021 Initiatives
Developing a stable supply chain
In 2021, the purchasing departments of the NLM Group began toface unprecedented changes in the procurement environment.
In response to the tight supply-demand balance and the sharp
rise in the prices of metallic silicon and magnesium, which was a
result of the sudden change of the Chinese government’s energy
policy, we looked for suppliers from free-market countries otherthan China.
Against the background of the global disruption of container
logistics and delayed arrival of aluminum and other raw materials
stemming from the COVID-19 pandemic, we focused our efforts
on looking for roundabout routes and collecting logistics
information.
In response to the extreme global shortage of boron andpotash sources caused by the Russian invasion of Ukraine, we
worked with suppliers in Japan to search for new raw material
sources and consider new technologies.
Large-scale disasters, geopolitical risks and the instability ofthe supply of raw materials using conventional energy caused by
the transition to a decarbonized society are all elements of theinstability of the supply chain. At the NLM Group, we take thefollowing measures to minimize the negative impact of these
events.
⃝Reducing geopolitical risks by procuring items from new
production regions⃝Building stable supply systems under annual contracts with“suppliers whose faces we can see”
⃝Looking for subordinate sources in monopolistic supply chains

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Integrated Report 2022

45%

25%

48%

13%

19%

2020

2021

15%

(Fiscal year)

26%

31%

2020

2021

Protecting and respecting human rights
Through these and other measures, we are developing stablesupply chains.
Future issues include the transformation of supply chains into
deeper, multi-layered supply chains, resulting from the progress in
supply chain globalization. The importance of the visualization of
supply chains and the conducting of prior simulations based on
visual data is increasing. We will focus on preventive andpredictive BCP for supply chains in addition to our BCP focusedon reactive measures.
We are striving to ensure the stable supply of items we procure
under our purchasing policies of responding immediately andflexibly to changes in the environment and proposing andimplementing raw material and equipment procurement
strategies for all Group companies in Japan and other countries,
to hedge risks while also reducing costs.
For the procurement of aluminum ingots which are our main
raw material, we are striving to build a stable supply structure by
anticipating geopolitical risks and the risks involved in
procurement from overseas suppliers which exist due tolockdowns during the COVID-19 pandemic and other events. We
are also working on green procurement. We are increasingtransactions with overseas suppliers who use electricity fromrenewable energy sources, looking for new suppliers like this, andfurther, pushing forward with the procurement of recycled raw
materials with the goal of helping build a sustainable society.

At the NLM Group, we have been demonstrating our stance onhuman rights by observing 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.
We will begin planning to identify and assess risks
experimentally in 2022 by targeting some supply chains andusing the CSR/Sustainable Procurement Self-assessment Tool
Set from the Global Compact Network Japan. We will verify theeffectiveness of the risk identification and assessment based on
the results of this experiment and plan to identify and assess risks
in the major supply chains for centrally procured products in
FY2023. In addition, we are setting KPIs with a plan to ultimately
include not only the supply chains for centrally procured products
but also the supply chains of the NLM Group as a whole in thesubjects of the questionnaire survey.
Based on these plans, we will take the following steps toadvance human rights due diligence.

56%

41%
(Fiscal year)

2020

2021

(Fiscal year)(1) Assessment (identification and assessment of risks)
Identifying and assessing the risks and impact of suppliers’
activities, operations, products and services(2) Responses (prevention and mitigation of impacts)
Taking preventive and mitigation measures to ensure that ourbusiness activities will not have a negative impact on humanrights(3) Monitoring (tracking and effects measurements)
Measuring the effects of the responses that have been
implemented(4) Provision of information to internal and external parties(accountability)
Fulfilling accountability duties mainly for stakeholders
negatively affected* The NLM Group’s Human Rights Policy
https://www.nikkeikinholdings.co.jp/csr/human-rights/0402.html

Integrated Report 2022

66

Basic Information

Value Creation

Foundations of Value Creation

Data

Local Communities
Policy⃝The NLM Group respects local culture and customs andcontributes 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 nextgeneration 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 contributeto local communities.

Framework
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 engagementwith local communities and regional development by engaging in

Plan
FY2021 Plan⃝Ascertaining and promoting pro bono activities⃝Providing support for cultural and sports programs as well as
educational and research institutions in each locality⃝Active engagement with local communities⃝Cooperation with external organizations such as police and fire
departments and information gathering⃝Preparations for publishing social contribution activity website
posts⃝Support for BCP formulation

dialogue with people from each community. These initiatives areshared at Group General Affairs Liaison Meetings attended by thegeneral affairs personnel of Group companies and business sites,
to facilitate solutions to each local issue.

Social Contribution Accounting
In FY2021, we participated in 192 local programs, and our
expenses were 118 million yen.
Social Contribution Accounting (million yen)
180
168
133

113

118

2. Outline of the Basic Plan
(1) Short-term plan [Step 1]

2017

2018

2019

2020

2021 (Fiscal year)

Measures to address sedimentation in Amehata Dam
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, rising waterlevels on the Amehata River upstream of the dam due to torrential
rains caused by Typhoon Krosa in August 2019 and Typhoon
Hagibis in October 2019 caused flooding damage across thesurrounding region.
In order to achieve a fundamental solution following thenotification of regular inspection results from the Ministry of Land,
Infrastructure, Transport and Tourism in 2019, we received thefollowing administrative guidance to compile plans for
sedimentation control measures and systematically address thesedimentation issues.

Content of the administrative guidance⃝Regarding measures to respond to the regular inspection of
Amehata Dam
Notice No. 13 dated August 9, 2019 from the General
Manager of Kofu River and National Highway Office, Kanto
Regional Development Bureau, MLIT
To: Director of Kambara Complex, Nippon Light Metal Co., Ltd.
Notice from the General Manager of Kofu River and National
Highway Office, Kanto Regional Development Bureau, MLIT
⃝Findings of the regular inspection
・Measures to address sedimentation have been taken, but themeasures shall be strengthened and improved to surely
reduce the amount of sediment.

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Integrated Report 2022

・A plan for measures to address the sedimentation problem
shall be finalized and the measures shall be implemented in awell-planned manner to fundamentally solve thesedimentation problem.
・While abnormalities such as deflection have not been
observed, the amount of sediment has exceeded thesediment storage capacity. Accordingly, its impact on thedam body, etc. shall be investigated.
In response to the flooding damage that occurred and theabove administrative guidance from the government, in
September 2019 Nippon Light Metal Co., Ltd. established theAmehata Area Sediment Countermeasures Investigative
Commission (“the Commission,” hereafter) together with the
Ministry of Land, Infrastructure, Transport and Tourism (MLIT),
Yamanashi prefectural government, and the Hayakawa municipal
government, and after the Commission had met four times up to
March 2020, it considered emergency countermeasures to deal
with the flooding damage in the surrounding region along with
fundamental measures to address the sedimentation, after which
the Basic Plan for Measures Addressing Amehata Dam Sediment(“the Basic Plan,” hereafter) was compiled in April 2020 and
submitted to the MLIT.

Outline of the Basic Plan
1. Positioning of the Basic Plan
Floods have already occurred above the Amehata Dam
reservoir. Therefore, under this basic plan, we will aim toImplementing a solution to prevent floods and mudslides(removing accumulated sediment so that the water level will
not exceed the normal water level)Removal andtransportation of the accumulated sediment that is believed
to cause floods and mudslides(estimated amount: 3,000,000 m3)
Details ● Emergency measures
・Construction of a temporary embankment and securing ariver channel
・Temporary use of the inside of the dam lake for theconstruction of embankments to protect the prefecturalroad, to construct a temporary road, and for other purposes● Drastic measures		・Increase the capacity of the belt conveyor to discharge
sediment below the dam
・Use the sediment (as an aggregate resource, forconstructing haul roads in rivers, for building embankments
for land development, and for other purposes)
・Review the continuous countermeasures addressing
sedimentation
		● Follow-up, etc.
Goal(2) Medium-term plan [Step 2]

Period FY2022 to the end of FY2024
Target Remove 3,000,000 to 4,000,000 m3 of accumulated sediment
to secure sufficient sediment storage capacity to prepare forthe largest ever inflow of earth and sand.
Details ● Use the sediment (as an aggregate resource, for building
embankments for land development, and for other purposes)● Review and implement the continuous countermeasures
addressing sedimentation●F ollow-up, etc.

