Sustainability report 2021

CONTENTS
Top Message...........................................................................................3
Company Profile
Company Profile......................................................................................................................5
Sustainability at NSK............................................................................................................ 12

SocialQuality, Customer Service and Product Responsibility............................................... 19
Employee Data...................................................................................................................... 23
Human Capital Development............................................................................................ 24
Diversity and Equal Opportunities.................................................................................... 26
Conducive Workplace Environments.............................................................................. 28
Occupational Safety and Health & Health Management............................................ 31
Respect for Human Rights................................................................................................. 35
Responsible Supply Chain.................................................................................................. 36
Relationships with the Local Community: Social Contribution Activities.............. 38

Environment
Environmental Management............................................................................................. 44
Our Products and Environmental Activities................................................................... 55
Controlling Climate Change.............................................................................................. 59
Effective Use of Resources................................................................................................ 67
Reducing Emissions of Hazardous Chemical Substances ........................................ 71
Management of Chemical Substances........................................................................... 75
Conserving Water Resources............................................................................................ 79
Supply Chain Environmental Initiatives........................................................................... 81
Biodiversity Preservation.................................................................................................... 82

GovernanceCorporate Governance........................................................................................................ 86
Compliance............................................................................................................................ 89
Risk Management................................................................................................................. 93
Tax Transparency.................................................................................................................. 95
Interviews with Outside Directors................................................................................... 96

Editorial Policy

Significance of This Report
NSK has been issuing our Environmental Report since FY2013. Starting from FY2021, we will be
issuing our Sustainability Report which expands on the scope of reporting and introduces thesustainability initiatives of the NSK Group. Through this report, we aim to allow stakeholders to
widely understand our initiatives.

Scope of Report
In principle, this report covers NSK and its consolidated subsidiaries. In this report, “NSK” refers to
NAKANISHI INC. as an unconsolidated entity, while “NSK Group” refers to the overall NSK Group in
Japan and overseas. “NSK” can also refer to our brand name.
Period of Report
January 1, 2020 to December 31, 2020 (including 2021 for certain sections)Time of Issue
August 2021
Reference Guidelines
GRI Sustainability Reporting Standards
For Inquiries
Corporate Communication Department, NAKANISHI INC.

2

Top Message
Through Unique and Innovative Grinding Technology
We Will Contribute toward Achieving a Better Society and People's Happiness
C-P-S —NSK's Management Policy
With its mission, “To create brilliant progress via innovative grinding technology,” NSK has developed core high-speed
rotary, ultrasound and micromotor technologies and created innovative products in the dental, medical and industrial
business fields. We currently have business sites in 16 countries around the world and sell our products in more than 135
countries. In the conduct of business, we have cherished the three concepts of “Culture oriented,” “People based” and“Social perspective” (C-P-S ) as our management policy for many years. Through practicing management that respects
local cultures, is based on people and has a social perspective, we have earned the trust of stakeholders around the world.

Materiality for Sustainability
In recent years, there are increasingly more requirements for initiatives regarding various social issues surrounding
companies, such as climate change, a circular economy, human rights and the issue of disparity. In 2021, NSK formulated materiality (eight material issues) to share again internally the initiatives carried out under C-P-S and our future
direction as well as show clear commitment toward requirements from outside the company.
Besides strengthening the provision of innovative and safe products, which is the core of business, we will also provide product and medical knowledge through seminars in cooperation with dentists and doctors so that products canbe used more safely and efficiently. We will also establish an after-sales service system that allows products to be
immediately repaired affordably so that they can be used safely for long periods across the globe.
Regarding human capital development, we will enhance education programs, education by grade and other efforts
to improve skills in monozukuri (manufacturing) and development. We will also revise our system toward a humanresource system that increases individual value so that employees improve their own value exchangeability. Qualitative aspects—such as employee autonomy, pursuit of issues and engagement with others—have also been added tothe evaluation criteria. We are also putting effort into occupational safety and health as well as health management.
Furthermore, given that the required scope of response to various social issues has spread to the supply chain inrecent years, we formulated our Business Partner CSR Guidelines in 2021 and will request business partners to implement initiatives related to ESG. Such requests to business partners will be undertaken globally.
In the environmental aspect, we have concluded our Green Plan 2020 medium-term plan for the previous five years
and will embark on Green Plan 2030, our next medium-term plan. We have set even higher targets than before in areas
such as using renewable energy, reducing per unit energy use and reducing waste volumes, and will implement theplan with a sense of speed.

VISION2030—Toward 2030
Moving toward 2030, NSK thinks that the social issue of super-aging should
be handled in particular. The world is aging rapidly, and especially so in Japan,
where it is predicted that people 65 years and older will exceed 31% of the
population in 2030. There are similar trends in other countries such as various
European countries, China and South Korea. One of the most important issues
in a rapidly aging society is the extension of health expectancy, and NSK willcontribute toward solving the two issues of dental and physical health. Furthermore, super population aging is leading to a decline in the working population,
which in turn creates a bottleneck in economic growth. We will help to address
this issue by contributing toward factory automation.
Toward our 100th anniversary in 2030, we hope to carry out the best value
exchange with all stakeholders by achieving VISION2030 and the eight key
sustainability themes. We will do our best so that we can continue to deliver
even more inspiration to everyone and contribute toward people’s happinessand a recycling-oriented society.

3Company Profile

Company Profile
Company Name

NAKANISHI INC.

FoundedFebruary, 1930

Established

January, 1951

Head Office

700 Shimohinata, Kanuma, Tochigi 322-8666, JapanPhone+81-289-64-3380

Web Sitehttps://www.en.nakanishi-inc.jp

Number of Employees

1,184 (as of December 31, 2020)

End of Fiscal Year

December 31

Capital Stock

867 million yen

Representative

President & Group CEO Eiichi Nakanishi

Stock Exchange Listings

Tokyo Stock Exchange, JASDAQ Standard

Company profile

Company Profile

5

Changes in Consolidated Sales & Operating income

Consolidated sales and operating income(¥100M)

400
350
300

309

343

319

365

354

318

330

Company profile

Financial Results

250
200
150
100

92

96

2014

2015

84

94

97

92

85

2017

2018

2019

2020

50
0

2016

Consolidated sales

Consolidated operating income

Sales ratio by business domain (FY2020)

Others4%
Industrial products
8%

Dental products
88%

Sales ratio by region

Others
14%
Asia
15%
North
America
15%

Europe
30%

Japan
26%

6

Centered on high-speed rotary technology, NSK undertakes businesses in three domains: dental products, medical
products and general industrial products.

Dental businessCompany profile

Business Domain

To achieve “dental health”, we will develop innovative products in the fields of restorative dentistry,
preventive

dentistry,

periodontics,

implantology,

oral surgery and mobile dental care using NSK’s“innovative grinding technology”, namely, high-speed
rotary technology and ultrasound technology. All theaforementioned are complemented by our growing
range of decontamination products. In each field, we
will produce equipment that will allow dentists anddental hygienists to carry out treatment more quickly,
efficiently and safely, equipment that will make itpossible to provide new types of treatment and beless stressful for patients.
Furthermore, we will also develop equipment used byveterinary surgeons for the treatment and healthcareof animals.

7

Company profile

Medical business

Due to the rapid aging of society, there will be a significant increase in surgery for brain disease (e.g. stroke,
subarachnoid hemorrhage), spinal disease (e.g. spinal
stenosis, intervertebral disk herniation), orthopedic
procedures (e.g. implant surgery of knees and hips),
as well as various types of endoscopic surgery. NSK’shigh-speed rotary and ultrasonic products will be
indispensable in these kinds of surgery. Nothing ismore important than safety and speed when considering cranial, spine, and orthopedic surgery. The
precision of surgery is linked to the burden reduction
on patients and the speed with which they can makea favorable recovery. For this purpose, NSK takes theinitiative to include the opinions of famous surgeons
around the world to create medical tools which are
truly easy to use.

8Company profile

Industrial businessAs more and more factories become automatedor unmanned, NSK’s high-speed high-precisionspindles will be used in machines and robots in automated production lines in a variety of industries. The
usage for such equipment is becoming increasingly
diversified, and expectations of the performanceand conditions are getting higher. However, NSK willdevelop products by taking these needs into accountin advance.
Furthermore, Nakanishi’s high-speed micro grinder
is used for fine deburring of work that demands
precision and accuracy in the mold manufacturing,crafts, and jewelry industries, and is greatly valued asa high-end class product.

9The NSK Group has its own sales bases at 15 locations outside Japan, and its products are used in more than 135
countries around the world. We have achieved the number one share of the global market in the field of dental rotaryequipment. Even in countries where we do not have local subsidiaries, we are strengthening our partnerships withlocal sales agents to achieve meticulous responses to user needs.

Company profile

NSK—Expanding Globally

10

To achieve the mission of “To create brilliant progress via innovative grinding technology,” NSK has continued to hone
the three core technologies of high-speed rotary technology, ultrasound technology and micromotor technology.
Using these core technologies, we will continue to provide innovative products in the dental, medical and industrial
fields, and keep contributing toward the creation of all kinds of progress, such as bringing inspiration, happiness,benefits and joy to society and people.

Company profile

NSK's Core Technologies

High-speed Rotary Technology
Our dental drill (handpiece)—which we have continued to make since ourfounding—rotates at an extremely high speed of 400,000 revolutions per
minute. The ball bearings inside the handpiece significantly reduce friction
between parts to achieve high-speed rotation. At least 90% of the parts,
including the ball bearings which require processing precision at the submicron*1 level, are produced in-house. This high rate of in-house production
significantly contributes toward improving our product’s quality and costcompetitiveness.
*1: 0.0001 mm

Ultrasound Technology
Ultrasound is sound waves with high frequencies that cannot be heard by
our ears. Ultrasound vibrate at least 20,000 times per second, and the power(amplitude) of this vibration is applied as grinding power. Examples of ultrasonic equipment being used in the field of dental include ultrasonic scalers
and ultrasonic bone cutting equipment. The three parts, the tip, handpiece(vibrating part) and control engine, work together to enhance performance.
We brought our ultrasound technology in-house and have succeeded inraising power factor—which is usually around 0.6—to a level close to 1.
Micromotor Technology
Using electronic drive circuits, which we have developed over many years,
we achieve stable torque*2 and smoothness over a wide range of rotation
speeds, from ultra-low to ultra-high speeds. Our micromotors—which
achieve precise rotation control and manifest powerful and stable torque—
are used in equipment for implantology in the dental field. They are also
used in the field of industrial engineering in products such as robot arms
and motor spindles which are used in combination with various types ofindustrial machines.
*2: This is the force of rotation centered on an axis, expressed by force multiplied bydistance. It refers to rotational force.

11

NSK's Corporate Philosophy and Sustainability
In line with the Group’s values, “Our Core,” NSK holds to the mission of creating “brilliant progress” via innovative

Company profile

Sustainability at NSK“grinding technology.” By creating new technologies, we strive to contribute to the development of medical care andto the enrichment of people’s lives. Amid the global trend of super-aging, extending health expectancy has become
a common issue for humankind. We believe that one of the solutions to extending health expectancy is dental healthand physical health. In addition, we also see factory automation as a solution to a decline in the workforce which is
attributable to the super-aging of society. Through our business activities, we will provide solutions for these social
issues, and we will help to realize a sustainable society.

Corporate
Philosophy[ Mission ]VisionVISION2030

Business Plan

CSR

Medium-Term Management Plan
NV2025Materiality

Business Activities[ Style ][ Our Motto ]Annual President’s Policy
Department Action Plans
Daily Business Activities

Social issues and demands

12Company profile

Corporate Philosophy

MissionStyle

Our Motto

To create “brilliant progress” via• Exciting • Quality

Let's increase individual value

innovative “grinding technology”• Open • Honest (EQOH)“Let's fly” “Let's add”

Our Core represents the corporate philosophy at NSK. Our Core broadly identifies the thoughts and ideal manner ofacting/existing that NSK should value in terms of the company as a whole, its various activities, and each and every
member. Positioning Our Core at the nucleus, we strive to be a company with an elevated social value.
Here is an introduction to some aspects of Our Core:

Brilliant progress
It is wonderful that the society in which we live is able to achieve more favorable progress. We at NSK feel “To create
brilliant progress” is our raison d’etre - Our mission - throughout all of our corporate endeavors. The simple word
“brilliant” is infused with many meanings for us, such as “complete/amazing solution,” “what people and society
truly pursue,” “dramatic change in style,” and even concepts of “admirable.” The word comes with the connotationof socially ideal progress. Creation of such “brilliant” value via our “innovative grinding technology,” in which we takepride, allows us as a company to help the steady development of our customers and society in terms of deep emotion,pleasure, comfort, and convenience.

EQOH
EQOH is our original acronym that uses the first letters from the four types of style upon which we place importancein the conduct and activities we engage under the NSK name. The first letter, E, was taken from “Exciting.” It represents a feeling of being excited about new challenges and creation. Q was taken from “Quality,” and it represents
the pursuit of high quality. O was taken from “Open,” representing an openness toward society. And, the H was takenfrom “Honest,” imparting the meaning of sincerity and righteousness. We refer to these four styles, EQOH, as the wayof NSK.

Fly & Add
Fly & Add represents the behavioral guidelines for each of us at NSK. The members of NSK engage in their jobs every
day, all the while placing great importance on Fly & Add. The meaning of Fly, you know. In this case, it implies unreservedly taken on any challenge to move forward in any job or task. The meaning of Add, you also know. In this case,it implies the adding of one’s own additional value in the form of commitment and stance to one’s job. A company is acollection of people, and it is the overall strength of those at NSK that represents the source of its strength. NSK is agathering of people who display their abilities to their heart’s content.

13Company profile

Vision and Keyword for Business Development
VISION2030

NSK’s long-term vision for 2030

VISION2030
To be The Leading Excellent Global Medical Device Company

In the global dental and medical markets, we will
become the only manufacturer capable ofmaking a significant contribution to extending
the health expectancy of people all over theworld by creating a steady stream of innovative
products the world has never seen.
MISSIONKEYWORDTo create brilliant progress via
innovative grinding technology

Super-aging society

Keyword for business development toward 2030
NSK believes that one of the keywords for business development in the decade leading up to its 100th anniversary is“super-aging.” The percentage of Japan’s population aged 65 and over is currently more than 28%, and is predicted
to exceed 31% in 2030. This trend of rapid population ageing is progressing rapidly not only in Japan but also in large
parts of the world such as Europe, China and Korea. In the rapid ageing society, the most important challenge is “theextension of health expectancy”, and the solution lies in (i)“dental health” and (ii)“physical health”. Furthermore, super
population ageing is leading to “a decline in the workforce”, which in turn creates a bottleneck in economic growth, andthe solution lies in (iii) “factory automation”. . To address these three major social needs, we will create innovative new
products and services and make a big social contribution in three business domains (dental, medical and industrial)using NSK’s “innovative grinding technology”.
Super-aging society

Prolongation of health expectancy

Decline in the workforce

Dental health

Physical health

Factory automation

DentalMedicalIndustrial

Innovative “grinding technology”

14

In addition to striving to maximize its business value in the dental, medical and industrial business fields by utilizing
the innovative grinding technology that it has been honing since its founding, NSK is also committed to creating social
value and environmental value. The Sustainable Development Goals (SDGs) were unanimously adopted at the UN
summit in 2015. The aim is to achieve the 17 goals listed as SDGs by 2030, the same year as our 100th anniversary.
In the leadup to 2030, we will continue to advance our business based on both a business plan and materiality for

Company profile

Materiality

sustainability.

Process for Identifying Materiality
In selecting our materiality, we identified the issues to be addressed by first understanding the relevance of the SDGs to
our products and services and to our business activities generating them, and by considering priorities with reference
to relevant guidelines and ESG evaluation indices, such as the GRI Standards, ISO 26000 and the FTSE4Good Index.
STEP1

Understand the relevance of the SDGs to our products and services and to ourbusiness activities generating them

STEP2Consider priorities based on the GRI Standards, ISO 26000, the FTSE4Good Index, etc.

STEP3

Our Sustainability Promotion Team identifies candidate materiality

STEP4

Reconsider candidate materiality based on business value, social value
and environmental value

STEP5

Board of Directors discusses and decides on materiality for sustainability

Materiality for Sustainability Promoted by NSKMateriality

Relevant SDGs

Promoted through business1. Proving innovative and safe products
Contribute directly to health, welfare and industrial infrastructure through theprovision of products and services
2. Provide product knowledge and best clinical knowledge
Disseminate and share advanced clinical technologies through NSK Academy
activities, etc.
3. Extend product life through expanded service structure
Contribute by our reliable and durable quality to our customers

Socialvalue

4. Develop human resources for advanced manufacturing
Strengthen human resources as the most important business foundation forcontinuing to provide products and services

Businessvalue

Promoted through corporate activities
5. Promote occupational safety and health & health and productivity management
Pursuit workplaces for the creation of innovative products

6. Create workplaces where diverse human resources can grow
Implement diversity and inclusion

7. Respect our business partners around the world
Implement sincere and fair corporate activities while respecting stakeholders
8. Response to climate change and contribution to a recycling-oriented society
Contribute to reducing environmental impact through products, services andbusiness processes

Environmental
value

15

Handpieces fitted with infection prevention systems as standard
In the field of dental practices, standard precautions had been established and were in operationeven before the COVID-19 pandemic. Based on the thinking that “all wet biomaterial from patients,
including blood, body fluids, secretions, skin lesions and mucous membranes, must be treated as
being infectious,” NSK handpieces are equipped with a unique mechanism (DualDefense System:

Company profile

Contributions to SDGs

Clean Head System and Anti-Retraction Valve) as standard to prevent wet biomaterials from patients from penetrating the handpiece during treatment.
DualDefense System: A unique infection prevention mechanism built into NSK handpieces

Clean Head System

Anti-Retraction Valve

Unique mechanism prevents suck-back

DualDefense video

Prevents contaminated waterfrom being sucked in

Urgent release of infection prevention adapters for handpieces marketed to developing countries
Low-priced handpieces that we sell to developing countries were not previously fitted with Anti-Retraction Valves,
one of the mechanisms for preventing infection. Now that developing countries also focus on infection control indental practices, to provide safety and peace of mind, in April 2020, we began developing adapters with Anti-Retraction Valves that could be retrofitted. In just three months, we mass-produced the adapters and began selling them indeveloping countries struggling with the COVID-19 pandemic.

