N.E. CHEMCAT CORPORATIONSUSTAINABILITYREPORT

N.E. CHEMCAT CORPORATIONWorld Trade Center Building South Tower 27F, 2-4-1
Hamamatsucho, Minato-ku, Tokyo, 105-5127
Tel: +81-3-3435-5490
Website: https://www.ne-chemcat.co.jp/2022

CORPORATE PHILOSOPHY

CONTENTS
Corporate Philosophy

1

Contents / Editorial Policy

2

Message from the President

3Long-Term Vision

5

History of N.E. CHEMCAT

7

N.E. CHEMCAT's Business Fields

9

We at all times strive to develop technologies and provide
high-quality products to our customers, and bring about
the creation of new value.

Helping to Build a Sustainable Future

11

Sustainability Management

13

We respect human rights and fulfill corporate social
responsibilities, seek to co-exist with the environment andsociety around us, and aim to become a company that istrusted by stakeholders.

Environmental Initiatives
Responsible Care Activities

We promote transparent and sound management, develop
the potential of each employee, and foster a culture thatmaximizes the achievement of the entire company.

We contribute to achieving a sustainable and quality global
environment and affluent society through chemistry.

Feature Article

Creating a Hydrogen Society

15

ENVIRONMENT
19
22

SOCIAL
Together with Customers Quality Assurance Activities
Cooperating with Business Partners CSR Procurement

23
25

Cooperating with Employees Human Resource Development
Occupational Health & Safety27
29

Stakeholder Engagement

31

GOVERNANCE
Corporate Governance32

Compliance & Risk Management

33

ESG Data

36

EDITORIAL POLICY
The aim of this report is to present N.E. CHEMCAT's approachto sustainability and its efforts to help solve environmental andsocial issues through its business activities. The company’s wide
range of initiatives related to sustainability are presented in the
ESG categories of environment, society, and governance. We
hope this report will help our stakeholders gain a better understanding of our sustainability management.
Reporting period:
Fiscal 2021 (April 2021 to March 2022)
Some data from before/after the reporting period are included.

Reporting scope:
N.E. CHEMCAT CORPORATION
Reporting frequency:
Once a year
Reference guidelines:
GRI Standards
Contact:
Corporate Administration Dept., N.E. CHEMCAT CORPORATION
Email: info-pr@ne-chemcat.co.jp* This report is the English version of the Japanese original.

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2

MESSAGE FROM THE PRESIDENT

Helping to solve social issues
while pursuing sustainable growth
Matsuru Kushida

President & Representative Director

intend to continue building business models and systems

the vision goals by strengthening our systems for engag-

that are beneficial to both society and our company.

ing in SDG-related businesses, improving the efficiency

Under Vision 2030, we aim to provide new values forof internal processes through digital transformation (DX),catalysts to society and thereby contribute greatly to theensuring workplace health & safety and environmental

development of a sustainable society and protection ofprotection through Responsible Care activities, and cre-

the global environment. Our goal is to also contributeating an HR system that supports employees and encour-significantly to the realization of a sustainable society andages them to take on challenges.

the protection of the global environment. At the same

As we continue to practice sustainability management

time, Vision 2030 lays out a vision of the kind of company

and develop systems this way, we have decided to issue

we want to become in the three areas of finance, busi-

this Sustainability Report. This publication was preparedness, and management infrastructure.

since we believe that it is essential to practice proper infor-

In addition, we have established 16 key drivers as spe-mation disclosure so that the stakeholders of N.E. CHEM-

cific actions for achieving the vision. We aim to achieve

CAT can understand the company's beliefs and initiatives.

Leveraging the power of catalysts to help build a carbon-neutral,recycling-oriented society

Promoting sustainability management based on our Corporate
Philosophy and Vision 2030
After more than two years of the global COVID-19 pan-that all sales of new cars must be zero-emission vehicles

demic, lifestyles and work styles have changed signifi-(ZEVs) by 2040.

cantly. This requires us to continue adapting responsively
to the new normal.
Meanwhile, large-scale natural disasters attributable

and the utilization of captured CO2. We believe that oureven more sustainable, affluent society through its cata-

technical contributions in these fields will support the de-lyst business. We have provided broad support to societyvelopment of a society powered by renewable energy.

through the development and manufacture of catalysts

Moreover, the recovery and refining of precious metals,

that are used in a variety of applications. For example, ourwhich is one of our core businesses, will become even more

auto exhaust catalysts contribute greatly to environmen-

important in a recycling-oriented society. Accordingly, wetal conservation by detoxifying vehicle emissions, while

are also pursuing technological innovation in this area.

our chemical catalysts are used to make products such

There are many other areas where N.E. CHEMCAT can

as pharmaceuticals, agricultural chemicals, fertilizers, andcontribute significantly, such as helping to reduce foodlight-emitting polymers.

loss and conserve water resources.

In the 1990s, N.E. CHEMCAT began developing and

Catalyst development and production requires knowl-

manufacturing catalysts for stationary fuel cells and elec-edge accumulated from a wide variety of fields, and thisTo better respond within the dramatic changes unfold-

trode catalysts for fuel cell vehicles. Since then, we beendevelopment has even been described as a multidisci-

ing today and to achieve steady growth, we established aworking to develop products that can help realize a hy-

plinary pursuit.

new Corporate Philosophy in April 2021.

drogen society.

Having developed extensive knowledge of catalysts,

to climate change have become more frequent. WithAt the same time, we released our Vision 2030 to clar-

By utilizing the knowledge we have already accumu-

precious metals, chemical reactions, and relevant tech-environmental problems such as these, people are be-

ify the direction and aims we seek to achieve by that year,

lated, we are now enhancing our technological develop-

nologies, N.E. CHEMCAT is proud of its potential to play acoming increasingly aware of the need to build a more

as well as to indicate the management approach thatment to help society achieve carbon neutrality. For exam-

major role in building a sustainable society. We also be-sustainable society, and companies are also being calledshould be consistently pursued.

ple, starting with the treatment of exhaust gas createdlieve that it is our mission to exercise our capabilities to

Based on our Corporate Philosophy and Vision 2030,

when fossil fuels are replaced by e-fuels and biofuels, wehelp society overcome the challenges it faces.

The business environment faced by N.E. CHEMCAT is

we are now focused on sustainability management. By

are developing catalysts and technologies to be applied

We will continue to focus our efforts on helping to build

also undergoing major changes, especially the automo-

helping to solve social issues as part of our business ac-

in a variety of areas. These include the synthesis of car-a sustainable society. I would like to ask you, our stake-bile industry. The participating countries of the 2021 Unit-

tivities, we aim to achieve sustainable growth as a compa-

bon-neutral fuels, the creation of hydrogen value chains

holders, for your continued support and cooperation.

ed Nations Climate Change Conference (COP26) agreed

ny that is needed by society. With our ESG perspective, we(manufacturing, storage, transportation and utilization),

upon to help solve social issues.

3

Since its founding, N.E. CHEMCAT has helped to build an

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Long-Term Vision

Vision 2030

Our Vision 2030 was created by first forecasting the desired social environment of 2050 and thenworking backwards to connect that specified future to the present (backcasting). The long-term vision
identifies the company we want to be in 2030 based on three areas: finance, business, and management
infrastructure. We are now promoting corporate transformation to achieve this vision by 2030.

Catalysts that facilitate chemical reactions are used indrives ecosystem destruction. In order to prevent these

the chemical field and a wide range of other industries.

problems, there is an urgent need to reduce CO2 emis-

Since the beginning, N.E. CHEMCAT has contributed tosions. Companies are expected to support this effort

the overall development of society by providing catalysts.

while also helping to solve other social issues.

At the same time, we have also made a big contribution to

In the midst of these changes faced by society, N.E.

environmental solutions by supplying auto exhaust cata-

CHEMCAT is committed to fulfilling Vision 2030. In orderlysts to detoxify vehicle emissions.

for our company to grow and develop sustainably while

Meanwhile, the climate change crisis has become everhelping to solve social issues, we need to rebuild our sys-

more critical. If action is not taken, by 2050 the averagetems to leverage catalyst technology to create new value.

global surface temperature could be two degrees Celsius

We have established 16 key drivers to achieve Visionhigher. Global warming intensifies desertification, raises

2030. We will use these to reform our existing structure andsea levels, contributes to abnomal weather events, andtransform the company so that we can create new value.

16 Key Drivers to Achieve Vision 2030

Vision 2030

Finance

To provide new values in catalysts
to society and thereby contribute
greatly to the development of asustainable society and protectionof the global environment.

FinanceBusinessStrengthen our
financial foundation
focusing on ROIC

Explore new businessdomains to contributeto resolving social
issuesTo build a lean internal processthat helps to increase throughput,
allocate assets needed for business
operations in a planned manner on
the basis of return on invested capital (ROIC), and thereby support thesustainable growth and development of our business and strengthen the financial foundation.

To develop new catalyst technologies and business domains that
contribute to solving such social
challenges as those addressed by
the SDGs, on the basis of the catalyst technologies and customer
relations we have built over theyears, and thereby achieve sustainable growth.

Management
Infrastructure

Business

Promote ESG
management

To practice sound business management, based on the principles of environment, social, and governance (ESG)
management, build an environmentand structure that allows employees toshare the joy of working for N.E. CHEMCAT and constantly breed innovation incollaboration with stakeholders, andthereby increase our corporate value.

16 Key Drivers to Achieve Vision 2030

(1)

Strengthen business management process and financial base focusing on ROIC

(2)

Restructure the business execution framework to strengthen existing
businesses and create new businesses(3)

Explore new areas and develop new technologies (products)(4)

Strengthen marketing functions and optimize the value chain(5)

Streamline the development process and create new technologies by utilizing digital transformation (DX), etc.

(6)

Establish a lean production process by strengthening the process engineering functions(7)

Improve the overall process through the promotion of Lean Six Sigma (LSS)
activities(8)

Strengthen procurement functions and secure a sound supply chain(9)

Optimize the precious metal management process(10) Establish a system to promote corporate-wide digital transformation (DX)(11) Reduce environmental load substances throughout the business activities;
prevent environmental and labor accidents(12) Strengthen the management of precious metals and chemical substancesat plants

Management
Infrastructure(13) Enforce safe & hygiene workplace and environmental management
through promotion of responsible care (RC) activities(14) Strengthen stakeholder engagement through appropriate information
disclosure and dialogue(15) Establish an HR system to encourage and support aggressive challenges(16) Promote ESG management and create a lively working environment

5

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6

History of N.E. CHEMCATCatalysts facilitate chemical reactions. Through the development and manufacture of catalyst
technology, N.E. CHEMCAT has contributed to the development of the Japanese chemical industry andvarious other industries.

The company has also pursued environmental conservation including air pollution reduction, andmore effective use of resources.

Early Years

Breakthrough Period

Expansion Period

Towards New Development

As a catalyst manufacturer, N.E. CHEMCAT
contributed to the development of theJapanese chemical industry during thecountry's period of rapid economic growth.

Auto exhaust catalyst business expanded
along with the motorization of society

Eco-friendly business expanded
beyond Japan

Management focused on building asustainable society

Founded as Nippon Engelhard Ltd. on April 9, 1964, theIn 1979, the company started manufacturing auto exhaust

The company began its global expansion in 1996, and by

The Numazu Plant celebrated its 50th anniversary in Julycompany was established with a total of 37 employees as

catalysts. As automobile use grew, the health effects of

2002, it had sites in locations including Singapore, Thai-

2020, the head office relocated in May 2021, and the Tsuku-

a fifty-fifty joint venture between Sumitomo Metal Mining

harmful substances contained in exhaust gas, such as

land, and China.

ba Plant marked its 20th anniversary in February 2022.