Long-term plan [Step 3]

Period From FY2025 onwards
Target Maintain a safe level of sedimentation
Details ● Use the sediment (as an aggregate resource, for building
embankments for land development, and for other purposes)● Implement continuous countermeasures addressing
sedimentation● Follow-up, etc.
* Chapter three is not listed in this report. 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)

Period FY2020 to the end of FY2021

Roadmap
Roadmap of the Basic Plan for Measures Addressing Amehata Dam Sediment
Item

Issue

Construction of atemporary embankment—

Surveying and Design
Discussion and Coordination

Short Term
FY2020

FY2021

Construction
Work

Operation

Medium Term
FY2022

FY2023

Long Term
FY2024FY2025 ~Construction completea sufficient river channel to prepare for the
Securing a river channel Securing
largest ever inflow of earth and sandIn the future we will continue to excavate the river channel in an effort to prevent disasters.

Construction work in the insideof the dam lake and temporarystorage in the dam lake—

Protecting existing structures and riverside roads, constructing temporary storage yards, etc.

Increased sedimenttransportation capacity—

Soil utilization

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

implement a solution to prevent floods and mudslides as soon
as possible and ensure that the Amehata Dam reservoir cansurely fulfill its functions in the future. Accordingly, we divided
countermeasures into three stages: a short-term plan [Step 1],
a medium-term plan [Step 2], and a long-term plan [Step 3].
This basic plan was formulated with the greatest possible
consideration of the living environment of local residents. It hasa realistic target for the amount of accumulated sediment to be
removed, before describing the feasible countermeasures that
we formulated. To begin the implementation of the Basic Plan
immediately, we attached importance to the short-term plan (asolution to prevent floods and mudslides) to be implemented in
FY2020 and FY2021.
Under the medium-term plan for FY2022 and onward, we willtake measures such as securing places to dispose of removed
sediment by finding candidate locations where embankments
are needed so the removed sediment can be used as a material
to build the embankments, while continuing to cooperate with
the Hayakawa and Minobu municipal governments, the national
government, and the Yamanashi prefectural government. In
addition, the Basic Plan will be reviewed at the follow-up
meeting* of the Investigative Commission described in Chapter
3 in accordance with its progress, to formulate and advancefeasible measures to secure sufficient sediment storage capacity
to prepare for the largest ever inflow of earth and sand.
Further, there are many issues to be studied surrounding
Amehata Dam, including the remarkably large amount of
sedimentation compared to other dams in Japan. Therefore,
we will continue to study countermeasures from a broad
perspective to ensure sedimentation stays at a safe level andtake measures to maintain sufficient sediment storage capacity(continuous countermeasures against sedimentation) byconsulting with other stakeholders at the follow-up meetings ofthe Investigative Commission. We have positioned this process
as a part of the long-term plan.

A system to remove 1.5 million m3 per year was established in 2021.

Aggregate
Making adjustments to prepare for the expansion ofUsing soil as aggregate resources (continued)
resources
demand for aggregate
Amehata River—
Completion of construction at the end of May 2022
transportation route
Hayakawa River
Detours near narrow sections and river crossing
Construction underway
transportation route structures
Securing a disposal
Considering use of soil in response to wide area needs
site

Ongoing countermeasures Consideration for a shift to a long-term plan, etc. andaddressing sedimentation coordination with relevant organizations
Amount of sedimentremoved and transported

Results for FY2020 and FY2021: 3.0 million m3

Construction of embankments in candidate soil disposal sites and studying new candidate sites
Under continual consideration

1.5 million m3 1.5 million m3 1.0 million m3 1.0 million m3 1.0 million m3 Measures based on
the amount of inflow

3.0 million m3

3.0 million to 4.0 million m3
Integrated Report 2022

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Basic Information

Value Creation

Foundations of Value Creation

Data

Local Communities
Progress Report

Receipt of a Notification Based on Article 78 of the River Act Regarding Hydroelectric Power Generation Facilities and Renewal of Water Rights at Hakii Power Plant

Since FY2020, Nippon Light Metal Co., Ltd. has been working
diligently to implement the Basic Plan. The period for the shortterm plan ended at the end of FY2021, and progress was madeas scheduled concerning the planned measures.
In implementing the countermeasures, for the fiscal year ended
March 2020 we recorded an extraordinary loss of 11,000 million
yen for sediment control costs related to countermeasures, forwhich it became possible to reasonably estimate the costs for
implementation during FY2020 to FY2021, and for the fiscal year
ended March 2021 we recorded an extraordinary loss of 16,200
million yen for sediment control, for which it became possible toreasonably estimate the costs for implementation during theperiod until FY2024.
Overall view of the Amehata Dam

History of measures to address sedimentation in Amehata Dam
August 9, 2019
August 16

concerning response to the results of regular inspection of the Amehata Dam, which is a facility of Nippon Light Metal Co., Ltd.

We report the outline of the hydroelectric power generation
facilities of Nippon Light Metal Co., Ltd. and the results of theinvestigations as follows.

Outline of the hydroelectric power generation facilities of Nippon Light Metal Co., Ltd.

●Flooding damage is incurred across the region surrounding the Amehata Dam due to the torrential rains of Typhoon Krosa.

●The 1st meeting of the Amehata Area Sediment Countermeasures Investigative Commission is held.

October 12●Flooding damage is incurred across the region surrounding the Amehata Dam due to the torrential rains of Typhoon Hagibis.

February 4, 2020

that they may adopt a policy of giving us the permit but
shortening the period of the permit to around five years from thedate of renewal.
NLM Holdings and Nippon Light Metal Co., Ltd. take thenotification seriously and will strive to ensure appropriate
management by further enhancing measures to prevent
recurrence, in addition to implementing existing measures toimprove the equipment and the management framework, such as
the control method, while receiving guidance from the Ministry ofLand, Infrastructure, Transport and Tourism.
Once again, we extend our deepest apologies to local
residents and other stakeholders for the great problems andanxieties we have caused.

●Administrative guidance is received from the Kofu River and National Highway Office, Kanto Regional Development Bureau, MLIT,

September 3

December 20

Nippon Light Metal Co., Ltd., a major subsidiary of the NLMGroup, investigated the (five) hydroelectric power generation
facilities it owns (subject period: 1987 to 2021) in accordancewith the (Request for) Investigations into Reporting, etc. of Water
Intake Quantity of Hakii Power Plant, etc. of Nippon Light Metal
Co., Ltd., which was received from the Kofu River and National
Highway Office of the MLIT’s Kanto Regional Development
Bureau on April 8, 2022.
As a result of the investigations, deficiencies in ourmanagement methods and framework that were put in place
more than 10 years ago were found regarding the use of water atthese hydroelectric power generation facilities. On account of
this, we received a notification pursuant to the provisions ofArticle 78 of the River Act.
Regarding the renewal of the water rights at the Hakii Power
Plant, which is one of the (five) hydroelectric power generation
facilities, the period of permission expired on March 31, 2020,
and we applied for its renewal. The government has indicated●The 2nd meeting of the Amehata Area Sediment Countermeasures Investigative Commission is held.

Upper row: Water intake quantity
Bottom row: River maintenance flow

Fuji River
Haya River

12.00 m3/s—

(irrigation period/non-irrigation period)

Sumise Power Plant

Lake Motosu

Kuretsubo weir—
(Discharge not mandatory)

Amehata Dam

ShimobeHot Spring●The 3rd meeting of the Amehata Area Sediment Countermeasures Investigative Commission is held.

Hakii Power Plant
March 25
April 30

●The 4th meeting of the Amehata Area Sediment Countermeasures Investigative Commission is held.
●The Basic Plan for Measures Addressing Amehata Dam Sediment is submitted to the General Manager of the Kofu River and National

Highway Office, Kanto Regional Development Bureau, MLIT.

June 11●The 1st follow-up meeting of the Amehata Area Sediment Countermeasures Investigative Commission is held.

November 26●The 2nd follow-up meeting of the Amehata Area Sediment Countermeasures Investigative Commission is held.