ARA-M4

ARA-B2

Dentists in India using the adapters

Launch of high-pressure steam sterilizer (autoclave) for handpieces
As part of infection control measures, it is strongly recommended that
handpieces used in dental treatment be cleaned, disinfected and sterilized
after each use. The COVID-19 pandemic is further fueling concern among
both dentists and patients for infection control measures, and in response,
in October 2020, we launched iClave mini2, a new autoclave sterilizer
specially designed for handpieces. With improved sterilization performance and ease of use, the new product has been favorably received andhas been adopted by many dental clinics in Japan, making a significant
contribution to strengthening infection control in dental practices.
iClave mini 2

16

Seminars at the NSK Academy in Japan and overseas bases
seminars a year (including online seminars), welcoming lecturers who are active on the frontlines of clinical dentistry.
The objective is to improve the quality of clinical dentistry by communicating the latest information to dental professionals as quickly as possible through practical seminars and lectures using training equipment. Seminars cover awide range including oral hygiene, restorative dentistry, dental oral surgery and geriatric dentistry. Multi-day seminarcourses are also offered on matters that are of particular interest to medical professionals. We are also involved inCompany profile

The world of dentistry is constantly evolving. Launched in 2016, the NSK Academy in Japan holds more than 100

a wide range of activities, including support for school education at dental colleges and dental hygienist schools,
seminars at exhibitions and events organized by dental supplies stores that are our business partners, support forseminars organized by study groups and corporate exhibits at dental conferences. In addition to holding seminars forexchange between dentists in Japan and other Asian countries, local subsidiaries of our Group companies in Europe
and the U.S. are equipped with dedicated training equipment and seminar rooms, where seminars are held for medical
professionals in each region.
In 2020, while there was a significant decrease in the number of onsite seminars due to the impact of COVID-19, seminars with new content were also added to the lineup, including online seminars using web conferencing tools. We
also sponsored a cross-regional online seminar featuring eminent dentists which attracted more than 1,000 viewers.
In 2021, we will continue our efforts to provide high-quality information through a combination of onsite and online formats.

An online seminar organized by the NSK Academy in Japan

An online seminar at a dental hygienist school in Japan

Online seminars at our overseas bases

Eco-friendly packaging for handpieces
Up until now, we have used plastic cases for packaging handpieces in order to give them a sense ofluxuriousness. However, to reduce waste plastic, which is becoming a global problem, we decided
to introduce new eco-friendly packaging made of paper. Going forward, we will roll out this new
eco-friendly packaging for our domestic and overseas products.
>Related links
Transition to Paper Packaging Materials

17SocialQuality, Customer Service and Product Responsibility
Quality Policy
The products and services that are provided by NSK places top priority on conforming to the requirements of relevantlaws and regulations as well as customer requirements. We have established our quality policy based on the approachof undertaking quality management with all divisions to meet the satisfaction and trust of customers. Under this policy, we conduct quality management—which includes safety—in the entire product lifecycle, from planning, productdevelopment, manufacturing, sales and servicing to disposal. Once each year, we analyze the state of our organization
based on internal and external issues and the needs and expectations of stakeholders to identify initiatives for risks
and opportunities. We formulate quality targets for the fiscal year based on our quality policy, the President’s annual
targets and activities toward achieving quality targets are undertaken by all employees.

Socialdirection and the initiatives for identified risks and opportunities. These targets are then developed into departmental

Quality Policy• Nakanishi achieves customer satisfaction and trust by quality management with all Nakanishi
staff members, based on the philosophy of “quality first”.
• Nakanishi maintains effectiveness of the quality management system by meeting the quality
management requirements.

Quality Management Structure
NSK strives to maintain and improve its quality management system structure based on the quality management
system standard of ISO 9001 and ISO 13485 as well as the pharmaceutical regulations of market countries, such as
Japan’s Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices(PMD Act). In addition, besides ISO 9001 and ISO 13485 certifications, we obtained MDSAP* certification in 2019 tofurther solidify legal compliance in our sale of medical devices to various countries.
Our quality management structure comprises is organized into the Quality & Regulatory Affairs Division, comprisedof the Quality Department which is in charge of managing product shipment to markets and managing safety after
manufacturing and sale; the Regulatory Affairs Department which is in charge of applications based on the pharmaceutical regulations of each country; and the Quality Pharmaceutical Affairs Department, which houses the QMS
Section, that implements and maintains the quality management system. The Quality & Regulatory Affairs Division, isin charge of companywide quality assurance and legal compliance, and is managed with the President & Group CEO
as the executive-in-charge.
In our PDCA cycle, executives and employees including the President & Group CEO, the three persons designatedby Japan’s PMD Act (Marketing Director of Medical Devices , Domestic Quality Assurance Administrator and Safety
Control Manager) and General Managers attend the monthly QMS review meetings and annual management reviews.
At these meetings, we work on improving quality by monitoring the progress of plans related to quality, sharing information, and addressing and solving issues.
* Medical Device Single Audit Program (MDSAP): A program that confirms the compliance and appropriateness of a manufacturer’s QMS against
the requirements of regulatory authorities of Australia, Brazil, Canada, Japan and the United States through a single audit by an auditing agency

19

President & Group CEO(Management supervisor)

Annual management review
Monthly QMS review meeting

Marketing Director of Medical Devices

Domestic Quality Assurance Administrator

Divisions

Sales Division
R&D Division
Manufacturing Division

Safety Control Manager

Management Representative

Internal Audit Team

Quality & Regulatoru Affairs Division
Service Division
Administration Division

SocialInitiatives
Quality in Design
In the design and development stages of products, NSK always strives to meet the laws, regulations and standardsof countries around the world while maintaining and improving product quality. In the lifecycle process of products,
eight “quality gates” have been established to confirm quality. In addition, during the design and development stages
for new products and at all times collecting information about complaints and safety for existing product designs, we
conduct risk assessment regarding quality and safety and strive to lower events with high risks. We put efforts into
quality evaluation during the development stage, which is the source of monozukuri (manufacturing), and establish
environments allowing the conduct of EMC, product safety tests, useability evaluation, mechanical and environmental tests, material analysis, electronic component analysis and fault analysis within the company to ensure productsafety and quality.

Initiatives to Improve Product Quality and Safety
At NSK, the manufacturing frontlines have in place structures to ensure quality. The occurrences of nonconformancein the manufacturing process and at suppliers are monitored monthly and suppliers with high nonconformance rates
are instructed, as appropriate, to improve quality. At the same time, quality audits are conducted regularly.

Quality Education for Employees
NSK conducts internal education regarding quality policy, quality targets and the impact on the quality management
systems of each operation for all employees. Specifically, education is conducted by department and grade on therelevant standards of quality management systems such as ISO 9001 and ISO 13485 as well as the requirementsof law and regulations. Education essential for the maintenance of quality management systems is also conducted,
including risk management workshops and internal quality auditor workshops. In addition, quality education also
includes workshops by external agencies, internal seminars with invited external lecturers and internal workshops by
employees who are experts in their respective operations. Recently, internal education is being actively conducted
online due to the impact of COVID-19, improving efficiency by conducting workshops without the need for lecturers
to travel from afar.

20Quality Issues and Responses
NSK has introduced a complaint processing system to collect information about quality from markets around theworld in a timely manner. When information about nonconformance is obtained, we immediately pursue the cause
to prevent nonconforming products from entering the market. In addition, when corrective or preventive measures
are necessary for the nonconformance which occurred, we promptly follow internal regulations to plan and confirm
these measures for their effectiveness. Through these actions, we strive to prevent the occurrence of similar nonconformances.

Customer Service Structure
At the NSK Group, more than 6,000 cases of customer feedback are collected and analyzed by department throughthe Customer Service Helpdesk as well as surveys by the Sales Division and external agencies. Reports to the management and verifications are conducted regularly, and the information collected is fed back internally for use inSocialproduct development and quality improvement.
Surveys by Sales Division and external agencies
Customerfeedback
Customer Service Helpdesk
Customers
Agents in Japan

Customer Service
Department

Overseas agents

Overseassubsidiaries

Receipt of
repair request

Feedback
within NSK

Repair Service
The NSK Group has established a sales network spanning 152 countries in the world. To allow customers to use
products with peace of mind, we accept repairs ourselves within Japan’s domestic market while 13 local subsidiaries
and approximately 450 local agents do so for overseas markets. Across the Group, we are working to enhance ourstructure for accepting repairs at local subsidiaries and local agents. We have approximately 120 service staff at ourheadquarters and local subsidiaries. Technicians who carry out repairs on our products undergo training either at ourheadquarters or overseas subsidiaries. We have established a system that evaluates the skills and knowledge developed through work and training and certifies technicians who meet a certain standard. In FY2020, 48 technicians
were newly certified to reach a total of 252 technicians certified so far.
Training Structure

Training by trainer from headquarters

21

Responsible Marketing
NSK undertakes fair and responsible marketing activities in accordance with the Code of Ethics, Charter of Business
Behavior and Promotion Code of the Medical Devices Industry formulated by the Japan Federation of Medical Devices Associations. NSK America Corporation , our subsidiary in the United States, undertakes fair and responsible
marketing activities in accordance with the Physician Payments Sunshine Act.

Social22

Employee Data
Number of Employees

As of December 31 in each FY

FY2016
NAKANISHI INC.

FY2017999

FY2018FY2019FY2020

1,056

1,073

1,114

1,134

Regular employees*1

732

768

806

850

869

Temporary employees*2

267

288

267

264

265

222

246

277

309

315

222

246

277

309

315

Overseas group companies
Regular employees*1

—

—

—

—

1,302

1,350

1,423

1,449

Regular employees*1

954

1,014

1,083

1,159

1,184

Temporary employees*2

267

288

267

264

265

*1 Excluding employees seconded to other companies *2 Part-time and contract workers

Number of Employees by Gender

As of December 31 in each FY

FY2016
NAKANISHI INC.

Social

—1,221

Temporary employees

NSK Group (global)

FY2017FY2018FY2019FY2020

999

1,056

1,073

1,114

1,134

Male

599

647

660

672

683

Female

400

409

413

442

451

Note: Scope of aggregation covers regular and temporary employees of NAKANISHI INC.

Number of Employees by Region

As of December 31 in each FY

FY2016NSK Group (global)

FY2017FY2018FY2019FY2020

1,221

1,302

1,350

1,423

1,449

Japan

999

1,056

1,073

1,114

1,134

Europe

138

149

160

184

189

United States

58

57

62

67

68

Asia (excluding Japan) and others

26

40

55

58

58

Note: Scope of aggregation covers regular and temporary employees of NAKANISHI INC.

Number of New Employees
FY2016
NAKANISHI INC.

FY2017

166

159

Male

100

Female66

FY2018FY2019FY2020

136

131

76

89

76

79

43

70

60

52

33

Note: Scope of aggregation covers regular and temporary employees of NAKANISHI INC.

State of Employee Retention
FY2016FY2017FY2018FY2019FY2020Resignation rate

4.92%

4.59%

5.99%

3.46%

2.11%

Resignation rate of new employees
within three years

15.38%

4.35%

13.64%

0.00%

5.00%

Note: Scope of aggregation covers regular employees of NAKANISHI INC. who resigned due to personal circumstances. The resignation rate of new employees within three years is calculated as of April 1 of each FY based on the number of new employees who joined three years ago and have resigned.

23

Human Capital Development
Basic Approach
A company is a collection of people, and it is the overall strength of those at NSK that represents the source of ourstrength. Human resources are our most important resource and most valuable asset. It is human resources thatrealizes our potential, and the quality of value exchange hinges on the quality of human resources.
We have formed a wonderful team consistent with the “Exciting, Quality, Open, Honest” style of NSK where everyone
shares a sense of excitement and fulfillment as well as a sense of joy and achievement at all times, and display theirabilities to their heart’s content. Our motto is “Let’s increase individual value” and this is the ideal of our actions that wealways keep close to heart. We make this the basic policy of our human capital development and constantly undertake
Socialhuman capital development that maximizes individual value.
Basic Policy of Human Capital Development
Our Motto“Let’s increase individual value”
Basic Approach to Human Capital Development

Company

Employees

Provide opportunities

Provide opportunities (human resource
system) for individual employees andthe company to grow together

Increase value

Able to obtain opportunities for individual
growth as long as they continue to increasein value

Initiatives
Human Resource System That Increases Individual ValueAt NSK, one definition of growth is the improvement of value exchangeability with stakeholders. Our human resource
system is the tool that supports the development of human capital which achieves this growth. Centered on Our Core,
which encapsulates our values, we established systems for employee grade, evaluation, remuneration and capability
development to achieve increase in individual value and individual and organizational growth, which is equivalent toimprovement of value exchangeability. With these systems, we are building mechanisms that support the development of human capital which achieves the improvement of value exchangeability with stakeholders.
Career-building guideline for achieving improvementof individual value exchangeability (growth)Role & capability grade
system by career track

Remuneration
system

Evaluation
systemSystem to remuneratedemonstrated
individual values andresults (performance)

Career & capability
development system

System for proper
evaluation ofdemonstrated
individual values andresults (performance)

System to support growth and career building24

Training & Education System
Continuous improvement of education and culture is essential for developing human resources. At NSK, with increasing individual value as the basic policy of human capital development, human capital development training—such as
corporate philosophy training, training by grade, business literacy training and specialized training—is conducted.
Our Motto“Let’s increase individual value”

Management

ValuesDevelopment ofmanagement executives

Business literacy

Specialization

Mid-level employees

New employees• NSK University• Recognition of roles
Management, Assistant Manager, Mid-level
employees and New employees• Quality
Quality by grade• Ethics
Safety consideration
obligation; harassment• Communication
Disability training• Career formation
Career design training• Skill development
Problem solving(basic, elementary, intermediate, advanced)

SocialBy grade

Assistant Manager• Corporate philosophy• Health
Mental health Engagement improvement& subordinate care training• Respective fields of specialization(conducted by each department)

Fair Evaluation
To increase individual value and achieve individual and organizational growth—which is equivalent to improvement ofvalue exchangeability—NSK decides remuneration based on two aspects: performance evaluation that assesses theaccomplishment of tasks based on results, and role and capability evaluation that looks at behavioral characteristics
such as how roles and capabilities are applied. In addition, through our internal open recruitment system, we offer
support for autonomous career development that matches, as far as possible, the careers that the company has inmind with the careers desired by employees. We also create opportunities for the penetration and use of these humanresource systems through interviews with superiors that take place three times each year.

25Diversity and Equal Opportunities
Basic Approach
NSK is a collection of diverse individualities. Individualities are characteristics possessed by each person. If we canbring together individualities from various backgrounds—such as nationality, culture, age, gender, education, work
experience and lifestyles—and fuse them while competing against and learning from each other to create unprecedented power, we will be able to overcome any kind of situation. We respect diversity such as culture, practices,
language and race. At the same time, we actively promote fair employment and utilization of human capital regardlessof gender, age or disabilities. Through dynamic teams that achieve breakthroughs by sharing thoughts and efforts
and bringing together individualities, we advance efforts that allow everyone to play active roles and keep aiming toSocialcreate new value.

Initiatives
Women’s Success in the Workplace
Approximately 40% of our employees are women. In addition, we have improved the rate of women in our management from 1.96% in FY2016 to 4.50% in FY2020.
Rate of Women in Management
FY2016
NAKANISHI INC.

1.96%

FY2017
1.83%

FY20182.70%

FY2019FY2020

5.31%

4.50%

Note: Figures as of January 1 of each FY

Localization of Management
NSK believes that what is essential to become the global No.1 brand is the building of strong sales and marketing
capabilities in major markets around the world and customer service and after-sales service capabilities to increasecustomer satisfaction. Currently, we have expanded our direct sales network to 15 bases around the world, including
overseas subsidiaries and representative offices. Out of these 15 bases, 11 of them are led by employees recruited locally. We will continue to promote management rooted in the cultures of countries and regions where we are located.

Interaction with Vietnamese Human Resources through Technical Intern Training Program
Since 2009, NSK has been accepting overseas technical interns from Vietnam. Currently, we have approximately
120 interns undergoing technical training. In 2016, we built a dormitory within company premises to allow all interns
to live in a clean and quiet environment. In addition, when constructing our new factory, we gave consideration to
being able to commute to work on foot or by bus through implementing dedicated shuttle buses. In addition, besides
technical training, we also provide opportunities for getting in touch with Japanese culture and traditions, such as
participating in local festivals and conducting regular trips to Mount Fuji, which are popular with the interns. With
the spread of COVID-19 continuing even today, we give consideration to interns who have completed their training
period but are unable to leave Japan due to travel restrictions by extending their status of residence so that they cancontinue technical training until they return to their country.
Employment contracts are based on Japan’s laws and regulations and signed in Vietnamese.

26

Participation of Employees with Disabilities
Toward a society where persons with or without disabilities can work and live together, the Human Resource Department and workplaces collaborate to strengthen support systems and conduct regular seminars for encouraging
understanding of staff at workplaces where persons with disabilities work. In this way, we are promoting the creationof workplace environments where employees with disabilities can work easily and with motivation. In addition, we
also introduced the use of electronic memo pads to support communication with employees with hearing disabilities.
Employment Rate of Persons with Disabilities
FY2016
Employment rate (NAKANISHI INC.)

1.22%

As of June 1 of each FY

FY2017
1.62%

FY20182.20%

FY20192.32%

FY20202.42%

Reemployment Initiatives
reemployment system. In addition, we also employ part-time workers after they pass 60 years old.

SocialTo promote the employment of employees who retired at the mandatory age of 60, we have established a retiree27

Conducive Workplace Environments
Basic ApproachWith being the “To be The Leading Excellent Global Medical Device Company” stated in NSK’s long-term vision VISION2030 in mind, efforts are being made to improve workplace environments, establish human resource systems
and create the best workplaces with motivation so that everyone working at NSK can work with motivation andcontinue to apply themselves at their workplaces.

SocialInitiatives
Creation of Comfortable Workplaces Offering Peace of Mind
—New Headquarters R&D Center and A1 Factory
NSK’s new headquarters R&D center (RD1) is equipped to serve a headquarters function and a research and development function to achieve efficient operations. In particular, to raise the level and speed of new product development,
we have created an environment to make it easier for development designers to work assisted by state of the art
equipment. In addition, our A1 Factory—which specializes in the integrated production of high-precision parts—comescomplete with environmental hygiene and disaster-prevention facilities meeting high standards so that employees
can work comfortably with peace of mind. It also has comprehensive measures against oil mist.

RD1

Research and development facilities

Center Court

A1 Factory

Production facilities

Canteen28

SUNNY CAMPUS“SUNNY CAMPUS” is the name given to the entire premises of NSK’s headquarters.
“SUNNY” is derived from “Hinata” (toward the sun), the name of the area in which
our headquarters is located. The name expresses our company ethos of always
reaching for the sun and working for a new dawn. The word “CAMPUS” highlights
our company’s dedication to production, operations, research and development,
positioning this place as the center of innovation. There are trees, ponds andstreams within the campus as well as tennis courts, a field and barbeque pits. We
lend them out so that employees can use them to enhance health and communica-

Campus overview

tion after work or during non-working days.