Co., Ltd. and Engelhard Corporation of the United States.

carbon monoxide (CO), hydrocarbons (HC), and nitroxides

Our research and development division launched a

In April 2021, the company established a new Cor-The Ichikawa Laboratory was set up later in the same year.

(NOx), began to raise concern. At that point, the auto ex-

development project to explore the potential of electrodeporate Philosophy and started practicing sustainabil-

In 1970, operations began at the Numazu Factory (nowhaust catalyst business expanded rapidly due to the tight-

catalysts for fuel cell vehicles (FCVs). In response to stricter

ity management.

Numazu Plant), which is still a base for manufacturing andening of vehicle emissions regulations.

vehicle emission regulations for diesel vehicles, the com-

While helping to achieve the UN Sustainable Develop-pany opened the Tsukuba Plant in 2002 to create a mass

ment Goals (SDGs), N.E. CHEMCAT is now pursuing struc-production system for diesel automotive catalysts.

tural reforms to achieve Vision 2030, which outlines the

1964-1978

R&D today.
By manufacturing a wide range of products, including
catalysts, chemical products (precious metal salts, plating

1979-1995

In June 1989, the company name was changed to N.E.
CHEMCAT CORPORATION, and the company went public in
September of the same year.

1996-2019

In order to accelerate decision-making capabilities, thechemicals, electrodes, etc.), as well as liquid gold (luster),company delisted in 2010, and became a fifty-fifty joint

and through its precious metal recovery and refining busi-

venture between Sumitomo Metal Mining Co., Ltd. and theness, N.E. CHEMCAT helped promote the development of

BASF Group.

2020-

company's long-term direction and aims.
In April 2022, the new corporate tagline, "Excite the
Imagination," was unveiled.

the Japanese chemical industry.

N.E. CHEMCATEnglish Logo Mark + Slogan Logo Mark

2022.3.28

Color 4CFirst management team

Auto exhaust catalyst, honeycomb carrier

BASF CHEMCAT (Thailand) Limited

Head office moved in May 2021

"Excite the Imagination" expresses the company's aspiration to bring about new innovation by spurring theimagination. It conveys a passion for building an evenbetter future by fostering excitement and motivation inall employees.

NE CC B L UE
C:9 0 M :5 0 Y:5 K:5
K:7 0

Numazu Factory at the start of operations

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SUSTAINABILIT Y REPORT 2022

First shipment of auto exhaust catalysts

Tsukuba Plant groundbreaking ceremony

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N.E. CHEMCAT's Business Fields

BUSINESSAs a leading manufacturer of precious metal catalysts in Japan, we contribute to achieving a sustainable
and quality global environment and affluent society through chemistry.

Auto Exhaust Catalysts

Chemical Catalysts

Catalysts for Fuel Cell Applications

Precious Metal Recovery

Untreated vehicle emissions contain environmental pol-Chemical catalysts are used for accelerating chemical

Fuel cells, which generate electrical energy through the

N.E. CHEMCAT separates and recovers precious metals

lutants and substances harmful to human health. Autoreactions or selectively producing specific compounds,

reaction of hydrogen and oxygen, are attracting increas-from spent catalysts, including platinum (Pt), palladium

exhaust catalysts convert these pollutants into harmlessand are indispensable for industrial manufacturing. N.E.

ing attention as a clean energy technology. N.E. CHEMCAT(Pd), rhodium (Rh), ruthenium (Ru), and gold (Au). Our pro-

substances through chemical reactions, thereby detoxify-

CHEMCAT develops and manufactures chemical catalysts

produces electrode catalysts, which are the core of fuelprietary process allows impurities to be removed and theing the exhaust. Vehicle emission regulations have beenused in a variety of fields, from power plants to the man-cells used in FCVs. We also develop and manufacture re-precious metals to be refined to a high degree of purity.

getting ever tighter over the years. Accordingly, we work

ufacturing of pharmaceuticals, pesticides, fertilizers, andforming catalysts and PROX catalysts necessary for pro-closely with automakers to develop and manufacture cat-light-emitting polymers. Through these activities, we pro-ducing hydrogen gas.

alyst products that meet the highest standards in areas

vide support to many aspects of society, from cutting-edgesuch as durability, catalytic, low temperature performance,industries to the everyday lives of citizens.

and thermal durability. Our products are market leadersboth in Japan and globally

Gasoline Automotive Catalysts

1. Energy: Hydrogen production, city gas production andnuclear power plants

These products control carbon monoxide (CO), unburned

2. Environment: Deodorization and detoxification of off-hydrocarbons (HC), and nitrogen compounds (NOx), which

gas from plants, and treatment of factory wastewater

are harmful substances emitted from gasoline automobile

3. Petrochemicals: Synthesis of basic chemicals used inengines. We are also developing catalysts for purifying
motorcycle exhaust gas.

Diesel Automotive Catalysts
These products control CO, HC, NOx, and particulate matter (PM), which are harmful substances emitted from diesel automobile engines.

9

Chemical catalyst applications

the manufacture of fiber and plastics, etc.
4. Pharmaceuticals: Manufacture of antidiabetic drugs,
antihypertensive drugs, and antibiotics, etc.
5. Fine chemicals: Production of agricultural chemicals,Electrode catalysts
These play a vital role in accelerating the reaction energy
of hydrogen, and are an essential technology for fuel cells.

Our company also excels in technology for reducing
precious metal use. This allows us to design and offer catalysts that require less precious metal but still deliver performance equal to or better than conventional formulas.
We are helping to conserve scarce precious metal resources by providing total-solution services, from the develop-

Reforming catalysts

ment and manufacture of catalysts to the recovery andFor both polymer electrolyte fuel cell systems (PEFC sys-refining of precious metals.

tems) and solid oxide fuel cell systems (SOFC systems), reforming catalysts serve to convert methane to hydrogenas part of the hydrogen gas production process.

PROX catalysts
These remove CO in the process of producing hydrogengas for PEFC systems.

fertilizers, light-emitting polymers, dyes, incenses, andresin additives, etc.

Providing value to society

Providing value to society

Providing value to society

Providing value to society

Promoting a livable planet by eliminating substances that are harmful
to humans and nature

Supporting industrial development
and affluent living

Facilitating the adoption of clean
energy and promoting a sustainable society

Promoting the effective use of
scarce resources and helping tobuild to a recycling-oriented society

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Helping to Build a Sustainable Future

By continually advancing the technologies we have amassed in developing our catalyst, precious metal recovery
and other businesses, we aim to help create an even more sustainable, affluent world for future generations.

Working to solve social issues through business activities

1

Sustainable foodsupply2

We are using the power of chemistry to help solve foodshortages, which are becoming more serious due toglobal climate change and population growth. In orderto enhance the diets of people worldwide, we support
the production of agricultural chemicals and fertilizers
with catalyst technology, while also promoting thedevelopment of high-performance catalysts that enablelong-term food storage and reduce food loss.

3

Supporting
healthcare

Our catalysts are also used in the production ofpharmaceuticals and fine chemicals. The development ofhigh-performance catalysts enables chemical synthesis
with less impact on the environment. By promoting
the development of sterilization and antibacterial
applications, we are helping people to lead healthier lives
worldwide.

Cleaner air
and water

Utilization of
captured CO2

4

Catalysts are indispensable for decomposing anddetoxifying harmful substances found in automobileand factory emissions and in industrial wastewater. In
order to contribute to a more livable planet, we areadvancing our purification technology to ensure cleaner
air and water.

Technology for capturing and recycling CO2 is attracting
attention as a contribution to the fight against climatechange. We are improving the performance of catalysts
used in the production of green fuels synthesizedfrom CO2 and hydrogen, which will further improve theefficiency of each process stage, from CO2 capture to thegreen fuel production.

1
2

7

3

5

4
8

6

5

Next
generation
mobility

A major transformation is underway in the mobility
sector as part of the effort to achieve carbon neutrality
by 2050. N.E. CHEMCAT is working to develop advanced
technologies to meet society's changing mobility
needs, including vehicle electrification and the use ofgreen fuels.

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6

Building ahydrogensociety

Recently hydrogen has seen resurging interest as anext-generation energy source that does not emit CO2.
In order to promote a carbon-free hydrogen society, ourcompany is working to develop the catalysts necessary formore efficient hydrogen production, storage, transport
and use.

7

TechnologicalInnovation

Semiconductors are essential for the advancement of thetechnologies being adopted for the digital transformationof society, including AI, IoT, and 5G. In order for nations
to achieve carbon neutrality, energy-saving and othersectors need semiconductors with higher performanceand efficiency. We will continue to contribute to thesetechnological innovations with the power of chemistry.

8

Resource recycling

Precious metals are scarce and important resources.
This is why N.E. CHEMCAT is helping to recycle theseminerals by utilizing advanced technologies to recoverthem from spent catalysts. We are also promoting
more effective resource use and waste reduction
by developing catalyst technology for the chemical
recycling of plastics.

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Sustainability Management
Based on its Corporate Philosophy, N.E. CHEMCAT contributes to achieving a sustainable society
through its business activities. We are implementing sustainability management to achieve sustainablegrowth as a company that is beneficial to society.

 Material issues (materiality)
Classification

Material issues
Developing products to
help solve social issues

Making the Most of Our Strengths to Help Solve Social Issues
Environmental challenges such as climate change, marine

has helped develop the chemical industry, while promoting

pollution, and deforestation have worsened in recent years.

the prosperity of society. We have also played a major role in

Meanwhile, society faces many other issues such as poverty

reducing environmental impact, including through air pollu-

and human rights violations. In order to make society moretion control.

sustainable going forward, it is important for companies toWith the technology and knowledge we have accumu-

help achieve the UN Sustainable Development Goals (SDGs).

lated over the decades, we are well-positioned to address

The underlying purpose of companies is being questioned,

challenges such as climate change, sustainable energy,

and the public is asking what they can do to help overcome

food preservation, and healthcare. With this considerable

these challenges.
Since N.E. CHEMCAT’s founding in 1964, the company

potential to help build a sustainable society, a key mission
for N.E. CHEMCAT is to fully demonstrate its strengths by

has been focused on catalysts as well as precious metal

helping society overcome these challenges.

E

Reducing environmental
impact across the entire
supply chain

Stakeholder engagement

S

As part of our mission to help build a sustainable society,elements and identified the relationship with each one. The

we have identified important social issues that we can andelements are: (1) creating products that help solve social is-must prioritize by leveraging our strengths, specifying thesesues; (2) establishing sustainable supply chains and opera-

as our material issues.

tions; and (3) building solid management infrastructure.

 Material Issue Identification Process

the perspective of important ESG issues and SDGs. Specific

To identify our material issues, we set up an ESG & SDGs

individual issues are now incorporated into our Vision 2030,

Promotion Project team made up of employees and held

and we are pursuing various initiatives accordingly.

Building of stable
management infrastructure

discussions for about five months. Based on our past andture, we identified the issues N.E. CHEMCAT should address.