June 4, 2021

●The 3rd follow-up meeting of the Amehata Area Sediment Countermeasures Investigative Commission is held.

April 27, 2022

30.00 m3/s—

Motosu Power Plant

Tokiwa River

Amehata River

30.00 m3/s
1.40 / 1.00 m3/s

Sano River

Shionosawa weir

Hakii River

61.30 m3/s
5.00 / 3.00 m3/s

MinobuMt. FujiHakii weir—
0.057 m3/s

Kakimoto Dam

Sanogawa Power Plant

Fujikawa First Power Plant

61.30 m3/s—

●The 4th follow-up meeting of the Amehata Area Sediment Countermeasures Investigative Commission is held.

Fujinomiya

Toshima weir

75.00 m3/s
5.00 m /s / 3.00 m3/s

4.70 m3/s
0.057 m3/s

Fuji

3

Shin-Kambara

Fujikawa Second Power Plant

Kambara Complex
Shimizu

Shimizu Plant
75.00 m3/s—

69

Integrated Report 2022

Integrated Report 2022

70

Basic Information

Value Creation

Foundations of Value Creation

Data

Local Communities
Outline of Results of the Investigations (Source: Outline of Results of the Investigations into Quantities of Water Intake and Discharge by Five Power Plants of Nippon Light Metal Co., Ltd. at Fuji River)
below the amount specified for each power plant (permitted
water intake quantity at Hakii Power Plant and Fujikawa
Second Power Plant and the permitted water intake quantity
less the water intake quantity from the No. 4 Water Inlet at
Fujikawa First Power Plant), which caused excess water
intake.
⃝Regarding water discharge, before 2010, when we revised
the management method, we controlled the gate by setting
the median value for the water level of the water inlet so thatthe quantity of water discharge from the gate will beequivalent to the river maintenance flow. When the quantity ofwater discharge was below this level, it did not reach the river
maintenance flow.
⃝Limiters or similar equipment which record excess water
intake as the upper limit of the permitted water intake
quantity or record the river maintenance flow as the lower
limit had not been installed.
Dam power plants(❹ Sanogawa Power Plant and ❺ Sumise Power Plant)⃝Regarding water intake, in April 1998 and before, quantities
exceeding the permitted water intake quantity were recordedin the conversion table used in those days. This caused a
false recognition by workers, which resulted in the excesswater intake.

1. Objectives
From the Kofu River and National Highway Office of the
Ministry of Land, Infrastructure, Transport and Tourism(hereafter, “MLIT”), we received an Investigations into
Reporting, etc. of Water Intake Quantity of Hakii Power Plant,
etc. of Nippon Light Metal Co., Ltd. request dated April 8,
2022. We later conducted on-site investigations, and then wewere requested to point out problems and describe our views
about the status of water intake. In response, we conducted
detailed investigations into the quantities of water intake in a
35-year period by the five power plants that had received
permits from the national government. We also investigatedthe quantities of water discharged over a 29-year period(approx. 10-year period for the Sanogawa Power Plant). We
conducted detailed investigations into the quantities of watertaken in and discharged by checking daily logs on water
delivery and dam related to operations, chart record papers,
PC data and power record data which show the equipment’s
condition, and by interviewing related people.
2. Results(1) Presence or absence of factors hindering appropriatequantities of water taken in and discharged
Conduit hydropower plants(❶ Hakii Power Plant ❷Fujikawa First Power Plant, and❸ Fujikawa Second Power Plant)⃝Regarding water intake, before April 2007, when theautomation of the management was completed, we operated
the plants in a way such that the intake quantity would not be(2) Results of investigations into quantities of water intake
We confirmed the occurrence of excess water intake as shownin the table below.

Results of investigations into quantities of water intake
Permitted
waterTime when water
Total number of days
Total water intake Average excess quantity
Period of investigation intake exceeding the when the permitted quantity in excess of for the days when theintakequantity
permitted quantity took amount of water
the permitted quantity permitted quantity was(m3/s)
place (Note 1)
intake was exceeded
exceeded (m3/s)(thousand m3)(Note 2)

Power plant name❶ Hakii Power Plant

30.00❷ Fujikawa FirstPower Plant❸ Fujikawa Second
Power Plant

0]0.23 [

0]129]

160,203 [ 4,177]

0.63 [

0.37]

19 [

150]

419 [ 3,962]

0.26 [

0.31]

0 [

3]

0 [

58]

0 [

0.22]

0 [

0]

0 [

0]

0 [

0]

1987 to 2021

Until October 2004

1,422 [

0]61.30

1987 to 2021

Until December 2004
[Until January 2007]

2,929 [

75.00

1987 to 2021

Until October 2001
[Until August 2006](Note 3)

❹ Sanogawa Power Plant

4.70

1987 to 2021

No excess water intake[Until April 1998]❺ Sumise Power Plant

12.00

1987 to 2021

No excess water intake

28,665 [(Notes) 1. “Time when water intake exceeding the permitted quantity took place” is the last month in the period subject to investigation when excess water intake was confirmed tohave occurred.
2. Figures in brackets [ ] are estimated figures for the period when raw observation data for the water intake quantity was not kept.
3. The figure for Fujikawa First Power Plant was obtained by subtracting the water intake quantity from the No. 4 Water Inlet (4.70 m3/s) from the permitted water intake quantity(66.00 m3/s).

Investigation Methods
Conduit hydropower plants(❶ Hakii Power Plant, ❷ Fujikawa First Power Plant, and❸ Fujikawa Second Power Plant)
The water intake quantity for each day was calculated basedon the water level at the point where the water from the intake
weirs joins together. For days without water level data, thewater intake quantity was estimated based on the amount of
power produced by the plant. Presence or absence of excess
intake was confirmed based on comparison with the permitted
water intake quantity.

71

Integrated Report 2022

Dam power plants(❹ Sanogawa Power Plant and ❺ Sumise Power Plant)
The water intake quantity for each day was calculated using a
conversion table based on output data from generators andwater level of the dam. Presence or absence of excess intake
was confirmed by comparing this value with the permitted
water intake quantity.

(3) Result of investigations into the quantity of water discharged

We confirmed insufficiencies as shown in the table below.
Results of investigations into the quantity of water discharge (Note 3)

Power plant name❶ Hakii Power Plant

Quantity of water
Time when an
Total number of days Total shortfall in Average shortfall on
Period ofdischarge needed for riverinvestigation (Note 1) insufficient quantity of when an insufficient the quantity of days when the quantity
maintenance (m3/s)
water wasquantity of water water discharged of water discharged
discharged (Note 2)
was discharged(thousand m3) was insufficient (m3/s)
Irrigation period

1.40

Non-irrigation period

1.00

Irrigation period

5.00

Non-irrigation period

3.00

Irrigation period

5.00

Non-irrigation period

3.00

April 1 to September 30
October 1 to March 31❷ Fujikawa FirstPower Plant

March 16 to September 30
October 1 to March 15❸ Fujikawa Second
Power Plant

March 16 to September 30
October 1 to March 15

year
0.057
❹ Sanogawa Power Plant Full
January 1 to December 31❺ Sumise Power Plant

Discharge for river
maintenance not mandatory1993 to 2021
29 years

No insufficiency[Until September 2003]

1992 to 2021
30 years

Until August 2001
[Until May 1994]

1992 to 2021
30 years

Until April 2000
[Until November 1992]

2012 to 2021
10 years

No insufficiency

—

—

0 [

88]

0 [ 137]0 [ 0.02]

0 [

35]

0 [

82]

0 [ 0.03]

75 [

1]

707 [

3]

0.11 [ 0.04]

64 [

0]

182 [

0]

0.03 [100 [28]

516 [ 286]

0.06 [ 0.12]

26 [

11]

283 [

34]

0.13 [ 0.04]

0 [

0]

0 [

0]

—

—

0 [

0]

0]

—

(Notes) 1. The beginning of the period of investigation is the year when permits were granted under the rules on water use that require the quantity of discharged water be equivalent to
the river maintenance flow quantity.
2. “Time when an insufficient quantity of water was discharged” is the last month in the period subject to investigation when it was confirmed that the quantity of water
discharged was insufficient.
3. Figures in brackets [ ] are estimated figures for the period when raw observation data for the quantity of water discharged was not kept.

