Sustainability Management

Toward Realization of a “NAMERAKA Society”
About UsIn December 2021, we formulated a roadmap for realizing a “NAMERAKA Society” as an overview of our management
to ensure that our Group continues to grow as a company that contributes to society. The roadmap shows the Group’s
approach to materiality, envisioning the period from the 2020s to the 2050s.

Roadmap for realizing a “NAMERAKA Society”

ESG issues

Realize carbon
neutrality

Materiality
Respond to climatechange2020s

Initiatives

2030s

Visualize and improve electric power at production plants
Reduce CO2
emissions inbusiness activities

Scope1 and 2
FY203050%

Promote the introduction of natural energy generation and purchase ofrenewable electricity

H2

Hydrogen embrittlement
resistant bearing

Propose CO2 reduction by high efficiency and low friction of core products (CVJ, hub bearing, and bearing)

Product realization of further environment-contributing products

Hub bearing that supports the wheel

CFJ

50% reduction in
torque loss
(compared to EBJ ofconventional products)

62% reduction in friction(compared to 2009)
Low friction hub bearing III

Propose CO2 reduction by multi-functional module products utilizing core technology
Contribute to stable vehicle
driving and improved fuelefficiency
Adaptation to avoidancesHUB behavior of self-driving cars

Contribute to fuel efficiency of HVsuch as drive assist and power
regeneration during decelerationeHUB

Ra-sHUB

Control steering angle at the left
and right rear wheels separately
Expected to contribute toautonomous driving

Support electrificationof brakes and auxiliary
equipment such as pumps
Electric motor actuator

Contribute to reducing wasteful electricity consumption by increasing the operating rate of manufacturing facilities through IoT and sensing
Wi-Fi

Condition
Monitoring
SystemNTN Portable
Vibroscope

TalkingbearingTM

Edge Application for
Bearing Diagnostics

Contribute to reducing CO2 emissions in the entire supply chain by reusing used bearing
Bearing refurbish
business

Extra-large
bearing for paper
mill application

Production

Spindle formachine tool

Recycling

Establish robot-related modules to compensate for labor shortage due tothe declining working-age population

Robot-related

SocialWrist joint
modulei-WRISTTM

Provide safety and comfort
Contribute toprosperous lives

Use

Circular economy
Establish bearing refurbish business

Propose solutions for automation, efficiency, and labor saving at production sites

Visualinspection

SASB Index

Increase efficiencyof manufacturing
equipment

NTN Group Information

Reduce energy loss

Contribute to hydrogen society

Software

Driveshaft that transmits driving force

Save energy
for EVs andelectrification(new areas)

FY2050Carbonneutrality
Sustainability Management

HardwareScope3

Realization of a “NAMERAKA Society”

Environment

Save energy
for EVs andelectrification(core products)

Contribute tocarbon-free society

Scope1 and 2

Contribute to the spread of wind turbine use with hardware and software
Contribute to spreadof wind turbine andhydrogen society

After 2050

FY2035
Carbonneutrality(compared to
FY2018)Introduce internal carbon pricing

Realize a sustainable society
using natural energy

2040s

Value Creation Story

Contribution to solving social issues toward the future we aim for

Provide independent power supply equipment that contributes to the preparation for natural disasters
Disaster mitigationand disasterprevention

Green Power
StationN3 N-CUBE

Foundation to support ESG management
ESG issues

Materiality

47 NTN Report 2023

Environment / Environmental protection

Resource recycling andpollution prevention

Social / Sustainable supply chain

Social / Prosperous human development

GovernanceImprove the reliability of products and services(Quality assurance and stable supply)

Promote safety and health

Human resource development

Thorough compliance

Procurement activities with an emphasis onenvironment and society

Respect for human rights

Promote diversity

Strengthen governance

NTN Report 2023

48

Materiality

Sustainability Management Toward Realization of a “NAMERAKA Society”

Sustainability Management

Materiality

Reduce energy loss

Save Energy for EVs and electrification
The electrification of cars and electric vehicles are essential
to achieving carbon neutrality, and the electric drive units
needed to power vehicles are becoming more sophisticatedand powerful at an accelerating rate. We will contributeto energy conservation for electric vehicles by developing
automotive deep groove ball bearings compatible with theminiaturization of electric drive units and the high-speed
rotation of motors, as well as modular products that add
energy recovery and steering functions to hub bearings.

Contribution to solving social issues toward the future we aim for

Five initiatives that NTN Group focusses on
toward a carbon-free society

Save energy
for EVs andelectrification(core products)
Spread ofwind turbine,
contributeto hydrogensociety

Contribute to
Carbon-Free
Society

Bearing refurbish
business

Save energy
for EVs andelectrification(new areas)

Increase
efficiency of
manufacturing
equipment

Foundation to support ESG management
Environment
We are striving for “environmental protection” by promoting efforts in resource recycling and pollution prevention as part ofour business activities.
Social
We will strive to improve the reliability of our products and services, promote CSR procurement, and aim to realize a“sustainable supply chain.” In addition, we believe that it is important for business operations to protect the safety of
employees who support the business and improve the quality of human resources. Based on this thought, we are working
to achieve “prosperous human development” by promoting safety and health, and fostering a culture of learning anddevelopment in the workplace.
Governance
As a company that is trusted and needed by society, we engage in business activities with an emphasis on compliance. We
also strive to increase corporate value over the medium to long term through management that emphasizes transparency
and fairness.

49 NTN Report 2023

Characteristics of “Ra-sHUB”

SASB Index

Contribution to society by providing products and services
In “contribute to carbon-free society,” we will contribute to
the spread and stable operation of wind power generationequipment by providing bearings that support the increase in sizeof wind power generation equipment and providing condition
monitoring services that utilize IoT. In addition, as a response to
the electrification and EVs shift in the automobile industry, weare promoting higher efficiency, smaller size and lighter weight ofcore products, and developing multifunctional module productsthat utilize core technologies.
In “contribute to prosperous lives,” we will propose solutions
such as robot-related modules to meet the growing demand forlabor saving due to the declining working population. In addition,
to prepare for frequent natural disasters, we will contributeto disaster mitigation and disaster prevention by providing
independent power supplies and others.

The electric drive units used in EVs and HEVs are
increasingly needed to be more efficient, compact
and lightweight. The development of e-axles, in which
the motor is integrated with an inverter and reduction
gearbox, is gaining momentum. We have alreadymarketed “High Speed Deep Groove Ball Bearing for
EVs and HEVs” with a dmn value* 1.8 million, and highly
evaluated by our customers. Rolling bearings used in
motors and reduction gears, which are becoming smallerand faster, are required to rotate at higher speeds. We
have developed a high speed deep groove ball bearing
with a dmn* value of 2.2 million under oil lubrication by
optimizing the internal dimensions of the bearing throughthe establishment of a calculation method for the amountof oil supplied to optimize the balance of heat generated
by the bearing and its lubrication conditions, and byreviewing the cage shape to suppress deformation
caused by centrifugal force.
Furthermore, the housing of the drive unit is thinner,
reducing the overall weight of the drive unit. “Creepphenomenon,” in which the bearing gently rotates andshifts on the mating surface between the housing andbearing, may occur due to outer ring deformation causedby the rotational load. We have developed “Creeplessbearings” with a relief portion on the outer diametersurface of the bearing outer ring to make the housing
and bearing mating surfaces discontinuous, thereby
stopping creep and preventing abnormal noise andvibration in the equipment and reducing bearing life.
In the future, the demand for bearings in theautomotive market is expected to continue to grow in
response to the progress of EVs and HEVs. We willcontinue to enhance and develop our product lineupthat anticipates market needs and contribute to thecarbon neutrality of automobiles by leveraging ourcore competencies and incorporating next-generation
technologies.

We are developing “Ra-sHUB” hub bearings with asteering function for rear wheels, which individuallycompensates for the steering angles on the right andleft sides by making full use of the technologies we haveaccumulated in our hub bearings.
The rear-wheel steering systems on the market arelimited to some suspension systems, such as multilink system used in luxury vehicles, and it is difficult toachieve a large steering angle with the existing structure.
“Ra-sHUB” is a module product that adds a steeringfunction to our hub bearings with using our proprietary
technologies. They are as small as existing hub bearings,
and can be mounted on any type of suspension system,to achieve rear wheel steering. By controlling the steering
angle of the rear tires from the steering angle and driving
information of the front wheels separately from the left
and right sides, the cornering performance and highspeed straight driving stability of the vehicle can be
improved. At low speeds, the minimum rotation radius
can be reduced to improve the vehicle’s small turning
performance and tire traveling resistance. In addition,
as the level of automated driving increases, vehicle
operation control must become even more sophisticated.
“Ra-sHUB” also contributes to safe driving during crisis
avoidance.