2

The issues were categorized into the two areas of economic
and social value, before being prioritized, and the results
were mapped.
Through this mapping, initiatives with both high economic and social value were identified as key candidate
issues. After consulting external experts, eight material issues were chosen.
 Elements for Practicing Sustainability Management
To ensure the effective practice of sustainability manage-- Continuing to reduce CO2 emissions,water use and waste in all businessactivities

Establishing systems to minimize theuse of hazardous substances andprevent environmental accidents- Implementing Responsible Care (RC)
activities

Continued efforts to earn the trust ofsociety as a fair company

Building a sustainable supply chain(practicing CSR procurement, andreducing environmental impact)

Product
planningRawmaterial
procurement

Manufacturing

Sales

1

Sustainable operations
Fostering human resources and a corporate culturethat value challenge-taking

Realization of safe andsecure workplacesG

Developing
products to
help solve
social issues

Fostering humanresources and acorporate culture thatvalue challenge-taking

SDGs

Increasing workplace diversity

3

Workplaces that value
diversity
Solid management
infrastructure

Creating efficient business management
systems based on numerical targets
Promoting compliance and establishing acomprehensive risk management system

Moreover, each material issue has been arranged fromissues, and a discussion of the company's vision for the fu-

Targeting carbon neutrality by 2050,
reducing the environmental impact of
all business operations

Developing management systems andorganizations for disclosure of management
information in a timely and appropriate way

Identification of Material Issues

SDG-based targets- Developing eco-friendly products- Developing products that enhance health and safety

Building a sound value chain,including the avoidance of conflictminerals

CSR procurement

Details

Helping to solve environmental
challenges and other social issues
through business activities

Good communication with stakeholders

recovery and refining. Through these efforts, our company

present initiatives that are closely related to ESG and SDG

Important ESG issues- Developing resource-saving products- Practicing high-efficiency energy
management- Deepening mutual understanding withcustomers, suppliers, employees andshareholders- Enhancing corporate branding- Strengthening employees' sense of belonging- Establishing procurement policies to avoid conflictminerals and promote green procurement, etc.
- Examining supplier selection andimplementing monitoring- Enhancing the compliance promotion
system- Developing crisis management andresponse systems (including PR activities
and BCM)- Improving business efficiency based on
thorough ROIC management- Setting and managing financial targets

Constructing a system to comprehensively manage environmental
protection, as well as health and safety- Creating a comprehensive system toprevent workplace accidents (RC activities)

Creating workplace environments
where human rights are respected andemployees can work with peace of mind

- Eliminating workplace harassment

Clarifying employee roles and targets,and creating of a system thatappropriately evaluates theirachievements- Clarifying employee roles and targets aswell as required conduct- Developing a fair, transparent personnel
evaluation system

Creating work environments where
the individuality and diversity of
employees is respected and where
they are encouraged to take onchallenges

Financial foundation, ensuring safe, secure work
environments, and stakeholder engagement- Developing human resources who cantake on challenges- Fostering a corporate culture thatwelcomes diverse opinions andencourages open and frank discussions- Increasing the recruitment and promotionof diverse human resources- Diversifying work styles (remote work, etc.)

ment, we categorized the chosen material issues into three Value Creation Story
ESG-focusedsustainable operations

Value Creation at N.E. CHEMCAT13

In accordance with our purpose, which is set forth in ourbusinesses and products based on ESG awareness, thereby

Corporate Philosophy, we are working to strengthen rela-

helping to solve the social issues identified by the SDGs. In

tionships of trust with our diverse stakeholders. In addition,

doing all this, we seek to improve corporate value and help

we are striving to ensure sustainable operations and createbuild a sustainable society.

SUSTAINABILIT Y REPORT 2022

Corporate
Philosophy

Business activities
Creating ESG-focusedbusinesses and products

Helping tosolvingsocial issues(to achieve
the SDGs)

Improvingcorporate
value

Building asustainable
societySUSTAINABILIT Y REPORT 2022

14

Feature Article

Creating a Hydrogen Society
Conversation

The Potential of
Catalysts Holds the Key
to Carbon Neutrality
Today, both the international community
and Japan have embarked on a major shift
toward carbon neutrality in order to combat
climate change. We asked an expert incatalytic chemistry, Professor Yasushi Sekineof Waseda University, about the role ofcatalysts in supporting carbon neutrality.

Susumu Endo

Executive Vice President and Representative Director

Yasushi Sekine

Professor, School of Advanced Science and Engineering,
Faculty of Science and Engineering, Waseda University

Based on our Vision 2030, N.E. CHEMCAT is working toMoreover, since power generation fluctuates whenstrengthen our technological development and leverageusing renewable energy sources such as solar, it is also

catalyst technology to create new value and help solve

important to convert surplus electricity into hydrogensocial issues.

and store it. Then the hydrogen can be converted backFor example, we are working on the development of

into electricity when needed. In other words, we need tocatalyst technology to facilitate the production, storage,

secure energy from simple chemical reactions that aretransport, and utilization of hydrogen, as well as the utili-

on-demand and on-site.

zation of captured CO2. We are also pursuing the develop-

Endo: Even if we increase our use of renewable energy,

ment of the exhaust gas purification technology that will

this source alone will likely not be enough to meet sud-be needed when biofuels replace fossil fuels.

den surges in power demand.

With catalyst technology becoming the key to achiev-

Sekine: That's right. In fact, power demand on the Ky-

ing carbon neutrality, what do you see as the main points

ushu grid of southern Japan is relatively low in this year,

for the further development of this technology?

and some of the energy we are getting from solar power

Sekine: In order to achieve carbon neutrality, going for-during this period is being wasted. If this could be con-ward, we will need to use the bare minimum of fossil re-verted to hydrogen for use in urban areas, or if it could

sources. At the same time, we must meet the needs for all

be converted to synthetic fuel or sustainable aviation fuelhuman activities using only the resources already avail-(SAF), it could be properly utilized.

able on the planet surface.

Now that environmental regulations are becoming

In other words, we must create what we need from

more stringent, one of the keys to the future will be wheth-resources such as biomass, hydrogen, CO2, and waste. To

er catalytic chemistry can be effectively utilized together

do this, it is important to use sunlight, heat, or electricity,with lower-temperature heat sources, light, and electricity

etc., to power uphill reactions which are difficult to hap-to promote greater adoption of renewable energy.

pen under normal conditions.

Catalytic reactions as a key element in solving
climate change issues
Endo: Dr. Sekine, you have been researching catalyt-

Change (IPCC) in August 2021, "It is indisputable that hu-

ic chemistry involving methane and hydrogen for many

man activities are causing climate change." Therefore, in

Endo: In 2020, the Japanese government announced its

petroleum and natural gas. In other words, we are living off ayears. How did you become interested in catalysts as aorder to minimize the impact of climate change on thecommitment to Japan achieving net zero greenhouse

resource from 300 million years ago. But it won't last forever.

research subject in the first place?

planet, we need to reduce not only CO2 emissions but

gas emissions by 2050. According to materials released

In order to build a sustainable society going forward,

Sekine: A catalyst is a substance which dramatically al-also methane and NOx emissions in the short and me-by the government's Green Innovation Strategy Meet-

we need to break our dependence on underground re-ters the process to produce unexpected selectivity anddium term.

ing, various initiatives are being put forward for achiev-

sources and instead operate our economies using only

activity. In other words, it is a miracle substance that has

The environmental impact of methane in particular

ing carbon neutrality. From this series of actions, we cansolar energy and other resources found above ground. In

the potential to control any reaction as long as thermo-

has been enormous over the last ten years. Problems

see how serious our government is about this goal, and I

other words, carbon neutrality can be easily achieved the-dynamics permit it.

such as methane slip, where a fraction of methane usedthink it goes beyond merely sending a positive message

oretically, just by cleverly using our above-ground resourc-

When I started my research, I remember my supervi-

ends up escaping into the atmosphere unburned, need toto the international community. Do you think this trend

es. At the same time, by using technologies such as carbon

sor mentioning to me that if you could produce ethanol

be resolved as soon as possible. Precious metal catalysts,

will only accelerate?

capture and storage to reduce atmospheric CO2 and store

from natural gas and air, you could make a lot of money.

especially platinum group metals, can provide solutions

Sekine: I really think so. The earth is a closed system,

In recent years, such research has finally begun to yieldfor these problems. Basically, catalysts can help solve a

and although there are 2.4 × 10

molecules in just one

In Europe, they are seeking to rapidly promote carbon

results, but at the time, it was considered very difficult tonumber of the problems facing humankind. That is why

cubic meter of the earth's biosphere, there are almost

neutrality with regulations such as the EU's taxonomy

realize, even though it was theoretically possible.

industry, government, and academia are working closely

no inflows or outflows. For thousands of years, humanclassification system to encourage green investment. In

to promote catalyst research. This could help solve many

beings have extracted and used kerogen (insoluble or-

Japan, however, we are striving to promote green inno-

for solving global issues such as those identified by the

problems and open the door to a brighter future.

ganic matter in sedimentary rocks). This insoluble organic

vation in stages. This will allow us to respond flexibly to

SDGs and for creating better societies and lives for peo-Endo: I understand that precious metal catalysts have amatter was originally created through photosynthesis andchanges in society, and there should therefore be fewer

ple worldwide. According to the 6th Assessment Reportvery important role to play.

then decomposed and became trapped in sedimentary rockreversals over the long term.

Today, catalysts have become essential substances

released by the UN Intergovernmental Panel on Climate

15

Precious metal catalysts can play a key role in creatinga hydrogen society

SUSTAINABILIT Y REPORT 2022

25

it underground, we can eventually start cooling the planet.

over a span of 300 million years. We know this material as

SUSTAINABILIT Y REPORT 2022

16

Feature Article

Creating a Hydrogen Society
Endo: When you say "stages," are you talking about theAlternatively, synthetic hydrocarbons produced from CO2

Sekine: Since there is only so much you can do on yourcombined promotion of not only hydrogen, but also meth-and hydrogen can be used as fuels for aircraft and trucks,

own, I like to bring together people who can share theiranation, the production of methane from water, CO2 and hy-

or even as a raw material in the petrochemical industry.

own areas of expertise. By also mentoring young people,

drogen, as well as the use of ammonia and synthetic fuels?

Broadly speaking, these raw materials all represent

I am trying to help make the world a better place.

Sekine: Yes, fuel cells, ammonia, hydrogen, and synthet-uses of hydrogen in different forms, and precious metal

ic fuels can be used for their respective optimal applica-

catalysts are indispensable for adopting all of them.

ane, new fields are being created through collaboration

tions. Undoubtedly, some internal combustion engines

Endo: When it comes to utilizing hydrogen, technologies

with researchers in areas such as quantum computing,and hybrid systems will still remain, so precious metal

for not only hydrogen production but also for storage

electrochemistry, and solid-state ionics. I believe thatcatalysts will play an important role in reducing nitrous

and transport are extremely important.

younger generations can develop a better society by tak-oxide and methane emissions.

Sekine: Liquefied ammonia with its high volumetric hy-

ing an interest in and developing these new technologies.