Investigation Methods
Conduit hydropower plants(❶ Hakii Power Plant ❷ Fujikawa First Power Plant, and❸ Fujikawa Second Power Plant)
The quantity of water discharged each day was calculated
based on the water level of the water inlet and the degree towhich the scour gate was opened.
For days without this data, the quantity of water discharged
was estimated based on the data recorded in the daily log onwater delivery.
The presence or absence of insufficient discharge wasconfirmed based on comparison with the river maintenanceflow specified in the rules on water use.

Dam power plants(❹ Sanogawa Power Plant)
The quantity of water discharged from the dam each day wascalculated based on water level data from flow observationequipment. The presence or absence of insufficient discharge
was confirmed based on comparison with the river
maintenance flow specified in the rules on water use.

(4) Results of internal investigations
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 quantityof water discharged was insufficient until August 2001 (until
September 2003 if estimated values are included).
In addition, the quantities of water taken in and discharged inthose periods had not been reported correctly to MLIT.

3. Views of Nippon Light Metal Co., Ltd. based on the resultsof the investigations
Up to the date the investigations were conducted, we had been
striving to ensure appropriate water intake control throughefforts such as the introduction of programmable logic
controllers (PLC). We had been using water without questioning
the existing management methods and framework.
However, the investigations revealed that the permitted water
intake quantity had been exceeded and the quantity of water
discharged had been below the river maintenance flow for
specific periods in the past. We found that this was attributableto problems with control methods, recording, and the
management framework. We will roll out measures to prevent
their recurrence through equipment improvement and therevision of operations, initiatives that we have been advancing
in a step-by-step manner, and we will continue to work on thefollowing tasks to ensure that we do not cause similar
problems in the future.
⃝Providing employees with training related to river laws,
compliance, etc.
⃝Daily operations management of the water intake anddischarge status, which will be performed using data
⃝Strengthening the requirements regarding the preservation ofrecords related to power generation operations⃝Regular audits by personnel in charge of environmental
protection from Nippon Light Metal Co., Ltd.

(5) Current status of water use
Conduit hydropower plants(❶ Hakii Power Plant ❷ Fujikawa First Power Plant, and❸ Fujikawa Second Power Plant)⃝Regarding water intake, the automation of water intake
management was completed in April 2007. The permitted
water intake quantity has been maintained, with no humanjudgment in matters such as the reading of data.
⃝Regarding water discharge, we strengthened operations
management in 2010. We have continued to ensure that thequantity of water required for river maintenance isdischarged.
Dam power plants(❹ Sanogawa Power Plant)⃝Regarding water intake, we began to create a database inJune 2019, and the quantity is calculated automatically. The
permitted water intake quantity has been maintained, with nohuman judgment in matters such as the reading of data.

Integrated Report 2022

72

Basic Information

Value Creation

Foundations of Value Creation

Data

Financial and Non-Financial Highlights
Financial Highlights
Net Sales(million yen)

481,439

500,451486,579

465,946432,568

Non-Financial Highlights

Operating Profit /Operating Profit Ratio

Return on Capital Employed (ROCE)

Number of Officers /Percentage that are Outside Officers

Number of Violations of Laws orRegulations

Ownership Regarding the Practice ofCompliance*■■ Operating Profit (million yen)●● Ratio of Operating Profit to Net Sales (%)(%)■■ Number of Directors■■ Number of Auditors●● Percentage that are Outside Officers (%)(cases) ■■ Environmental■■ In the Provision of Products or Services■■ Other(%) ■ Top Management■ Legal Affairs and Compliance Department■ HR Department■ Each One of Us

29,893 30,052

18
24,607 24,194

6.2

6.0

10.7

10.8

6

22,198

5.3

19

6

6

8.7

8.4

8.0

19

5.6

12

4.6

33.3

13

13

36.8

36.8

20

20

6

6

6.2

13*
14

14

40.0

40.0

5.3
15.8

72.7

2017

2018

2019

2020

2021
(Fiscal year)

Net sales increased year on year with a rise insales prices in the Ingot Sector, Sheet andExtruded Products Sector and other segments,
reflecting the condition of the aluminum ingot
market, in addition to an increase in sales volume
in the Aluminum Chemical Sector, the area of
secondary alloys for automobiles and other areas,
as well as steady demand related to electricalmachinery and electronics.

2017

2018

2019

Net Assets / D/E Ratio(Million yen) ■■ Cash flows from operating activities■■ Cash flows from investing activities■■ Cash flows from financing activities■■ Net Assets (million yen)●● D/E Ratio (times)

189,322

41,942

2021(Fiscal year)

Operating profit declined year on year, mainlyreflecting rising prices of raw materials and fuels
and the stagnation of production in the truck
mounting business attributed to the chassis
supply shortage that stemmed from thesemiconductor shortage.

Cash Flows (From Operating/
Investing/Financing Activities)

48,676

2020

2017

2018

■ Before Reverse Stock Split(yen)202,735 201,198 207,104

220,907

10.0

0.8

-626

74.6

0.7

0.7

0.8

2017

2018

2019

65.00

The decrease in cash flows from operating
activities resulted from an increase in tradereceivables, inventories and other working capital,
mainly reflecting the soaring aluminum prices.
Net cash was used in financing activities becauseof a decrease in proceeds from long-termborrowings.

2017

2018

2019

2020

2021
(Fiscal year)

We will strive to improve our corporate value by
investing in measures to strengthen ourmanagement foundation, R&D, human resource
development, initiatives to achieve carbon
neutrality, and other areas, in addition to
expanding business in growth areas and creating
demand and increasing earning power in the areaof infrastructure business.
We will strive to keep the D/E ratio below 1.0.

Integrated Report 2022

000

000

000

2017

2018

2019

2020

0

0

2021
(Fiscal year)* All of the above were pointed out by Japan Quality Assurance
Organization (JQA).

* Percentage of employees who responded when asked who they
believed was responsible for practicing compliance

Water Usage

Percentage of Raw Materials Used
That Are Recycled Ingots(thousand tons CO2) ●● Scope 1 ●● Scope 2■■ Water Consumption (million m3)

(%)

568

1.3

32.0

532

361

353

340

362

302

377

33.3
27.8

0.9

25.6

25.2

2020

2021
(Fiscal year)

328

80

27.1

31.4

20

0
2017

2018

2019

2020

2017

2018

2019

2020

2021
(Fiscal year)

2017

2018

2019

2020

2021
(Fiscal year)

2017

2018

2019

Frequency Rate of Lost-time Injuries

Percentage of Female Employees /Percentage of Female Managers

Average Annual Amount of
Expenditure for Education/Training●● Group-wide●● Nippon Light Metal(%) ●● Percentage of Female Employees●● Percentage of Female Managers(thousand yen/person)

2021(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%,
including the acquisition of treasury shares.
Note: The Company conducted a 10-to-1 reverse stock split ofcommon shares on October 1, 2020. The graph lists actual
dividend amounts regardless of whether it was before orafter the reverse stock split in question.

73

000

40

0
2021
(Fiscal year)

2021(Fiscal year)

CO2 Emissions

390

60

4.0

-25,674
2020

2020

100

85.00

-18,021-29,684

2019

0.8

2.0

-22,7772018* Began to be calculated in FY2019.

27.5-14,948

9.00

8.0 8.00

6.0

1,487

2017

1.0

●● Payout Ratio (%)■■ After Reverse Stock Split
(yen)

119.6
9.00

8,194
-15,745

2021(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 FY2021 was 8.7%.