NTN Group Information(1) Confirmation of power usage status and systematic reduction of CO2 emissions by visualizing power consumption in the
product manufacturing process(2) Introduction of solar and wind power generation facilities at business sites and the promotion of purchasing renewableenergy power(3) Utilization of internal carbon pricing

Providing high-performance bearings (core products)

Providing high-performance module products(new areas)

Sustainability Management

Reduce CO2 emissions in business activities
In “realize carbon neutrality,” we have set “Achieve carbon neutrality by the fiscal year 2035 (by the fiscal year 2050 for theentire supply chain)” as the target, and are working to reduce CO2 emissions in our business activities. We are accelerating
our efforts toward carbon neutrality by mainly implementing the following measures.

Realize a sustainable society using natural energy

Value Creation Story

The roadmap for realizing a “NAMERAKA Society” consists of “contribution to solving social issues toward the future we
aim for” and “foundation to support ESG management,” which forms the base for its activities. The roadmap represents
related materiality and specific measures based on the seven ESG issues of “realize carbon neutrality,” “contribute tocarbon-free society,” “contribute to prosperous lives,” “environmental protection,” “sustainable supply chain,” “prosperous
human development” and “governance.” We have defined the measures that must be taken by combining the perspectiveof forecast, which identifies the anticipated future as an extension of conventional business activities, with the perspectiveof backcast, which considers what needs to be done and at what point in time by working backward from the targeted
future.
We will promote ESG management along the roadmap to achieve sustainable growth, creating environmental and social
value. We aim to realize a “NAMERAKA Society.”

Contribute to
Carbon-Free Society

About Us

Promotion of ESG management

Reduce energy loss

• Module product with steering function for hub
bearings• Controls the rear wheel angle independently on theleft and right sides• Rotation angle +/-10 degree• Improved cornering performance and high-speed
straight driving stability of vehicles• Reduce the minimum rotation radius of the vehicleLargerotation radius

General vehicles

Ra-sHUB

Small
rotation radius

Vehicles equippedwith Ra-sHUB

Image of action at low speed(*dmn value: Index of the bearing rotational performance Rolling element pitch circle
diameter mm x rotational speed min-1)

High Speed
Deep Groove Ball
Bearings for EVs
and HEVs

Creepless Bearing
NTN Report 2023

50

Sustainability Management Contribute to Carbon-Free Society
About UsTo improve productivity at manufacturing sites, there isa desire to minimize equipment downtime by monitoring
equipment operating conditions and accurately andsystematically performing maintenance and parts
replacement based on the data. Furthermore, in recent
years, with the advancement of DX and IoT technologies,
there is a growing need for remote and automatic
monitoring of equipment that is not restricted by location
or time, as well as the stabilization and improvementof manufacturing quality through the use of condition
monitoring information obtained.
To meet these condition monitoring needs, we havedeveloped “Talking bearingTM,” which incorporates a power
generation unit and wireless communication device intoa standard rolling bearing without changing the bearing
dimensions or load capacity and wirelessly transmits
sensing information on temperature, vibration and rotation
speed. The energy generated by the rotation of the bearings
is used to power sensors and wireless communication
devices to transmit sensing information automatically.
Because the sensor is built into the bearing, the bearing
condition can be detected with greater sensitivity than when
the sensor is mounted externally on the equipment housing,allowing earlier detection of abnormalities.
This newly developed product will enable advanced
condition monitoring. It will help increase the efficiency andproductivity of manufacturing facilities.

Trend in achievements and forecasts
Driveshafts and hub bearings, which are our main
products and account for about 50% of our net sales,
and green energy products contributed 1,474 thousand
tons of CO2 reduction in the fiscal year ended March
31, 2023. Sales of S- to B-eco grade environmentcontributing products, which are the result of our recent
development efforts, comprised 52.6% of net sales in thefiscal year ended March 31, 2023.
*Products are classified according to environmental factor standards specified for
different products in line with technology standards across the world.

Calculation methods for environmental
factors and eco-efficiency
To quantify products’ environmental friendliness, NTN
adopted environmental factors and eco-efficiency thatare defined in formula and as follows.
Environmental =factors

Eco-efficiency of developed products
Eco-efficiency of benchmark products*1
Product value*2

Eco-efficiency =Environmental impact*3

Bearing refurbish business

Trend in composition of environment-contributing
products by grade (driveshafts and hub bearings)
S-eco
0.1%

24.2%

0.3%

14.8%
100%

1998

24.7%

A-eco
2.0%

17.2%

27.4%

B-eco
2.6%

27.6%

C-eco
2.8%

D-eco

26.9%
52.6%

22.2%

25.7%

22.9%

30.8%

29.0%

31.3%

40.3%

33.8%

20.6%

24.0%

17.6%

15.1%

16.1%

2019

2020

2021

2022

year ended/2023 (Fiscal
ending March 31)

139.8

147.4

Contribution to CO2 reduction*(10,000 tons)

150

127.5

148.5

132.3

Talking bearingTM

100

We are engaged in the business of refurbishing bearings
used in various types of machinery and equipment,such as extra-large sized bearings for paper mill, large
sized bearings for steel mill, and bearings for railway
application. We provide optimal bearing refurbishing
services based on our bearing technology know-how in
response to these customer requirements. Furthermore,along with training on the proper use of bearings andcondition monitoring services, we will expand ourcomprehensive approach to NTN Group’s materiality,
which includes “Provide safety and comfort,” “Reduceenergy loss,” and “Resource recycling and pollution
prevention.”

50
0

0

1998

2019

2020

2021

2022

In order to realize a carbon neutral society, natural energy
generated using wind and solar power to generate
electricity and hydrogen energy that does not emit CO2
at combustion, are attracting attention as next generation
clean energy.
In the field of wind power generation, there is a
growing demand for developing higher durability andreliability of components than ever before, especially inoffshore wind power generation, due to the increasing
size of power generation equipment and the lack of easy
maintenance. In the hydrogen-related field, there is alsoa need to extend the service life of rolling bearings andplastic products used in hydrogen stations and otherhydrogen-related infrastructure.
We will contribute to the realization of a sustainable
society through product development and businessinitiatives.

Wind power
Wind power generation projects are expanding toachieve a carbon-neutral society. Especially in recent
years, offshore wind turbines have been installed in
sea areas with stable wind directions. Offshore windturbines are larger than their onshore counterparts, andtheir components must be highly durable and reliable.
In order to meet the needs, we are marketing “left-rightrows asymmetrical spherical roller bearings” with a DLC(diamond-like carbon) film on the roller surface, which
has excellent wear resistance, thereby enhancing thereliability of rolling bearings.
Furthermore, in order to improve the operation rateof wind power generation, we provide wind power
generation operators with a service that distributes
operational status using “Wind DoctorTM,” a Condition
Monitoring System (CMS) for wind turbines. In 2022,
we entered into a business alliance with Hokutaku Co.,
Ltd. (hereinafter referred to as “Hokutaku”), expanding
the maintenance business for wind power generationequipment. If any abnormal trends are observed, we
will distribute information to wind power generation
operators that have installed our CMS and suggest
the need for maintenance. After that, upon request,
we will inspect the wind power generation equipment
jointly with Hokutaku, identify any abnormal parts andarrange for repair bearings in a single operation. Powergeneration companies have received this well for ourability to provide a full range of services from abnormality
detection, inspection and repair.

For offshore wind turbines, which are expected to
be expanded in the future, improving the accuracyof condition monitoring and performing appropriate
maintenance based on accurate data analysis will
become even more critical. As a manufacturer that can
provide products and services on a one-stop basis, wewill contribute to expanding the wind power generationequipment market.

Wind DoctorTM

Asymmetrical
spherical roller
bearing

HydrogenHydrogen is attracting attention as a next-generationenergy source, and technological development is being
actively pursued globally in all aspects of its utilization,
including production, transport, storage and use. We
are developing the application of products used in highpressure hydrogen compressors for hydrogen stations,which are indispensable for the widespread use of fuelcell vehicles (FCVs). Mechanical parts used in hydrogenrelated equipment are used in special environments
such as hydrogen exposure and high pressure, requiring
higher reliability and durability.
We have developed new steel material with many
hard, fine metal compounds dispersed on the bearing
raceway, combining them with a newly developed
special heat treatment technology to develop a hydrogen
embrittlement-resistant bearing that has more than
three times a longer life compared to our standard
bearing against premature failure of bearings caused byhydrogen and started sample prototyping and delivery.
In addition, resin products developed using ourcomposite material technology have been adopted as
sealing components for hydrogen environments. To
further enhance the functionality of these products, weare also working on development in collaboration withindustry and academia.