Endo: Can we assume that a hydrogen society will inevita-

drogen density is suitable for industrial use under the su-

Endo: By passing the baton to younger generations, we

bly result if we pass through these stages?

pervision of experts. Since ammonia is highly toxic, how-

can have an even bigger impact. Among the corporate

Sekine: There is no doubt that hydrogen is one of theever, it cannot be used for consumer products.

executives of my generation, we realize that, even if we

For example, even as we focus on hydrogen and meth-

key elements for attaining carbon neutrality. However,Fuel cells that use hydrogen in its original form areare not able to achieve all our goals, our role is to sow theinstead of hydrogen alone, various technologies such as

suitable for on-demand use, while organic hydrides areseeds of success for the next generation. So, I really under-

storage batteries, ammonia, synthetic fuels, and organic

suitable for storage. The method that uses toluene as astand what you are saying.

hydride need to be used where they are most effective.

hydrogen carrier is particularly suited for traveling be-

Sekine: I think it is the role of both universities and com-tween destinations.

panies to create such opportunities. Companies can also

For example, organic hydrides can be used to storehydrogen in a liquid state. Hydrogen can then be extract-

Each technology needs to be appropriately adopted

generate profits through such efforts, and universities

ed when needed using a platinum catalyst. This makes or-according to its characteristics.

can help develop diverse human resources.

ganic hydrides an essential part of regulating the power

Endo: That makes sense. So, to achieve carbon neutrality,

Endo: You're right. We believe that the creation of new

supply from variable renewable energy.

we need to utilize hydrogen in different forms, and pre-value begins with fostering an environment in which ev-

cious metal catalysts hold the key to making this work.

eryone can collaborate and share their knowledge. This

Meanwhile, ammonia can be synthesized using a ruthenium catalyst and then utilized as a CO2-free fuel in large plants.

means not only our own company, but also other companies, universities, and other stakeholders. That is why
we are working to strengthen stakeholder engagement.

Becoming a “catalyst” company that bridges between
different industries

ogies of companies from completely different industries,
amazing new technologies can be generated.
Endo: I believe you yourself have become a "catalyst!"

methane since the 1990s. What sparked your interest in

Sekine: You may be right. Innovation arises when compa-

this field, which did not get much attention back then?

nies and researchers from different industries and fields

Sekine: To tell you the truth, I first wanted to be an archi-

meet and interact with each other. Therefore, the role oftect. However, because I spent most of my student daysa catalyst who can facilitate this kind of interaction is ex-

Sekine: Rather than merely providing catalyst technol-

doing sports, my marks weren't good enough in thosetremely important.

ogy, I encourage you to become a "catalyst" between

classes, but I did well in chemistry and ended up majoring

Endo: As a company, it is important for us to reach out ac-

different industries and fields by maintaining the twoin that. On top of that, hydrogen, CO2, and methane were

tively and connect with those in new and different fields.,

frameworks of open innovation and collaboration withthe only chemical terms I was familiar with back then.

while continuing to meet customer needs.

different industries.

Now I have been researching hydrogen, CO2, methane,

Sekine: Shifting from a needs-driven approach to a

and biomass for 30 years.

seeds-driven approach is essential.

but even more central than that is the field of catalysts.

Endo: You are also active on the frontlines and helping

Endo: Right. That is why we are also working on chal-

I hope N.E. CHEMCAT will become the core that brings

to make policy proposals, as part of your role serving as

lenging development initiatives, such as artificial photo-

together the companies that surround it. I believe you

working group chairman for the government's Green In-

synthesis. Even if we do not know when the sprouts will

can become the catalyst that everyone utilizes, just like anovation Strategy Promotion Meeting.

appear and the crop will grow, we keep our focus on ourdash of seasoning that brings out the full flavor of food.

vision for the future.

Endo: We intend to fulfill our responsibilities as a catalyst

you seem to have a passion for building a better future for society.

SUSTAINABILIT Y REPORT 2022

to bring companies together. By combining the technol-

Born in 1968, Yasushi Sekine obtained a Doctor of Engineering degree from the Department of Applied Chemistryat the University of Tokyo's Graduate School of Engineering. After working as an assistant researcher in the samedepartment, in 2007 he became an Associate Professor at
Waseda University in the Department of Applied Chemistry,
Faculty of Science and Engineering. Since 2011, he has also
been serving as a Fellow with the Japan Science and Technology Agency ( JST) in the Energy and Environment Unit of
the Center for Research and Development Strategy (CRDS).
He has been in his current position since 2012.

Endo: You have been researching hydrogen, CO2, andSo, in addition to your interests as a researcher,

17

Sekine: Recently, I have also been focusing on activities

Yasushi Sekine

I would like to conclude by asking what your expectations might be for our company, going forward.

Chemistry is often referred to as the "central science,"maker in the quest to achieve carbon neutrality. Thankyou for this very thought-provoking conversation today.

SUSTAINABILIT Y REPORT 2022

18

Environmental Initiatives

ENVIRONMENT

Every company has a social responsibility to be proactive in its efforts to conserve the global environment.
N.E. CHEMCAT seeks to minimize environmental impact in all its processes and business activities.

Environmental Management
Our Corporate Philosophy includes the commitment to"fulfill our corporate social responsibility and strive tocoexist harmoniously with the environment and society
surrounding us." To further promote this, N.E. CHEMCAT
has established an environmental policy and is actively engaged in environmental conservation activities.

Environmental Policy
1. We consider global environmental conservation to
be one of our most important missions. We strive
to reduce the environmental impact of our businessactivities with help from the creativity and ingenuity of
all our employees. We also actively promote businessactivities that aim to control environmental pollution.
2. As one effort to fulfill our key mission of conserving
the global environment, we properly manage chemical
substances while taking into consideration technicaland economic factors. This includes the managementof substances in all equipment, parts, and productsthat we design, manufacture, and deliver.

Promotion System for Environmental
Management
Environmental Conservation Committees have been established at each plant to promote initiatives related toenvironmental conservation, chemical substance management, and energy, as part of our Responsible Care activities (see RC on page 22).
Initiative progress is reported to the supervisory company-wide RC Committee chaired by the General Managerof the Production & Technology Div.
Meanwhile, Energy Management Committee promotes
company-wide energy plans, including the adoption of
new energy-saving technologies.
Promotion System for Environmental Management(kl: Crude oil equivalent)
20,000

Environmental Management System
N.E. CHEMCAT has obtained ISO 14001 environmental
management system certification, and the company's system is constantly being enhanced. We have also preparedan environmental manual, and we conduct environmental
activities as part of daily operations.
Business Sites with Environmental Management System
Certification
ISO 14001:2015

Numazu and Tsukuba Plants

Environmental Education
In addition to providing employees with our environmental manual, we conduct education and training to improve
employee environmental awareness and to comply with
relevant environmental laws and regulations.
FY2021 Environmental Training Programs

RC Committee

Quality Committee

PlantsEnvironmental
Conservation Committees

19

SUSTAINABILIT Y REPORT 2022

Health and Safety
Committees

16,64016,18615,000We have installed our own water supply equipment andare working to minimize water usage by recycling water.
15,92916,238Annual Water Use and Industrial Wastewater Discharge
Water Use Discharge

10,000(Thousand m )
1,000

5,000
0

912

873

868

813

800
2018

2019

2020

2021

(FY)

Reduction of Greenhouse Gas Emission
Intensity
We have set a target to achieve a 50% reduction in ourgreenhouse gas (GHG) emissions intensity by 2030, compared to the 2013 level. GHG emissions are considered tobe the cause of global warming, and we are pursuing initiatives to reduce them.
Target to Reduce Greenhouse Gas Emission Intensity
2030

50% reduction compared to FY2013

2050

Achievement of carbon neutrality

821

773

671

623

600
400
200
0

2018

2019

2020

2021

(FY)

Effective Resource Use

Frequency

Biodiversity

Once a year

Waste Management and Public Cleansing
Act and Act on the Effective Utilizationof Resources

Once a year

Basic Act on Establishing a Sound
Material-Cycle Society

Once a year

Environment Month (Message fromthe President)- Energy conservation and loss reduction measures for electricity and LNG use (installation of LED lighting and higher-efficiency air conditioning equipment)

Once a year

- Adoption of highly energy-efficient equipment and technology

Internal auditor course

Once a year

Emergency equipment training

Once a year

Environmental safety patrol

Industrial Wastewater Discharge

3

Training name

Initiatives for Target Achievement- Production efficiency improvement- Adoption and expanded use of renewable energy Precious Metal Recycling
Platinum (Pt), palladium (Pd), rhodium (Rh), ruthenium (Ru)and other precious metals can be found in spent catalysts.
Since they are important resources, N.E. CHEMCAT has its
own facilities for recovery and refining of these metals.
High-quality precious metals can be separated, recovered
and refined using appropriate technology. This is true
even when the post-use precious metal catalyst contains
multiple precious metal types, additives, and/or toxic substances that accumulate during use.
Each metal is recovered with a purity of 99.9% or higher
purity as shown below.

Four times a year

High pressure gas (LNG) leak training

Once a year

Chemical leak and emergency shutoff
valve training

Once a year

Chlorine gas leak training

Once a year

Annual Greenhouse Gas Emissions and Emissions
Intensity (with 2013 intensity level set as 100%)(ton)
50,000

(%)
100

100%
Greenhouse Gas Emissions
Greenhouse Gas Emissions Intensity

40,000General Manager of Production and Technology Div.

Energy Management
Committee

Effective Water Use

Annual Energy Consumption

74.5%

73.3%

70.5%

67.8%
30,830Purity of 99.99%
or higher

10,000

20

2013

2018

2019

2020

2021

Purity of 99.9%
or higher

*

40

0

Purity of 99.95%
or higher

60

20,000We have established energy-saving targets for each plant
and are implementing energy-saving measures. These
include improving production processes, adopting highly
energy-efficient equipment, installing LED lighting in offices, and reducing standby power supply usage.

Purity of 99.95%
or higher

Au

Energy Conservation

30,554

26,646RhRu

30,00032,246

Pd

80

Initiatives to Reduce Environmental
Impact31,337Pt* Ruthenium is recovered as ruthenium chloride0(FY)

SUSTAINABILIT Y REPORT 2022

20

Responsible Care Activities

Environmental Initiatives

Waste Reduction

Management of Chemical Substances

Wastewater sludge accounts for the largest volume ofwaste emitted by the company. In order to reduce thiswaste, we have been enhancing our production processes
and updating equipment and machinery.

 Compliance with Chemical Substances Regulations
N.E. CHEMCAT complies with all relevant laws and regulations including Japan's Act on the Regulation of Manufacture and Evaluation of Chemical Substances (Chemical Control Law), Act on the Assessment of Releases ofSpecified Chemical Substances in the Environment and
the Promotion of Management Improvement (Chemical
Management Law), and Industrial Safety and Health Act.
The appropriate management procedures are stipulated
in our Chemical Substance Management Regulations, andchemicals are being properly managed accordingly.

Annual Industrial Waste Generation
(ton)
1,000
800

831
709

645

741

600
400
200
0

2018

2019

2020

2021

Along with managing chemical substances handled internally, we are promoting chemical substance management
for all raw materials and products used in our processes
from design to manufacturing and delivery.

(FY) Management of Chemical Substances Containedin Products
In the product design and development stage, we clarify
the management standards for chemical substances contained in products to be applied at each stage, from raw
material purchase to product manufacturing and delivery.
This allows us to promote appropriate chemical management across the supply chain.
In order to manage chemical substances contained in
products throughout the supply chain, the key is to appropriately manage chemical substances contained in intermediates and products that are the result of chemical
agent conversion.
At N.E. CHEMCAT, we manage not only the amounts ofchemical substances found in chemical agents used in intermediates and products, but also the amounts of andchanges in chemical substances in the manufacturing process. This extends to the prevention of any contamination.

Supply Chain and Management of Chemical Substances Contained in Products

Purchasing stage
Chemical agents

Molding and firing, etc., after
blending and reaction(raw materials)

Information on
chemical
substances
contained inpurchased products
SDS, chemSHERPA, etc.