Total site area : 98,000m2
Total floor area : 30,100m2

SocialNSK R&D Center

Field

Tennis courts

Different flowers bloom during eachseasonHuman Resource System Supporting Diverse Working Styles
At NSK, a system for working from home has been introduced to support diverse working styles that increase options
for time and place of work. In addition, we introduced a paid leave system by the hour so that it is easier to balance
work and private life, thereby encouraging the taking of paid leave. The rate of taking paid leave in FY2020 was 56.2%.

Systems to Support Balancing Work and Childcare
As support for balancing work and childcare is an important theme for us, we have established systems for childcare
leave and shorter working hours that exceed statutory requirements. These systems are common for both regular andpart-time employees. In FY2020, 14 employees made use of the childcare leave system and 100% of them returned towork. Three of them were male employees.

29Nursing Care Leave
NSK has established various systems related to nursing care. In addition to statutory nursing care leave, employees
also have up to 10 days of our in-house nursing care leave each year, which can be taken in full-day, half-day or hourly
units, depending on the number of family members who need care. Employees can take up to 40 days of nursing careleave, when combining accumulated paid leave. One employee made use of the statutory nursing care leave system
in FY2020. Furthermore, in FY2021, we introduced a system for working from home, which can be used for childcare
or nursing care, to support balancing work with caring for children/family members.

Communication between Employees and Management
NSK has an activity called O-Time (Opinion Time). Employees, either self-nominated or nominated by others, discuss
on a specific theme related to the company for approximately six months and make proposals to the management. So
far, 13 themes have been discussed with several proposals implemented.
SocialExamples of proposals

Thank-you cards

dialogues with the President
and Executive Vice President

signages

Stress & Engagement Survey
Together with the annual stress checks for employees, NSK also conducts an employee engagement survey. We
have established a PDCA cycle as an initiative for health and productivity management with the reduction of highstress and low engagement rate* as a target. The survey results are given as feedback to the departments, which thenanalyze the results and develop and execute action plans to improve on issues.
* High stress and low engagement rate: The rate of respondents with a low engagement score in addition to having a stress scorehigher (worse) than the standard

30

Occupational Safety and Health& Health Management
Safety Policy
NSK states that safety is prioritized over productivity and efficiency in its corporate philosophy. We formulated oursafety and health management regulations aimed at creating comfortable work environments that ensure the safety
and health of our employees and people who cooperate in our operations. We actively and continuously work on the
improvement of working environments and enhancement of both mental and physical health to promote the creation ofcheerful and vibrant workplaces without accidents or illnesses. Based on these regulations, we work on improvement
agement Declaration, we have made it a companywide policy to give top priority to the health aspects of employees.

Socialactivities to reduce the load on workers and make it easier to work. In addition, based on our Nakanishi Health Man-

Safety Management Structure
At NSK, the Health and Safety Committee—which makes decisions about basic matters to enhance safety and healthactivities and prevent occupational accidents—is established based on the safety and health management regulations
to ensure the safety and health of employees at the workplace.
Administration Division
Dental Business Division
Industrial Business Division
Medical Business Division
Overall Safety
and Health Manager

Committee
Chairperson

Committee
Vice-chairperson

Customer Service Department
Quality & Regulatory Affairs Division
R&D Division
Manufacturing Division

Joint Safety Management by Labor and Management
NSK’s safety and health targets cover the number of occupational accidents resulting in time away from work and the promotion ofdental, physical and mental health and productivity management . We work toward these targets centered on the Health and Safety
Committee. The committee adopts measures to prevent accidents from short- to long-term perspectives based on the approach ofrisk assessment, such as the elimination of occupational accident risks discovered during workplace patrols.

Initiatives
Occupational Accident Statistics
Number of Fatal Accidents during WorkFY2016FY2017FY2018FY2019FY2020

Employees

0

0

0

0

0

Dispatched employees

0

0

0

0

0

Note: Scope of aggregation covers regular and dispatched employees of NAKANISHI INC.

31

State of Accidents Resulting in Time Away from Work at Sites in Japan
FY2016
Number of employees
who required time away from work

FY20171

As of December 31 in each FY

FY20180

FY20193

FY202002Initiatives to Prevent Occupational Accidents
NSK takes measures to prevent occupational accidents by conducting occupational accident risk assessment eachyear centered on the Health and Safety Committee.

Conduct of Safety Education
Besides conducting the following training regarding safety education, the required education is conducted at each
workplace.
• Danger experience seminar• Dust explosion workshop• First aid workshop• Automated external defibrillator (AED) workshop• Safe driving workshop

SocialSafety education training (work supervisor education)

Health and Productivity Management
Based on our Nakanishi Health Management Declaration which is our philosophy for promoting health and productivity management, NSK focuses
on dental, physical and mental health when being more active in promoting
health enhancement activities, identifying health issues and taking measures.

Nakanishi Health and Productivity Management Declaration

Amid a society that is growing old rapidly, NSK strives to contribute toward the extension of healthexpectancy for people based on the approach that dental health leads to physical health.
To achieve this approach, we think that the most important thing is for each and every employee tocontinue to be healthy.
“Let’s increase individual value”—stated in our motto—also applies to health.
We declare that we will actively undertake various health enhancement activities so that eachand every employee can take the initiative to maintain and enhance mental and physical healthautonomously to increase individual health value.

NAKANISHI INC.
President & Group CEO
Eiichi Nakanishi

32

Promotion Structure
NSK has established the Health Management Promotion Committee, and health and productivity management promotion measures discussed and decided by the committee are promoted by the Health Enhancement Section of the
Human Resource Department—which acts as the secretariat—in collaboration with affiliates within and outside thecompany.

President

Collaborate

Health and Productivity
Management Promotion Committee

Consult

Secretariat: Health Promotion Section
Consult

CollabIndustrial
physicianorate

ReportDiscuss

Collaborate

Health and Safety
Committee
ExecuteConsult

SocialCollaborate

Health insurance
societyCounselor

PromoteEmployees

Dental Health
FY2020 measures and targets

Results and performance

Rate of undergoing dental health examination during working hours
Actual rate :100%

Actual rate in FY2018: 88.6%
Actual rate in FY2019: 91.6%

Rate of recommaending visit to dental clinic for employees with untreateddecayed tooth
Actual rate :100%

Actual rate in FY2019: 100%

Internal training by dental specialist
Conduct lecture on brushing ofteeth

Actual performance in FY2018: Conductedfive times with a total of 194 participants
Actual performance in FY2019: Conductedfive times with a total of 84 participants

Rate of undergoing dental healthexamination during working hours

%
100
95
90

88.6

91.6

85
80

0

2018

2019

Physical Health
FY2020 measures and targets

Results and performance

Rate of undergoing primary health examinations
Rate of undergoing : 100%; rate of Actual rate in FY2019: 97.4%; rate of employemployees with diagnosis: 60% or ees with diagnosis: 62.9%
lower

Rate of undergoing primary healthexaminations

%
100

90

Actual rate :100%

85

Creating habit of exercise: Employees who conduct exercise to sweat twice ormore each week, 30 minutes or longer each time
20% or more

Actual rate in FY2019: 16%

97.4

2018

2019

95

Rate of recommending examination to employees applicable for secondary
health examinations and follow-up
Actual rate in FY2019: 100%

96.6

80

0

33

Mental Health
FY2020 measures and targets

Results and performance

Conduct of stress & engagement survey
conducted

conducted

Employees with high stress & low engagement
16.5% or less

Actual rate in FY2019: 18.0%
Actual rate in FY2020: 15.7%

Engagement improvement training
Attendance rate: 89.2%
Mental toughness improvement training
Attendance rate: 90.9%
Attendance rate of e-learning lessons (mental toughness improvement of subordinates, assertion, etc.)
SocialAttendance rate: 100%
(scope: all management positions)

Keeping Down Long Hours of WorkAs excessive work is a factor that undermines mental and physical health, we work to prevent long hours of work.
Together with observing the relevant laws and regulations, we strive to improve operations by establishing internal
standards and requiring supervisors to be contacted and checklists to be submitted to the Human Resource Department when working hours exceed the internal standards. In addition, we create opportunities for consultations withindustrial physicians when necessary.
Regarding the management of working hours, we manage time at the workplace using IC cards.

34

Respect for Human Rights
Basic Approach
Human rights are rights that all human beings are born with and a universal value. A company is a social system that
contributes toward society’s expectations and people’s happiness. Its management is but a public institution thatmust follow the logic of people. NSK is always oriented toward the ideal of companies as public institutions of society.
We carry out management not based on the company’s logic, which puts the company at the center, but based on
the logic of people. We respect the human rights of every person and do not accept any form of discrimination (suchas gender, age, nationality, race, ethnicity, ideology, belief, religion, birth, education, disabilities, illness and marital
status). In addition, we treat everyone with the same respect and dignity. Based on the above policy, we respect theety. We respect the human rights of our employees and those working at our company based on laws and regulations
as well as employment rules.

Socialprinciples regarding human rights in the United Nations Global Compact and will realize the qualities required by soci-Initiatives
Human Rights Risk Evaluation
NSK checks the state of harassment through the stress & engagement survey conducted annually for employees andtake corrective actions as appropriate.

Human Rights Awareness & Education Training
NSK strives to prevent violations of human rights by conducting education for purposes such as preventing harassment (annoyance) and spreading the correct knowledge about work. We conduct training regarding harassment andlabor management in the training organized for new managers each year. At the same time, based on the results ofstress checks and engagement surveys, we conduct harassment training for existing management and managers as
appropriate. In FY2020, 30 new managers attended the training.

Hotlines for Human Rights-related Whistleblowing and Consultation
NSK has established hotlines that can be used freely by all employees and overseas technical interns for consultation
about their worries at the workplace and problems in the working environment. Information regarding whistleblowing
is handled strictly so that they can use the hotlines with peace of mind. Employees and interns will not be penalized
because of whistleblowing or consultation. The hotlines are established with the Human Resource Department internally and with an external agency outside the company. Whistleblowing is possible through telephone, fax or email. In
FY2020, there was one case of whistleblowing reported internally and zero case externally.

Respect for Human Rights in the Supply Chain>Related Link:
Responsible Supply Chain

35

Responsible Supply Chain
Basic Approach
The supply chain, leading from the procurement of raw materials and parts to manufacturing, distribution, inventory
management, sales, use and disposal, can include social issues such as human rights abuses, poor working conditions,environmental destruction and conflict minerals, especially in raw material procurement and secondary and tertiary
business partners. These problems are seen as a global issue. To ensure sustainable procurement, companies are required to expand purchasing management to not only their own purchasing but their entire supply chain, contributing
to resolving this social issue. At a time when poverty is causing human rights and labor issues to become increasingly
serious, and the social environment is changing at an accelerating pace, NSK recognizes that deepening our relationBased on an optimized, solid procurement platform, we will contribute to the creation of a sustainable society by aiming
to resolve social issues such as conflict minerals through collaboration and dialogue with our procurement partners.

Socialships with our procurement partners and working to strengthen our purchasing abilities is more important than ever.

Initiatives
Business Partner CSR Guidelines / Green Procurement Guidelines
NSK's corporate activities are founded on our raison d’etre of “creating brilliant progress” as a way so the society inwhich we live can make better progress. In addition, we also hold that the definition of a company is a social systemthat seeks happiness and contributes to the expectations of society and the happiness of people through the exchangeof value. This raison d’etre and company definition are defined as our basic principles and management philosophy,
which all officers and employees must abide by, and we work to ensure they are all aware of them. In addition, we arecommitted to meeting society's expectations in terms of safety, quality, compliance, environmental protection, stablesupply and fair value. Also, we believe it is important to promote these initiatives through our business during our
procurement of raw materials and services. NSK created our Business Partner CSR Guidelines in April 2021 as a way
to respond to the expectations of society in collaboration with all our business partners, and put together the items
we want our business partners to work on. We are carrying out activities to ensure these Guidelines are understoodand thus strengthen our supply chain together. At the same time, we are working to ensure awareness within ourcompany of the following two points in our Compliance Behavioral Guidelines.
Healthy Corporate Activities
We respect our suppliers and other business partners as equal partners based on the principle of good faith, aiming formutual prosperity and practicing sincere, fair, and equitable corporate activities. In addition, we do not carry out any
unfair or improper activities that take advantage of our superior position.
Monitoring Human Rights Issues across the Supply Chain
We monitor human rights issues and risks in the supply chains that feed us the parts and raw materials for our products, and strive to comply with the laws and regulations. In addition, we have established our Green Procurement
Guidelines for managing chemical substances.
>Related Link:
Green procurement Guidelines

36Respect for Human Rights Across the Supply Chain
NSK uses contracts to require our suppliers to comply with all laws and regulations both domestic and international intransactions in Japan or overseas. We audit our suppliers on an annual basis, checking for any instances of slave labor,human trafficking, or forced relocation along our supply chain.
>Related Link:
Statement regarding the UK Modern Slavery Act

Response to the Conflict Minerals Issue
Certain minerals (tin, tantalum, tungsten, and gold) produced in the Democratic Republic of the Congo and neighboring countries have been reported as being a source of funding for armed groups, and may be contributing to humanrights abuses caused by their conflicts. This is an issue that arises at the start of the supply chain, and we at NSK are
the Democratic Republic of the Congo and neighboring countries in our products, parts, and materials, as we aim fora society where there are no abuses of human rights in the mines that are the start of our supply chain.

Socialaware that we need to take responsibility for addressing it. Therefore, we have stopped using conflict minerals from

We carried out an investigation into conflict minerals, and, within the scope of the investigation, confirmed that there
was no evidence of our involvement with these specific minerals or with conflicts.

37

Relationships with the Local Community:
Social Contribution Activities
Basic Approach
The NSK Group holds up the mission of creating “brilliant progress” via innovative “grinding technology” at the “Our
Core” values of corporate philosophy. To achieve this, we contribute to the extension of health expectancy for people
all over the world through our corporate activities, and at the same time, we carry out a range of social contribution
activities as a company rooted in our local community. Our products are sold in more than 135 countries around theworld, and we carry out our business activities in many different countries and regions mainly through our headquarPeople-based, Social-perspective) as its core premise when carrying out our business. Our group strives to provide
solutions to social issues by drawing on our partnerships with the various local stakeholders, while we deepen ourSocialters and the overseas subsidiaries we have set up in 15 countries. Amidst this, our group holds CPS (Culture-oriented,

understanding of the cultures, societies, and environments of the various countries and regions we operate in. Our
headquarters is located in a rich natural environment, overlooking the Oashi River, a major river famed for its clear waters. Inspired by the original Japanese name of the place, we gave it the name SUNNY CAMPUS. While it is of course
the headquarters of our group's business, we also hope that it will continue to be a place of organic interactions withthe local community. NSK products end up all over the world, but most of them are produced either at our headquarters factory in SUNNY CAMPUS, or the A1 Factory next door. As the slogan “Made in KANUMA” suggests, for ourgroup, which continues to carry out integrated production in the Kanuma region, maintaining good relationships withthe local community is one of the key management issues. As a good corporate citizen, we intend to continue carryingout a range of social contribution activities that build on the demands and expectations the local community has of us.

Initiatives
Main Recent Initiatives
Initiatives in Japan
Blood Donation at the Headquarters and A1 Factory
NSK has held blood drives for many years now. Twice a year, in May and November, we work with the Tochigi Red
Cross Blood Center to hold a blood drive at our headquarters and A1 Factory. Each time, about 120 people donate
blood. The coronavirus pandemic has caused a shortage of blood in 2021, so we intend to up our blood drives to threetimes a year, in March, July, and November.

38

NSK Nakanishi Foundation (scholarship)
The NSK Nakanishi Foundation (became a public interest incorporated foundation in 2018), founded on October 12, 2016, provides
scholarships to dentistry students to secure and train the skilled people who will lead the dental medicine of the future. The Foundation
pays out scholarships to provide an environment where students
can learn passionately, contributing to the further advance of dental
medicine.

Sponsorship of Local Sports Teams
NSK has signed sponsorship agreements with a number of professional sports teams in Tochigi Prefecture. Encouraging sports together with employees and local residents, it continues contributing to revitalizing the local communityand encouraging[promoting] sports in it.
SocialMembership in B.LEAGUE
Professional basketball teamUtsunomiya Brex

Membership in Japan Cycle League
Professional cycle road racing teamUtsunomiya Blitzen

Membership in J.LEAGUE
Professional soccer teamTochigi Soccer Club

Membership in Asia League Ice Hockey
Professional ice hockey club

H.C. Tochigi Nikko Ice Bucks

Support for Vocational Skills Development Projects
NSK focuses on training people for monozukuri (manufacturing). In addition to our initiatives
for training our own employees, we also workwith various organizations around the prefecture. We provide testing venues and judges forthe skills testing and certification carried out
by the Vocational Ability Development Association, and encourage our own employees totake them. These multi-faceted activities led
to our being awarded the Minister of Health,Labour and Welfare's Prize for Vocational Skills
Development in December 2017.

Donations to Support Training People in Monozukuri
In 2018, as we celebrated our 88th anniversary,
we donated a total of 50 million yen to Tochigi
Prefecture and Kanuma, where our headquarters is located, as a way of thanking everyone in
our local community for their support . The donation is used as the funds for the Super Technology School Project promoted by the Tochigi
Vocational Ability Development Association asa way to train people in monozukuri so they canlead Tochigi's industry into the future.

39

Council for Village Beautification of Oya
To encourage the Oya district of Utsunomiya to flourish, the first symposium for the "Tochigi Food, Farm, & Tourism
Step-Up Project: Connecting Oya and the world" was held at our headquarters RD1 Center Court on September 19,
2019. It was attended by about 180 related parties, residents, and so on, who confirmed the possibilities of the Oya
district. The symposium was run by the Founders Society of the Council for Village Beautification of Oya, which ismade up of Kazunori Otowa, owner-chef of
Otowa Restaurant in Utsunomiya and a noted
master of French cuisine, and others including
the president of a university in Tochigi andrepresentatives of major companies. NSK’spresident & Group CEO, Eiichi Nakanishi, also
took part as one of the founders.

NSK donated 10 million yen to provide relief for victims and help rebuild affected areas of Kanuma, Tochigi Prefecture,

SocialDisaster Relief Donations
where we have our headquarters and where many of our employees live, affected by Typhoon No. 19 in October 2019.