Hydrogen embrittlement
resistant bearing
Please refer to our website for details on “Contribute to carbon-free society.”https://www.ntnglobal.com/en/csr/idea/carbon-free.html

year ended/2023 (Fiscal
ending March 31)

Calculation standard
JAPIA LCI Calculation Guidelines by Japan Auto Parts Industries Association(Consumer Use-phase LCI calculation tool)*Applicable to S to C-eco products

51 NTN Report 2023

Contribute to spread of wind turbine andhydrogen society

SASB Index*1 D-eco product (Products that help to reduce energy loss of finished products atthe same performance level as that of around 1997)*2 Values are quantified by using the QFD method (including CO2 reduction
contribution of finished products)*3 From the perspective of evaluating contribution toward measures against
climate change, environmental impact is calculated as CO2 emissions
generated throughout the process of raw materials mining to production (using
the LCI calculation tool by the Japan Auto Parts Industries Association)

Realize a sustainable society using natural energy

NTN Group Information

We continue unwavering efforts to realize its corporate
philosophy by developing and providing higher-grade
products that contribute to the environment whilequantifying the degree of environmental contribution of
our main products, such as bearings and drive shafts,
and green energy products.

Materiality

Sustainability Management

Increase efficiency of manufacturing
equipment

Value Creation Story

Development ofenvironment-contributing product

Extra-large sized spherical roller bearing for
paper mill application

NTN Report 2023

52

Sustainability Management

Realize Carbon Neutrality

Respond to climate change

Reduction of CO2 emissions from theburning of fuel and the use of electricity(Scope 1 and 2 )Respond to climate change

The NTN Group Target Year for Carbon Neutrality
50% reduction by the fiscal year 2030 (compared to the fiscal year 2018)

Reduce CO2 emissions in business activities(Scope 3)

Achieve carbon neutrality by the fiscal year 2050

Achieve carbon neutrality by the fiscal year 2035

Carbon Neutrality Strategy Promotion Dept. LaunchedWith the Goal of Target Year for Carbon Neutrality

Please refer to the website for Environmental data of each site
Japan:https:// www.ntnglobal.com/en /csr/environment/sitereport-japan.html
Overseas:https:// www.ntnglobal.com/en /csr/environment/sitereport-overseas.html

The NTN Group is working on reducing CO2 emissions(Scope 2) by introducing self-consumption type naturalenergy generation to business sites based on various
schemes (PPA*1, lease, and self-investment). We are
actively promoting the procurement of renewable energy
and electricity offset with carbon credit. Reduced 477
tons of CO2 in Japan and 11,409 tons in overseas in thefiscal year ended March 31, 2023.*2

RegionScope 1: Direct emissions

Japan

1,073,015

430

China

11,961,519

7,348

Total

13,034,534

7,778

Scope 2: Indirect emissions*1(ten thousand tons)

80
72.8
60
40

59.2

54.9
62.0

56.4

53.7

Actual Procurement of Renewable Energy(Fiscal Year Ended March 31, 2023)

36.4
46.3

48.6

46.3

45.7

20
0

Site name

31.0
10.8
2019*2(Benchmark)

8.6
2021

10.6
2022

10.1
2023

8.0
2024

5.4
2031
(Target)0.02036 (Fiscal year ended/ending March 31)*1 Calculated using emission factors sourced from “Electric Utility Emission Factors”(Ministry of the Environment and the Ministry of Economy, Trade and Industry) inJapanese sites and calculated using emission factors sourced from
“Emissions Factors 2022” (IEA) in overseas sites.
*2 Set the carbon neutral benchmark as fiscal year ended March 31, 2019.

Energy type

Procurement(kWh)

CO2 emission
reduction(tons-CO2)

Nagoya Sales
Office80,98231

Hamamatsu
Automotive
Sales Office

13,077

5

20,05911

13,057,800

4,061

13,171,918

4,108

CO2-freeelectricity

Hiroshima
Automotive
Sales Office

The NTN Group is reducing CO2 emissions (Scope 3
Category 9) during product transportation by improving
logistics efficiency. Main measures include “shortening
transportation distances by optimizing distribution
routes,” “increasing the loading ratio by expanding theuse of module outer boxes,” “reducing the numberof containers by increasing the loading ratio of export
containers” “promotion of reuse and recycling (repair) ofwooden pallets,” and “having carries strictly adhere to
non-idling requests”. CO2 emissions from the transportof domestic products in the fiscal year ended March
31, 2023, was 12.9 thousand tons-CO2/year (target:
12.8 thousand tons-CO2/year), which is slightly below
the target. We will continue to promote the measures,
including optimizing a truck’s loading capacity to increasetransportation efficiency.
CO2 emissions in logistics* (Japan)(thousand tons)

20
15

13.9

14.0

13.3

10

10.9

12.7

12.9

2022

2023 (Fiscal year ended/

50

NTN-AT
Total

53 NTN Report 2023

CO 2 emission reduction(tons-CO 2)

CO2 emissions (Scope 1,2)

Reducing CO2 Emissions in Logistics
SASB Index*3 Please refer to the website for the CO2 emissions verification opinion from.
https://www.ntnglobal.com/en/csr/idea/carbon-neutrality.html#anchor02

Promotion of Introduction of Natural
Energy Generation and Renewable
EnergyPower generation*2(kWh)

NTN MANUFACTURING DE MEXICO, S.A.DE C.V.
(Mexico) installed a total of 1,180 solar panels on theroof of a factory based on PPA*1. Its operation started inAugust 2023, and the amount of power produced andCO2 reduction are expected to be 1,012,000 kWh/year
and 403 tons-CO2/year*2, respectively.
*1 A contract to install solar power generation equipment owned by a third-party
power producer on a roof or other location and purchase its electricity.
*2 Calculated using emission factors sourced from “Electric Utility Emission Factors”(Ministry of the Environment and the Ministry of Economy, Trade and Industry) inJapanese sites and calculated using emission factors sourced from “Emissions
Factors 2022” (IEA) in overseas sites.

Natural Energy Generation Results(Fiscal Year Ended March 31, 2023)

CO2 emissions reduction results
The NTN Group is working on CO2 reduction in thewhole of the company’s business activities and aiming to
reduce CO2 by 50% compared to the fiscal year 2018 by
fiscal year 2030 and achieve carbon neutrality by fiscal
year 2035. We receive a third-party verification to ensure
no problem in the calculation method of CO2 emissions.
For Scope 2, the calculation uses emission factors*1 ofthe market-based approach for domestic business sites
and emission factors*2 of the location-based approachfor overseas business sites. We are also considering
emission factors of the market-based approach to
calculate the emissions of overseas businesses.

*Liquefied natural gas

An Example of the Introduction of Natural
Energy Generation Equipment in Overseas

NTN Group Information

The NTN Group is working on the following priority measures for the purpose of steadily promoting an action plan forachieving carbon neutral targets.
(1) Reduce CO2 emissions generated by
Carbon neutrality realization image
processing machines and heat treatment
equipment by visualizing the energy used
Reduction of CO2 emission
factor by an electricity
in the manufacturing process, and reduce
supplier
CO2 emissions by improving the efficiencyof energy used in utilities such as air, air
Improvement inconditioning, and lighting. [Reduction]
Visualization of energy
Activities to improve
Reductionenergy saving
Business activities by(2) Reduction of CO2 emissions by energy
energy savingenergy sources derived
conversion of heat treatment equipment
Energyfrom fossil fuel
Energy transformation of the heattransformation
Conversion treatment process[Conversion]
Purchase of CO2 -free electricity(3) Reduction of CO2 emissions derived
from fossil fuels by purchasing CO2-free
Energy creation
PPA of solar power, etc.
Creation
electricity [Conversion](onsite and offsite)(PPA of solar power)(4) Reduction of CO2 emissions derived from
2019
2036
Offset the remaining CO2 emissions
fossil fuels through renewable energy(Fiscal year ended/ending March 31)
from fossil fuelpower generation such as solar power
PPA [Creation]

Roller Factory (NTN Mie)

Sustainability Management

Based on the activity result of the carbon neutrality promotion project from July 2022 to March 2023, the “Carbon
Neutrality Strategy Promotion Dept.” was launched in April 2023. It inherits the projects, establishes the global promotion
system, and shifts to the execution phase, including the mid-to-long-term issues.

NTN Mie Corp. (Japan) installed a total of 828 solar
panels on the roof of a roller factory based on PPA*1.
Its operation started in April 2023, and the amount of
power produced and CO2 reduction are expected to be541,342 kWh/year and 205 tons-CO2/year*2, respectively.

Value Creation Story

Reduce CO2 emissions in business activities(Scope 1 and 2)

The NTN Group is working to reduce CO2 emissions(Scope 1) from fuel combustion in heat treatment facilities
and boilers, etc. For heat treatment facilities, which area major source of CO2 emissions, we have completed
fuel conversion to LPG* and city gas at major facilities as
the first phase of energy-saving measures. In the future,
we will not only expand the use of high-efficiency highfrequency heating equipment and electric furnaces thatuse renewable energy, but also consider the use of green
energy sources such as ammonia and hydrogen, which
do not emit CO2 during production and use, to promote
carbon neutrality by utilizing a variety of energy sources.
In addition, The NTN Group is working to improvethe efficiency of air, air conditioning, lighting, and otherutilities as part of its efforts to reduce CO2 emissions(Scope 2) associated with the use of electricity in its
production activities. We are conducting steady activities
to reduce energy use by installing high-efficiency
compressors, air conditioning, lighting, and otherequipment, regularly taking measures to prevent air
leaks, and turning off non-operating equipment.