21

SUSTAINABILIT Y REPORT 2022

Manufacturing stage

Confirmation

Conversion to "Information on Chemical
Substances Contained in Purchased Products"
based on manufacturing information
Conversion rules, conversion logic, anddesign data for conversion

Delivery stage

ENVIRONMENT

N.E. CHEMCAT emphasizes Responsible Care (RC) activities as one of its 16 key drivers for achieving
Vision 2030 and is actively practicing them.

RC Activities
RC activities are being promoted by chemical industry
associations in more than 70 countries worldwide. RC isa voluntary initiative for members of the chemical industry to implement and improve their environmental safetymeasures. Participating companies pledge to ensure environmental protection, health and safety throughout thelife cycle of their chemical products, from development,
manufacturing, and distribution, to use, final consumption
and disposal. Since fiscal 2020, we have been participating in meetings of the Responsible Care Committee established by the Japan Responsible Care Council ( JRCC). Ourparticipation involves presentation of activity results andengaging in dialogue withother members, and the aim
is to earn the further confidence of society.

Responsible Care Policy
We regard environment protection, safety and health as
the highest-priority issues, and we engage in the following
voluntary and ongoing Responsible Care activities.
1. We strive to reduce environmental impact and protect
the environment throughout the entire life cycles of our
products, from development to disposal.
2. Based on the principle of "safety first," we aim for zero accidents and occupational injuries, and we ensure the safety of all onsite personnel and local community members.
3. We verify the safety of chemical substances found in the
raw materials, intermediate products, and final productsthat we handle and will take into consideration the healthof everyone connected to our business activities, including employees, logistics personnel, and customers.
We publicly release the results of the above activities andmaintain appropriate communication with stakeholders.

protection), we established a Responsible Care manual,clarified the details of initiatives for each management
system code, and launched our RC activities.

RC Management System
N.E. CHEMCAT has adopted the JRCC's Responsible CareManagement System (RCMS) to promote the company's
RC activities. The RCMS independently developed by the
JRCC satisfies the requirements of ISO 14001 and OSHMS(ISO 45001), and activities have been clarified for eachmanagement practice code.
RC Activities (Six Management Practice Codes)
Code 0 Management system
Code 1
Environmental
preservation

Code 2
Process safety anddisaster prevention

Code 3
Occupationalsafety and health

Code 4
Logistics
safetyCode 5Chemical agentsand product safety

Code 6
Dialogue withsociety

RC Audit System
Based on the RCMS, RC audits are conducted annually ateach plant.
PDCA Cycle under RCMSRC Policy / RC Management Regulations
Establishing targets
and action plans

PLAN

Products and intermediates(precious metal complexes, etc.)

Information on
chemical substances
contained in products
to be delivered
SDS, chemSHERPA, etc.

DORC
activities

RC Promotion System
We have established an RC Committee to promote Responsible Care activities as well as safety and environmental
protection activities. (See p.19 for the organizational chart)
Based on the priority points of the Responsible Care
Policy, the committee manages execution of the actionplans established by each plant for achieving their targets.
In fiscal 2021, along with Responsible Care Management Regulations (health & safety and environmental

Plan execution

ACT

Corrective measures

CHECK

Internal audits andmanagement review

SUSTAINABILIT Y REPORT 2022

22

Together with Customers Quality Assurance Activities

SOCIAL

Since its founding, N.E. CHEMCAT has provided high-quality products and services that earn theconfidence of customers and meet their expectations. We strive to improve our quality on a daily basis
so that we can work with customers to provide them with optimal solutions.

In order to ensure our customers receive high-quality
products, we have implemented a Quality Policy and arealways striving to further improve quality.

Quality Policy
1. This is our quality policy.
(1) We provide quality that satisfies customers andearns their confidence.
(2) Through the efforts of all employees, we aim forcontinuous quality improvement.
2. In order to fulfill this quality policy, we implement the following measures(1) Create a quality management system that is ISO
9001 compliant, and strive for continual system improvement.
(2) Ensure that each department sets and implements
its own quality targets, monitors their progress, andreviews them regularly.
(3) Review the appropriateness of our quality policy
during management review activities.
(4) Inform all members of the organization of our quality policy and enhance their understanding.

ISO 9001:2015

Numazu Plant

IATF 16949:2016

Head Office, Numazu Plant, and Tsukuba Plant

Quality Audits
Based on our quality management system, each plant conducts external and internal quality audits once a year.

23

SUSTAINABILIT Y REPORT 2022

Setting targets for thequality system and its
processes❶❹

Formulating andexecuting action plans

N
LA

PDCA
Cycle
T

Business Sites That Have Acquired Quality Management
System Certification

 PDCA Cycle for Quality Improvement
N.E. CHEMCAT continually improves quality by implementing a plan-do-check-act (PDCA) cycle for quality assurance.

AC

At N.E. CHEMCAT, the General Manager of the Production& Technology Div. is ultimately responsible for service
quality assurance and product liability, and oversees thecompany's quality assurance activities.
Our quality management system has been certified under the ISO 9001 and IATF 16949 programs, and we provide a stable supply of high-quality products.

 Internal Bodies for Quality Improvement
The company has established the following bodies for
quality improvement, and has established a system enabling departments to cooperate for enhancing quality.
- Audit Reporting Committee- Quality Committee- Quality Manufacturing Liaison Committee- Quality Defect Reporting Committee- Quality Patrol
In April 2022, the Customer Service (CS) Group was set
up to centralize daily order receiving and placing operations and to strive for further service quality improvement.

Improvingperformance whenneededDO

Quality Management System

N.E. CHEMCAT makes the following efforts to continuously
improve quality.

EC

K

Quality Policy

Continuous Quality Improvement

P

Quality Assurance Activities

CH

❷
❸

Monitoringprocesses,
products, andservices for compliancewith policies and plans, etc.

 Customer Satisfaction Surveys
We often work closely with our customers, from catalyst development to scale-up. In order to further improve customer satisfaction and quality, we conduct
an annual Customer Satisfaction Survey. The results
are used for our continual quality improvement.
Quality Awards Received in FY2021

N.E. CHEMCAT actively conducts quality control training to improve the abilities of human resources involved in quality control. This includes QMS basic training, IATF tool training, and internal quality auditor training.
Main Quality Control Training in FY2021
Training programs:

Daihatsu
Motor

Quality ExcellenceAward

May 2021

NissanNissan Global Supplier
Award

July 2021

SUBARU

Quality ExcellenceAward

November
2021

Hino
Motors

Quality Management
Excellence Award

March 2022

PlantsIATF internal auditor seminar / preparatory session

Numazu / Tsukuba

IATF standards study group

Tsukuba / Sales

CP and P-FMEA preparation / OJTNumazu / Tsukuba

Process approach and process indicator management

NumazuIntroduction to IATF for new process owners /scopes due to organizational change
Corrective action review using QMS-style cause
investigation diagram and Naze-naze Analysis

Site needing corrective action based on
IATF review

Lean Six Sigma Activities
Lean Six Sigma (LSS) is a globally recognized management approach for quantitative improvement of processes and quality. In
addition to being a means for operation improvement, LSS activities are also helping us to develop the human resources who willbe the leaders of tomorrow. Through Green Belt (GB*1) / Black Belt
(BB*2) training and project coaching, our employees are able tocomprehensively develop the four skill areas.
Since the launch of LSS activities in 2019, their scope has expanded year by year, and our GB/BB Project will complete its 5thterm by the second half of 2021. LSS enables the company tosteadily promote human resource development while improving
manufacturing processes.

LSS
Activities

Number of GB/BB certified personnel
■

GB

■

BB

18
12
6
0
2019

0
2020

(first half)0
2020(second half)

21

2
2021

(first half)

26

3
2021

(second half)

Four Personal Skill Categories Fostered by LSSManagement
Stakeholder management
Decision making and final decision
makingPersonal leadership development
Team member leadership development
Team member motivation

Statistical techniques
Risk analysis and risk management
Data collection and analysis
Utilization of statistical software

Projectmanagement

LeadershipBlack Belt
Green Belt

Cooperation with Group Companies
A technology transfer system has been created so that
auto exhaust and other catalysts developed in Japan canbe manufactured at overseas production plants without
any loss of product performance.
We also regularly share technical information with the
BASF Group and adopt the latest technology to further enhance quality.

Quality Control Training

Numerical
analysis skills

LSS tools

Business process improvement
Solving actual problems (realizationof improvement opportunities)
Creative thinking
Change management
Continuity and management
Report presentation skills
Identifying and prioritizingorganizational interests
Six Sigma
Lean methodology
Customer orientation
Process conceptualization skills*1 Green Belt (GB)This is the first level of LSS qualification. A GB holder supports project data collection and analysis as a part-time Six Sigma activity team leader.
*2 Black Belt (BB)This is one level higher than GB. A BB holder is a team leader dedicated to Six Sigma activities, promoting projects to solve actual problems.

SUSTAINABILIT Y REPORT 2022

24

Cooperating with Business Partners CSR Procurement
In order to address CSR throughout its supply chain, N.E.CHEMCAT shares its procurement policy andCSR procurement guidelines with its suppliers and works with them to resolve social issues.

SOCIALCSR Procurement Guidelines
1. Environment

CSR Procurement
Procurement Policy
N.E.CHEMCAT practices CSR procurement based on its
Corporate Philosophy. We established a new procurement
policy in April 2022 and have shared it with our suppliers
and other stakeholders.
We completely avoid the use of conflict minerals andengage in environmentally friendly green procurement.

CSR Survey Process
Corporate Philosophy and Corporate Guiding Principle(1) Environmental Management Systemate with, and choose not to associate with, groups of their choicetem for implementing environmental activities.

in accordance with the laws and regulations of each country and(2) Greenhouse Gas Reduction
emissions generated by their business activities.
(3) Environmental Impact Reduction
Our suppliers comply with the laws and regulations concerning

CSR Procurement Guidelines

the prevention of air, water, and soil pollution in each country
and region in which they operate, and they continuously work to
reduce environmentally hazardous substances.
(4) Resource Conservation and Waste Reduction

Procurement Policy
1) We will comply with all laws and regulations, and conduct procurement activities based on social ethics.
2) We will select our suppliers with fairness and equity, conduct transactions in good faith, and strive to strengthen
and develop mutual understanding and trust.
3) We will eliminate conflict minerals and will not procure articles that may be associated with humanrights violations.
4) We will give attention to conserving the global environment and strive to reduce environmental impacts
through our procurement activities.

Dissemination of CSR Procurement Guidelines to suppliers

Our suppliers comply with the laws and regulations concerning
the proper disposal and recycling of waste in each country andregion in which they operate, and they ensure that resources are

Selection of CSR survey sites

effectively utilized.
(5) Chemical Substance Management
Our suppliers comply with the laws and regulations concern-Collection of suppliers' responses to the CSR survey

Improvement request/support activities

The company practices CSR procurement under the leadof the Corporate Administration Dept. which cooperates
with the purchasing sections of plants in this effort.

Establishment of CSR Procurement
Guidelines
In order to practice CSR activities throughout the supply
chain, we established CSR Procurement Guidelines in April
2022 to define our approach to CSR procurement including environmental, human rights and legal compliance.