NSK Rising Event
NSK holds the NSK Rising Event as a way for both us and our local community to continue rising up together. At thisevent, we invite locals to cultural events held and improve the cultural level of our employees. The event started as away to celebrate the completion of our new headquarters, RD1, in 2017, and has been held annually since. Between
our employees, their families, and local residents, we always get huge crowds attending. However, due to concerns
about COVID-19, we did not hold an NSK Rising Event in 2020.

1st NSK Rising Event (Oct. 22, 2017)
Performance by Noh artist Shonosuke Okura

2nd NSK Rising Event (Dec. 9, 2018)
Lecture by Kenichi Ohashi, Master of Wine

3rd NSK Rising Event (Sep. 21, 2019)
Rakugo session with Ichinosuke Shumputei

Future Creation University for Children in Tochigi Project
We want to provide children with opportunities to "touch and learn from the real thing" and help them create theirown visions of the future. We have been part of the Future Creation University for Children in Tochigi project run by
the prefecture since 2018. We also host a number of social studies class visits from elementary schools throughout
the prefecture.

40

Open SUNNY CAMPUS“SUNNY CAMPUS” is the name we give to the entire site where our headquarters factory is located. The sports field,
tennis courts, and other facilities on the grounds are made available for local educational institutions and so on to use
for free.

We continue to support job-seeking activities for local students who are approaching the milestone that is graduation.

SocialSupport for Kanuma Rotary Club's Education for Job-seekers
We take charge of courses for job-seeking students run by the Kanuma Rotary Club, and hold seminars on interview
techniques.

Clean-up NSK Campaign
We are promoting the “Clean-up NSK” campaign, a local cleaning activity, mainly undertaken by Environment Committee. We are working to clean and beautify the roads around our premises so that local residents and employees canuse them safely and comfortably every day. We have submitted the AI-Road” (which means “Love-Road”) application
to Tochigi Prefecture for this cleaning activity, and we are responsible for maintaining and managing the environment
around the factory.

Initiatives by Group Companies
NSK America Corp.
Volunteers at our US-based subsidiary, NSK America Corp., take part in the US NPO, Feed My Starving Children,
packing and shipping food packages to be sent to children around the world suffering from famine (October 2019).

41

NSK Oceania Pty. Ltd.
Promoting the “Going Green” campaign
Our Australia and New Zealand-based subsidiary, NSK Oceania Pty. Ltd.,
trades in used hand-pieces from our customers in both countries, thenrepairs them and donates them to dental clinics in Pacific nations. This
contributed to correcting regional medical imbalances and in reducing theamount of waste (April 2020).

SocialNSK Dental Spain S.A.
Partnering with food banks in Spain and Portugal to provide donations according to sales
Our Spanish subsidiary, NSK Dental Spain S.A., made a donation to food banks in Spain and Portugal based on theamount of sales from a campaign conducted in July 2020. This allowed more than 500 families in both countries toreceive food that would otherwise be wasted.

42

Environment

Environmental Management
In recent years, social issues related to the environment, such as climate change due to the impact of global warming,
resource depletion due to population growth and marine pollution due to ocean plastics have become increasingly
serious. As a movement of the international community toward the environment, it is necessary to tackle these issues
on a global scale. In response to this situation, in September 2015 the United Nations General Assembly adopted “The2030 Agenda for Sustainable Development,” centered on “Sustainable Development Goals (SDGs).” SDGs outline 17
goals and 169 targets that need to be addressed for a sustainable world—including environmental conservation—such
as “Taking urgent action to combat climate change and its impacts" and “Ensuring sustainable consumption and production patterns.” They call for the active involvement not only of countries but of companies, too. As societal issues
grow more complex and more serious, at NSK we believe that companies have a duty to contribute to the developmentof societies through their business activities. In December of the same year, the “Paris Agreement” was adopted at theInternational Conference “COP21” of the United Nations Framework Convention on Climate Change (UNFCCC), andthe movement toward decarbonization is accelerating in Japan and overseas. Companies are required to understandthe risks and opportunities posed by climate change to their businesses, set long-term reduction targets, and work
to reduce greenhouse gas emissions throughout the supply chain. It is also expected that local communities, companies, and the whole world will work together to resolve important environmental issues. Accordingly, we believethat companies have an increasingly important role to play in solving environmental issues, and that companies are
dutybound to respond to the various needs and expectations of society.
At NSK, we recognize that addressing environmental issues such as climate change is a management issue of theutmost importance. We intend to use the monozukuri (manufacturing) expertise and advanced technological capabilities we have accumulated to demonstrate solutions to environmental problems, and build a foundation for achieving
SDGs by steadily advancing wide-ranging initiatives. These include strengthening legal compliance, reducing theenvironmental impact of our monozukuri, promoting environmental education and communication and conserving
environment. In response to environmental issues such as climate change, we have defined “coexistence between
people and the earth” as one of our goals, and we intend to promote our Green Plan 2030 medium-term plan. By integrating our technological capabilities and inventiveness, and by resolving societal issues and growing our business,
we believe we can contribute to the creation of a bright future. We understand this to be a corporate duty , which we

Environment

biodiversity. At NSK, we recognize we are both a member of society and a company that contributes to the global

intend to fulfill as part of our responsibility to society.

44Environmental Policy
At NSK, based on our Environmental Policy, we take the environment into consideration in our business activities.

Environmental Policy

NSK shall implement in all its corporate activities, such as research and development, manufacturing, sales and services of ultra-high-speed rotary equipment, including dental instruments,
considering the organization state that can affect business activities, the following environmental
activities based on the goals of reduction of environmental impact for the global environment of
the future, harmony with nature, and the establishment of a healthy and prosperous society:1. Promotion of environmental protection, including prevention of contamination
NSK reduces environmentally hazardous substances in all of its activities to prevent contaminationand protects the natural environment from harm and degradation arising from organizational activities, products and services.
2. Continuous improvement of the environmental performance of energy and resource conservation
NSK continuously improves its environmental performance in all fields of its activities including
manufacturing products, focusing on energy conservation for global warming prevention andrecycling for resource conservation.

NSK ensures compliance with environmental laws and regulations related to all of its corporate
activities, products and services and standards judged to affect the needs and expectations ofinterested parties.

Environment

3. Compliance with environmental laws, regulations and other voluntary standards

4. Reduction of environmental loads in all processes of business considering the life cycle
NSK strives to continuously improve the activities to reduce environmental impact of all production
processes from product planning and development to manufacturing, sales, use and disposal, withall of its employees, by accurately assessing the impact of its corporate activities on the environment and setting environmental targets within the range of technological and economical abilities.
5. Promotion of communication with stakeholders
NSK communicates with stakeholders, including those in the surrounding areas, to maintain theenvironment.
6. Dissemination of environmental policy
NSK communicates environmental policies and the importance of global conservation to all related
stakeholders.

45Environmental Management Promotion Structure
At NSK, our President & Group CEO is responsible for overseeing the promotion of environmental management. Under
his supervision, we proactively execute our responsibilities centered on the following four key aims:
1. Strengthening our Environmental Management System
2. Providing environmentally friendly products
3. Establishing environmentally friendly monozukuri systems
4. Promoting environmental communication
In order to promote these aims effectively, we have integrated our company’s environmental activities in a cross-departmental manner; specifically, we have appointed an Environmental Control Manager and established the EMS
Section as the secretariat responsible for supervising these promotions. These personnel and organizations are
responsible for debating and making decisions on key matters, such as defining our Environmental Policy and environmental activities, ensuring we comply with environmental laws and regulations and making recommendations to
the management. We have also established the Environmental Committee, which is responsible for the operation of
the Environmental Management System, document reviews and the promotion of energy conservation and the 3Rs(reuse, reduce, recycle). Likewise, we have established the Pollution Prevention Subcommittee, which monitors the
RoHS Directive and other requirements for chemical substances in various countries and seeks to prevent chemical
substance pollution and reduce environmental risk. These committees examine and deliberate all manner of issues,and the conclusions are reflected in activities throughout the company.
Environmental Management Promotion Structure

Environmental Policy

Environmental Control Manager

・Environmental Targets
・PlansEnvironmental Control Secretariat(EMS section)

Headquarters
Factory

A1
Factory

Tokyo
OfficeOsaka
OfficeEnvironment

Environmental Management Supervisor(President & Group CEO)

Chubu
Sales OfficeEnvironment Committee
・Preparation of environmental impact assessments, environmental targets, action plans and EMS documents
・Establishment and implementation of annual environmental targets
・Company-wide activities related to energy and resource conservation
・Establishment of subcommittees (committee members appointed from all divisions)

Pollution Prevention Subcommittee
・Management of chemical substances
・Response to chemical substance regulations
・Green procurement
・Activities of relevant departments

Departmental Subcommittee
・Environmental activities of each department
・Report to the Environmental Committee

46

Identifying Environmental Risks and Opportunities
At NSK, we have established an Environmental Management System that conforms to ISO 14001; through thismanagement system, we identify important risks and opportunities related to environmental issues, discuss how
to respond to these issues and implement action plans accordingly. In addition, based on the concepts outlined in
ISO 14001:2015, we are in the process of establishing systems to identify risks and opportunities with the potential
to impact our business activities in a manner that exceeds merely an environmental framework. Examples include“external and internal issues that can affect an organization” and “the needs and expectations of interested parties.”
Process for Identifying Risks and Opportunities

Identification ofenvironmental aspects

Identification of
external and internal
issues that can affectan organization

Identification of theneeds and expectationsof interested parties

Compliance obligations(compliance with laws
and regulations)

Identification of risks and opportunities

Identification ofremarkableenvironmental aspects

Organizational issues
to be acted on

Needs andexpectations ofinterested parties to beacted on

Additional complianceobligations

Discussion of approaches

Environmental action plans

Risk or opportunity

Remarkable environmental aspects
1. Electricity use

Risk

2. Waste emissions

Risk

3. Recycling rates

Risk

4. Paper use

Risk

Environment

Risks and opportunities to be acted on as part of ISO 14001

Organizational issues (external)
1. Monitoring and complying with environmental laws and regulations

Risk

2. Increasing energy and industrial waste costs

Risk

Needs and expectations of interested parties
1. Formulating medium and long-term Environmental Vision

Opportunity

47

Environmental Audit
The EMS Section, which is the department responsible for environmental management, carries out internal environmental audits once a year in all divisions. The internal environmental audits verify the state of progress of environmental
action plans in each division, and thereby confirm the suitability, compliance and effectiveness of the Environmental
Management System. The results of these internal environmental audits are reported to the management once a year.
Environmental audits of business partners are jointly carried out by the Purchasing Department, the Production
Control Department and the EMS Section. “Environmental audits of business partners check sheets” are distributed
to business partners in advance to verify the state of their environmental initiatives. We then narrow down target
areas to be audited, and carry out on-site checks of environmental burden reduction activities, compliance with laws
and regulations and other aspects. These environmental audits of business partners are also used as opportunities toshare issues related to the promotion of environmental management and to provide education related to environmental laws and regulations.
Number of Environmental Audits Carried Out
FY2018Internal audits
Environmental auditsof business partners

FY2019FY20201

1

1

Suppliers

11

10

8

Subcontractors

5

6

5

Other on-site inspection audits of industrial waste contractors and external dangerous goods warehouse managers
At NSK, we carry out on-site inspection audits of industrial waste contractors (collection and transportation, and intermediate disposalsites) and external dangerous goods warehouse managers with whom we have concluded contracts. Through these inspection audits,
we verify compliance with applicable laws and regulations, and suggest corrective measures and recommend improvements where
necessary. In FY2020, we carried out inspection audits of eight industrial waste contractors, two resource recovery plants and one
external waste warehouse manager. We found no points that required improvement.

Environment

48

Environmental Management System
Environmental issues are common to people all of the world, and it has become an age that companies' effort to reduce
their environmental burden affects the evaluation of the management quality and, in turn, the evaluation of products.
At NSK, we are engaged in environment-friendly business operations; to this end, we acquired ISO 14001 certification, the global standard environmental management system, in January 1999. We are implementing environmental
activities based on our management policy of reducing the environmental impact for the future global environmentand realizing a healthy and prosperous society in harmony with nature through all our business activities including research and development, manufacturing, sales, and service of dental medical equipment and other ultra-high-speed
rotary equipment. We have adopted the Environmental Management System at each of our five business sites—ourHeadquarters and A1 Factories, and our Tokyo, Osaka and Chubu Sales Offices. In order to grasp states of progress
and potential issues, and in order to strengthen our management activities at each of these business sites, we haveintegrated our environmental activities and operate an efficient management system rooted in ISO 14001. Throughthese activities, we categorize business and environmental issues as “risks” or “opportunities,” and implement solutions aimed at their resolution. Our approach conforms to ISO 14001:2015.

Environmental Management System (EMS)
Applicable sites
Headquarters, A1 Factory, Tokyo Office, Osaka Officeand Chubu Sales OfficeInternal andexternal
problems

Scope
Applied to designing, manufacturing, sales, ancillary services
and marketing of the following products:• Dental handpieces• Surgical handpieces• Ultrasonic scalers• Dental cleaners• Endodontic apex locators

D

C

A

• Environmental aspects• Legal and other requirements• Objectives, targets and action plans• Resources, roles, responsibility and authority• Competence, training and awareness• Communication• Emergency preparedness and response• Control of documents• Operation control• EMS documentation

EnvironmentP• Sterile burs
• Dental laboratory handpieces• Maintenance devices• Cosmetic devices• Industrial spindles

Needs andexpectationsof interested
parties• Monitoring and measurement• Evaluation of compliance• Conformity as well as corrective and preventive action• Control of records• Internal audits• Management review

Intended results of the environmental management system (EMS)

49

Targets and Results
Medium-term Plan: Green Plan 2030
At NSK, we have for a long time promoted environmental activities based on our medium-term plans. In our previous
Green Plan 2020, which ran from FY2016 to FY2020, we set out targets to reduce energy use and industrial waste
emissions by 1% year on year, and worked hard to reduce our impact on the environment. With the exception of
reducing our industrial waste emissions, we succeeded in achieving all targets set out in the Green Plan 2020. We
formulated the Green Plan 2030 based on the results of the Green Plan 2020 activities, on various environmental
issues such as global warming and on our medium-term management plan. The Green Plan 2030 sets even higher
targets than our previous medium-term plan. We believe that companies have an increasingly important role to playin solving environmental issues, and that they are dutybound to respond to the various needs and expectations ofsociety. Our formulation of the Green Plan 2030 is rooted in an awareness that responding to society’s expectations inthis way will help us execute our social responsibilities. At NSK, we intend to carry out a variety of initiatives aimed at
reducing our impact on the environment, based on our Green Plan 2030 medium-term plan. Going forward, we expectthat climate change reduction goals, initiatives and measures will be defined by various countries. We will strive to
reduce our greenhouse gas emissions, paying close attention to greenhouse gas reduction trends both in Tochigi
Prefecture and in Japan as a whole. If necessary, we will adjust our reduction targets accordingly.

Environment

50

Green Plan 2030
Initiative

Aim

Management
items

Headquarters

A1

Control
greenhousegas emissions

2025

2030

80%

100%

5%

10%

7%

15%

7,791

2019

Reduce per unit energy use(1,000 kW per 1,000 units)

Reduce per unit CO2
emissions(production units)(1,000 kW per 1,000 units)

Target values

2019

Calculated greenhouse gas
emissions(t-CO2)

Combatingclimatechange

Base
year
Base
value

—
0.39972019—
0.0513

Establishing a
recycling-oriented society—

99%
or more99%
or moreResource recovery rate
99% or more

Reduce foodloss

Food recycling rate

2020

5%

10%

Standardize disposal
methods0• Regularly monitor laws
and regulations in various
countries• Ensure green procurement across entire supply
chain• Integrate management ofdata using chemSHERPAManagementof chemical
substances

Promotegreen
procurementin supply
chainsContent of banned
substances
(%)

Legal
compliance

Monitorapplicablelaws

Compliance rate withrelated laws

—

100%

100%

• Promote green procurement• Monitor domestic andoverseas environmental
laws and regulations

Preventing
environmental pollution

Plant
effluent
standards

Compliance with effluent
standards

—

100%

100%

Trend management ofinspection data——

Water usage

Water usage
surveys

Clean water, industrial
water and effluent water
usage surveys

—

—

0

Environment

25%

55.474

Resource recovery rate

• Repair air loss
• Update aging facilities• Review automatic
air-conditioning controls
and operations• Optimize compressor
source pressures• Discontinue use of
mercury lamps

20%

Per unit industrial waste
emissions(production units)(kg per 1,000 units)

Promotezero
emission• Reduce per unit CO2
emissions• Review greenhouse gas
coefficients• Increase proportion ofrenewable energy used

• Optimize sorting
processes• Properly classify industrial waste and generalwaste from businessactivities• Reuse waste oil andcleaning fluids• Reduce food waste• Carefully implement
the 3Rs

2019
Controlwasteemissionvolumes

Concretemeasures

Headquarters Factoryclean water—

Monitoring andreductions (m3)

A1 Factory clean water
A1 Factory industrial water
A1 Factory effluent water

51

Environmental Activity Results for FY2020
At NSK, we set—and work to achieve—annual environmental targets based on our Green Plan 2030 medium-term planand on the business issues we have categorized as “risks” or “opportunities.”
Our results for FY2020 are outlined below.
Initiative

FY2020 targets

FY2020 results

Initiative

Promote zero
emission

Resource recovery rateof 99% or more

Industrial waste resource
recovery rate: 99.3%• On-site audits of 13 industrial waste collection
and transportation contractors• Careful sorting of industrial waste

Reducing waste
volumeYear-on-year comparison
Per unit produced
reduction of 1%
Target value of 2.707 kg
per 1,000 units

FY2020 results: 2.325 kg
per 1,000 units
Target achievement rate:116%• Control storage volumes in waste alkali tanks
through the installation of water faucet
adjustment valves• Optimize sludge (grease trap) recovery
frequency• Promote recovery and recycling of in-process
cutting fluid

Strengthening
managementof chemical
substances
contained in
products

Survey of phthalates

Substitution of all partscontaining phthalates iscompleted• Identify parts containing phthalates• Identify substitute parts and conclude specification sheets

Reducing paperuse

Per unit reduction of 1%
225.6 sheets per person

FY2020 results: 208.5
sheets per person
Target achievement rate:108%• Use of digitalized deviation acceptanceapplication forms• Use of tablets for repair systems

Per unit reduction of 1%
0.001444 kL per 1,000
m3/1,000 units

FY2020 results: 0.00143
Target achievement rate:
101%

Complying withenvironmental
laws andregulations

100% compliance

Exceeded BOD with A1
Factory septic tanks(300-person tanks)