An Example of the Introduction of Natural
Energy Generation Equipment in Japan

About Us

Materiality

Materiality

2018

2019

2020

2021

ending March 31)*Including CO2 emissions during intra-company transportation
NTN Report 2023

54

Sustainability Management Realize Carbon Neutrality
About Us

Initiatives for TCFD recommendations

Governance
The Group has established the Sustainability Committee as an organization to promote sustainability management, and has
established a system to report its efforts to the Board of Directors as appropriate.

Outline of the future vision assumed in scenario analysis

Future imageof society

When the temperature rises by 4 °C
(Physical)

When the temperature rises less than 1.5 °C(Transition)

Environmental policies such as from the government
are passive, and the move to low-carbon anddecarbonization has not progressing.
The scale and intensification of natural disasters due
to climate change are progressing.
The number of hot days increases even in seasons
other than summer, increasing the risk of heat stroke.

Due to the aggressive environmental policies of thegovernment and other parties, carbon taxes havebeen introduced, fossil fuel-derived electricity islimited, and the industrial structure is centered on
renewable energy (wind power, hydrogen, etc.).
The industry as a whole is strengthening efforts suchas energy saving to reduce CO2 emissions.
In the automobile industry, the electrification and EVs
shift is progressing.

Structural diagram

Value Creation Story

In May 2021, we expressed our support of TCFD (Task Force on Climate-related Financial Disclosures) recommendations.
We identify the risks and opportunities posed by climate change in our business and reflect them in our management
strategies. We also disclose information based on TCFD recommendations. Through dialog with a wide range ofstakeholders, the Group will further strengthen its efforts to address climate change and contribute to the sustainable
development of society through its business activities.

Board ofDirectors

Organization

Major items to
be deliberated

Chairperson : Executive Officer
Secretariat : ESG Promotion Department
Members: Departments in charge of sustainability management

Sustainability Management

Sustainability Committee

Risks and Opportunities
Officers
Employees

Classification• Identifying Materiality• Amendment/Abolition of corporate philosophy system/CSR policy• Sustainability activity plan

<Internal>
Regular confirmation using a hazard map of domestic
business sites<Business Partners>
Encouragement to build BCP and BCM throughProcurement Policy briefing sessions and CSR
Procurement Guidelines
Introduction of supplier crisis management system

Promote safety andhealthProcurement
activities with
an emphasis onenvironment andsociety

Promote safety andhealthIncrease in procurement
and operating costs due tocarbon taxes, etc.

Promotion of decarbonization in our business activities
Considering the introduction of internal carbon pricing

Respond to climatechangeIncrease in demand forsolutions that are usefulin preparing for natural
disasters and in the eventof disasters

Securing a lifeline that prevents power shutdown due
to natural disasters (providing stationary independent
power supply units and transportable independent
power supply units to the market)

Provide safety andcomfortIncrease in demandfor energy saving inmechanical devices

Reduction of CO2 emissions by core products

Reduce energy loss

Spread of wind power
generation equipment

Provision of large bearings and CMS services for windturbines

Realize asustainable society
using natural energy

Spread of hydrogenenergyDevelopment of product technology and market
provision of bearings for hydrogen energy-related
equipment

Realize asustainable society
using natural energy

Spread of EVs andelectrified vehicles

Development of product technology and market
provision of electric module products

Reduce energy loss

SASB Index

Identification of working environments where air
conditioning is not effective
Systematic implementation of heat measures

Transition

Risk of heat stroke among
employees at plants andsuch

NTN Group Information

Related materiality

Physical

Opportunities

Our financial condition, results of operations and cash flows could be impacted by extreme weather conditions (such as
shutting down operations and businesses due to heavy rain, floods or storms) associated with climate change (temperature
increases), and by stricter environmental regulations (such as increased procurement costs for raw materials and energy
due to the introduction of carbon taxes) in the countries and regions in which we operate.
Regarding the effects of climate change (temperature increases), the risks and opportunities assumed based on the
scenario in which the temperature rise during the 21st century is “4 °C” and “less than 1.5 °C” are as follows.

Downtime at our plants
and within the supply chain
due to extreme weather
conditions (heavy rain,
floods, storms)

Our countermeasures

Transition

Risk management

PhysicalResponses to the risks and opportunities assumed from the scenario analysis results, in line with the TCFD
recommendations, are applied to business activities as measures for related materialities such as “Reduce energy loss”
and “Respond to climate change.” In addition, we concentrate our R&D resources on areas that lead to “carbon neutrality(environmental impact reduction and decarbonization)” and the “pursuit of safety and comfort” and are accelerating our
R&D activities for future growth.

Risks

Strategy

Anticipated risks andopportunities

Metrics and targets

Among 13 items of materiality, the target of “respond to climate change” is “Achieve carbon neutrality by the fiscal year2035 (by the fiscal year 2050 for the entire supply chain).” Also, we have set a “50% reduction in CO2 emissions inbusiness activities in the fiscal year 2030 compared to the fiscal year 2018” as KPIs (management indicators) for the fiscal
year ended March 2023 and beyond.
For the fiscal year ended March 31, 2023, CO2 emissions were reduced by 22.6% compared to the fiscal year 2018,
relative to the KPIs (management indicators). We recognize the need to strengthen further our efforts to achieve the plan.
As of April 1, 2023, we have established the Carbon Neutrality Strategy Promotion Department, a dedicated organization
for promoting carbon neutrality, to strengthen the promotion of various measures to achieve carbon neutrality.

55 NTN Report 2023

NTN Report 2023

56

Sustainability Management

Provide safety and comfort

Provide safety and comfort

Resource recycling and pollution prevention

Disaster mitigation and disasterprevention*Act on Confirmation, etc. of Release Amounts of Specific Chemical Substances in theEnvironment and Promotion of Improvements to the Management Thereof

Material BalanceMaterial balance of business activities (Fiscal year ended March 31, 2023)

INPUT

OUTPUT

Resources

58.3

ten thousand
tons

Steel materials

56.8

ten thousand
tons

Resin materials, grease, etc.

6,456 TJ

*4

Development/
DesignGasoline

Industrial water
Ground water

Forging/
Turning284

Heat
treatment

3

Grinding/
Polishing3371

Assembly

NOx*3

WastewaterRiversReleased/Transferredthousand m
225 ten3

214 ten thousand m
11 ten thousand m

3
3

19 tons

Waste generation 162,598 tons
Recycled
Recycling rate

ten thousand
tons/kmthousand
10 tentons
ten thousand
46 tons
41 tons
10 tons

PRTR *3 chemical substances

Landfilled

tons

Logistics

8,677

Scope 2 CO2 emissions

Sewers

164 ten thousand m
24 ten thousand m
96 ten thousand m

Traffic*2
Freight weight×distance56
ten thousand tons

SOx*3

ten
thousand m3

PRTR*3 chemical substances
HandledAtmosphericemissions
Scope 1+2 *1

SASB Index

Top water

201
ten thousand tons

Scope 1 CO2 emissions

3

Water

Atmosphericemissions Scope 3
Category 1 *2

thousandtons
1.5 ten

56 kL
521 kL
Kerosene
Diesel oil
390 kL
Heavy oil A
139 kLLPG
12,012 tons
City gas
27,683 thousand m
Purchased electricity
1,240 GWh
Purchased electricity(Renewable energy)
13 GWhNatural energy power generation 13 GWh
Fuel

Raw materials procurement

NTN Group Information

EnergySustainability Management

We have developed “N3 N-CUBE,” a transportable
independent power source containing small-sized wind
power generators, solar panels and storage batteries incontainers. The initial purpose of the development was tocreate storage facilities in preparation for natural disasters
and rescue facilities in the event of a disaster. However, as
the market has evolved, many of these facilities have also
been adopted as infrastructure equipment in places wherecommercial power has not been installed.
Disaster prevention centers are being built in various
locations to serve as disaster relief operations bases
and storage facilities for stockpiling emergency food andmedical supplies. We propose to install “N3 N-CUBE” inthe center to provide electric power for lighting and air
conditioning in the center in normal times and to use it asa first-aid facility and emergency power source during adisaster.
We have also developed the “N3 N-CUBE” equippedwith a circulation-type flush toilet and treatment tank to
be installed at parks and facilities in mountainous regions
etc. where commercial power has not been introduced.
Water used in the toilet is filtered in the treatment tank andcirculated as reclaimed water. Maintenance only requires
a few changes of water a year, and no water supply or
sewerage construction is required. Because water isrecycled as reclaimed water, it is possible to use cleanwater without draining it outside. In addition, our products
are widely used in various situations, such as in bus
waiting areas and workcation facilities.