CSR Surveys
In addition to informing suppliers of our CSR Procurement
Guidelines, we launched a survey on CSR procurement forbusiness partners in fiscal 2022. The results of the surveyof each product or supplier will be shared with our suppliers. We will work with suppliers to establish a system
to develop and implement improvement measures and toengage in responsible procurement.

25

SUSTAINABILIT Y REPORT 2022

(1) Conflict Minerals
Our suppliers do not procure minerals that may be associatedwith child labor, forced labor, or other violations of human rights,
or that may cause environmental destruction, or that may provide a source of funding for armed groups.
(2) Raw Materials Associated with Human Rights Violations
Our suppliers do not conduct business with companies suspected of committing human rights abuses such as forced labor (orthose with business ties to such companies).

(1) Legal Compliance System
Our suppliers comply with the laws and regulations of eachlution and adverse effects on the human body.

country and region in which they operate and maintain a system

2. Quality

to ensure product quality and safety and conduct continuous
quality improvement activities.
In the event a defective product is discovered, our suppliers takeall appropriate measures to ensure safety, including sharing inoughly implementing measures to prevent recurrence.

Trade in minerals such as tin, tantalum, tungsten, gold,
and cobalt mined in the Democratic Republic of Congoand adjoining countries in Africa has been identified as asource of funding for armed groups.
N.E.CHEMCAT manufactures product using gold andtungsten, and its CSR Procurement Guidelines stipulatethat the company avoids the use of conflict minerals.
The guidelines also stipulate that the company does
not procure minerals that may be involved in human rights
abuses such as child labor, forced labor, and environmental destruction, which are problems not only in the region
but also for the international community.

4. Raw Material Procurement

throughout the product life cycle to prevent environmental pol-formation in a timely manner, investigating the cause, and thor-

Conflict Minerals

strive to prevent accident and injury.

5. Legal Compliance(2) Product Safety

Management Structure

Our suppliers ensure health and safety in the workplace andthey operate. Our suppliers strictly control chemical substances

Our suppliers maintain a quality assurance management system

Achieving responsible procurement

region in which they operate.
(6) Safe and Healthy Working Environment

ing chemical substances in each country and region in which(1) Quality Assurance Management System

Improvement activities at suppliers

Our suppliers recognize the right of employees to freely associ-Our suppliers establish and operate a general management sys-

Our suppliers undertake activities to reduce greenhouse gas

Procurement Policy(5) Freedom of Association

to promote compliance.
(2) Compliance with Competition Laws
Our suppliers comply with the competition laws of each country
and region in which they operate and do not engage in unfair
restraint of trade (cartels, bid rigging, or other practices), unfair
trade practices, or abuse of superior bargaining position.
(3) Prevention of Corruption
Any political contributions and donations our suppliers make are
made in accordance with the laws and regulations of each country and region in which they operate, and they maintain fair relationships with political parties and governments. Our suppliers

3. Human Rights

do not provide entertainment, present gifts, or give money to, or(1) Prohibition of Discrimination

receive money from, business partners for the purpose of obtain-

Our suppliers do not discriminate in recruitment, hiring, or treatment on the basis of race, creed, gender, social status, family
origin, sexual orientation, gender identity, or disability.
(2) Prohibition of Inhumane Treatment
Our suppliers respect the human rights of their employees anddo not tolerate sexual harassment, power harassment, bullying
or any other conduct that may degrade the work environment.
(3) Prohibition of Forced and Child Laboring or maintaining unfair advantage or preferential treatment.
(4) Respect for Intellectual Property
Our suppliers protect intellectual property rights owned by or
belonging to their company and do not infringe on intellectual
property rights owned by third parties.
(5) Confidential Information Management and Protection
Our suppliers maintain a system for managing the confidential and personal information of customers and third parties in

Our suppliers hire only employees who work of their own freeaccordance with the laws and regulations of each country andwill, ensuring that they are not forced to work and are free toregion in which they operate. Our suppliers do not illegally ac-

leave their jobs as desired. Our suppliers do not use the labor ofchildren who have not reached the legal working age under thequire, use or leak this information.
(6) Exclude Antisocial Forces

laws and regulations of each country and region.

Our suppliers do not maintain relationships with such antisocial(4) Compliance with Work Hours and Wage Payment

forces as organized crime groups or corporate blackmailers, or

Our suppliers comply with the maximum working hours set by
the laws and regulations of each country and region, as well as

make payments to these groups, under any circumstances.
(7) Export Transaction Managementwith those regarding salaries and wages, including minimum

Our suppliers follow appropriate export procedures and controls

wage, overtime pay, and piece-rate wages.

for the export of technology and goods as regulated by the laws
and regulations of each country and region in which they operate.

SUSTAINABILIT Y REPORT 2022

26

Cooperating with Employees Human Resource Development

SOCIAL

N.E.CHEMCAT encourage employees to be proactive about taking on challenges and strives to promote
diversity to “build an environment and structure that allows employees to share the joy of working for
N.E.CHEMCAT and constantly breed innovation,” as stated in Vision 2030.
To create the infrastructure for encouraging employees totake on challenges, we introduced and began operating a
new human resource system in fiscal 2021. The system isdesigned so that each employee can recognize clear roles
and goals, take on challenging and rewarding work, andhave it evaluated appropriately.

Human Resource Development
Human Resource System That
Encourages Employees to Be Proactive
about Taking on Challenges
To create innovation and achieve sustainable growth evenin a rapidly changing business environment, it is essential
to foster a corporate culture that encourages each and every employee to take on new challenges.

Human Resources Management
Promotion System
The company’s Human Resources Dept. and the HR functions of each plant manage human resources in cooperation with other departments. The company formulates andimplements various human resource policies based on thehuman resource strategy in its mid-term management plan.
Personnel evaluations and changes in role grades, personnel transfers and annual hiring plans, succession plans for key
posts, and the selection of candidates for the next management level are discussed by the Personnel Committee, which
is chaired by the president and consists of full-time directors
and executive officers. This ensures a medium- to long-term
perspective in the management of human resources.

Five Components of the Human Resources System
Execute personalg o a l s s e t i n a c c o rdance with company-wide strategies
and fulfill expectedroles

Practice

Evaluate the degreeo f a c h i ev e m e n t o f
individual goals tied
to the company-wide
strategy as well as thedegree of fulfillmentof expected individualroles

Evaluation

Human
Resources
Training System Planning
In addition to onsite
training, Human Resources Dept. plans
off-the-job training,taking into account thecompetencies required
for the role

Allocation

Through periodic interviews between supervisors and subordinates, formulate development plans for eachindividual and selectcandidates for the
next management
level

Based on the company-wide
strategy, establish appropriate organizations and roles,
and assign appropriate
personnel according to theirroles

Human Resource Development
Our human resource development is mainly based on onthe-job training, which involves communication with supervisors and senior employees in daily work as well as

Human Resource Development System
OFF-JT
OJT

Self-development support

Function-specificSelected training
training (conducted
Knowledge & skills training (training for potential
by each organization Dispatch to outside themanagers)
category)
company

Position-based training

guidance and advice provided via regular interviews withsupervisors. We also provide training for new employees,
newly appointed managers, and coaching training, as well
as off-the-job training for each employee grade. The goal
is to help them acquire the skills required to fulfill theirroles and to develop and improve their competencies.
In addition, we provide necessary support for employees' career development using a system that supports theacquisition of doctoral degrees and a bachelor's degree
in liberal arts from the Open University of Japan. We actively support the self-development of each employee via
an e-learning system that allows applicants to freely selectfrom a menu of more than 300 courses.

Promoting Diverse Work Styles
 Flexible Work Style
As part of efforts to prevent the transmission of COVID-19,
the company began operating a telecommuting systemthat utilizes web conferencing and other forms of online
communication. In fiscal 2021, the system was rolled out
beyond the head office to plants that serve as manufacturing bases.
The flex system implemented at the head office has
also been expanded during the pandemic to include a super-flex system with no core hours, allowing employees towork flexibly.
In addition, a telecommuting system was introduced asa permanent system for new ways of working, with an viewto the post-COVID world.
 Support System for Childcare and Nursing Care, etc.
To support the activities of employees with childbirth, childcare, and nursing care needs, the company has introduced
a variety of support systems that exceed legal standards.

Individual learningChildcare Leave

Officers

27

SUSTAINABILIT Y REPORT 2022

Support for online English training

Provision of E-learning (management, technical skills, health management, languages, PC)

Support for taking various correspondence courses

Support for acquisition of qualifications

Dispatch of external seminars

Support for acquisition of abachelor's degree in liberal arts
from the Open University of Japan

Support for obtaining doctoral degree (bachelor’s degree or higher)
Support for obtaining doctoral degree (employees with bachelor’s degree or higher)

Training necessary for the execution of operations (in-house training, dispatch to external seminars)

Training related to Lean Six Sigma (LSS) activities

Education related to Responsible Care (RC) activities

SeniorManagement
Program

Education related to health, safety, environment, and quality

Practical placement and guidancePre-assignment training for overseas assignment

Performance Improvement Support Training

Diversity training (life planning, career design, nursing care)

metals management, etc.)

Compliance training (legal compliance, human rights, harassment)

Coaching training

Evaluator training

Basic skills training (logical thinking, facilitation, anger management, precious

S1

Followershiptraining

English training outside the company

S2

New supervisor training

Mid-career employee training *Introductory training and tours of plants

S3

New manager training

English Training for new employees

Employees

S4

Middlemanagement
program

Instructor system

M1

Training for new employees

Managers

M2

Assignments/guidance through regular meetings with supervisors

Off-site meetings

M3

Extension to 2 years old is possible
depending on the situation of thechildcare center. (The rate of employees who have returned to work after
taking childcare leave is 100%.)

Shortened Work
Hours for Childcare

Available until the child graduates fromelementary school

Nursing Care
Leave

Can be taken up to three times for aperiod of up to 93 days for a family
member in need of nursing care.

Family Support
Leave

Available for up to 40 days per year for
nursing care of family members who are
injured or ill or in need of nursing care*Can be taken even if not in need ofnursing care

Job Return
System

Employees who have left the company
due to marriage, childbirth, childcare,nursing care, or a spouse's transfer are
eligible to return to work if they so desire.

Diversity and Inclusion
We believe it is important to respect diversity in the broadest sense, which includes not only nationality, gender, andage, but also different values and lifestyles.
Believing that acceptance of diversity leads to the creation of innovation and enhancement of corporate value,
the company is working to create a work environment inwhich the individuality of employees and the abilities ofdiverse human resources can be fully realized by encouraging an open exchange of ideas and positive challenges.
We also promote the employment of people with disabilities, and the employment rate for FY2021 was 2.9%, well
above the legally mandated level. In addition, the company
plans to focus on hiring foreign nationals in the future.

Women in Management Positions
Of the approximately 700 employees at the company, approximately 10.8% are women. The percentage of womenin management positions has been increasing in recent
years and was 4.4% in FY2021.
(%)
FY2018FY2019FY2020

FY2021

Percentage of regular
employees who are women

9.8

10.0

11.0

10.8

Percentage of management
positions held by women

1.7

3.3

4.5

4.4

General Business Owner Action Plan based on
the Act on Advancement of Measures to
Support Raising Next-Generation Children
We have established and are implementing the following
goals in order to create an environment in which all employees can balance work and child rearing and in which
all employees can work comfortably so that they can fully
demonstrate their abilities.
1. Encouraging employees to take annual paid leave by
informing their supervisors of the status of their use ofannual paid leave.
2. Using the intranet to inform employees about childcare
leave based on the Child Care and Family Care Leave
Law and various systems based on the Unemployment
Insurance Law.
3. Appropriately managing the transition of employees'
overtime work and striving to reduce working hours.