Since concentration of influent water was high,we are in the process of discussing increasingwater volumes

Assessment Criteria:= Achievement rate of 100%

Environment

Reducing perunit energy use• Review of optimal number of compressors(Headquarters: seven units stopped, 12 units
operational)• Optimization of compressor pressures(0.67 MPa->0.63 MPa)
• All compressor operation stopped at nighttime
on weekdays and at weekends• Promote company-wide reductions in air loss (atotal of 37 repairs)• Automatic air-conditioning control (air-conditioning systems stopped for six minutes at
random per 30 minutes of operation)• Switching to energy-saving air guns

Assessment= Achievement rate of 80% or more

52

State of Environmental Impact of Business Activities
NSK assesses its environmental performance across its entire value chain, and promotes environmentally friendly
business activities.
Material Balance (2020)

Focused on reduction in use ofhazardous chemical substances
included in the products andmaterials.
Promoted energy saving initiatives
through raising employees'
environmental awareness(FY2020 results)

Promote zero emission
Unit energy consumption
Reducing use of chemical
substances(FY2020 results)

Development

Raw materials
Metallic materialuse

Per unit energy use (Headquarters)kL per 1,000 units

153,094
units

Per unit energy use (Headquarters)

Chemical substances
Cutting fluids

23,400 L

Cleaning fluids

13,200 L

0.000442

kL per 1,000 units

0.03938

Emissions volumes

Procurement

Energy (Headquarters)

Emissions into
atmosphere20.8 kgElectricity(1,000 kw)

4,582

Emissions into
public water

0.0 kg

LPG (m3)

6,219

Emissions
into soil

0.0 kg

Input

Energy (A1)Electricity(1,000 kw)

9,972

LPG (m3)

4,445

Output0.6 kgSewage0.0 kgManufacturing

3,131
sheets

Waste
Industrial waste
emissions

31,573 kg

Landfill volume

318 kgClean water (Headquarters)m3

Products

10,930Clean water (A1)
m

3

4,271

Industrial water (A1)
m3

2,864

Gasoline-powered vehicles (company-wide)
Total of 10 units

Distribution
Sales

Number of products
produced(1,000 units)

53,767

Number of
shipments(1,000 units)

2,668

Environment

Paper Purchase Amount
Purchase Amount(A4 size equivalent)

Transfer amount
Waste

Wastewater from the factory (A1)
m3

6,211

4,810 L53

Initiatives
Compliance with Environmental Laws and Regulations
As global warming, resource energy, and other global environmental issues are becoming more widespread andglobalized, policies and regulations are being reviewed and strengthened at the regional and national levels with theaim of achieving sustainable growth. At NSK, we ensure careful environmental compliance with the aim of minimizing
environmental risks such as environmental pollution, destruction of ecosystems and climate change. In FY2020, we
violated zero environmental laws and regulations or other requirements.

Environmental Education
Raising environmental awareness of each employee is important for promoting environment conservation activities.
Therefore, we believe that it is important to enhance the education system and implement continuous education. At
NSK, the Environmental Control Manager and EMS Section work together to carry out various educational programs.
Through general environmental education programs, we seek to deepen employee understanding of how environmental activities and various work processes impact the environment; we also implement specialized education
programs for relevant departments, aimed at raising awareness of the latest trends in environmental laws and regulations, including those covering chemical substances. In addition, when elementary school children take part in plant
tours, we teach them about recent environmental issues, the environmental activities we carry out at NSK, as well as
environmental initiatives that can be carried out by individuals. At NSK, we carry out monozukuri activities in regionswith rich natural environments. We believe it is our corporate duty to pass these natural environments down to future
generations, and we implement initiatives accordingly.

Environment

54

Our Products and Environmental Activities
Basic Approach
NSK recognizes that companies are expected to respond to environmental issues such as climate change, and societal changes such as a rapidly ageing society. Consequently, we believe it is important we increase our profits andlaunch highly competitive products while actively contributing to the resolution of societal issues. We are working todevelop products that help society to reduce its environmental impact and, at the same time, we are responding to
the needs and expectations of markets. In this way, we seek to achieve sustainable growth hand in hand with society.

Environmental Design in the Development Process
At NSK, at the development stage we seek to accurately grasp and reduce the environmental impact of the entire
lifecycle of our products—from materials to distribution, use and disposal. We aim to provide high-performance products that are extremely energy-efficient, as well as products that are more compact, lighter, and incorporate multiple
functions in response to increasing demand for mobile dental care in a rapidly ageing society. We have set ourselves
the goal of “coexistence between people and the earth,” and aim to become a company that contributes to improving
the global environment and society through the provision of these products.

Structures that Facilitate User Maintenance (Resource Conservation)
Air Turbines are one of our core dental products. They are used to drill teeth, and powered by compressed air. Air
Turbines work by using compressed air to drive rotors that spin an axle; the axle is fitted with a bur, and this bur ismaintainability of the cartridge, and designed an easily interchangeable structure. Enabling customers to replace thecartridge extends the life-expectancy of the turbine, and results in significant resource savings.
Air Turbine Structure

Environment

used to drill teeth. The rotor part of the system is known as the “cartridge.” We gave careful consideration to the

Cartridge

Compressed air

Turbine body55

Integrating Distinct Products for Greater Efficiency
As societies begin to age with increasing rapidity, we can expect greater demand for mobile dental care. And, sinceelderly people today retain more of their natural teeth, a wide range of mobile treatment will be required. Our VIVA ace
mobile dentistry system integrates a high-performance micromotor, an ultrasonic scaler, a three-way syringe, and avacuum into a single package. Previously, our mobile dentistry solutions required three distinct devices: the VIVAsupport 2, the VIVAMATE G5, and Varios 370. However, VIVA ace not only broadens the scope of possible treatments,
but provides the convenience of a traditional dental clinic treatment environment in condensed form in a high-added
value product. Condensing necessary functions into a single package realizes significant energy savings whencompared to using a variety of distinct devices. At NSK, we intend to recognize future societal changes as business
opportunities, and provide products that cater to market needs and expectations in a timely manner.
VacuumUltrasonic scaler
Micromotor
Three-way syringe
Vacuum bottle
Water bottle

Water
spray

Control panel

Water bottle
SalivasuctionVacuumhose
Cable

Foot control Vacuum bottle(optional)

Foot control

Handpieces used to treat patients must always be washed and sterilized after use. At NSK, we have launched iCare,a device that automatically washes and lubricates up to four handpieces at once, and iClave, a device that sterilizes
using high-pressure steam.

Environment

Product Development that Takes Maintenance and Other Lifecycle Processes into
Consideration

The iCare automatic cleaning and lubrication system dispenses lubricant volumes tailored to the type of handpiece
used, so reducing excess oil use. The iClave mini2 high-pressure steam sterilization system is more compact than its
predecessor, the iClave mini. In addition, increasing the high-pressure steam gravity displacement process enables
even the inside of handpieces to be carefully sterilized, and improves the device’s sterilization capabilities. Our maintenance products enable users to keep their handpieces in better condition for long periods of time, and contribute to
reduced use of new materials. They also help prevent infection, and can therefore be used safely.

iClave mini 2

iCare

56

Energy Conservation
Efficient Transmission of Compressed Air to Drive the Rotor (high-efficiency and energy-saving)
Our Air Turbine dental products efficiently transmit compressed air to rotate the rotors. This improves the basic performance of the product, including its rotational speed and rotational torque. Our S-Max M Turbine uses a modified
rotor shape that increases the surface area that receives compressed air by 100% (a two-fold increase) over previous
models. Accordingly, the rotor spins more efficiently when using the same volume of compressed air as previous
models, leading to a significant increase in torque from 20W to 26W.
Air Turbine Structure
Cartridge

Rotor
Air discharge

Air supply

Improved Internal Circuitry Leads to Energy Savings
At NSK, our industrial ultrasonic polishing devices are highspeed devices that operate at 19,000 to 29,000 rotations per
Environment

second, with a maximum amplitude of 40 μm. In our latest
models, we have introduced a raft of improvements overprevious versions, including: a heat-protection function toprevent temperature rises and enable continued use; improved visibility through the use of large numbers of LEDs;
and energy savings of 13% by refining the structure of its
internal circuits. At NSK, we work to reduce the environ-

Ultrasonic polishing device: Sheenus ZEROmental burden of our products throughout their lifecycles,
and to this end we promote energy savings while they arebeing used.

Effective Use of Resources
Transition to Paper Packaging Materials
At NSK, we recognize that waste plastics have a major impact on the global
environments, such as by contributing to marine pollution. For this reason,
we have switched from the use of plastic to recyclable paper packaging
materials for our core Air Turbine and Contra-angle Handpiece products.
Switching to paper materials has enabled us to make our packaging 30%
more compact and 50% lighter than our previous plastic packaging.

Eco-friendly handpiece packaging

57

Management of Chemical Substances
At NSK, we have formulated the Green Procurement Guidelines to define our basic approach to environmentallyfriendly materials and parts, and together with our Japanese and overseas business partners we promote green procurement activities. We also carry out environmental audits at some of our business partners every year. During theseenvironmental audits of business partners, we verify whether they have environmental management policies in place,and whether they have established energy and resource conservation targets and plans.

Our Products and Chemical Substance Management
Acquiring Information Related to Chemical Substances Contained in Products
In order to comply with applicable laws and regulations, to prevent negative health impacts of controlled chemical
substances, and to prevent environmental pollution, we use chemSHERPA. This tool allows us to appropriately manage information on chemical substances contained in our products across our entire supply chain, from upstream
to downstream companies, improving information accuracy, and enabling us to carry out more reliable chemical
substance management. In addition, we carry out regular information-gathering initiatives for chemical substances,and verify the applicability of laws and regulations in countries where they are being strengthened. At the same time,
we have built a database for the integrated management of this information.
Preventing Contamination (preventing contamination of our products)
According to the EU’s RoHS Directive, the use of four phthalates will be prohibited in medical devices from July 2021.
For this reason, we transitioned to the use of parts and materials that contain none of the four phthalates in question
at the end of December 2020.

Environment

58

Controlling Climate Change
Basic Approach
Climate change, which stems from increased greenhouse gas emissions, is leading to natural disasters such as
torrential rain occurring with increasing frequency across the world. Against such a backdrop, the Paris Agreement
was adopted at the International Conference COP21 of the United Nations Framework Convention on Climate
Change (UNFCCC), and the movement toward decarbonization is accelerating in Japan and overseas. Companies
are expected to understand the risks and opportunities posed by climate change to their businesses; it is also hopedthat local communities, companies and the entire world will work together to resolve environmental issues. NSK’senergy consumption exceeds the equivalent of 1,500 kL of crude oil, and so it is recognized as a Specified Business
Operator under the Act on the Rational Use of Energy. We are a company that consumes large amounts of energy, andour business activities therefore have some bearing on environmental issues. At NSK, we have defined “coexistence
between people and the earth” as one of our goals and carry out our activities as a member of society accordingly. We
recognize that using the monozukuri (manufacturing) expertise and advanced technological capabilities we have accumulated to demonstrate solutions to issues related to global warming is both a need and an expectation of society.
In order to respond to these expectations, we seek to accurately grasp the risks posed by climate change, and work to
reduce greenhouse gas emissions in our production processes. At the same time, we intend to work on the basis that
expanding sales of environmentally friendly products is an opportunity for creating new business and, by reducing
climate change-related risks, fulfill our social responsibility for realizing the Paris Agreement. For this reason, all our
employees will possess high environmental awareness, our supply chain will work together to achieve the Green Plan
2030 and, as an industrial leader, we will contribute to the resolution of environmental problems.

Environment

59

Climate Change Action Policy
In recent years, climate change has become a major business management risk. At NSK, we believe that accurately
assessing the risks and opportunities provided by climate change and actively disclosing our Climate Change Action
Policy to our stakeholders is necessary for our company to grow in a sustainable manner.
Item

Activities

References

Governance

At NSK, we recognize that global warming poses significant risks to our company. For
this reason, we formulated the Green Plan 2030, in which we set a target of reducing
our FY2030 greenhouse gas emissions by 46% compared to FY2019.
Our President & Group CEO has ultimate responsibility for our company’s climatechange initiatives. The Environmental Control Manager is responsible for drawing
up the Environmental Medium and Long-term Plan and for reporting results to the
President & Group CEO every year. Under this framework, we will discuss how we canrealize the Green Plan 2030.

Green Plan 2030
Environmental Policy

Strategies

If climate change grows more conspicuous, it will lead to societal issues which, in turn,will have an economic impact. This economic impact will give rise to risks and opportunities for NSK. We are a monozukuri company. As such, if we do not implement any
improvements, then we expose ourselves to the risk of rising capital investment andother costs, and we may also miss out on business opportunities. For this reason, wemust transition away from the use of fossil fuel-based resources, improve the energy
efficiency of our production systems and our products and implement measures toboth mitigate and adapt to changes in the global environment. At NSK, we intend both
to expand our business and contribute to the resolution of environmental issues, andwe recognize the need to take an integrated approach to business strategies andenvironmental improvements. In this way, we will respond to problems such as climatechange, resource depletion and waste. We will actively carry out improvements in our
production processes such as repairing air leaks, optimizing compressor numbers andair supply pressures, and recycling cutting fluids and washing fluids.

Green Plan 2030
Environmental Policy

RiskManagement

NSK conforms to the ideas set out in ISO 14001:2015. We have established annual
systems to identify risks and opportunities with the potential to impact our businessactivities, in a manner that exceeds merely an environmental framework. Examples
include “external and internal issues that can affect an organization” and “the needs
and expectations of interested parties.” We also set out related environmental targets.

•G reen Plan 2030
•E
 xternal and internal issues that canaffect an organization•T he needs and expectations ofinterested parties•R isks and opportunities•C ompany-wide environmental targets

Indicesand Targets

We have established the Green Plan 2030, and set out environmental targets related toclimate change accordingly. We report the results of our efforts every year.

Company-wide environmental targets

Following the adoption of the Paris Agreement, the movement toward decarbonization is accelerating in Japan andoverseas. Nevertheless, there is a danger that climate change will increase in severity and have a considerable impact

Environment

Risks and Opportunities Posed by Climate Change

across the world. NSK carries out monozukuri activities in regions with rich natural environments. Unless we takemeasures to combat climate change, there will be significant risks to our business continuity, including cost increases, the loss of business opportunities and the onset of natural disasters. However, we also believe that we can createbusiness opportunities by being among the first to take action. One example is improving the utilization rate of our
production facilities. If we can actively use employee feedback from everyday monozukuri work to improve productivity, we will be able to reduce our per unit CO2 emissions and so significantly reduce our greenhouse gas emissions.
In addition, decentralizing our production sites to avoid climate change risks can also be taken as a business continuity
opportunity. An example of this is our A1 Factory. At NSK, we previously carried out all processes from metal processing to assembly and delivery at our Headquarters Factory. However, we built A1 Factory, a dedicated metal processing
site, in the neighboring Utsunomiya Nishi Chukaku Industrial Park, and commenced operations there in FY2018.

60

RisksScenario

Initiative

Revised laws and regulations will ban the use of certain
chemical substances and technologies; this will result indifficulty supplying parts and materials or in increased costof substitutes

Establish systems and methods to monitor laws andregulations around the world

Energy and materials costs will rise

• Establish energy conservation targets and implement
initiatives to achieve them
• Transition to highly efficient facilities• Transition to the use of renewable energies

Natural disasters will result in difficulty ensuring the stablesupply of products and services

Establish business continuity plans and decentralize
production sites to lower risks

Transition risks

Physical risks

Opportunities

Scenario

Initiative

EnergyImplementing energy savings will reduce energy costs, andtransitioning to the use of low-carbon energies will improve
our corporate image• Implement energy-saving measures; improve efficiency offacilities• Transition to the use of renewable energies

Efficient useof resources• We will improve recycling rates of auxiliary production
process materials such as cutting fluids and cleaning fluids• Promotion of waste reductions and zero emissions will
result in improved corporate image•P romote the 3Rs in our production processes•U se waste to contribute to biomass power generation

Products andServices• Promote environmentally friendly products• Increased frequency of mobile treatments due to an ageing
society will lead to increased demand for functionality,
versatility, portability, lightness and compactness•E stablish energy conservation targets and implement
initiatives to achieve them•T
 ransition to highly efficient facilities• I mprove product durability; improve the quality of our
products and processes

Markets

Launching environmentally friendly products, and disclosing
relevant information will lead to increased market approvaland market expectation

Ensure quality of the information we disseminate; ensure
adequate delivery methods, including the internet

Resilience

Securing stable supplies even during natural disasters willlead to improved customer trust

Establish business continuity plans and decentralize
production sites to lower risks

In Japan, the Act on the Rational Use of Energy and the Act on Promotion of Global Warming Countermeasures requirecompanies that use more than a certain amount of energy, or emit more than a certain volume of greenhouse gases,
to report their energy usage and greenhouse gas emissions. The Act on the Rational Use of Energy requires these

Environment

Response to the Act on the Rational Use of Energy and the Act on Promotionof Global Warming Countermeasurescompanies to target, in the medium and long-term, on average an annual 1% reduction in per unit energy consumption, or its equivalent when taking electricity demand leveling into account. However, reductions in greenhouse gas
emissions rely fundamentally on voluntary initiatives; for this reason, under the Act on Promotion of Global WarmingCountermeasures, it is important not only to implement energy savings, but also to transition to the use of fuels withlow emissions factors in order to realize decarbonization. NSK is a Specified Business Operator under the Act on
the Rational Use of Energy. For this reason, we are working to achieve on average an annual 1% reduction in per unit
energy consumption in the medium and long-term, and we regularly report the results of our initiatives to the relevant
administrative bodies.
In the Business Operator Classification System, we have been ranked highly due to the results of our improvement
initiatives.
Response to the Act on Rational Use and Proper Management of Fluorocarbons
The Act on Rational Use and Proper Management of Fluorocarbons came into effect in April 2015. As a result, NSK identified all devices
that contain fluorocarbons, regularly calculates fluorocarbon leakage quantities and carries out simple inspections, and thereby works
to control the generation of greenhouse gases from fluorocarbon leaks.

61

Company-wide Initiatives
Climate change due to global warming has various impacts on human life and natural ecosystems. Society as a wholemust use both energy and resources more efficiently to prevent environmental problems from growing more serious.
Similarly, when it comes to reducing environmental burden, there are limits to what a single company acting alone
can achieve. Instead, it is vital that the entire supply chain increases its efforts to protect the global environment. NSK
has been striving to reduce its per unit energy use by 1% year-on-year. Specific initiatives have included continued
efficiency improvements in our production processes and planned switches to the use of highly efficient facilities.
Going forward, in line with our Green Plan 2030, we intend to set even loftier targets, and all our employees will work
together to achieve them. When it comes to our suppliers, we require their delivery vehicles not to idle their engines
and to abide by company speed restrictions; we also verify the state of and request their cooperation with regard toenergy conservation initiatives when we carry out environmental audits of business partners.