The NTN Group has established a system to comprehensively promote the 3Rs (Reduce, Reuse, Recycle), taking into
consideration the sustainable use of resources, input resources such as raw materials and water, and waste reduction. In
addition, we thoroughly manage chemical substances used in our products and manufacturing processes, and actively
promote the conversion of procured products containing PRTR*-listed chemical substances to alternatives. We have set
annual targets for the amount of waste generated, the recycling rate, and the amount of chemical substances subject to
the PRTR Law handled, and are promoting efforts to achieve these targets.

Value Creation Story

We have launched the “TRINITTETM,” our uniquefeeder for picking robots, which supplies parts froma rotating disk that automatically provides parts andhas been well received. “TRINITTETM” is connectedin conjunction with a camera and picking robot andprovides continuous picking of moving workpieces byfollowing the workpieces on a circular arc path. We
have also developed a compact and lightweight “Rotary
Actuator Type Hand” for picking robots to be used in
combination with “TRINITTETM.” The position and posture
can be adjusted within a range of 0 to 100° by rotating
the mounting section with the chuck section gripping theworkpiece around the rotary axis of the rotary actuator.
When attached to a SCARA robot, picking can be
performed from the side or diagonally. This system cansignificantly reduce the number of parts missed, and it
realizes stable and continuous picking of parts with an
inexpensive equipment configuration.
In addition, in response to numerous requests for
improved portability of the “i-WRISTTM” wrist joint module
for robots, we have developed the “IWS-C01,” which
increased the maximum payload capacity from 1 kg to 3
kg. The “IWS-C01” has been well received by the market
as it has expanded the range of applications.
We will continue to propose modular products for
robots that contribute to the promotion of efficiency
and reduce manpower as a measure of automation at
manufacturing sites.

Environmental Protection

Materiality

Resource recycling and pollution prevention

Materiality

Manufacturing facilities are responding urgently to the need for automation to sustain economic activity in a social
environment with a declining birthrate and an aging population. We have developed a “Rotary Actuator Type Hand” andthe feeder for a picking robot, “TRINITTETM,” that contribute to human replacement and efficiency at production sites.
Meanwhile, as natural disasters due to abnormal weather and other factors increase, disaster prevention and mitigation
efforts are being promoted to reduce the impact of disasters on people’s lives. We have also developed and marketed“N3 N-CUBE,” which houses small-sized wind generators, solar panels, and storage batteries in containers from theperspective of disaster prevention and disaster mitigation, which are used in a wide range of fields.
Through these products, we provide peace of mind and comfort to customers.

Robot-related

Sustainability Management

About Us

Materiality

Contribute to
Prosperous Lives

Materiality

Atmosphericemissions Scope 3
Category 9 *2

157,999 tons
4,599 tons
97.2 %

1.3
ten thousand tons

*1 Calculated using emission factors sourced from “Electric Utility Emission Factors” (Ministry of the Environment and the Ministry of Economy,
Trade and Industry) in Japanese sites and calculated using emission factors sourced from “Emissions Factors 2022” (IEA) in overseas sites.
*2 Transport volume and Scope 3 CO2 emissions are results in Japan only.
*3 NOx, SOx, PRTR chemical substances, and recycled amount are results in Japan only.
*4 The energy of electric power is calculated using physical quantity (3.6MJ/kWh),and the energy of fuel is calculated using the emission facter sourced from
“Emission intensity database for calculation of greenhouse gas emissions of organizations through the supply chain (Ver.3.3)”(Ministry of the Environment).

Wrist joint module for visual inspection ofaluminum castings “i-WRISTTM”“N3 N-CUBE” installed asa waiting room at a bus
stop in Yoshida Town,
Shizuoka Prefecture,Japan

Please refer to the website for details on “Resource Recycling and Pollution Prevention”
https://www.ntnglobal.com/en/csr/environment/chemical.html

Rotary Actuator Type Hand

57 NTN Report 2023

NTN Report 2023

58

Materiality

Sustainability Management Environmental Protection

Reverdin’s Blue Butterfly sanctuary, Number of adultoccurrences (Nagano Works)
1-voltinism*(Number)500

2-voltinism*

3-voltinism*

300

100
0

Tree-planting scene at Chubudai Sports Park (Mikumo Works)

Five active
femalestransplanted.

80 butterfliesin the first
year

5

3
38
27

2020

2021

185 butterfliesin the second
year

Quality management system
In order to improve customer satisfaction and provide
products/services in a consistent manner, the Group’s
domestic and overseas manufacturing sites have acquired
ISO9001 certification, which is an international management
system standard. We are steadily working to acquirecertification for new businesses and newly launchedplants. 100% of our domestic and overseas consolidated
subsidiaries related to manufacturing have acquired
certification for their quality management systems.
We have also acquired IATF16949 certification, astandard for the automotive industry, and JIS Q 9100
and Nadcap, standards for the aerospace industry, as
well as CRCC (China) certification for the railway industry.

171

58
17

2022

105
40
year ended/2023 (Fiscal
ending March 31)*There are 1, 2, 3, and 4 voltinism, respectively, depending on the numberof generations per year, and those that are 3 or more voltinism are called
multi-voltinism.

Male 3-voltinism imago perched on a verbena flower.
Please refer to the website for details on “Environmental Protection.”
https://www.ntnglobal.com/en/csr/environment/protection.html

59 NTN Report 2023

We strive to maintain and improve product quality
globally in accordance with our Quality Policy,
which serves as the basic philosophy for all of ourmanufacturing activities, in order to create quality thatsatisfies our customers.
We also conduct customer satisfaction surveys as anopportunity to hear directly from our customers about
their satisfaction level and requirements. In the survey
for the fiscal year ended March 2023, a total of 113
customers responded and 88% of the overall evaluations
were “Excellent” or “Good,” as well as the results fromthe previous year. Going forward, we will continue toprovide quality that is responsive to customer needs inorder to further improve satisfaction.

Develop quality awareness of human resources
110

12

15

Create the quality to improve customer satisfaction

In order to enhance knowledge and awareness ofquality among employees, we provide specialized quality
education such as basic and advanced QC courses. In
the fiscal year 2022, 145 employees took part in thesecourses. In our training, we use examples of actual claim
cases that have occurred in the past to show specifically
how customers have been affected so that participants
can be reminded of the importance of quality.
In March 2023, we issued the third edition of our“Quality Control Handbook: Quality Guidelines”, which
describes our approach to quality and the basic actions
that are essential to maintain quality. In the future, wewill translate it into English and other languages, anddistribute it as a reference for suppliers, making it widely
available on a global basis.

Stabilize new core system
As a company-wide project, we are rebuilding our
mission-critical systems by standardizing businessprocesses and systems using ERP* and other new

packaged systems. This will serve as an IT foundation
to support future DX promotions, and we are promoting
business speed and service levels as well as more
efficient operations. Following the start of operations of
new systems in the areas of financial accounting, humanresources and salaries, and technology, a new system
for sales, logistics, supply and demand adjustment,
inventory management, etc. of finished products in the
SCM field began full-scale operations in August 2020.
Thereafter, we are promoting activities to introduce new
systems into the production, procurement, process,work-in-process, and cost domains at each plant.
The new systems have enabled us to improve theefficiency of drawing and prototype control through thedigitization of sales activities and the introduction of a
project management system, to speed up price anddelivery deadline response, to strengthen inventory
management, and to enhance cost management.
Furthermore, we aim to ensure a stable supply forcustomers and respond flexibly to fluctuations in demandby linking future demand plans to plants, not only basedon fresh demand information, inventory information, andsales results, but also using statistical prediction.
*ERP is an abbreviation of Enterprise Resource Planning, which is packaged
software that oversees the company’s core operations, including sales, logistics,
production, accounting, and human resources.

Build the CSIRT system
SASB Index

331 butterfliesin the third
year

400

200

4-voltinism*

Build the quality assurance system

NTN Group Information

As part of its environmental contribution to the local
community, The NTN Group promotes environmental
protection activities in mutual cooperation with thelocal community through various activities such as
cleanups, weeding, and tree planting along roads, rivers,
beaches, and parks around its business sites. Throughour activities, we will continue to make further efforts tostrengthen cooperation and build good relationships withsurrounding residents and other interested parties.