25,868-8,9042020

Dividend Per Share / Payout Ratio

34,644-17,040

2019

29.2

1.05
0.91

18.1

19.4

19.1

24.9

15.5

0.73
0.56

16.2

0.58

0.54

0.52
0.27

0.27

2017

2018

25.0

18.3

2019

5.5

5.5

5.4

5.5

5.4

2017

2018

2019

2020

2021
(Fiscal year)

17.8

0.26
2020

2021
(Year)

2017

2018

2019

2020

2021
(Fiscal year)

Integrated Report 2022

74

Basic Information

Value Creation

Foundations of Value Creation

Data

Operating Results and Financial Analysis
Overview of Operating Results

Management Indicators (2022 Mid-term Management Plan)At the NLM Group, we endeavored to implement measures
steadily and achieve targets based on the three basic policies of
the three-year mid-term management plan that started in April
2019 (hereafter, the “2019 Mid-term Plan”): creating new
products and new businesses, investing resources in growth andreinforcing the management foundation.
We were unable to achieve the targets partly because of thesignificant impact of the changes in the external environment thattook place during the period of the 2019 Mid-term Plan, including
the soaring prices of raw materials and fuels, in addition to theeconomic slowdown attributed to the U.S.-China trade war andthe COVID-19 pandemic and the decline in automotive
production due to the shortages of semiconductors and othercomponents. However, we were able to secure a certain level ofprofit in this challenging business environment.

Changes in Consolidated Ordinary Profit(billion yen)

Financial Indicator

Basic Policy on Profit Distribution

At the NLM Group, we adopted a three-year mid-term
management plan that started in April 2022 (hereafter, the “2022Mid-term Plan”).
During the 2022 Mid-term Plan, we will build a revenue basethat is less susceptible to the external environment and aim todevelop a structure which enables us to secure stable profits
exceeding 30.0 billion yen, to enable the sustainable growth of
the NLM Group.

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
the amount of dividends and other returns based on a total
payout ratio of 30%, including the acquisition of treasury shares.
Dividend

2013 Mid-term Plan

2016 Mid-term Plan

Operating Profit

2019 Mid-term Plan

85 yenReference value*

24.5

26.3

29.5

Exceeding 30.0 billion yen

31.1
23.5

20.6

24.0

20.0 billion yen

Interim dividend paid

Interim dividend forecast

Revised value that has been announced

40 yen40 yen2021

2022

Mid-term plan target

12.5 billion yen

6.9

2013

2014

2015

2016

2017

2018

2019

2020

2021

(billion yen)

2018

2021

2019

2020

2021

(Results)(Target in the 2019 Mid-term Plan)(Results)(Results)(Results)

Net sales

500.5

540.0

465.9

432.6

486.6

Operating profit

30.1

37.5

24.6

24.2

22.2

Ordinary profit

31.1

37.0

23.5

24.0

22.9

Profit attributable to owners of parent

20.6

24.0

7.5

3.4

16.8

ROCE (%)*

10.8

11.4

8.0

8.4

8.7

2022

Final year of the 2022 Mid-term Plan (Fiscal year)2024* The value is the current rough estimate made by the Company. It is not
positioned as a target to be achieved.

Financial Positionreflecting the continued efforts to enhance our financial
foundation, despite the posting of an allowance for sedimentcontrol measures at the Amehata Dam owned by Nippon Light
Metal Co., Ltd., performance fluctuations and changes indemand for funds attributed to COVID-19, and other negative
factors.

It is expected that the global economy will see progress in theshift to the new normal created by the COVID-19 pandemic,
including remote working, while reducing COVID-19 risks. The
modest recovery is expected to continue despite unfavorable
conditions such as supply chain disruptions, high prices, andlabor shortages. However, risks putting strong downward
pressure on economic growth — including increasing factors fornegative business confidence attributed to the situation inFY2022 forecasts(Oct. 31)

Net sales

515.0

FY2021 Results

486.6

1.6

25.0

25.5

26.6

2012

2013

2014

Integrated Report 2022

Change+28.4(+5.8%)

Factors for Changes in Ordinary Profit
FY2021
results

FY2022
forecast (Oct. 31)-7.9 billion yen(billion yen)

Sales prices● D/E Ratio (times)

1.8

Ukraine, economic sanctions against Russia, and the belttightening policy of the United States — have also surfaced.
In this environment, we calculated the forecast of consolidated
financial results based on the currently available information andpredictions.
(Announced on October 31, 2022/Consolidated Financial
Results for the First Half of the Fiscal Year Ending March 31,
2022/ Forecast of Consolidated Financial Results for the Fiscal
Year Ending March 31, 2022)(billion yen)

Equity Ratio and D/E Ratio

1.8

We will strive to improve our corporate value by investing forthe future, including in measures to strengthen our managementfoundation, R&D, human resource development, and initiatives toachieve carbon neutrality, in addition to investing to expand
business in growth areas and creating demand and increasing
earning power in the area of infrastructure business. We will strive
to keep the D/E ratio below 1.0.

FY2022 Earnings Forecasts* ROCE (return on capital employed): Ordinary profit before interest / Capital employed

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. During the period of the 2019
Mid-term Plan, our financial position remained stable, partly

2021(Fiscal year)75

Final year of the 2022 Mid-term Plan (Fiscal year)2024* The value is the current rough estimate made by the Company. It is not
positioned as a target to be achieved.

2012● Equity Ratio (%)

Year-end dividend paid Year-end dividend forecast

45 yen22.2 billion yen

12.7

85 yen45 yenResults

22.9

Annual dividend (reference value*)
100 yenAnnual dividend forecast

Annual dividend paid

1.4

28.8

2015

35.6
0.9

2016

37.2

0.8
2017

39.0

39.6

0.7

0.7

2018

2019

37.6

Operating profit

12.5

22.2

-9.7
(-43.7%)

Ordinary profit

15.0

22.9

-7.9
(-34.6%)

38.1

0.8

0.8

2020

2021

+11.5
New products

22.9

-2.4
OthersSales quantity

Profit attributable toowners of parent

10.0

16.8

-6.8
(-40.3%)

Dividend per share

85 yen*85 yen

±0

+2.0

-3.3

15.0

Purchased items-15.7(Fiscal year)* Interim dividend of 40 yen/share and year-end dividend of 45 yen/share

Integrated Report 2022

76

Basic Information

Value Creation

Foundations of Value Creation

Key Financial Data for the Past 11 Years

Data(Unit: million yen)

(Fiscal year)

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

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

403,00916.8
13,6659,709
2,856

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
22,19822,92816,759Segment Information
Net sales
Aluminum Ingot and Chemicals
Aluminum Sheet and Extrusions
Fabricated Products and Others
Aluminum Foil, Powder and Paste

99,56070,618
127,972
104,859

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

Operating profit (loss)
Aluminum Ingot and Chemicals
Aluminum Sheet and Extrusions
Fabricated Products and Others
Aluminum Foil, Powder and Paste
Elimination or corporate

5,227
1,569
6,392
3,402
(2,925)

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)

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

225,200
197,471
192,070
121,752
100,033
434
8,382
187,697

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

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

19,537
17,040(18,289)
23,167(6,915)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)

Per-Share Information (yen) (Note)
ProfitDiluted profit
Net assets
Amount of dividends

52.51—
1,847.13
2.0

61.69
—
1,933.30
3.0

94.29
90.43
2,030.30
4.0

177.35155.862,232.72
5.0

285.62251.012,393.87
6.0

345.79314.65
2,578.24
8.0

290.88—2,809.28
8.0

332.03—
3,033.74
9.0

120.73—3,008.26
9.0

54.37
—
3,081.54
65.0

270.77—
3,281.17
85.0

Indicators (%)
Return on capital employed (ROCE)
Return on equity
Equity ratio

4.9
2.9
23.8

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

545,126
4,902
10,041

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
12,750

OthersNumber of shares issued (thousand shares) (Note)
Research and development expenses
Number of employees

Note: The Company conducted a 10-to-1 reverse stock split of common shares on October 1, 2020. Profit per share, diluted profit per share and net assets per
share are calculated on the assumption that the reverse stock split was carried out at the beginning of FY2011. Dividend per share lists the actual dividend
amounts regardless of whether before or after the reverse stock split in question.