CO2 equivalent greenhouse gas emissions(t-CO2/kwh)

Carbon Dioxide Equivalent Greenhouse Gas Emissions
9,000
7,791

8,000

6,000
5,000
4,000

6,768

6,684

7,000

3,992

4,430

4,791

5,147

3,410

3,000
2,000
1,000
0

2013

2014

2015

2016

2017

2018

2019

2020

Using Regional Biomass and Contributing to Biomass Power Generation

Environment

Climate Change Initiatives
Tochigi Prefecture’s Kanuma City and the private sector are jointly operating a regional biomass power generation
business. Sewage sludge, food waste and other regional biomass is collected at sewage treatment facilities andturned into energy, generating approximately 900,000 kWh per year. NSK began participating in the business in 2021
by providing food waste. In FY2020, we generated approximately 25 tons of food waste, which is enough to generate
approximately 9,000 kWh. We have also started participating in a biomass power generation business that makes
use of our industrial waste. Waste plastic generated via our industrial activities is combusted, and the resulting combustion gas is used as fuel to generate power. In FY2020, we generated approximately 22 tons of waste plastic, all ofwhich was used to generate renewable energy.

62

Sewage treatment
facilities
SewagesludgeDigestive
tanks

Biomass power
generation facilities

Sale ofelectricity

BiogasPowercompanies

SupplyNAKANISHI INC.

Kanuma City
food waste
collection

Biomass receiving
facilities

General hospitals
in Kanuma City

Meal supply centers

Reducing Greenhouse Gas Emissions in Our Production Processes
Corporate energy consumption is one of the sources of greenhouse gas emissions, which cause global warming.
NSK uses large amounts of energy to manufacture products. For this reason, we are continually working to promote careful energy conservation, such as by installing highly efficient facilities and making improvements to our
production processes. Our Green Plan 2030 defines our medium and long-term energy reduction targets, which are
based on the greenhouse gas reduction targets of both Tochigi Prefecture and Japan. To this end, we are carefully
working to eliminate waste across all our departments and all our employees, by improving work efficiency in our
production activities. Concrete examples include optimizing compressor pressures, preventing air loss and making
other improvements to our production processes. As a monozukuri company, many of our previous energy reduction
initiatives related directly to production. Going forward, however, we also intend to pay attention to reducing energy
use in air conditioning, lighting and other regular sources of electricity consumption in our facilities, and continue toEnvironment

work to reduce our greenhouse gas emissions.
Energy Use Per Unit Shipped at Headquarters Factory
1.00
Energy use per unit shipped(Thousand kL per thousand units)

0.889
0.80

0.784

0.728

0.934

0.763

0.60
0.477
0.400

0.40

0.442

0.20

0.00

2013

2014

2015

2016

2017

2018

2019

2020

63

Energy Use Per Unit Produced at A1 Factory
0.06
Energy use per unit produced(Thousand kL per thousand units)

0.05130.05
0.04220.0394

0.04
0.03
0.02
0.01
0.00

2018

2019

2020

Key Initiatives
Improved yields, automation, optimized production spaces, reduced working hours

Optimizations offacility operating hours

Machines switched off when non-operational, reduced standby power consumption

Review of air-conditioning use

Optimized temperature settings, optimized operational hours, intermittent operation based on automatedtemperature control, partitioning of spaces

Energy savings at
production facilities

Transition to high-efficiency equipment, updates to ageing equipment

Energy savings fromair-conditioning

Regular equipment replacements, regular filter cleaning

Energy savings fromlighting

Transition to high-efficiency lighting, introduction of motion sensors, transition to fewer lighting fittings

Energy savings fromcompressors

Transition to inverters, reduced number of units, optimized air pressures, prevention of air leaks, transition toenergy-saving air gun nozzles

Environmentally Friendly Buildings
NSK’s new RD1 headquarters building commenced operations in April 2017. It is surrounded by a beautiful natural environment—including the Nikko mountain range, Mt. Fukaiwa

Environment

Improvements to
productivity

and the Oashi River—and strikes a harmony with Kanuma’s scenery, which changes withthe four seasons. The exterior wall of the building is covered with “Sigma” environmental
control panels, made from special-order aluminum extrusion to protect the structure of thebuilding. These Sigma panels incorporate external insulation layers and natural ventilation
devices, helping to control the environment both inside and outside the building and guarantee a comfortable internal environment. They also contribute to significant reductions in

RD1 headquarters building

energy consumption. Sigma panels feature free-form curve cross sections, which generate
soft shadows and, according to the time of day, weather conditions and time of year, resultin a variety of light patterns.

Building exterior showing Sigma environmental control panels

64

Energy-conserving Lighting
NSK is working to transition entirely to the use of LED lighting. In addition to a plannedtransition to LED lighting, we have also installed motion sensors in some corridors to reduce
unnecessary energy use.

Interior lighting controlled by motion
sensors

Green Spaces and Planting
Our headquarters factory has planted more than 300
of 10 different trees and seeds, including cherry trees,zelcova trees and grasses, outside the building to develop rich green walkways and gardens. In prefecturalproperty opposite our Headquarters main entrance,
we carry out beatification activities such as sowing
seeds and ivy groundcover, and actively take part inthe creation of green spaces.

Planting and green space management on company grounds

Underfloor Cooling and Heating Air-conditioning Systems
The air-conditioning systems in larger spaces in the RD1 building—such as entrances, showrooms and the Center Court with four-story atrium—make use of abundant groundwater. By
circulating groundwater and using it in conjunction with underfloor air-conditioning systems, NSK is making efficient use of small amounts of energy to make its residential spaces
comfortable.

Office Initiatives
All NSK employees engage in environmental contribution activities, ensuring that lighting and computer monitors are switched off

Environment

The Center Court uses underfloor coolingand heating

during out of office hours. Office air-conditioning is managed by Automated Control Systems that carefully ensure room temperaturesof 28˚C in the summer and 21˚C in the winter.

Installing Automated Air-conditioning Control Systems
NSK’s air-conditioning systems are operated by Automated Control Systems. These systems can be programmed to stop operating
for a certain period of time within set intervals; we have set air-conditioning systems to stop operating for six minutes within every
30-minute interval, leading to reductions in energy use of approximately 20%.

Energy-saving Activities Using the “Power Visualization System”
NSK has installed a Power Visualization System thatuses internal monitors to visualize the power usage ofindividual buildings in real time. Visualizing power usage trends enables us to level our electricity demandby limiting power use at peak times. This, in turn, allows
us to reduce our electricity costs and greenhouse gas
emissions. Visualizing the effects of energy-saving
improvements also helps raise employee awarenessof energy conservation and plays a significant role inPower Visualization System

encouraging further environmental initiatives.

65Installation of Solar Panels
NSK has long recognized the impact of energy supply and demand on the environment to bea matter of the utmost importance. For this reason, beginning in 2011, we installed 256 solar
panels on the walls of Headquarters Factory. Annual power generation of solar panels is approximately 33,000 kw, equivalent to approximately 8 residential homes, and the electricity
produced is used for lighting in buildings.

Solar panels

Active Introduction of Hybrid Vehicles
In order to limit fuel consumption by and greenhouse gas emissions from company vehicles, NSK monitors and manages the distances
driven and gasoline consumed by each of its vehicles, and thereby raises environmental awareness among its drivers. We have actively
introduced hybrid and fuel-efficient vehicles with less environmental impact than gasoline vehicles, and as a result, have reduced
greenhouse gas emissions associated with driving by approximately 34% compared with 2.0 L gasoline vehicles. Headquarters Factory and A1 Factory together own 14 company vehicles, 10 of which are not used for transportation of goods. These 10 vehicles are
all hybrid vehicles.

Environment

66

Effective Use of Resources
Basic Approach
Resource issues caused by economic development and population growth are universal, and measures both to control large-scale consumption of resources and to limit large-scale emissions of waste are required. NSK is working to
improve the efficiency of its resource use, by promoting resource conservation in its monozukuri (manufacturing)
and waste reductions in its production processes. In our Green Plan 2030 medium-term plan , we have set targetsof reducing waste volumes and promoting zero emissions, with the aim of contributing to the establishment of arecycling-oriented society. Every year, we actively engage in activities based on the 3Rs of reuse, reduce and recycle,
with the goal of reducing and recycling waste stemming from our production activities.
Waste Volumes per Unit Produced
3.20
2.73

Per unit produced(kg/1,000 units)

2.40

2.34

2.17
1.74

1.77

2013

2014

1.60

1.61

1.68

1.57

0.80

2015

2016

2017

2018

2019

2020

Initiatives to Reduce and Recycle Waste Generated via our Production Processes

Environment

0.00

NSK generates both waste and valuable byproducts in its product manufacturing processes, and is engaged in efforts
to control them. In FY2020, we generated approximately 126 tons of industrial waste, around 90% of which waswaste plastic, waste oil, or sludge. However, we achieved high rates of recycling, with 99.3% of our industrial waste
reused as roadbed material and for other purposes after intermediate treatment.
Key Measures
Process improvements• Increasing yields of parts and products

Packaging material reductions• Reducing packaging materials by making our products smaller• Using returnable boxes

Reuse of cutting fluids• Collecting and reusing cutting fluids stuck to shavings• Collection/reuse of oil mist floating in the work space air

Reuse of washing fluids• Distilling, restoring and reusing spent washing fluids

Other reductions• Reusing wipes• Recycling metal waste• Recycling work clothes• Reducing food waste

67

Recycling Industrial Waste
Intermediate treatment

Waste item

Recycling
Plastic materials

Compression
Crushing

Waste plastic(mixture)

Blast furnace reducing agent
Roadbed materials

PC and OA
devices

Incineration

Waste power generation

Disassembly
Sorting

Plastic materials
Return of valuable materials

PC board
Electronic parts
Spray cans
Oiled wipes

Crushing
Smelting

Extracted metal

Incineration

Roadbed materials
Recycling

Fluorescent lamp

Fuel chips

Crushing

Chip of wood

Iron products

Waste liquid cans
Sorting/Melting

Metallic material

Sorting/Incineration

Roadbed materials

Waste oil

Distillation and regeneration

Recycling

Sand/Sludge

Incineration

Metal and waste
plastic mixes

Roadbed materials

Glass
Crushing

Ceramics

Landfill

Grindstone

Environment

FY2020 Recycling Rates
Waste volumes

Intermediate treatment volumes

Reuse volumes

125,752kg

125,752kg(100%)

124,892kg(99.3%)
Post-treatment final
disposal volumes
860kg(0.7%)

Direct final disposal volumes

Final disposal volumes

0kg
(0%)

860kg
(0.7%)

68

Reusing Cutting Fluids to Reduce Waste
NSK is actively engaged in reducing waste oil. The majority of our waste oil comes from cutting fluids used to process
metals and is generated by A1 Factory, our dedicated metal processing site. During processing, cutting fluids adhere
to metal shavings and float in factory working environments as oil mist. We use ceiling-mounted oil mist collectors
to collect these fluids and micro-filtration devices to recycle them. We reuse these recycled cutting fluids in our
production processes, enabling us both to significantly reduce waste oil volumes and to limit our use of raw materials.
When the cutting fluids have been removed, the remaining metal shavings are collected as a valuable resource; they
are melted, then reused as raw materials. As a result of these activities, the volume of waste oil generated at our A1
Factory was approximately 20% lower in FY2020 than in FY2019.

Recycling and Reusing Cleaning Fluids to Reduce Waste
regeneration machines, utilizing differences in boiling points to ensure only washing fluid substances are evaporated.
The resulting clean recycled washing fluids are reused in our factories to wash parts. As a result of recycling ourwashing fluids, we purchased 64% less washing fluids in FY2020 than in FY2019. By recycling washing fluids, we arecontributing significantly both to the effective use of resources and to reductions in waste fluid volumes.

Environment

NSK uses hydrocarbon-based washing fluids to wash its parts. Dirty, used washing fluids are heated in distillation

Washing Fluid Recycling System (provisional name)

Vacuum distillation chamber

Cooling

Dirty washing fluids are heated,using differences in boiling points
to ensure only washing fluid
substances are evaporated

Evaporated washing fluid iscooled and reliquefied

Dirty fluid
storage

Distillation recycling
chamberHeat-transfer
oil is used toindirectly heat
the dirty fluid

Dirty fluid

Only clean washingfluid substances isreusedConcentrated waste fluid
After washing fluid substances areevaporated, the waste substances
remaining in the distillation chamber isconcentrated to reduce waste volumes

69

Using the Cross-jurisdictional Waste Management Certification System toReduce Waste Plastic
NSK is engaged in work uniform recycling that makes use of the Ministry of the Environment’s Cross-jurisdictional
Waste Management Certification System, so reducing its waste plastic volumes. The “Cross-jurisdictional Waste
Management Certification System” is a system in which manufacturers are working to improve the recycling rate
through a series of life cycle assessments, ranging from materials to design, production, and recycling. Using this system, we sell our used uniforms as valuable resources to manufacturers, where they are recycled into felt. In FY2020,
by recycling approximately 700kg of used uniforms, we managed to reduce our waste plastic volumes by around 2%.

Uniforms

Recycled fibers

Forming felt

Reducing and Recycling Repair and Service Process Waste
Including Maintenance Guides with Repaired Parts to Encourage Long-term Use
When returning repaired parts to its customers, NSK includes Maintenance Guides to encourage the long-term useof its products. These Maintenance Guides instruct customers on how to appropriately maintain their products, enabling them to extend the life expectancy of their products and contributing to the effective use of limited resources.

NSK has established a Customer Service Helpdesk on its company website. This helpdesk receives a large volume ofinquiries and feedback related to product quality, prices, product specifications and maintenance. Questions related
to maintenance methods account for approximately 10% of our monthly inquiries. We explain appropriate methods

Environment

Establishing a Customer Service Helpdesk to Communicate Appropriate Methodsof Maintenanceof maintaining our products to help our customers understand how to use their products safely and for a long time.

70Reducing Emissionsof Hazardous Chemical Substances
Basic Approach
Our lifestyles are made possible by various natural resources, including the atmosphere, water, soil and animals andplants. NSK’s entire value chain—from raw materials procurement and product manufacturing to the energy it uses
for transportation—has some impact on ecosystems. We work hard to maintain ecosystems from two perspectives:contributions through our business activities and social contributions related to nature conservation. One of ourecosystem conservation activities entails the proper management of chemical substances that have the potential toaffect ecosystems. In terms of concrete initiatives aimed at preventing and reducing the risk of chemical substancecontamination, we regularly take and analyze the water quality of samples of factory wastewater that has been treated at our in-house wastewater treatment facilities. Boric acid is a hazardous substance. Previously, waste fluids containing boric acid from our production processes were purified at our wastewater treatment facilities so that levels of
boric acid were within required standards, then released into rivers. However, in FY2019, the production processes
requiring the use of boric acid were transferred to a separate building removed from our wastewater treatment facilities. If we installed pipes to connect the new building to the wastewater treatment facilities, we would not be able towholly eliminate the risk of pipe leakage. For this reason, we have switched to storing the waste fluid in storage tanks
and discharging it as industrial waste. At NSK, we make advance assessments of the impact our business activities
have not only on human health but also on the environment, and we continuously work hard to eliminate as far as
possible all risks of environmental pollution.

When using new chemical substances, NSK refers to information regarding their hazardousness and toxicity containedin safety data sheets (SDS). Based on this information, we identify appropriate methods of handling the chemical
substances, necessary facility specifications, levels of risk posed to workers and potential impacts on worker health.

Environment

Advance Assessment of Chemical Substance Risks

We then conduct a chemical substance risk assessment and, if necessary, install local exhaust ventilators and otherdevices, and so work to improve worker safety.

Reducing Release and Transfer of PRTR Substances
NSK works to manage and reduce its use of chemical substances listed on the Pollutant Release and Transfer Register(PRTR)*. We also ensure such substances are handled according to SDSs, and we carry out safety management of ourwaste. In addition, once a year we aggregate stock, purchase, use, waste and release volumes of PRTR substances
and, where necessary, notify the relevant parties. At NSK, we are engaged in initiatives to store washing fluids inairtight conditions and increase recycling rates, with the aim of reducing our use of PRTR substances.
*Pollutant Release and Transfer Register
The Pollutant Release and Transfer Register is a system that enables Japanese administrative bodies grasp, aggregate, and publicize
information regarding chemical substances that are potentially harmful to human health and to ecosystems. Companies independently assess emissions of these substances from their work sites into the environment—into the atmosphere, into bodies of water, and into
the soil—and submit reports to the relevant administrative bodies once a year.

71Release and Transfer Volumes(kg)

PRTR Release and Transfer Volumes

30

20

10

0

0.99
0.66

0.52

24.75

20.79

18.81

2018

2019

Release amount2020

Transfer amountManaging Ozone Depleting Substances
NSK uses specified fluorocarbons, which are ozone depleting substances, as refrigerants in the air-conditioners in its
factories. We ensure that waste is appropriately treated in line with all applicable laws. In addition, as required by the
Act on Rational Use and Proper Management of Fluorocarbons, we have verified that our calculated leakage amountof fluorocarbons is less than the equivalent of 1,000 tons of CO2. Going forward, we intend to further strengthen ourmanagement of fluorocarbons through daily and regular inspections.

Lead-free Initiatives
whether they have established measures to prevent mixing of lead-containing solders and lead-free solders.

Environment

All solders used at NSK are lead-free solders. In addition, when carrying out audits of our business partners, we verify

Measures to Combat Atmospheric, Soil and Water Pollution
In order to prevent emissions of hazardous chemical substances from causing atmospheric, soil, or water pollution,
NSK ensures it complies with all relevant laws, ordinances and regulations. In addition, we also enter into agreementswith local organizations and set our own voluntary standards.

Measures to Combat Soil and Groundwater Pollution
NSK does not use chemical substances that cause soil pollution. With regard to groundwater at Headquarters Factory,
we carry out water quality analyses once every two months to verify that we have not exceeded applicable standards.
Our A1 Factory does not use groundwater, so we do not carry out analyses there.

Measures to Combat Water Pollution
NSK carries out water quality analyses of factory wastewater once a month. In particular, we analyze concentrationsof hydrogen ions and biochemical oxygen demand. We carry out nitrogen and phosphorus quantity checks once a
year, and confirm that we have still not exceeded permissible standards. In addition, the wastewater treatment facilities in our factories are fitted with an external interlock function that forcibly interrupts the release of wastewater if
abnormalities are detected. We verify that this function operates properly once a year.