Improve the reliability of products and services (Quality assurance, stable supply)

Sustainability Management

Environmental Contribution to theCommunity

Nagano Works (Japan) signed a biodiversity partnershipagreement with Nagano Prefecture in 2019 and has
established a sanctuary for the endangered Reverdin’sBlue (butterfly) within the works to continue conservation
activities. Since the establishment of the sanctuary,
we have faced various problems, such as a lack ofindigo plants, on which the larvae feed, due to a large
number of inchworms and aphids, and predation of thelarvae by natural enemies such as paper wasps andpraying mantis. However, the population has steadily
increased as a result of replanting of indigo plant andimplementation of measures such as extermination ofnatural enemies on a case-by-case basis. In August
2022, we accepted work experience students from a
local high school and organized a special class to help
students understand the importance of biodiversity andparticipate in the conservation of the Reverdin’s Blue(butterfly). As for future activities, since the population
has been steadily increasing due to protection activities,
we will continue to accept outside visitors and increase
the number of sanctuaries within the business site tofurther increase the population through more active
protection activities.

Materiality

Procurement activities with an emphasis onenvironment and society

Value Creation Story

In cooperation with local residents and non-profit
organizations (NPOs), The NTN Group is working
to conserve forest ecosystems through sustainable
forest management, such as appropriate thinning andafforestation, and to preserve biodiversity by protecting
endangered species in the vicinity of each business siteand by maintaining natural parks. Since the COVID-19
pandemic, we have been working to ensure that ouractivities do not become a mere formality by adjusting
the number of participants and taking thoroughmeasures to prevent infection.

Conservation Activities for theEndangered Reverdin’s Blue (butterfly)

Sustainable Supply Chain

Improve the reliability of products and services(Quality assurance, stable supply)
About Us

Biodiversity Preservation

Sustainability Management

In response to increasing risks of cyber attacks andinformation leakage, we newly established “The Basic
Policy of Information Security” as one of the NTN Group’s
Basic Policy to be set forth under our Management
Policy, in view of the importance of information security inrecent years.
As cyber attacks are becoming more complicatedand sophisticated every day, other companies have also
suffered similar damage such as information leakage quite
often. In case of an information security incident, a quick
response against information security risks is required,from detection to reporting and handling. Therefore, wehave been developing a cross-department emergency
system for handling information security risks (NTN-CSIRT:NTN Computer Security Incident Response Team).
Purposes of developing the information security
emergency response system (NTN-CSIRT)(1) Detect information security risks and acceleratecommunication, reporting, handling, and recovery in caseof risk occurrence(2) Reduce risk of and prevent information security incidents(3) Strengthen governance to enhance information security
Please refer to our website for other initiatives related to “Improve the reliability of
products and services (Quality assurance, stable supply).”
https://www.ntnglobal.com/en/csr/sc/customer.html
NTN Report 2023

60

Materiality

Sustainability Management Sustainable Supply Chain

Prosperous Human
Development

Procurement activities with an emphasis on environmentand society
We conduct annual survey of business partners to further
raise awareness of “NTN CSR Procurement Guidelines”
and to confirm compliance.
By the fiscal year 2022 questionnaire, theachievement ratio of human rights and labor, quality
and safety, and information security was more than
90% However, the ratio of social contribution and CSR
procurement was less than 70%, and it meant that theirawareness was not high at this stage.
In recent years, companies have been required to
not only achieve corporate performance (economic
value), but also to be an entity that is needed by society(social value). To help business partners understand thatsocial value is important, we will continue to engage inawareness-raising activities.
Degree of achievement according to CSR questionnaires
Degree of achievement according to CSR questionnaire results
1 Compliance80

procurement

60
20
0

contribution

Risk management for suppliers

6 BusinessContinuity
Management (BCM)

3 Environment

4 Quality andSecuring human resources who will lead thenext generation to take on the challenge oftransformation

Amid a rapidly changing environment and the rapidlychanging relationship between employees andcompanies, the Group is working to “secure humanresources who will lead the next generation to takeon the challenge of transformation” by creating anenvironment that encourages each employee to think
and act independently, with passion and enthusiasm.

safetyP.63 Human resource development

5 Information security

2
CSR questionnaires for suppliers
Questionnaire items
1

Compliance2

Human rights and labor

3

Environment

4

Quality and safety

5

Information security

6

Business Continuity Management (BCM)

7

Social contribution

8

CSR procurement

Please refer to our website for other initiatives related to “Procurement activities
with an emphasis on environment and society.”https://www.ntnglobal.com/en/csr/sc/client.html

Creating a rewarding environment that
respects the diversity of employees

The Group respects and recognizes diverse values
regardless of nationality, race, culture, gender, age,disability, etc., and is committed to “create a rewarding
environment that respects the diversity of employees”
where people from all walks of life can freely contribute
better ideas and maximize their abilities.
P.65 Promote diversity

3

4

Realizing a workplace where employees
can work safely and healthily

Ensuring the safety and health of all people working in
the Group is the essential value that takes precedence
over all business activities as the foundation ofmanagement, and based on this fundamental stance, we
aim to “realize a workplace where employees can worksafely and healthily.”P.66 Promote safety and health

5

SASB Index

From the viewpoint of risk management, we begin
transactions with our business partners after checking
their management structure, quality, and environmental
management. Even after beginning transactions,
we conduct annual survey to confirm our partners’
business conditions, and provide partner-specificfollow-ups when deemed necessary. If we determinethat a transaction involves a high risk, we strive tominimize our procurement risk and ensure stableprocurement by implementing risk reduction measurescommensurate with the magnitude of the impact, taking
into consideration procurement parts, transaction
amounts, etc.
With regard to risks such as natural disasters
and infectious diseases, we have established a risk
management system to immediately share information
with each business site and our business partners,
thereby ensuring a proper risk management that enables
a stable supply of our products even in an emergency.

and labor

Organization and human resource transformations are necessary to realize the basic
policy of our Medium-Term Management Plan, namely, to “for the new 100 years,
drive forward the transformation of our business structure, strengthen our financial
and organizational structure, and build a corporate structure that can respond flexibly
to changes in the business environment,” while adapting to rapid changes in theenvironment in recent years.
To this end, it is necessary to foster an organizational culture that works to solve
various social issues and increase social value, environmental value, and economic
value, and to develop diverse human resources that can work with job satisfaction.
With this aim, the Group has set “prosperous human development” as one of its ESG
issues. Furthermore, we will steadily work on concreate measures one by one, with“securing human resources who will lead the next generation to take on the challengeof transformation,” “creating a rewarding environment that respects the diversity of
employees,” “fostering a culture of learning and development in the workplace,” “realizing
a workplace where employees can work safely and healthily” and “respect for humanrights” as five pillars of our human resources strategy.

Five pillars of human resources strategy

2 Human rights

40
7 Social

Yasuhiro Kawabata

1

100
8 CSR

Executive Officer
Deputy Corporate General Manager,
Group Management HQ.
Human Resources Strategy Dept.
Personnel Dept.
General Affairs Dept.

Respect for human rights

NTN Group Information

In April 2021, we formulated a Procurement Policy
corresponding to each SDGs. Based on the perspectivesof “Fairness/impartiality,” “Compliance with Laws andRegulations,” “Green Procurement,” and “Coexistence
and Co-prosperity,” purchasing departments at ourhead office play a central role in building a relationshipof trust with business partners and we are conducting
purchasing activities. Based on the “NTN Group
Green Procurement Standards,” we are promoting
green procurement, which prioritizes environmental
preservation efforts and procurement from business
partners with superior environmental quality. We havealso established “NTN CSR Procurement Guidelines” andare requesting active promotion of CSR activities. We arealso working to achieve local procurement at all of ourmanufacturing sites, including those outside Japan, andto procure materials from optimal locations globally.
In 2022, we announced our “Declaration ofPartnership Building” with the aim of building newpartnerships by promoting collaboration, coexistence
and co-prosperity with business partners in the supply
chain and businesses seeking to create value.

Promote safety and health

Sustainability Management

CSR questionnaires for suppliers

Promote diversity

Value Creation Story

Basic approach to procurement activities

Human resource development

About Us

Materiality

Sustainability Management

Respect for human rights

The Group believes that fulfilling its corporate
responsibility regarding “respect for human rights” isessential to contribute to a sustainable society andremain a necessary business for the community. Basedon this belief, we are committed to not being complicit
in any form of human rights abuses and providing asafe and comfortable work environment for all Group
employees.
P.67 Respect for human rights

Fostering a culture of learning anddevelopment in the workplace

The Group provides growth opportunities based on
individual aptitudes and careers, from new hires toleaders. We also recognize that learning is essential toemployees’ personal growth and that personal growthleads to company growth. We are committed to “foster aculture of learning and development in the workplace.”
P.63 Human resource development

61 NTN Report 2023

NTN Report 2023

62

Sustainability Management Prosperous Human Development
About Us

Materiality

Human resource development

Basic approach to human resource
development

NTN’s human resource development
systemNew employees

OJT

Mid-level employees

Managers

Systematic and continuous education on operations
Introductory education
Education for new
supervisors

Pre-assignment education
First-year education

Rank-based
education

Education for existing
managers
Education for new
managers

Business skill education
Third-year education

Management education

G course training
Education for those in charge of new employee education

Education for next-generation
executive candidates

Basic education on products
Education on basic bearing technologies

Off-JT

Education on quality control
Education on production technology
Education on intellectual property

Specialty-based/issue-based
education

Education for female employee
Diversity education
Development of QC circle trainer, leaders and coaching
Global business skill education
Overseas trainee system
Overseas education/tuition reimbursement system
Data literacy/AI literacy education

63 NTN Report 2023

Fair evaluation and treatment

NTN has introduced a personnel evaluation system
to further vitalize our employees and improve themanagement efficiency by evaluating the achievementof business targets, the contribution in businesses, andthe performance of jobs in a certain period, reflecting
them properly in salary increase, bonus, promotion/
experience-based promotion, education, training, etc.,
implementing a fair personnel management, and raising
the job performance of evaluatees to promote ourbusinesses.
To ensure a proper operation of this system, we
provide evaluator training every year. We also make surethat the system for reflecting the results of personnel
evaluation in employees’ treatment is well known andthat evaluation will lead to human resource development.