77

Integrated Report 2022

Integrated Report 2022

78

Basic Information

Value Creation

Foundations of Value Creation

Data

Consolidated Financial Statements
Consolidated Balance Sheets
Item

Fiscal Year
Ended March
2022(Unit: million yen)

Fiscal Year
Ended March
2021

Increase(decrease)

Item

AssetsFiscal Year
Ended March2022

Fiscal Year
Ended March
2021

296,727

270,781

25,946

Cash and deposits

45,18861,229(16,041)

Notes and accounts
receivable - trade—105,003(105,003)

Notes and accounts
receivable - trade, andcontract assets

115,558—

115,558

Electronically recordedmonetary claims operating

28,62028,770(150)

Inventories

89,39765,59423,803

Other

18,350

10,5707,780

190,542

166,116

24,426

Notes and accounts
payable - trade72,32465,815

6,509

Short-term borrowings

78,24562,66815,577

Current liabilities

(386)

(385)

(1)

Non-current assets

235,874

236,174(300)

Property, plant andequipment

175,923

179,105(3,182)

Buildings and structures

59,322

59,119203

Machinery, equipment
and vehicles

47,86849,507(1,639)Tools, furniture andfixtures

5,849

Land

54,904

6,234
54,690

(385)
214

1,281

Selling, general and administrative expenses

69,15265,875

3,277

Operating profit

22,19824,194(1,996)

Non-operating income

5,233

3,916

1,317

552

393

159

Share of profit of entities accounted for using equity method

1,663

623

1,040

Other non-operating income

3,018

2,900

118

Non-operating expenses

4,503

4,080

423

121,152

133,735(12,583)

Interest expenses

1,089

1,033

56

734

664

70

Non-current liabilities

606

—

606

2,808

3,047

(239)

Ordinary profit

22,92824,030(1,102)Extraordinary income

5,254

—

5,254

Gain on sale of shares of subsidiaries and associates

1,962

—

1,962

Gain on step acquisitions

Expenses related to special investigations
Other non-operating expenses

Long-term borrowings

76,42782,897(6,470)Retirement benefit liability

18,776

19,929(1,153)

Allowance for sedimentcontrol measures

18,253

24,634(6,381)

1,526

—

1,526

Other

6,962

5,611

1,351

Gain on sale of non-current assets

912

—

912

311,694

299,851

11,843Gain on contribution of securities to retirement benefit trust

854

—

854

2,883

16,200(13,317)

Expense related to recall

1,481

—

1,481

Impairment loss

1,402

—

1,402

Total liabilities

Extraordinary losses

Net assets
Shareholders’ equity

194,967

184,763

10,204

Share capital

46,52546,525—

Sediment control costs—

16,200(16,200)

Profit before income taxes

25,2997,830

17,469

Income taxes - current

7,656

6,691

965

Income taxes - deferred

268(3,958)4,226

17,375

5,097

12,278616

1,731(1,115)

16,7593,366

13,393

Capital surplus

19,107

18,992115

Retained earnings

129,465

119,377

10,088Treasury shares

(130)

(131)

1

Accumulated othercomprehensive income

8,122

5,949

2,173

Valuation difference on
available-for-sale securities

2,821

3,642

(821)

1,331

Other

9,948

5,962

3,986

Deferred gains or losses
on hedges

186

24

162

Investments and otherassets47,561

49,996(2,435)

Revaluation reserve for
land

145

145

—

Investment securities

29,79830,241(443)

Foreign currencytranslation adjustment

5,555

2,665

2,890

Deferred tax assets

10,961

11,898(937)

Remeasurements ofdefined benefit plans

(585)

(527)

(58)

Non-controlling interests

17,81816,392

1,426

Total net assets

220,907

207,104

Total liabilities and net assets

532,601

506,955

25,64690,069305

1,111

506,955

91,35034,306

2,442

532,601

Gross profit

34,611

Goodwill

Total assets

52,730

Other

5,317

(6)

342,499

1,098

7,073

(545)

395,229—

12,390(551)

Cost of sales

1,098

Intangible assets

Allowance for doubtful
accounts

54,011

Provision for recall(1,575)(1,049)432,568

937

9,555

8,402

486,579

3,327

7,980

7,353

Net salesInterest and dividend income

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Consolidated Statements of Cash Flows
Item

Integrated Report 2022

(Unit: million yen)
Fiscal Year Ended March2022

Fiscal Year Ended March
2021

Increase(decrease)

Cash flows from operating activities

1,487

41,942(40,455)

Cash flows from investing activities(18,021)(25,674)

7,653

Cash flows from financing activities

(626)

8,194

(8,820)Effect of exchange rate change on cash and cash equivalents

1,014

418

596

Net increase (decrease) in cash and cash equivalents(16,146)

24,880(41,026)

13,803

Cash and cash equivalents at beginning of period

61,17636,29624,88025,646

Net increase in cash and cash equivalents resulting from
inclusion of subsidiaries in consolidation

115

—

115

45,14561,176(16,031)

Cash and cash equivalents at end of period

79

Increase(decrease)

4,264

Construction inprogress

Other

Fiscal Year Ended March
2021

Income taxes payable

Bonds payable

Allowance for doubtful
accounts(Unit: million yen)
Fiscal Year Ended March
2022

Item

Increase(decrease)

Liabilities

Current assets

Consolidated Statements of Income

Integrated Report 2022

80

Basic Information

Value Creation

Foundations of Value Creation

Data

Data
Boundary

2017

2018

2019

2020

2021

Unit

Employees, etc.
Number of directors

Number of employees*1

Full-time directors

Managerial staff

General

Total employees
Number of employees
by country/region

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

81

2019

2020

2021

Unit

401

490

490

427

515

person(s)Percentage to employees

Consolidated (Japan)

3.4 *35.3 *3

5.1 *3

4.4 *3

5.3

%
%

190

208

216

209

223

person(s)Consolidated

Female

0

0

1

1

1

person(s)Three-year retention rate

Consolidated (Japan)

88.4

83.8

89.1

87.8

82.3

Consolidated

Total

190

208

217

210

224

person(s)

8

12

1

8

person(s)

Male

1,540

1,640

1,666

1,712

1,674

person(s)Non-consolidated (Nippon
Light Metal Co., Ltd.)

8

Consolidated

Number of those who were reemployed after retirement

Consolidated

Female

90

95

96

100

95

person(s)Labor Union participation rate

Non-consolidated (Nippon
Light Metal Co., Ltd.)

100

100

100

100

100

%

Consolidated

Total

1,630

1,735

1,762

1,812

1,769

person(s)Average age

Consolidated

Male

39.1

39.9

39.4

40.7

41.3

years old

Consolidated

Male

8,992

9,087

9,345

9,040

8,486

person(s)Consolidated

Female

36.9

37.4

37.0

38.4

39.8

years old

Consolidated

Female

2,233

2,494

2,504

2,310

1,775

person(s)Consolidated

Total

11,225

11,581

11,84911,35010,261

person(s)Consolidated

Total

12,855

13,316

13,611

13,162

12,030*4

Consolidated

Total

38.6

39.4

39.0

40.3

41.0

years old

Consolidated

Male

11.5

11.8

11.8

12.7

13.4

years

person(s)Consolidated

Female

7.7

8.0

7.6

8.6

10.4

years

Consolidated

Total

10.8

11.1

11.0

12.0

12.9

years

Consolidated (Japan)

Male

2,146

2,157

2,076

2,085

2,119

Hours/person

Consolidated (Japan)

Female

1,974

1,871

1,867

1,919

2,003

Hours/person

Consolidated (Japan)

Total

2,124

2,120

2,047

2,062

2,103

Hours/person

Consolidated (Japan)

Male

324

302

284

255

257

Hours/person

Consolidated (Japan)

Female

161

150

148

130

153

Hours/person

Consolidated (Japan)

Total

302

282

266

238

243

Hours/person

Consolidated

Male

9.9

9.9

11.0

10.8

12.7

days

Consolidated

Female

9.7

9.6

9.6

9.9

12.9

days

Consolidated

Total

9.9

9.8

10.7

10.6

12.7

days

Consolidated

Male

52.5

57.8

63.9

56.4

59.5

%

Consolidated

Female

71.6

73.4

74.3

64.3

67.2

%

Consolidated

Total

55.3

60.0

65.4

57.6

60.6

%

Consolidated (Japan)