72

Headquarters Factory Water Quality Analysis Results FY2020
Measured SubstanceHydrogen ion
concentration

Units

Suspended solids

Biochemical
oxygen demand

n-Hexane

-

mg/L

mg/L

mg/L

Standards

5.8~8.6

50mg or less

20mg or less

5mg or less

January

7.7

< 0.1

< 0.1

< 0.5

February

7.5

< 0.1

1.7

< 0.5

March

7.5

< 0.1

< 0.1

< 0.5

April

7.4

< 0.1

1.2

< 1.0

May

7.7

< 0.1

2.0

< 0.5

June

7.6

< 1.0

1.1

< 0.5

July

7.4

2.8

1.4

< 0.5

August

7.9

< 1.0

1.4

< 0.5

September

8.0

< 1.0

< 1.0

< 0.5

October

8.0

< 1.0

1.9

< 0.5

November

8.0

< 1.0

1.0

< 0.5

December

7.8

< 1.0

< 1.0

< 0.5

Biochemical
oxygen demand

n-Hexane

A1 Factory Water Quality Analysis Results FY2020
Measured SubstanceHydrogen ion
concentration

Units

Suspended solids

-

mg/L

mg/L

mg/L

Standards

5.8~8.6

50mg or less

20mg or less

5mg or less

January

7.2

< 0.1

1.3

< 0.5

February

7.5

7.6

8.3

< 0.5

March

7.2

< 0.1

4.4

< 0.5

7.3

4.4

4.3

< 0.5

May

7.0

13.6

15.0

< 0.5

June

7.3

< 1.0

< 1.0

< 0.5

July

6.7

< 1.0

< 1.0

< 0.5

August

7.6

< 1.0

2.1

< 0.5

September

7.2

< 1.0

2.9

< 0.5

October

7.3

< 1.0

< 1.0

< 0.5

November

7.4

< 1.0

2.0

< 0.5

December

7.5

< 1.0

2.8

< 0.5

Environment

April

Asbestos Measures
NSK verifies there are no health risks stemming from exposure to sprayed asbestos at its work sites.

PCB Measures (storage status)
NSK treats polychlorinated biphenyl (PCB) waste and PCB-containing in-use electrical equipment in line with the
Law Concerning Special Measures for Promotion of Proper Treatment of PCB Waste*. More specifically, we work
together with Japan Environmental Storage & Safety Corporation (JESCO) to treat high-concentration PCB waste,
and we work together with government-certified industrial waste disposal companies to treat low-concentration
PCB waste. At this time, we do not have any PCB waste in storage.
*Law Concerning Special Measures for Promotion of Proper Treatment of PCB Waste

73

Reducing Emissions into the Atmosphere
NSK does not emit NOx, SOx or VOC.

Environment

74

Management of Chemical Substances
Basic Approach
Countries and regions around the world are strengthening regulations related to chemical substances. Examples
include the Act on the Evaluation of Chemical Substances and Regulation of Their Manufacture, etc. in Japan and the
RoHS Directive and REACH Regulation in the EU. With the addition of increased interest in SDGs and ESG, companies
are expected to further improve their management systems and information disclosure for chemical substances. With
regard to chemical substances used in its production processes and contained in its products, NSK has establishedand conforms to management standards that encompass risks to health and the environment and limits to quantities contained in its products. In addition to complying with applicable laws and regulations, in order to ensure thepenetration and sharing of SDGs and ESG, we work together with all business partners involved in the transmissionof chemical substance information, and carry out operational management of chemical substances in a supply chainwide manner.

Management of Chemical Substances in our Production Processes
NSK works to prevent environmental pollution caused by chemical substances. Specifically, we manage chemical
substances in a manner that prioritizes the environment from purchasing and use to disposal and work to eliminate
environmental risks posed by the chemical substances we use as far as possible. It has been internationally agreed
that we should ensure the impact of chemical substances is minimized not only on human health but also on theenvironment. As countries around the world strengthen their management of chemical substances, at NSK we take aprecautionary approach, carrying out advance assessments of the environmental risks posed by chemical substancfrom our production processes and our products, and thereby improve safety both for our production line workers
and for users of NSK-brand products.

Advance Assessment of Risks Posed by Chemical Substance

Environment

es, and minimizing risks before we start to use them. In this way, we are working to eliminate hazardous substances

When using new chemical substances in either its production processes or its products, NSK assesses the risks posedby chemical substances in advance. Before using new chemical substances, we acquire the relevant SDSs*, carryout risk assessments and take the appropriate measures. We assess levels of risk posed to workers and potential impacts on worker health based on information regarding the hazardousness and toxicity of the chemical substances,methods of handling them, work environments and facility specifications. According to the results of the above risk
assessments, if necessary we install local exhaust ventilators and other devices to improve worker safety. In addition,in order to minimize the risks posed by chemical substances, we continue to explore potential substitutes. In fact, wehave already identified a substitute for 1-bromopropane, which is contained in the washing fluids we use to wash
parts in our production processes.
*Safety data sheets (SDS)
In order to encourage companies to improve proper management of chemical substances, the Act on confirmation, etc. of Release
Amounts of Specific Chemical Substances in the Environment and Promotion of Improvements to the Management Thereof requiresthat when specified “chemical substances or products containing chemical substances” are transferred from one company to another, safety data sheets containing information related to the characteristics and handling methods of the chemical substances areprovided in advance.

75

Green Procurement
In recent years, regulations on chemical substances contained have become increasingly strict, including theimplementation of the RoHS Directive in various countries and the revision of REACH Regulation; for this reason,companies are required to establish and operate thorough management systems. NSK uses a wide variety of chemical
substances both in its monozukuri (manufacturing) processes and in its products. In order to appropriately manage
these chemical substances, we have established the “NSK Green Procurement Guidelines.” We regard minimizing
the environmental risks posed by chemical substances to be an important issue, and we are promoting initiatives to
identify which chemical substances must be managed, as well as working to reduce their content and find potential
substitutes. The above initiatives are aimed at preventing the risk that our products will contain hazardous chemical substances when they are shipped, and at minimizing risks both to human health and the global environment.
In addition, as our business becomes increasingly global, we make sure to collect and evaluate the latest trends inchemical substance management policies and regulations in countries around the world and see they are reflectedin our management of chemical substances. We have designated two substances as “substances prohibited to be
included in procured items such as product parts and materials (prohibited substances)" and "substances that need
to be reduced or replaced by understanding their content in procured items in order to reduce environmental impact(controlled substances) ”. We promote "green procurement" in cooperation with our business partners and suppliers
to procure products, parts, and materials with low environmental impact.
Green Procurement Promotion System
Environmental Conservation System
Managing environmental impact of our factories

Green Procurement Promotion
Management of Chemical Substances
Contained in our Products
Environment

Managing chemical substances contained in our products

76

Green Procurement Promotion Structure
NSK has established a Pollution Prevention Subcommittee, comprised of members of the R&D Division and the Purchasing Department, under the supervision of the Environment Committee. The subcommittee monitors chemical
substances regulations, seeks to standardize our chemical substance management systems and promotes research
into chemical substances contained in our products.
Key Regulations regarding Chemical Substances Contained in Products in Countries around the World
EU

China

Korea

North America•RoHS Directive•REACH Regulation•WEEE Directive•ErP Directive•China RoHS

•Korea RoHS

•California Proposition 65

Japan•J-Moss (Japan RoHS)

Asia and Oceania

South America•Turkey RoHS
•UAE RoHS•Saudi Arabia RoHS

•Thai RoHS
•India RoHS
•Vietnam RoHS•Singapore RoHS

•Brazil RoHS

Environment

EU neighbors

Advance Verification of Substances Contained in our Products
Various countries are formulating laws and regulations governing chemical substances contained in products, suchas the RoHS directive and REACH Regulation; these regulations cover a growing number of chemical substances,products and uses. NSK investigates information related to chemical substances contained in its products, auxiliarymaterials, and packaging materials. The information we gather is shared via internal systems and made available
for relevant parties to verify when necessary. We list banned substances and managed substances in our Green
Procurement Guidelines. Before developing new products or switching to different parts and materials, we verify inadvance the substances they contain and thereby ensure our products are not hazardous to humans or the naturalenvironment. In addition, every year we carry out environmental audits of approximately 20 business partners. On
these occasions, we directly verify how chemical substances contained in products are being managed and, if theirsystems are unsatisfactory, request corrections and provide support for the establishment of appropriate systems.

77Environmental Audits of Business Partners
When carrying out environmental audits of business partners, NSK also takes the opportunity to directly verify whether they are carrying out Green Procurement. We ensure our business partners have an accurate understanding of ourGreen Procurement Guidelines, and carry out regular investigations to verify whether or not their products containany substances defined as banned substances or managed substances in our guidelines. When we revise our Green
Procurement Guidelines, we also verify whether or not the revised information is being properly communicated to our
secondary business partners.

Compliance with the RoHS Directive
In 2006, the EU issued the RoHS directive, which limits products from containing specified hazardous substances.
Since then, growing numbers of regions outside the EU have also demanded compliance with these standards. The
range of product fields falling under the scope of the directive has also steadily expanded, with medical devices—including NSK dental products and medical products—covered in 2014. RoHS directive standards have subsequently
become even stricter, with the additional prohibition of four phthalates and revisions such as the abolition of exempt
items. At NSK, we share the results of investigations into chemical substances contained in our products via internal
systems. Using information available in these internal systems, we identified parts and materials containing the fourphthalates and completed a transition to substitute materials.

Compliance with REACH Regulation
The EU’s REACH Regulation is a set of comprehensive chemical substance management regulations that requires
the registration, evaluation, authorization, and restriction of chemicals; it applies to all chemicals, whether they are
but also in articles such as machines and molds. The regulation chemical products came into effect in 2007, and isgradually being enforced. With regard to the regularly updated candidate substances of very high concern for authorization, NSK continually carries out investigations into whether they are contained in its articles, and verify that
contained quantities do not exceed 0.1%.

Environment

currently in use or new. REACH Regulation applies to chemical substances contained not only in chemical products78Conserving Water Resources
Basic Approach
Due to climate change and the destruction of forests, and to population growth and economic development in developing nations, water shortage risks are increasing around the world. In recent years, the impact of climate change andother factors have led to worsening quality of river water, resulting in strengthened regulations. From the perspectiveof risks to company activities, water-related issues are of great urgency. In FY2020, NSK used approximately 15,000
m3 of clean water and 3,000 m3 of industrial water. After use, this water was purified at our in-house wastewater
treatment facilities before being externally released. Since we use large amounts of water, we place great importanceboth on controlling our water use and on ensuring we purify water before releasing it externally. In this way, we engage in reducing our impact on aquatic environments. Going forward, we intend to continue focusing on the effective
use of water resources, and promote activities that enable us to have a positive impact on local aquatic environments.

Controlling Water Use
Installing Water Faucet Adjustment Valves
In some in-house processes, NSK has installedadjustment valves in its water faucets. These
adjustment valves enable small volumes ofwater to be released at high pressures, helping
us to wash our products efficiently. We intend
Environment

to install these adjustment valves in water
faucets that see large amounts of water use—
including in production processes, canteens

An adjustment valve

and washing basins—and thereby limit ourwater use.

Water Circulation in our Electrical Discharge Machines
At its A1 Factory, NSK uses a total of eight
general-purpose and four automatic electricaldischarge machines. These electrical discharge machines use a mix of industrial waterand dielectric fluid, which is poured onto metals during processing. We use approximately
800 m3 of industrial water per year on electrical discharge machining, which represents

Electrical discharge machining line

Water circulation tank with 100 L capacity

approximately 28% of total industrial water
use at A1 Factory. We have installed water circulation devices on our general-purpose electrical discharge machines,
which use filters to remove impurities contained in post-process water. This water is then reused in subsequent
electrical discharge machining processes. Going forward, we intend to install water circulation devices on all ourgeneral-purpose electrical discharge machines.

79

Wastewater Purification
The water NSK uses at its factories is purified at in-house wastewater treatment
facilities to meet water quality standards, before being released into nearby
rivers or industrial park wastewater treatment facilities. We carry out regularinspections at our wastewater treatment facilities, managing them at all times
to ensure there are no irregularities. We also carry out water quality analyses
at final outlets to verify that our effluent water meets applicable water quality
standards. In addition, we have installed water-release interrupt functions that
activate if effluent water exceeds water quality standards. We verify that thisfunction works properly once a year. In this way, we have implemented ample

Our in-housefacilities

wastewater

treatment

measures to combat environmental risks in the case that effluent water exceeds
applicable water quality standards.

Environment

80

Supply Chain Environmental Initiatives>Related Link:
Green Procurement Guidelines
Responsible Supply Chain

Environment81

Biodiversity Preservation
Basic Approach
If we wish to live in harmony with nature, we must protect abundant forests and other forms of nature around theworld. Yet forests around the world are shrinking, the habitats of diverse creatures are becoming fragmented andloss of biodiversity is growing worse. Loss of biodiversity leads to various issues, including the depletion of biologicalresources that are vital to society, the inducement of natural disasters and the progress of global warming and, assuch, it presents a risk to the sustainability of society as a whole. In the face of such risks, NSK carries out activities
aimed at reducing its impact on the environment, including biodiversity. By helping to prevent global warming, using
resources effectively and managing chemical substances, we act in an environmentally friendly manner when it
comes to monozukuri (manufacturing) and to the products and services we provide. At the same time, we promoteconservation activities that have a direct bearing on nature, and so contribute to the realization of a society thatcoexists in harmony with nature. It takes many years for biodiversity and ecosystems to recover and for their healthto improve. For this reason, we analyze the risks and opportunities to our company stemming from biodiversity preservation measures, and promote biodiversity preservation activities in a long-term and sustainable manner.
Biodiversity Policy
ItemManaging
paper use

Risks

Opportunities• Set reduction targets and promote reduction measures

Managing
wastewater• Ecological destruction due to the impact of releasing dirty
factory wastewater into rivers• Carry out regular inspections of factory wastewater
devices• Check external water-release interrupt functions activate
correctly in cases of abnormal readings• Carry out regular water quality analysis and trend
monitoring

Optimizing
planting at
our factories• Shrinking green spaces due to climate change leading toaccelerated global warming, loss of habitats and collapse ofbalanced ecosystems• Manage planting within company grounds in an appropriatemannerEnvironment• Resource depletion due to deforestation for resource
procurement

The Relationship between our Company and Ecosystem Conservation
Our lifestyles are made possible by the fruits of nature—also known as ecosystem services—provided by natural
capital such as the atmosphere, water, soil and plants and animals. NSK recognizes that its entire value chain—frommaterials procurement and production to energy used for transportation—has some impact on local ecosystems. For
this reason, we work to maintain and recover ecosystem services from the dual perspectives of contributions throughour business and social contributions related to nature conservation. As far as contributions through our business isconcerned, we provide energy-saving and other environmentally friendly products and, as part of our ecosystem conservation activities, carry out proper management of chemical substances. With regard to social contributions related
to nature conservation, we promote local clean-ups, green space management and other ecosystem conservation
activities.

82

Supply of raw materials such as timber

Corporate
activities

Ecosystems
Reduced impact of business activities on
ecosystems

Provision of environmentally friendly
products and services

Social contribution activities related tonature conservation

Ecosystem-dependent production activities
Reduced impact on ecosystems
Contributions to ecosystem conservation

Management of Chemical Substances Contained in Products
As part of its ecosystem conservation activities, NSK manages chemical substances contained in its products fromthe product development stage. This includes chemicals contained in materials and parts in every stage of the procurement and production processes. In particular, we carefully manage chemical substances in key procurement
materials according to our Green Procurement Guidelines. In cooperation with our business partners, we carry out
investigations into chemical substances contained in the materials and parts used in our products, as well as in allpurchased parts—including auxiliary materials—used in our production processes.

Reducing Paper Use to Promote Biodiversity
per employee use of copier paper, every year we set reduction targets and engage in activities to promote reduced
use. Core initiatives include digitalizing various in-house application forms and enabling work instructions for our
production processes to be viewed via digital media.

Environment

NSK seeks to reduce paper use as part of its biodiversity and forest resource conservation activities. In order to reduce

Per unit Copier Paper Use

Sheets per employee(Sheets per person per year)

350

328.8
274.3

280

258.1
227.9

210

208.5

140

70

0

2016

2017

2018

2019

2020

83

Coexisting in Harmony with the Natural Environment
NSK’s Headquarters Factory is surrounded by a beautiful natural environment—
including the Nikko mountain range, Mt. Fukaiwa and the Oashi River—andstrikes a harmony with Kanuma’s scenery, which changes with the four seasons.
Goheiiwa, a mountain rich in greenery that neighbors our Headquarters Factory,
provides a habitat for wild animals; fireflies also live by the river that runs between
the mountain and our factory. At NSK, we endeavor to minimize the risks ourbusiness activities have on ecosystems. We have defined “coexistence between
people and the earth” as one of our goals and carry out our business activities
accordingly. We engage in initiatives to safeguard plant and animal ecosystems,

Goheiiwa, a mountain neighboring
Headquarters Factory, provides a habitat
for wild animals

such as helping to maintain the green spaces around Goheiiwa.

Appropriate Management of Planting at our Factories
Our headquarters factory has planted more than 300 of 10 different trees andseeds, including cherry trees, zelkova trees and grasses, outside the building
to develop rich green walkways and gardens. In prefectural property opposite
our Headquarters main entrance, we carry out beautification activities such as
sowing seeds and ivy groundcover, and actively take part in the creation of green
spaces.
Company Gardens

Purifying Factory Wastewater
standards set out by applicable laws and ordinances. We have established wastewater treatment facilities withincompany grounds, where water used by our factories is purified to meet permissible standards. This water is thenreleased into rivers via the company pond. In FY2020, we did not exceed permissible standards.

Environment

In order to prevent water contamination due to wastewater, NSK regularly verifies it complies with wastewaterCommunication with Local Communities
Training and Education
In order to resolve recent environmental issues, NSK believes it is imperative that all stakeholders—not just NSK
employees—share responsibility for environmental issues and recognize the importance of initiatives to improvethem. Every year, we invite elementary schools from Kanuma, Tochigi Prefecture, to participate in factory tours. On
these tours, we give lectures related to environmental issues and our company’s environmental activities, discussing
questions such as: What can we do as individuals in response to existing environmental issues? Why are companies
recently placing greater importance on environmental issues? and, What environmental activities are they carrying
out? Through these activities, we believe that we have been recognized as a monozukuri company that gives due
consideration to the environment and develops locally oriented business by local residents.