Realize a variety of work styles

We have maintained an environment in which diverse
employees can work successfully by introducing ateleworking system and a flextime system and enhancing
the flexibility of when and where to work. Also formanagers, we provide job ranks to balance work and life
so that they can fulfill both child or other family care andmanagerial jobs and apply for a reduced work schedule
or a flextime system, which ensures that child or otherfamily care would not hinder career advancement.
In addition to these programs for current employees,
we have also introduced a job return system thatenables former employees who have left the company
due to marriage, child birth, fertility treatment, familycare, career advancement, etc. to come back to thecompany, and have maintained an environment in which
they can utilize their experience, knowledge, and knowhow accumulated while working in the company or after
leaving the company.

In a Japanese society where the decreasing labor force
is unavoidable due to the declining birthrate and aging
population, enhancement of productivity per person is
becoming a major issue.
To achieve a sustainable growth under suchcircumstances, we are required to further improve theproductivity and promote work style reforms to generatehigher business outcomes.
With the aims of responding to computerization
being promoted inside and outside the company andimproving the efficiency through automation of routine
jobs, we have continuously utilized various digital
tools such as RPA (Robotic Process Automation),while promoting business reforms, combined withstandardization of work processes, for back-office jobs
such as payroll calculation and slip processing.
In the future, we will develop an environment thatwill enable us to respond flexibly to changes in theenvironment surrounding us, which will lead to a higher
competitiveness and realization of work style reforms,
by promoting further paperless business information andautomation of routine jobs and reviewing the business
operation system at the company-wide level, in orderto promote proposal and materialization of new work
styles, based on the assumption of teleworking.

Implement employee engagement survey

SASB Index

To foster a culture of learning and development in theworkplace, we deploy programs to develop humanresources who “can think and act by themselves” forCreate a workplace to enhance
employee engagement

Promote RPA use

NTN Group Information*Off-JT is education and training outside the workplace.

In addition to conventional training for managers, weoffer an “NTN Next Leader Program (basic course/intermediate course)” for young managers with theaim of developing the number of candidates for nextgeneration management, who can make decisions on
management issues on long-term perspective.
The curriculum is designed to acquire viewpoints andknowledge required for management in a systematic way,with focuses on “reviewing from the managerial viewpoint
and taking a larger view” selectively in the basic sourceand “developing the ability for strategic planning andorganizational reform in the long term” in the intermediate
course. We have also introduced a succession plan
through selection of executive officer candidates. These
measures enable us to find management candidates at
an early stage and develop them in a planned manner.

We will continue to develop a work environment
where many employees can work sufficiently
successfully to realize a variety of work styles.

Sustainability Management

We are working on specific initiatives to realize two out of
the five pillars of our human resources strategy, namely,“securing human resources who will lead the next
generation to take on the challenge of transformation”
and “fostering a culture of learning and developmentin the workplace.” As our basic policy for humanresource development to enable “prosperous humandevelopment” toward realizing a “NAMERAKA Society”
stipulated in the Medium-term Management Plan,
we aim to foster three types of human resources: (1)human resources who are competent in the international
community, (2) human resources who are independent
as individuals, and (3) human resource with creativity. Ourhuman resource development is based on individual selfdevelopment and on-the-job training (OJT). In addition
to providing opportunities and various support systems
to promote this, we provide various types of rank-based,
specialty-based, and issue-based training as Off-JT*, ifnecessary, with a long-term perspective in a systematic,planned and organized manner, with adaptation to meetthe needs of the times.

Manager personnel development

Value Creation Story

all ranks. To expand our businesses for the next 100
years, it is indispensable for us to develop humanresources who can work successfully not only in Japanbut also overseas. As programs to enhance employees’
aspiration and develop internationally-minded persons,
NTN provides English-only training (global businessskill training) for young employees and put in place anoverseas education and tuition reimbursement system
as well. We also strive to increase the awareness,knowledge, and competence of all employees byenriching the content of corporate and technicalknowledge seminars through in-house e-learning andhave introduced programs for improving businessskills in which younger employees can voluntarily takepart. On the systemic side, we have implemented an
in-house recruitment system to promote employees’
career ownership and been engaged in autonomouscompetence development according to the skills andcareer plan of each employee. Meanwhile, we offer AI
and data literacy courses for promoting utilization ofdata and digital technologies, solving business issues,and leading to organizational innovation, in order toincrease the number and level of users of digital literacy,such as AI literacy and data analysis. For managers, we
provide training not only for new ones but also for thosewith certain years of experience (performance evaluator
training for existing managers) to improve their abilityof evaluating performance and providing guidance forsubordinates. We also offer seminars (NTN Next Leader
Program) to find and develop the new generation ofmanagement executives.

To achieve sustainable enhancement of corporate
competitiveness, we believe that it is important tocreate an open workplace in which each employee’s
abilities are utilized and treated fairly, as well as a good
relationship of trust and communication between
supervisors, subordinates, and employees. We areworking to improve employee engagement.
In order to enhance the effectiveness of ourinitiatives, we conduct an engagement survey to gauge
the thoughts and feelings of our employees and their
expectations for the company. Based on the survey
result, we also conduct activities to improve workplaceissues in department units, activate workplacecommunication through one-on-one meetings, and work
to develop an environment in which each employee has
a good reliable relationship with each other.
Through the development of personnel measures
to improve employee engagement (such as revision of
the managerial personnel system), implementation of
workplace improvement activities, measures to reformworking styles, and initiatives linked to the promotion ofhealth and productivity management, we will realize the“good working environment” and “motivation” of eachand every employee.
Please refer to our website for other initiatives related to “Human resource
development.”
https://www.ntnglobal.com/en/csr/sc/employee.html

NTN Report 2023

64

Sustainability Management Prosperous Human Development
About Us

Promote diversity

Materiality

Materiality

Basic approach to diversity andinclusion

Female managers (belonging to NTN)

(Persons)

140
120
100
80
60
40
20
0

75

81

53

55

22

26

94

106

114

123

127

127

Female supervisors

127

116

75

82

92

96

64

98

94

86

30

31

32

31

31

29

33

30

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Nurturing strong safety consciousness

Measures to promote the participation of male employees
in childcare leave include awareness-raising activities by
posting posters’ promoting male employees’ childcare leavethroughout the company, and holding seminars to promote
the development of the next generation (papa seminars),
to help male employees learn about the importance ofparticipating in childcare and to deepen their understandingof internal systems for childcare.
As a result of these efforts, the percentage of male
employees taking childcare leave in fiscal 2022 increased to37.2%, from 11.2% in fiscal 2021.

Received a “Platinum Kurumin” certification
as a child-rearing support company
We were granted a “Platinum Kurumin” certification in October
2022 for our high level of supportive initiatives related to
employees’ child-rearing.
For employees in childcare, irrespective of their gender,
we distribute a maternity/childcare leave handbook thatsummarizes laws and in-house systems related to childcare,from detection of pregnancy to maternity leave, childcare
leave, and reinstatement, to make those systems known
within the company. As a program for managers, we distributea childcare support book designed for managers to deepen
their understanding of childbirth and childcare and maintainan environment in which employees facing childbirth andchildcare can demonstrate their maximum performance. In
addition, we provide a childcare boss handbook designed for
managers to develop an environment in which diverse humanresources, such as those in child and other family care, canwork sufficiently successfully and raise awareness for helping
subordinates balance work and private life.