Male

1

6

12

12

50

person(s)Consolidated

Male

8,058

8,399

8,568

8,668

8,621

person(s)Consolidated

Female

1,198

1,271

1,323

1,384

1,431

person(s)Consolidated

Total

9,256

9,670

9,891

10,052

10,052

person(s)Consolidated

Male

2,243

2,282

2,221

1,858

1,317

person(s)Consolidated

Female

1,089

1,095

1,239

985

400

person(s)Consolidated

Total

3,332

3,377

3,460

2,843

1,717

person(s)Consolidated

Male

231

229

222

226

222

person(s)Consolidated

Female

36

40

38

41

39

person(s)Consolidated

Total

267

269

260

267

261

person(s)Consolidated

Male

－

0

0

0

0

person(s)Consolidated

Female

－

0

0

0

0

person(s)Consolidated

Total

－

0

0

0

0

person(s)Consolidated

Male

－

108

108

89

112

person(s)Consolidated

Female

－

15

21

20

13

person(s)Consolidated

Total

－

123

129

109

125

person(s)Consolidated

Male

－

2,153

2,124

1,925

1,691

person(s)Consolidated

Female

－

559

600

444

351

person(s)Consolidated

Total

－

2,712

2,724

2,369

2,042

person(s)Consolidated

Male

－

3,150

3,164

3,038

2,745

Consolidated

Female

－

833

894

826

Consolidated

Total

－

3,983

4,058

Consolidated

Male

－

2,878

Consolidated

Female－Consolidated

Total

Consolidated

Average duration of service

Average annual hours worked

Average annual overtime work hours

Average number of days ofannual paid leave taken

Average rate of acquisition ofannual paid leave

Number of employees who newly
took childcare leave

Consolidated (Japan)

Female

55

66

52

42

74

person(s)Consolidated (Japan)

Total

56

72

64

54

124

person(s)Consolidated (Japan)

Male

2

4

0

2

1

person(s)person(s)Consolidated (Japan)

Female

1

2

2

2

1

person(s)530

person(s)Consolidated (Japan)

Total

3

6

2

4

2

person(s)

3,864

3,275

person(s)Consolidated (Japan)

Male

0

1

3

5

5

person(s)

2,919

2,798

2,641

person(s)Consolidated (Japan)

Female

741

738

564

61

66

85

96

100

person(s)671person(s)－Consolidated (Japan)

Total

61

67

88

101

105

person(s)

3,549

3,660

3,536

3,205

person(s)

Male

－

1,975

2,010

2,252

2,290

person(s)Consolidated (Japan)

Male

34

59

51

45

43

person(s)Consolidated

Female

－

276

284

319

351

person(s)

－

2,571

2,641

2

9

8

5

8

person(s)2,294Female

Total

2,251

Consolidated (Japan)

Consolidated

person(s)

Total

686

650

681

68

59

50

51

person(s)

646

36

Male

－

Consolidated (Japan)

Consolidated

person(s)Consolidated

Female

－

52

60

63

61

person(s)Consolidated

Total

－

698

746

713

742

person(s)

18.1

19.4

19.1

18.3

15.5

%

Percentage of female managers

Consolidated

5.5

5.5

5.4

5.5

5.4

%

Total

Consolidated (Japan)

596

692

617

486

459

person(s)Percentage to employees

Consolidated (Japan)

7.1

7.8

6.8

5.3

5.0

%

Consolidated (Japan)

197

211

210

196

205

person(s)Integrated Report 2022

2018

Consolidated (Japan)

MaleConsolidated

Number of new graduates
who were recruited

2017

Total

Consolidated

Percentage of female employees

Number of new hires

Boundary
Number of employees who left

Number of employees who newly
took nursing care leave

Number of users of the shorter
working hour program

Number of employees who wereabsent from work due to mental
health problems

Average annual amount ofexpenditure for education/training

Consolidated

29.2

24.9

25.0

16.2

17.8

thousand yen/personEmployment rate of people
with disabilities*5

Non-consolidated (Nippon
Light Metal Co., Ltd.)

2.59

2.63

2.57

2.60

2.57

%

Non-consolidated(Toyo Aluminium K.K.)

2.03

1.93

2.55

2.63

2.30

%

*1 Fixed-term (full-time) employees are included. Temporary employees are excluded.
*2 Consolidated figures have been reported since FY2018.
*3 The calculation method was revised, and the figures were corrected accordingly.
*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 As of June 1 immediately after the end of each fiscal year. The statutory employment rate is 2.3%.

Integrated Report 2022

82

Basic Information

Boundary

2017

2018

2019

2020

2021

The environment
Greenhouse gas emissions (Scope 1, Scope 2)*1

Greenhouse gas emissions
per unit of sales*1
Breakdown of Scope 3 emissions*4

2017

2018

2019

Foundations of Value Creation

2020

2021

Data

Unit

Number of cases of lawsuits,penalties, or forfeitures related tothe environment

Consolidated

0

0

0

0

0

case(s)Consolidated

929

885

731

665

★704

thousand tons-CO2

Consolidated(Japan only)*2

804

748

606

548

605

thousand tons-CO2

Number of accidents related to theenvironment*11

Consolidated

0

0

3

3

3

case(s)Consolidated(overseas only)*3

125

137

125

117

100

thousand tons-CO2

Number of complaints related to theenvironment*12

Consolidated

10

16

10

6

7

case(s)Consolidated (Japan only)

2.09

1.87

1.60

1.57

1.58

tons-CO2/
million yen

Consolidated (Japan only)

12

23

19

12

15

case(s)Consolidated(overseas only)

9

16

16

7

14

case(s)Consolidated (Japan only)

65

64

53

58

46

case(s)Consolidated(overseas only)

5

5

7

3

4

case(s)Consolidated

0.56

1.05

0.91

0.58

0.73

Non-consolidated (Nippon
Light Metal Co., Ltd.)

0.27

0.54

0.27

0.52

0.26

Category 1
Purchased goods andservices*5

Consolidated

1,926

1,947

1,690

1,644

★1,781

thousand tons-CO2

Category 2
Capital goods

Consolidated

22

35

42

39

23

thousand tons-CO2

Category 3
Fuel and energy notincluded in Scope 1 or 2

Consolidated

28

34

34

31

33

thousand tons-CO2

Category 4
Upstream transportationand distribution*6

Consolidated

0

0

0

0

0

thousand tons-CO2

Category 5
Waste generated inoperation

Consolidated

4

5

4

3

4

thousand tons-CO2

Category 6
Business travel

Consolidated

SafetyNumber of workplace injuries*13

Lost-time injuries

Non-lost-time injuries

Frequency rate of lost-time injuries*13*14Compliance
Consolidated

15

28

29

16

24

case(s)Number of times
the meeting was held

Consolidated

2,102

2,066

2,156

2,517

2,416

times

Number of participants

total number

Number of cases that were reported to Group Hotline
Compliance meeting

0

0

0

0

0

Consolidated

20,237

20,972

21,40423,05922,307*13*15

Number of patent publications

Consolidated

182

167

160

140

213

case(s)Number of patent registrations*13*15

Consolidated

107

92

81

131

88

case(s)thousand tons-CO2

Category 7
Employee commuting

Consolidated

3

3

4

4

4

thousand tons-CO2

Electricity

Consolidated

10.8

10.4

8.1

7.8

8.3

PJ

Quality assurance

Fuels

Consolidated

6.3

6.2

6.0

5.5

5.8

PJ

Energy consumption intensity
per unit of sales

Consolidated

0

0

0

0

13

case(s)Consolidated

35.5

33.2

30.1 *630.4 *629.0

GJ/million yen

Number of violations of laws or
regulations in the provision of
products/services

Weight of raw materials usedin production

Number of prompt reports

Consolidated

6

8

7

9

15

case(s)Consolidated

576

601

523

426

456

thousand tons

Number of recalls

Consolidated

2

4

3

5

3

case(s)SOx emissions

Consolidated

473

379

365

330

350

tons

Community

NOx emissions

Consolidated

520

560

449

380

507

tons

Consolidated

133

168

180

113

119

million yen

Quantity of water intake*7

Consolidated

23.5

23.9

22.6

21.7

21.2

Expenditure related to social
contribution

million m3

Total amount of discharged water

Consolidated

21.5

22.5

21.3

20.7

20.4

million m3

4.6

4.6

4.8

4.2

10-5 million m3/
million yen

8

9

9

65

85

yen

Consolidated

4.5

Consolidated

Total wastewater per unit of sales
Water consumption*8

Consolidated

－

－

1.3

1.0

0.9

million m3

COD emissions

Consolidated

97

105

106

90

77

tons

Total emissions

Consolidated

41.9

51.9

45.6

37.1

44.2

thousand tons

Total emissions
per unit of sales

Consolidated

8.7

10.3

9.8

8.6

9.1

10-5 thousand tons/
million yen

Disposed (landfill)