SUSTAINABILIT Y REPORT 2022

28

Cooperating with Employees Occupational Health & Safety

Occupational Health & Safety
Seven Safety Action Rules
Under the safety policy that safety takes precedence overeverything else, N.E.CHEMCAT has established Seven Safety Action Rules to ensure safety and health.

SOCIAL

Health & Safety Management System

Safety Training

We have obtained OSHMS certification for our healthand safety management system, which is qualified by the
JISHA method.

We conduct safety-related education and training andmake educational materials available on our safety andhealth bulletin board.

Plants with Certified Health and Safety Management Systems

Safety Training (example)

JISHA-qualified OSHMS- Safety principles

Numazu Plant, Tsukuba Plant- Disaster preparedness education (BCP for major earthquakes/wind, flood, and earthquake disaster prevention)

Seven Safety Action Rules
1. Follow the rules
All company employees shall comply with laws, regulations, and other internal rules.
2. Implement thorough safety precaution
In order to prevent injury, supervisors shall give due
consideration to safety (pre-screening, education andtraining) before utilizing new employees or introducing
new equipment, new substances, or new tasks.
3. Standardize operational procedures
Workplace supervisors shall standardize operational
procedures in order to ensure safety.
4. Wear protective gear
Personnel working on site shall wear appropriate protective gear.
5. Patrol the workplace
Supervisors shall patrol the workplace in a timely manner to identify any on-site issues. Identified problems
shall be corrected in a timely manner without leaving
dangerous locations or dangerous tasks unattended.
6. Report obligations
If an accident, injury, or emergency should occur, work
shall be stopped immediately, and the situation shall bereported to a supervisor as quickly as possible.
7. Prevent recurrence thoroughness
Following an accident or injury, all workplace employees
shall reflect seriously on the circumstances, determine
the cause, and take steps to prevent recurrence.

Health & Safety Promotion System
N.E.CHEMCAT has established health & safety committees at each of its plants. These committees include safety managers, health managers, industrial physicians, andwork supervisors, and a system is in place to reflect theopinions of employees at workplace and safety meetings.
The initiatives reported to the committee are reported
to the company-wide RC Committee, which oversees the
progress of the initiatives.

Risk Assessments- Education on chemical substance management

We conduct risk assessments, placing the highest priority
on preventing serious accidents, and implement essential safety measures such as the maintenance and management of necessary equipment. In addition, we areworking to improve heavy-muscle tasks and hot-weather
work to create a workplace that is easy to work in, evenfor elderly workers.

- Education on management system of chemical substances in products

Risk Assessment Procedures- Training for high-pressure gas handlers

Selection of risk assessment targets

Work selection andimplementation
planning

Preparation of risk assessment plan

- Education on basic knowledge of protective equipment (for new and mid-career employees)- Education on prevention of exposure to liquids (chemical hazards)- Education on full body harness fall arrest equipment- Education on compliance with relevant laws and regulations- Traffic safety training- Heat stroke prevention education- Risk assessment of chemical substances

Identification of hazardous elements
Risk estimation of hazardous elements

Implementation ofrisk assessment

Evaluation of risk level
Consideration of countermeasures

Workplace Accident Prevention Activities
To prevent occupational accidents, we conduct regular facility safety inspections and health and safety patrols, aswell as workplace patrols by management, and shareholder audits.

SUSTAINABILIT Y REPORT 2022

 Health Consultations
From fiscal 2021, in partnership with an outside organization, the company introduced a system to provide mental
and physical health consultations 24 hours a day. In addition to daily health counseling, we also provide services
such as referrals to medical institutions where consultations
are available during the year-end and New Year holidays.
In addition, employees who request health counselingmeet with an industrial physician at least once a month atour head office and plants.

Response to COVID-19
Under our policy of giving top priority to employee safety
and health and continuing our business so as to contribute to society, the company has established Company-WidePreventive Measures and Guidelines for the Outbreak of Infectious Disease and is promoting the following initiatives.
 Ensuring Workplace Safety- Avoiding the three conditions that facilitate infectious
diseases and ensuring thorough ventilation- Installing partitions in offices and cafeterias- Installing high-performance air purifiersConsideration and determination of risk
reduction measures

Risk reduction
measures

Implementation of risk reduction measures

Supporting Employees' Mental andPhysical Health

Risk management

Safety Targets
With the aim of achieving zero lost-worktime injuries andinjuries without lost worktime, we are working to create asafe and healthy work environment for all employees. In
FY2021, two lost time accidents occurred.
Occupational Accidents- Placing non-contact thermometers and alcohol disinfectant at entrances and exits

Health(Number of accidents)	Employee Health Management through Health Checkups
Regular health checkups are conducted once a year tomaintain and promote employees’ health.

Lost worktime Injuries

0

1

1

2

Accidents without lost worktime

0

2

2

0

Fatal accidents

0

0

0

0

- Alcohol disinfection of desks and shared areas- Enforcing silent meals in the cafeteria
 Introducing New Work Styles- Encouraging Web conferencing and remote work
- Applying super-flex system without core hours (head office)Specific healthcheckups

FY2018 FY2019 FY2020 FY2021

29

 Mental Health
The company conducts annual stress checks to not only
address mental health issues but also promote mental
health in a broader sense, including the revitalization of
workplace communication.
In fiscal 2021, 97.8% of employees underwent stresschecks. We are following up with high-stress individuals
through interviews

Thoroughphysicalexamination

Specific health checkups are conducted
for all insured employees and dependents between the ages of 40 and 65.
For those who are selected for "motivational support" or "active support" in thespecified health checkup, an action plan isprepared under the guidance of a doctor,
public health nurse, etc., and health guidance is provided to improve lifestyle.
Insured persons and their dependents
can undergo physical examinations without age limitation- Encouraging staggered commuting hours and restricting attendance at work (head office) Other Support- Company covers PCR testing expenses for employees
and temporary workers- Payment of full salary when receiving medical care andduring home isolation- Establishing a special leave for employees to get vaccinated

SUSTAINABILIT Y REPORT 2022

30

Stakeholder Engagement

SOCIALWe seek to achieve sustainable growth and a prosperous society through stronger relationships withstakeholders by providing them with appropriate information and engaging them in dialogue, and bycreating new technologies and value in collaboration with stakeholders.

Communication with Stakeholders
To share our philosophy and objective of promoting sustainability management, we place immense importance on
opportunities for diverse dialogue with stakeholders.
Through dialogue, we seek to build relationships of
mutual cooperation between the company and its stakeholders and among stakeholders, and to grow and develop together.

Communication to Deepen Connections
among Stakeholders

Suppliers

Schools

NECC
Shareholders

Business
Partners

Opportunities for Dialogue with Stakeholders
Stakeholders

Objectives- Collaborating to solve social issues through business

Customers

Shareholders (Sumitomo
Metal Mining and BASF)

Suppliers

Business Partners- Building and strengthening relationships of trust through appropriate disclosure of sustainability and other initiatives- Be accountable to shareholders for business strategies and performance, and strengthen Group cooperation

General shareholders' meeting, acceptance of audits, and technical exchanges- Maintaining sound business relationships through fair and equitable transactions- Sharing procurement policies and CSR procurement guidelines,
and promoting CSR procurement throughout the supply chain- Strengthening collaboration with various companies to develop products and new technologies that contribute to a sustainable society- Creating opportunities for direct dialogue between officers and employees

Employees- Strengthening mutual trust through labor-management dialogue- Strengthening employee engagement- Fostering a lively work environment

Communication through purchasing
activities and conduct CSR surveys

Communication through projects, cooperative research- Creating new technologies and values that support a sustainable
society

Acceptance of internships, cooperative
research

Industry Groups- Exchanging views and sharing information with chemical and catalyst-related industry groups, and with organizations working tosolve social issues

Membership in industry groups ( JCIA,
Catalyst Manufacturers Association JAPAN,
Japan Hydrogen Association, and others.)- Contributing to local development through youth development,
local environmental conservation, and social activities- Coexisting and co-prospering with local communities

SUSTAINABILIT Y REPORT 2022

Internal Controls

To conduct transparent and sound corporate management, we need to establish corporate governance that is
in line with the true state of the company. The company
has put in place a general shareholders' meeting, a boardof directors, corporate auditors, and accounting auditors
to ensure appropriate corporate governance.

In accordance with the Companies Act and internal regulations, we held five board of directors’ meetings, and two
meetings of the board of directors held in writing, in fiscal
2021 to discuss important matters and report on the stateof business execution.
Corporate auditors also attended the general shareholders' meeting, the board of directors’ meetings, andother important meetings to monitor and verify whether
resolutions and reports have been made in accordancewith laws, the Articles of Incorporation, and internal regulations, and whether appropriate business judgment was
exercised in making decisions.

Providing extracurricular classes at technical colleges and high schools, regularly
engaging in dialogue with resident associations and landowners, participating in community cleanup activities, in regional chambers of commerce and environment-related councils, and in district sports competitions, and supporting AED advertising for
local government community facilities

The company has formulated the Policy on Internal Controls as an effort to establish a system necessary to ensure
the appropriateness of business operations as stipulated
in the Companies Act. Based on this policy, the company
has established a system for appropriate operational controls in terms of business processes, risk management,
and compliance.
The company also conducts internal audits on businessprocesses and compliance. Regarding internal audits, theInternal Audit Committee reviews and evaluates the status of the system’s development and operation in terms of
the appropriateness of the company’s important businessprocesses and compliance status.
When conducting internal audits, the company cooperates with external organizations as appropriate, and reports the existence of deficiencies and their causes to theInternal Audit Committee. If deficiencies are found, an issue
log is released, and the General Manager of the Corporate
Administration Dept. investigates and confirms the implementation of improvements in a timely manner and releases the summarized report to the Internal Audit Committee.

Overview of Directors and Corporate Auditors
Number of directors

6

Number of corporate auditors

3

Number of board of directors’ meetings held

7

Number of orporate auditors liaison meetings held

6

Corporate Governance System Chart
Shareholders

Employee Forum (held twice a year),labor-management council, employee
awareness survey (conducted once every
three years), executive blog, intranet

Schools (Universities)

Local Communities

31

Main communication
Sales and technical support, customer
satisfaction surveys, acceptance of plantinspections, CSR survey responses, information disclosure on website, sustainability reports- Improving customer satisfaction by maintaining the supply ofhigh-quality products

N.E. CHEMCAT is working to build a transparent and sound governance system and strengthening
internal controls in order to increase stakeholder trust and enhance corporate value.

Activities of the Board of Directors andCorporate Auditors
Industry
GroupsEmployee

GOVERNANCE

Governance System

Local
Communities

Customers

Corporate Governance

Cooperation

Corporate auditors

Accounting auditor

Board of Directors

Audit

Representative
Director and Vice
President

Reporting

ReportingAppointment, dismissal, and oversight ofbusiness execution

Reporting

ReportingInternal Audit
Committee
Audit

Instruction

ReportingOversight

Internal Audit
functionsInternal
audit

Business Strategy
Meeting
Instruction

Each division anddepartment

Business Execution FunctionsSUSTAINABILIT Y REPORT 2022

32

Compliance & Risk Management

GOVERNANCE

N.E.CHEMCAT views compliance as not limited to laws, regulations, and internal rules, but alsosocial norms, and places the highest priority on compliance in its corporate activities. N.E. CHEMCAT
also promotes risk management under the supervision of top management so that it can respond
appropriately and promptly to increasingly diverse and complex risks.