84GovernanceCorporate Governance
Basic Approach
NSK's basic management policy is to increase its corporate value as a global company that is trusted by shareholders
and other stakeholders. As such, we promote the strengthening and enhancement of our corporate governancesystem.

Outline of the Management System
Corporate Governance System
General Meeting of Shareholders
Appoints/dismisses

Board of Directors

AuditsAppoints/dismisses

Appoints/
dismisses

Audit and Supervisory Board

Selects/
dismisses
LiaisesPresident & Group CEO
Internal Audit Office

Corporate Vice President

Audits

Accounting Auditor

ISO Internal Auditor
External Certification Organization

Divisions & Group Companies

Board of Directors
NSK has a board of directors composed of six directors (including one female director), which is positioned as the
management decision-making organization, and thus judges and makes decisions regarding matters important to ourGroup. The Board of Directors holds regular meetings, as well as irregular meetings as required, at which decisions
are made on key management issues and work execution is supervised. The Board of Directors meetings are attended
by, in addition to the six directors, the three auditors, who provide their opinions as appropriate to help strengthen our
audit functions.

Designation of candidates for directors and auditors at NSK is made through resolutions of the Board of Directors
regarding candidates recommended by the representative directors in consideration of their character, knowledge,
experience, and abilities, and based on the policy of comprehensively considering the right person in the right place.

GovernanceAppointment of Directors

In addition, designation of candidates for auditors is done with the agreement of the Audit and Supervisory Board.

86Outside Directors
There are three outside directors at NSK. When appointing outside directors and outside auditors, we refer to criteriasuch as the independent standards stipulated by the Tokyo Stock Exchange, appointing those who have no vested
interests in us and no risks of conflicts of interest with general stockholders. They must also have superior character,the knowledge, abilities, and wealth of experience to accurately, fairly, and efficiently carry out management of theCompany, and high ethical standards.
Reasons for Appointing Outside Directors
Yuji Nonagase was appointed as an outside director due to our expectations that he can contribute to strengthening
corporate governance and maintaining management health through his specialist knowledge regarding management
systems engineering and through advice regarding management as a whole. Fusato Suzuki was appointed as an
outside director due to our expectations that he can contribute to strengthening corporate governance and maintaining management health through his wealth of experience and broad knowledge regarding financial institutions
and through advice regarding management as a whole. Yukiko Araki was appointed as an outside director due to our
expectations that she can contribute to strengthening corporate governance and promoting sustainability of NSK
through her wealth of experience in administration over many years, and her broad knowledge of, CSR, environmental
strategies and healthcare.

Audit and Supervisory Board
We have an audit and supervisory board composed of three auditors (all of whom are outside auditors). Based on theaudit plans set by the Audit and Supervisory Board, members will attend Board of Directors meetings, exchange opinions with the accounting auditors and internal Audit Department, and carry out other activities to audit management
activities, including the directors' performance of their duties.

Officers’ Remuneration
Amounts such as the remuneration for the Board of Directors are determined by the Board of Directors in considerationof the performance and execution of each director, the company's performance, and the economic situation. In addition, as medium-term incentives, directors (excluding outside directors) are provided with a set number of new stock
options in accordance with their post as remuneration when they leave their post. Amounts such as the remuneration
for auditors are determined by a meeting of the Audit and Supervisory Board and are set to be within the remuneration
limits approved by a resolution of the General Meeting of Stockholders.
Total amount, remuneration, etc. for each officer category by type of remuneration, etc.
and number of eligible officers (2020)
Officer category

Total remuneration, etc.
(1,000 yen)

Total amount per type of remuneration, etc.(1,000 yen)Basicremuneration

Stock options

Bonuses

Retirementpay

No. of eligible
officers(persons)

170,060

170,060

—

—

—

4

Audit and Supervisory
Board members(excluding outside directors)

—

—

—

—

—

—

29,75029,750———6

Outside officers

GovernanceDirectors(excluding outside directors)

87Internal Control
In accordance with the Companies Act and the Ordinance for Enforcement of the Companies Act, NSK's Board of
Directors passes resolutions on the development and operation of the system (the internal control system) to ensure the appropriateness of the operations of the corporate group (hereafter, “our Group") that comprises NSK and
our subsidiaries, working to ensure the appropriateness of our operations as well as improve and strengthen ourmanagement systems. We strive to improve corporate value by carrying out sound business operations through theenhancement of internal control.

Operation of the General Meeting of Shareholders
Voting Rights
NSK has stipulated in its Articles of Association that resolutions for the election of directors shall be adopted by amajority of the voting rights of shareholders present at a meeting where shareholders holding one-third or more of
the voting rights of shareholders who are entitled to exercise their voting rights are present. In addition, the Articles of
Association stipulate that resolutions for the election of directors shall not be made by cumulative voting.

Governance88Compliance
Compliance Behavioral Guidelines
NSK's mission is “To create ‘brilliant progress’ via innovative ‘grinding technology.’” To achieve this, we develop, manufacture, and sell high quality products centered around our core ultra-high-speed rotary technology. We contributesocially significantly in the three domains of dental, medical, and industrial, providing products and services in 135
countries around the world. In order to achieve our corporate mission and contribute sustainably to society, we haveset out Compliance Behavioral Guidelines which all officers and employees must comply with in their daily work.
In addition, we require all our overseas bases to comply with the laws and regulations of each country in our Group
Governance Code.

Compliance Behavioral Guidelines

1.Respect for Human Rights
We respect the human rights of every person and do not accept any form of discrimination (suchas gender, age, nationality, race, ethnicity, ideology, belief, religion, birth, education, disabilities,
illness and marital status). In addition, we treat everyone with the same respect and dignity.
2. Compliance with Laws and Regulations
We comply with laws, internal regulations and rules, and other social norms, and conduct corporate activities in a fair and sound manner.
3. Responsibility to Society
We act with a social conscience and take a firm hand against all forms of illegal and antisocial
behavior.
4. Positive Workplace Environments
We strive to create workplaces that are easy to work in and encourage good interpersonal relationships, respecting the character and personalities of each of our officers and employees. Concerned
about how others feel, we ensure personal privacy is protected.
5. Safe, Healthy Workplace Environments
working to achieve safe, comfortable workplace environments where people can work healthy inboth mind and body.
6. Preventing Harassment

GovernanceWe strive to create workplaces that prioritize the safety and health of each officer and employee,

We do not permit any form of harassment, including sexual or power harassment.
7. Respect Diversity of Human Capital
We aim to be a workplace which respects diversity and where each officer and employee can workwith enthusiasm.

89

8. Dedication to the Job
We dedicate ourselves sincerely to our jobs, following the set procedures and correctly understanding work-related directives and orders. In addition, we follow laws, regulations, and social
norms and ethics, always carrying out our work with a high awareness of ethics.
9. Making Products
In order to contribute to society through providing top-quality products using innovative, advanced
technologies, our core principle is to not make defective products, and to always deliver them atthe promised time. We listen sincerely to opinions from our customers and society regarding our
products and services, comply with all relevant laws and regulations, including those relating to
medical devices, strive to maintain and improve the quality of our products, and work towards
being able to provide a stable supply at fair prices.
Our research and development is carried out independently and sincerely, based on a high senseof ethics and scientific facts.
10. Healthy Corporate Activities
We respect our suppliers and other business partners as equal partners based on the principleof good faith, aiming for mutual prosperity and practicing sincere, fair, and equitable corporate
activities. In addition, we do not carry out any unfair or improper activities that take advantage of
our superior position.
11. Fair Business Activities
We comply with competition law (the Anti-Monopoly Act in Japan), laws and regulations relating
to import and export control, and other laws and regulations, striving to earn the trust of society
and improve our corporate and brand images through fair, free and lawful business activities.
12. Effective Use and Protection of Company Assets
We strive for the effective and efficient use of both tangible assets, such as our land, buildings, andfacilities, and intangible assets, such as patents, copyrights, and expertise. We manage these appropriately and will not use them for anything other than business purposes, including for personaluse. In addition, even for business use, we do not use or provide them for political activities without
the approval of the company.
We strive to manage our assets in order that payments to outside be both fair and appropriate.
13. Protection of Intellectual Property Rights
We respect the intellectual property rights of third parties, and do not obtain the results of third
parties unfairly, nor use them in our businesses. In addition, we require our business partners toalso comply with intellectual property laws.

We carefully manage information related to business or work, and ensure that management
secrets are not leaked and that personal information is handled in compliance with the laws andregulations.

Governance

14. Ensuring Information Management

15. Appropriate Information Disclosure
We disclose corporate information, such as our business activities or the state of our management,at the appropriate time, accurately, and in a way that is easy to understand, in accordance with therelevant laws and regulations.

90

16. Prohibition of Insider Trading
We do not use unpublished key information (such as information that could affect company stock
prices) for the gain of either ourselves or third parties.
17. Prohibition of Conflicts of Interest and Mixing Public and Private
We carry out our company work sincerely, and do nothing that would go against the company’s
interests. In addition, we make clear our position as a company and the positions of individuals, anddo not do anything that would bring in personal stakes into the company or utilize the company’s
position.
18. Opposition to Antisocial Forces
We take a firm and organized stance against antisocial forces and groups that threaten the orderand safety of civil society, and will not provide them with benefits of any sort. In addition, we cooperate with investigating authorities to the fullest extent provided by law.
19. Contributions to Local Communities
We aim to become a member of our local communities, always contributing to them by carryingout corporate activities that are rooted in the region. In addition, we actively carry out exchanges
with local communities.
20. Preventing Bribery and Corruption
We never offer inappropriate gifts or entertainment of any kind. Nor do we ever receive inappropriate gifts or entertainment of any kind.
21. Donations and Aid
We provide donations and aid responsibly, with full awareness of their necessity and appropriateness, as a company that exists as part of society.
22. Environmental Protection
We are aware that the protection of the global environment is one of the most important issues forthe entire human race, and that this protection is a vital requirement for our existence and activities
as a company. To that end, we give consideration to the protection of the regional and global environment in every field of our corporate activities.
23. Monitoring Human Rights Issues across the Supply Chain
We monitor human rights issues in the supply chains that feed us the parts and raw materials forour products, and strive to comply with the laws and regulations.

Governance91

Initiatives
Whistle-blower System
At NSK, since 2015 we have had a whistle-blower system which employees can discuss issues they have discoveredthat violate compliance. In addition to this company system, we have an external office set up by a lawyer to ensurethat reports can be made in complete confidence. The facts of the reported content are investigated and dealt with.

Preventing Harassment
At NSK, we strive to prevent infringements on human rights by providing training designed to prevent all forms ofharassment and ensuring people are fully versed with the correct knowledge for working. If an issue is discovered, weinvestigate the facts and deal with it in accordance with our company regulations.

Appropriate Relationships with Medical Workers
NSK complies with the regulations set by the Japan Federation of Medical Devices Associations (JFMDA) and theJapan Fair Trade Council of the Medical Devices Industry, and with our internal regulations and employee behavior
policies, to carry out corporate activities that maintain high ethical standards. With the goal of achieving a broad
understanding of how we contribute to the development of the life sciences, including medicine and medical engineering, and promote corporate activities that ensure a higher standard of ethics, in compliance with the JFMDA’s“Transparency Guidelines for the Medical Device Industry and its Relationships with Medical Institutions and Other
Organizations,” NSK publishes information about our corporate activities related to medical institutions and medical
personnel.

Dealing with Antisocial Forces
NSK takes a firm and organized stand against antisocial forces and groups that threaten the order and safety of civilsociety, and will not provide them with benefits of any sort. In addition, we cooperate with investigating authorities tothe fullest extent provided by law.

Governance92

Risk Management
Basic Approach
Changes to the world situation and the globalization of business mean that the business environment is changing rapidly, and we are seeing a greater variety of risks that could impact our business activities. This is why NSK carries out
appropriate initiatives towards minimizing risks that could have major impacts on our business activities. In addition,
to prepare for unexpected events such as natural disasters, we are also working on business continuity plans to either
continue operating or recover as quickly as possible after a disaster.

Risk Management System
We are constructing a system where, if there is an unexpected event that could have a major impact on NSK’s operations, it is promptly reported to the management team and the people responsible liaise with the related departments
to deal with the issue appropriately. In addition, we have established separate management systems, committees, andcouncils for major risks, and are working on understanding risks and appropriate responses.
Major Business Risks
1. Risks associated with a high proportion of exports
2. Legal regulations
3. Quality issues
4. Risks associated with restructuring the sales network
5. Risks associated with dependence on specific industries and increased competition
6. Risks associated with parts suppliers outside our Group
7. Risks of litigation
8. Risks of major natural disasters, infectious diseases, etc.

Initiatives
BCP Initiatives
NSK has a business continuity plan (BCP) in place to use in case of an emergency such as a major natural disaster.
This plan sets out the systems, rules, responding organizations, recovery priority steps, and so on needed to minimize
the effects on our employees, customers, local people and all other stakeholders and to recover business promptly.

NSK carries out regular drills in order to implement its BCP in the event of a disaster, verifying its effectiveness andmaking improvements to the plan in a PDCA cycle. In addition, we are working to ensure the effectiveness of ourdisaster measures by, for example, providing hazard maps, maintaining an emergency contact network, and maintain-

GovernancePreparations for Major Disasters

ing a safety confirmation system to collect information on the safety of employees and their families in the event of
a disaster.

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Infectious Disease Measures
At NSK, we are working to prevent employees from being infected by ensuring compliance with the “new normal”
directed by the government as a way to deal with the COVID-19 pandemic. In addition, we consider stable supplyof products and continued service for our customers to be two of the most important issues, so the entire company,
especially the Manufacturing Division and the Sales Division, will respond to ensure customer needs are met.

Cybersecurity
NSK works to ensure information security throughout our entire company by establishing a Basic Cybersecurity Policy that protects information received from customers and our own information assets from threats such as accidents,
disasters, or crime, allowing us to enjoy the trust of our customers and society. Specifically, we are maintaining andimproving information security levels based on rules that regulate personal measures, information asset management, physical measures, access control and authentication, use of IT equipment and software, system development
and maintenance, IT infrastructure operation and management, information security incident response and business
continuity management. In addition, we have established the Personal Information Protection Regulations to appropriately protect and appropriately handle the personal information of our customers and other stakeholders, andstrive to adhere to them.

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Tax Transparency
Tax Policy
NSK has established a Basic Tax Policy to carry out tax work ethically, based on sincerity and fairness.

Basic Tax Policy

1. Tax Compliance
We will carry out our tax work ethically, based on sincerity and fairness, to ensure that it does not
violate legal or social standards. This is done through understanding and compliance with theguidelines prepared by the Organisation for Economic Co-operation and Development (OECD)and the laws, regulations, etc. related to taxes in the various countries and regions Group companies do business in.
2. Transfer Price Taxation Compliance
We will strive to pay taxes appropriately in each country or region by setting internal Group transaction prices based on the guidelines prepared by the OECD and the laws, regulations, etc. related
to taxes in the various countries and regions in order to achieve a fair distribution of income among
Group companies in proportion to their contributions.
3. Tax PlanningWe will act based on the Base Erosion and Profit Shifting (BEPS) action plan prepared by the OECD,and will not take any actions designed to avoid paying tax that are not economically rational, suchas the transfer of profits to lightly taxed countries (tax havens).
4. Relationship with Tax Authorities
We will strive to build and maintain healthy relations with the tax authorities in each country or
region through the appropriate and timely presentation of information during tax administration
procedures and tax inspections. In addition, we will strive to deal appropriately and promptly withissues pointed out during tax inspections, and make improvements.

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Interviews with Outside Directors
Yuji Nonagase
NSK is gradually developing systems for the SDGs. At the point where new products aredeveloped, the company is now considering product structure and packaging materials
as well. So we can see progress being made at this point. The most important thing is tomeet the needs of dentists and physicians. Moreover, what's important is to contributeto providing top-class medical care to patients. In line with our corporate philosophyof "Our Core", we are required to take a total, bird's eye view of our customers, who
are people working in treatment facilities and their patients, and to take into accountsustainability. It is important to share our values globally, improving satisfaction for all
our stakeholders. We need to move ahead with creating organizations that recognize
diversity, bringing together a diverse range of human resources, and connecting this to a
corporate culture that offers ample motivation. Being able to establish a foundation as acompany that has grown from a medium-sized enterprise in a very short time is bound toform the basis for further growth in the future.
Our system to consider the dental health of employees is unique, and helps us have a dialogue with the market. I feel we should be striving to enhance our measures even further.

Fusato Suzuki
I do not see any major short-term issues for NSK in terms of creating corporate value,
thanks to our high profitability and strong financial position. The same can be said for therisk of misconduct occurring at company-wide management levels. The effects of the
COVID-19 pandemic, which continues on from last fiscal year, have also been more than
amply mitigated in terms of the temporary drop thanks to prompt, bold leadership from thetop, and indeed, we have increased our industry share and are currently focused on measures for what happens after the coronavirus. The importance and meaning of responses
to sustainability are increasingly important in steady times like this. Last fiscal year, weformulated an ambitious medium-term management plan, and debate at the Board of
Directors meetings was intense.
In future, I want to focus on the following points in terms of support for governance by outside directors. The changing nature of the dental market, our business portfolio balance,
the high proportion of overseas business, strengths and risks, the risks and opportunities
of climate change, strengthening our internal audit system, the completion of our medium-term management plan, and so on. At the same time, we have a great many different
are also risks that we cannot change as a company, such as climate change. The source ofour business resilience is, I am convinced, how we fully share among both top management and employees our purpose, the creation of brilliant progress, and march strongly tothat goal.

Governanceinitiatives for improving corporate value over the long term and responding to risks. There96

Yukiko Araki
With the expansion of information disclosure required of corporations to the environment,
society, and governance, rather than just financial matters, this is the first report that expands our previous environmental reports into a sustainability report. However, for NSK,
this has not made a sudden concern after the world started changing. Rather, I feel it is a
way to restate, in clear and understandable ways, the basic values and their practices that
we have always valued as a company to our external investors and customers, as well as tothe local community and a wide range of other interested parties.
Here, we first featured our most important cores as a company (“brilliant progress, EQOH,
Fly & Add). But these ideas seem a little abstract if you just focus on the words. But within
the company, this is something that has been rooted here for a long time, as specific,
concrete activities that are continually improved, from management to the factory floor.
In the context of our core as a company and our contributions to the SDGs, I think it will be
important to set more specific targets regarding how we should create value through ourbusiness in future, and then move ahead with initiatives for this and show their progress.

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21.09.EN