Consolidated

3.5

3.5

3.4

3.5

4.8

thousand tons

Disposed (landfill)
per unit of sales

Consolidated

6.7

7.0

7.3

8.2

9.9

10-6 thousand tons/
million yen

Environmental conservation
expenditure: Investment

Consolidated (Japan)

1,983

2,218

1,580

995

1,359

million yen

Environmental conservation
expenditure: Expenditure

Consolidated (Japan)

5,598

6,210

6,248

5,746

5,688

million yen

Economic effect ofenvironmental conservation
activities: Earnings

Consolidated (Japan)

486

554

370

334

603

million yen

Economic effect ofenvironmental conservation
activities: Changes in
expenditure*9*10

Consolidated (Japan)(1,440)

(982)

1,027

2,098

(1,849)million yen

Energy consumption

Emissions and disposal of waste
and waste byproducts

Environmental accounting

83

Boundary

Unit

Value Creation

Integrated Report 2022

GovernanceInterim and year-end dividend
per share*16

Amount of income taxes paid in FY2020 by country*17
Japan

China

ThailandIndonesia

VietnamAmount of income taxes paid (million yen)

3,915

526

59

U.S.
81

1

10

Number of employees

10,062

1,976

785

158

2

31

★ 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: CO2 emission factors of the respective countries shown in CO2FCOMB 2017 from the IEA
		Fuel overseas: Same as fuel in Japan in*2
The subject period is January to December for FY2017 to FY2019 and April to March for FY2020 to FY2021.
*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 FY2021 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 the volume of purchase of the top three items in terms of volume purchased from outside of the Group. Of the items, the aluminum ingots are thosepurchased by Nippon Light Metal Co., Ltd. Purchasing Department.
*6 Figures for FY2019 and FY2020 were corrected to improve accuracy.
*7 The seawater intake quantity is not included.
*8 Began to be calculated in FY2019.
*9	Changes in expenditure are calculated using the following formula: Changes in expenditure = expenditure incurred during a base period (FY2020) – expenditure incurred during the current year (FY2021)*10 - (minus) indicates an increase in expenditure.
*11 Environmental problems that affect external parties (such as the leakage of oil or chemicals)*12 Number of petitions from external parties (such as those regarding smell and noise)*13 The subject period is the calendar year (January to December).
*14 Injuries that resulted in one or more days’ absence from work (excluding commuting injuries)*15 Companies subject to calculation were added from FY2020.
*16 On October 1, 2020, the company conducted a one-for-ten reverse stock split.
*17 The amount of taxes paid was 1 yen or more and less than 1 million yen in India (46), Singapore (3), Taiwan (6), Hong Kong (0), and France (109). (The figures in the parentheses indicate the number of employees.)

Integrated Report 2022

84

Basic Information

To President and Chief Executive Officer of Nippon Light Metal Holdings Company, Ltd.

To communicate this new Management Policy to all officers and employees of the Group, and to ensure they understand it,
we have created and distributed an explanatory video in addition to creating and distributing a handbook as we have been doing.

Pleaseread it.

Please read it.

Nippon Light Metal GroupWhy did we revise it?

Society changes over time.

The Management Policy also needs to be
kept up to date.

What is theManagement
Policy?
It shows the stanceon work that you
should have.

To learn from failure and makea fresh start,

It shows the stance on work that you should have.

Our Independence and Quality Control
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 Control 1, we maintain acomprehensive system of quality control including documented policies and procedures regarding compliancewith 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
March 8, 2023

Details ➡ P. 1 and P. 9

Nippon Light Metal GroupThe 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.

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 theCompany’s reporting criteria as described in the Report.

Data

At the NLM Group, we revised the Group’s
Management Policy in May 2022.

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”) for theperiod from April 1, 2021 to March 31, 2022 included in its Nippon Light Metal Group Integrated Report 2022
(the “Report”) for the fiscal year ended March 31, 2022.

Our Responsibility
Our responsibility is to express a limited assurance conclusion on the Indicators based on the procedures wehave 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 theInternational Auditing and Assurance Standards Board. The limited assurance engagement consisted ofmaking 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 areless in extent than for, a reasonable assurance engagement. The level of assurance provided is thus not ashigh 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.
V isiting the Shimizu Plant of Nippon Light Metal Company, Ltd. selected on the basis of a risk
analysis.
Evaluating the overall presentation of the Indicators.

Foundations of Value Creation

Announcement of the New Management Policy

Independent Assurance Report

Independent Assurance Report

Value Creation

it is important that it be revised.

Our basic policies
are described in it.

Nippon Light Metal GroupOur basic policies are described in it.
To ensure it is useful in youreveryday work,
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.

85

Integrated Report 2022

It made me decide to work hard!

That’s true. It is simple and understandable. What a surprise!

we made each sentence short and simple.
Integrated Report 2022

86

Basic Information

Company and Share Information
Corporate Overview (as of March 31, 2022)

Value Creation

Data● Aluminum Sheet and Extrusions● Aluminum Foil, Powder and Paste● Aluminum Ingot and Chemicals● Fabricated Products and Others

Global Network

Foundations of Value Creation

Share Information (as of March 31, 2022)

Company Name

Nippon Light Metal Holdings Co., Ltd.

Total Number of Authorized Shares

200,000,000 shares

Head Office Location

Urbannet Uchisaiwai-cho Building, 1-1-13
Shimbashi, 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

12,750 (consolidated)

Established

October 1, 2012

Stock Exchange
Listings

Tokyo Stock Exchange First Section (Note)(Securities code: 5703)

Number of Shareholders

Nippon Light Metal Holdings● ● ● Nippon Light Metal● ● ● Nikkei Sangyo

51,679● Nikkei MC Aluminium● Aluminium Wire Rod● Shizuoka Kosan● Kinki Kenmazai Kogyo

Major Shareholders (top ten)
Name of Shareholder

Note:Transferred to the Prime Market of Tokyo Stock Exchange on April 4, 2022

Number of
Ratio of
Shares Held Shareholding(in thousands)(%)

The Master Trust Bank of Japan, Ltd.
(Trust Account)

11,909Custody Bank of Japan, Ltd. (Trust Account)

4,436

7.2

The Dai-ichi Life Insurance Company, Limited

2,000

3.2

Nikkei-Keiyu-Kai

1,833

3.0

The Light Metal Educational Foundation, Inc.

1,491

2.4

Asahi Mutual Life Insurance Company

1,275

2.1

DFA INTL SMALL CAP VALUE PORTFOLIO

1,178

1.9

Mizuho Bank, Ltd.

19.2

1,126

1.8

STATE STREET BANK WEST CLIENT – TREATY

949

1.5

Sumitomo Mitsui Trust Bank, Limited

909

1.5

● 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 Partners● Nikkeikin OhLiS● Nikkei Logistics● Arumi Reinetsu● Nikkei Information Systems● Nikkei New Business● Nikkei Hokkaido● Nikkei Matsuo● Nippon Fruehauf● NLM ECAL

● Nikkei Heat Exchanger● Nippon Electrode● Nikkan● NKS● Nikkei Kenzai Kogyo● Shiga Nikkei● Shimonoseki Nikkei● Keinara● Nikkei Fujioka● Fruehauf Industries● Fruehauf Hokkaido● Fruehauf Okayama● Fruehauf Kyushu● Fruehauf Shiga● Fruehauf Service● Toyo Aluminium● Toyo Aluminium Ekco Products● Toyo Tokai Aluminium Hanbai● ALP● Toyo Aluminium Kosan● ALPHAMIC

Note: R atio of shareholding is calculated after excluding treasury shares (82,325 shares).

Nippon Light Metal Group Management Structure (as of March 31, 2022)
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 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● Nikkei MC Aluminum America● 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 (Shanghai) Body Parts● Nikkei (Suzhou) Precision Parts● Nikkei (Shanghai) International Trading● Shandong Nikkei Conglin Automobile Parts● ● 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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88