Compliance
We believe that compliance must be addressed to fulfill
our required social responsibilities and achieve sustainable growth.
Based on this belief, the company has established the
Corporate Guiding Principle and the Code of Conduct toshow its commitment to rigorous compliance as a company,
and to clarify the items that must be observed by employees, which they must put into practice in their daily work.

Internal Reporting System
The company has established an internal reporting system
to promptly collect information on any violation of laws or
regulations and to respond to that information as quickly
as possible. If we find a violation of laws, regulations, orinternal rules after a required investigation by the function
in charge, it is reported to the president, corporate auditors, and other relevant parties.
In fiscal 2021, there were no serious compliance violations reported.
Internal Reporting Contacts
General Manager of the Corporate Administration Dept.,
General Manager of the General Affairs Dept. of the Numazu
Plant, General Manager of the General Affairs Dept. of the
Tsukuba Plant

External Reporting Contacts
Affiliated law firms

In-House Training
We conduct compliance training company-wide, focusing
on the importance of compliance, the company's compliance system, and the prevention of harassment.
In fiscal 2021, the company regularly published theCompliance Newsletter to raise awareness about harassment, safety and environmental laws and regulations, andantitrust laws.

Corporate Guiding Principle
Basic attitude towards business activities
We conduct active R&D based on a long-term perspective,
establish systems to supply safe and quality products consistently, develop existing businesses and create new businesses in order to resolve social issues.

Environmental initiatives
We position the preservation of global environment as animportant mission, and provide products that help resolve
environmental issues, as well as take actions to reduce environmental impact throughout our corporate activities.

Human Rights Policy
The company has established a human rights policy that
respects the Universal Declaration of Human Rights andother international norms and prohibits all forms of workplace discrimination. The policy also clearly states that wewill cooperate with relevant parties and not be complicit inany human rights violations, even indirectly.

Human Rights Policy
1) We will respect the Universal Declaration of Human
Rights and other international norms, comply with laws
and regulations, and promote initiatives towards respecting human rights.

SUSTAINABILIT Y REPORT 2022

We believe that identifying and strengthening our response
to management risks not only fulfills our corporate responsibility, but also leads to our sustainable growth, and we areworking to strengthen our risk management system.
The risk management policy stipulates that the company shall establish a high-precision crisis management
system. The policy also stipulates that in the event of an
emergency, we should prioritize respect for human lifeand seek rapid recovery.

Risk Management Policy2) We will not allow discrimination, harassments, or otheracts of human rights abuse in the workplace. We will
respect the diversity of our employees and will foster alively workplace environment.

1) Ensure the safety of company employees and preservecompany resources.

3) We will encourage supply chain partners and otherstakeholders to take initiatives towards respecting
human rights, and will not take part in any humanrights violations.

3) Develop risk sensitivity and share risk-related information.

We provide the quality that is satisfactory to our customers,
engage the entire company in the quality control systems
and conduct continuous quality improvement activities togain customer trust..

4) We will identify the adverse human rights impacts inour business activities and strive to prevent and mitigate such impacts, and to address such impacts when
they occur.

5) Maintain a high-precision crisis management systemwith the aims of not only quickly restoring operationsin the case of an emergency, but also contributing tosociety and enhancing our corporate image.

Relationship with stakeholders5) We will carry out awareness-raising activities for officers and employees to embed the Policy throughout
the Company.

Enforce safety
We make sure that safety is given first priority throughout
the company. We allocate management resources necessary to ensure safety, and strive to create an accident-free,disaster-free environment by enforcing training upon all
persons engaged in our corporate business activities.

Quality improvement

We value the dialogues with all stakeholders around us, andaim to be trusted as member of society through achieving
accountability and appropriate information disclosure.

Compliance, internal controls
We enforce legal compliance, provide appropriate internal
training, and take rigorous attitude against illegal and violating acts, as well as establish an internal controls systemwith emphasis on the management risks associated withour business activities.

Vibrant working environment
We respect the human rights of our employees and encourage open exchange of opinions and proactive challenges,
and create a cheerful working environment that will enable
employees to express their characters and diverse humanresources to reach their potential.

Harassment Prevention
The company will in no way tolerate any violation of human rights, including discrimination, harassment, or any
other forms of harassment in the workplace for any reason. When a case of suspected harassment is found, theprotection of the victim shall be given the highest priority,
and after careful investigation of the facts, if harassment isfound, it shall be dealt with strictly in accordance with therelevant laws, regulations, and internal rules.

Compliance with Safety andEnvironmental Laws and Regulations
The activities of the Internal Audit Committee in fiscal 2021
included compliance audits on safety and environmental
laws and regulations.
Although the Safety Environmental Group at each plant
plays a leading role in monitoring compliance with relevant laws and regulations, the head office checked thecompliance status again from a third-party perspective.

33

Risk Management

2) Conduct risk management to continuously improve risk
response capabilities.

4) In the event of an emergency, prioritize respect for human
life, responding promptly and quickly restoring operations.

Risk Management System
The company has established the Risk Management Committee, chaired by the President, as a body that oversees
risk management.
The committee is responsible for identifying and assessing various management risks and taking measuresagainst them, as well as planning and conducting disasterprevention-related education and training.
In the event of a crisis, the company ensures that it is prepared to quickly resolve the crisis and prevent its recurrence.

Business Continuity Management (BCM)
The company has created a system under the assumptionthat earthquakes, a major natural disaster risk for Japanese companies, are a target for BCM.
The basic approach of BCM is to place top priority on
securing human life, strive to prevent secondary disasters, and consider contributing to and coexisting with thelocal community.

SUSTAINABILIT Y REPORT 2022

34

Compliance & Risk Management

GOVERNANCE

ESG Data
Environment-Related Data

Disaster Prevention Training and Drills
We conduct diverse types of education and training aspart of our disaster preparedness efforts. Once a year, we
educate all employees at each plant on disaster prevention measures during normal times and action procedures
during emergencies.
Safetyverification
drillsResponse drills for all employees
using the safety verification andresponse system

Comprehensive disaster
drills(Numazu
andTsukuba)

Training for evacuation, roll call,reporting, firefighting, and inspection based on the assumption of alarge-scale earthquake, fire, chemicalleak, and injuries (we also assumed atsunami for the Numazu Plant)

Self-defense
firefighting
drills(head office)

Drills for evacuation, fire extinguishing, and reporting in caseof a fire

Twice a
year
Once
per
year foreach
type ofwork
Twice ayear

Information Security
To protect information assets including various confidential and personal information held by the company, we
have established Regulations for Handling Confidential

Information, Regulations for Handling Personal Information, and Regulations for Information Security to protect
information assets including distinct types of confidential
and personal information held by the company.
Based on these regulations, the company appoints
an Information Security Management Officer (Director in
charge of Corporate Planning Dept.) and an Execution
Supervisor (General Manager of the Corporate Planning
Dept.).
The Information Security Management Officer and the
Execution Supervisor identify information security risks
such as large-scale disasters, computer viruses, cyber-attacks, and information leaks, and promote measures toproperly protect and manage the company's information
assets from various threats, while constantly working tostrengthen information security.
If information security risks materialize that make it difficult to maintain our information security and seriously
affect our business, the Execution Supervisor shall reportto the Information Security Management Officer and convene the Information Security Emergency Response Committee to respond appropriately to minimize the damage
and promptly return the situation to normal.
In addition, to maintain and improve security, the company informs, educates, and instructs its officers and employees on information security standards and rules.

Unit
Energy consumption (crude oil equivalent)
Purchased electricity
Energy / GHG

Chairperson: President

ReportingCommittee member

Instructions forthe evaluationand improvementof deficiencies

PDCA- Establishment of risk management system- Risk management activities (including development of risk management plan)

SUSTAINABILIT Y REPORT 2022

34,472,000

34,873,000

33,391,000

33,094,000
1,108

kl

953

1,064

1,057

138

197

170

96

Liquefied natural gas (LNG)

Ton

2,595

2,477

2,343

2,591

Thousand m3

2,504

2,820

2,715

2,761

Ton

31,33732,24630,55430,830

0.745

0.733

0.705

0.678

Thousand m3

873

912

813

623

Tap water

Thousand m3

10

12

9

10

Groundwater

Thousand m3

848

885

790

599

Industrial water

Thousand m3

16

15

14

14

Industrial wastewater

Thousand m3

671

868

773

821

Waste

Amount of industrial waste (general/special management)

Ton

831

645

709

741

Chemical substances

Emissions of PRTR substances (amount transferred)

Ton

1,459

2,055

1,040

2,021

AtmosphericemissionsNOx emissions (Tsukuba Plant)

Ton

-

8.62

4.27

4.54

SOx emissions

Ton

0

0

0

0

OthersNumber of serious environmental accidents

Cases

0

0

0

0

Number of employees (regular employees)

People

590

628

661

676

People

532

565

588

603

Social Data
Unit
Male
FemaleEmployment

Diversity

Workplace
accidents

Number of new hires

2018

2019

2020

2021

People

58

63

73

73

People

55

42

39

44

New graduates

People

11

21

21

15

Mid-career

People

44

21

18

29

Average years of service (male)

Years

17.3

17.2

17.1

17.0

Average years of service (female)

Years

15.1

14.8

13.7

13.7

Percentage of women in management positions

%

1.7

3.3

4.5

4.4

Percentage of employees with disabilities

%

2.4

2.3

2.2

2.9

Number of employees aged 60 and over

People

23

37

52

63

Number of employees taking childcare leave

People

7

5

8

7

%

100

100

100

100

Percentage of employees returning to work after childcare leave*
Number of employees using family support leave

People1021Number of accidents resulting in lost worktime

Cases

0

1

1

2

Number of accidents without lost worktime

Cases

0

1

3

0

Number of fatal accidents

Cases

0

0

0

0

*Percentage of employees returning to work after childcare leave: Number of employees who returned to work in the same year divided by the number of employees
scheduled to return to work in the same year x 100

orCrisis management system foreach plant, R&D center, andhead office

Governance-Related Data
Unit
Directors andcorporate auditors

ReportingPlants, R&D center, and head office

35

Decision toestablish
a crisismanagement
systemCompany-wide crisis management
system

16,238kwh
kl

Water usage (total)

Childcare, nursing
care, and nursing

Crisis management system

Secretariat- Promotion of company-wide risk management
activities and review of the system- Formulation of risk countermeasures that
require a company-wide response- Planning and implementation of company-wide
education and training

Risk manifestation

2021

15,929GHG intensity (index with FY2013 as 1)

During a crisis

Risk Management Committee

2020

16,640Light oil

GHG emissions

 Risk Management System

During normal times

201916,186

Gasoline

City gas

Water

2018

kl

2018

2019

2020

2021

Number of directors

People6666Number of corporate auditors

People3333

Number of board of directors’ meetings held

Times

9

7

7

7

Number of corporate auditors liaison meetings held

Times

4

4

4

6

Company Outline
Company name

N.E. CHEMCAT CORPORATION

Representative

President: Matsuru Kushida

Capital3,423.5 millions of yen

Sales

122,996.35 millions of yen (as of March 31, 2022)

Founding date

April 9, 1964

Number of employees

676 (as of March 31, 2022)

SUSTAINABILIT Y REPORT 2022

36