Promote employment of persons withdisabilities
As part of developing an organization with diversity
in which everyone can work successfully, we actively
promote employment of persons with disabilities. Persons
with disabilities “collaborate” successfully at various
manufacturing sites and administrative departments with
their respective characteristics. In addition, as workplacesin which persons with disabilities can work as leading
members, we opened a dedicated workplace called“Yume Kobo (dream factory)” at each business site in
Kuwana, Iwata, and Okayama, which contributes to local
employment. We are also working to establish a work
environment in which even persons with disabilities canwork safely and easily, including barrier-free promotion.
The rate of employment of persons with disabilities was
2.57% in the fiscal year ended March 2023 through active
employment and retention programs.
Please refer to our website for other initiatives related to “Promote diversity.”
https://www.ntnglobal.com/en/csr/sc/employee.html

65 NTN Report 2023

We provide risk prediction (KY) training to improve therisk awareness of employees. By implementing risk
awareness training (KYT) on a workplace-by-workplacebasis, mainly led by trained employees, we aim todevelop people who can be aware of unsafe conditions
and do not act unsafely.
Similarly, we provide risk assessment (RA) training
on facilities and operations. Through trained employees’
participation in RA in their own workplaces, we intend
to improve the level of risk assessment implementation.
Also, through identification of hazards as part of the
RA procedure and understanding of risk estimation by
hazard, we aim to develop safety-conscious personnel
who are able to imagine potential risks, acts resulting
from personal carelessness, acts caused by impatience,omitted acts, etc.

Intrinsic safety of equipment
We continuously conduct risk assessment on facilities
and work environments to reduce manifest and potential
risks. In addition to taking engineering measures suchas safety covers and interlocks, we also ensure thesafety of facilities and operations through managerial
measures such as procedures, rules, and protective
equipment. Remaining risks are recorded in the residual
risk management sheet in accordance with the unified
company-wide residual risk management operation.
Based on this, stickers indicating residual risk levels are
put on the equipment for visualization. Furthermore,training on the residual risk of the equipment is provided
for operators to make sure that they know where thehazardous risk lies.

Creating structures to support safety
We are promoting the introduction of an occupational
health and safety management system to create asystem that supports the safety of the Group. By
continually implementing our management system and
PDCA cycle, we will strive to comply with laws andregulations and improve the level of safety and health.
All of our manufacturing sites have completed ISO
45001*1 certification, an international standard.
In our 16 domestic manufacturing affiliates, twocompanies have acquired ISO 45001 certification, eightcompanies have acquired JISHA OSHMS certification*2,
and two companies have acquired GSC certification*3 .
Currently, four affiliates are in the process of acquiring
GSC certification. Five overseas affiliates have alsoacquired ISO 45001 certification.
If any occupational accident should have occurred, its
information is shared on an occupational accident reportacross the entire company, including the occurrence
conditions and countermeasures. If an accident requiring*1 ISO 45001: International standards for occupational health and safety
management systems*2 JISHA OSHMS: Japanese standard in compliance with the MHLW’s “Guidelines
on Occupational Safety and Health Management Systems” (OSHMS Guidelines)*3 GSC: MHLW’s project for assessing occupational safety and health of small andmedium-sized business sites (Good Safety Company)

Approach to Kenko Keiei*(health and productivity management)
Certified as a “Health and Productivity
Management Organization in the Large
enterprise category (White 500)” for the third
consecutive year
We were certified as a “Health and Productivity
Management Organization 2023 (White 500)” in the large
enterprise category, which is selected jointly by the Ministryof Economy, Trade, and Industry and the Japan HealthCouncil. This is our third consecutive year of certification.
“The Health and Productivity Management
Organization Recognition Program” is a system forrecognizing companies that practice particularly excellent
health and productivity management. This year, out of
2,676 applicant corporations, top 500, including NTN,
were certified as “White 500” companies.
This survey evaluates corporations’ initiatives to tackle
health issues and promote health from the viewpoints
such as “management principles/policies,” “system/
initiative implementation,” and “organizational structure.”
This year, NTN received a top-class evaluation amongcorporations in the machinery industry in terms of“organizational structure,” which evaluates the attitudeof the management for health issues and corporations’promotion structures.

SASB Index

Trend in the number of female managers and supervisors
at NTN (employees belonging to NTN)/As of April 1

Promote male employees to take childcare
leaveabsence should have occurred, or multiple occupational
accidents should have occurred at a same workplace(section) within a same fiscal year, a safety audit isconducted to prevent reoccurrence with members incharge of safety at other business sites.
In such cases, safety activities at the workplace arechecked on site to ensure the effectiveness of its safety
management system.
Regarding any occupational accident that has
occurred, we identify why the victim had taken relevant
actions, as well as the root cause, and provide guidance
that will lead to countermeasures.

NTN Group Information

One of the biggest challenges in achieving diversity is
promoting women achievement in the workplace andclosing the gender gap.
Currently, the percentage of female managers in ourgroup is 14.7% globally, 4.0% in Japan, and 4.4% at NTN,
revealing a lower level in Japan than overseas. In order
for women to participate in important decision-making in
positions of responsibility, and to create innovation basedon diverse opinions and flexible ideas, we have introduced
a leadership development program for female employees
and systematically provide education to help them moveup, thereby creating an environment in which women canaims to take managerial positions. In addition to fostering
women awareness and developing their abilities, we will
work to further promote women’s activities with raising theawareness of the entire workplace.

Safety and health efforts

Sustainability Management

Career advancement of women

Balance childcare and work

Value Creation Story

Our group is working to “creating a rewarding environmentthat respects the diversity of employees” in which a varietyof human resources, regardless of nationality, culture,gender, age, or disability, can freely contribute better ideas
and maximize their abilities. More specifically, we areworking to further secure human resources having various
career backgrounds by increasing employment of midcareer
workers and maintain environments and systems thatenable us to actively promote diverse human resources
to positions of responsibility at domestic and overseas
business sites.
We will respect and recognize diverse values, andintegrate them to create an organization that generates
flexible ideas. While continuing to grow in a sustainable
manner, we will realize our company’s philosophy of “Weshall contribute to international society through creating newtechnologies and developing new products.”

Promote safety and health*Kenko Keiei is a registered trademark of the NPO Health Management Research
Association.

Certification mark of “Health and Productivity
Management Organization in the 2023
Large enterprise category (White 500)”
Please refer to our website for other initiatives related to “Promote safety and health.”
https://www.ntnglobal.com/en/csr/sc/employee.html
NTN Report 2023

66

Sustainability Management Prosperous Human Development
About Us

Materiality

Respect for human rights

The Group believes that in order to contribute to asustainable society and continue to be a “company
needed by society,” it is essential to fulfill our corporate
responsibilities relating to respect for human rights
and to earn the trust of society. Accordingly, we haveincluded “respect for human rights” in our Management
Policy. In addition, we have established a Human Rights
Policy, which stipulates that we will not violate any formof human rights. We are also committed to awarenessraising activities related to respect for human rights andwork environment development so that varied employeesof the Group can all work safely and comfortably.

In order to further promote human rights initiatives, wehave formulated a Human Rights Policy in which all
Group employees share common sense of values related
to human rights and which serves as the basis for their
day-to-day activities and business activities. In doing so,
we are making efforts to ensure that human rights arerespected.
Based on the Human Rights Policy, we will addresshuman rights issues which are gaining more and moreglobal attention, as exemplified by the Sustainable
Development Goals (SDGs) and the UK’s Modern Slavery
Act, and fulfill our corporate responsibility for respecting
human rights.

Human rights due diligence
Outline of the Human Rights Policy
1. NTN will respect internationally-recognizedhuman rights.
2. NTN will not violate the human rights of others.
3. NTN will respond appropriately to any negative
impacts its business activities may have onhuman rights.

Respect[Responsibility to Respect Human Rights]

Management
PolicyP

Human Rights
PolicyD

July, 2020

Procurement
PolicyDecember,
2019

April, 2021

Remedy[Responsibility to remedy human rights violations]
Complaint handlingA
Information
disclosure

C
Additionalverification

Human rights risk management

Building a framework that ensures access to remedies

mined from conflict and high-risk areas. In the fiscal year
ended March 2023, we traced back through our supply
chain of 245 business partners to identify the material
smelters, and more than 97% of such partners reported
that they do not use any conflict minerals. We willcontinue to conduct this survey periodically.
Companies listed on U.S. Stock Exchanges are
required to disclose any use of conflict minerals under
the U.S. Dodd-Frank Act. Based on the results of
the above survey, we respond to inquiries from ourcustomers regarding conflict minerals. As humanrights issues are gaining attention globally, corporateawareness of such issues is growing. Regardless of
the U.S. Dodd-Frank Act, the number of companies
voluntarily eliminating the use of conflict minerals isincreasing as shown in the chart below.

Number of conflict mineral surveys(responding to requests from customers)
500
384

400

Respond to human rights risks in the
supply chain

Japan

Overseas

464

451

457

151

147

157

313

304

300

2020

2021

2022

(Number of cases)

300

337

341

106

97

210

231

244

263

2016

2017

2018

2019

300
90

121

200
100

SASB Index

Overview of human rights due diligence

Prevention andmitigation ofnegative impact

Survey of foreign workers
We monitor the working condition of foreign workers in
our group and have a system in place to enable quick
response as necessary.

Correspond to forced labor and child labor (Conflictmineral surveys)
Incomes from the mining of tin, tantalum, tungsten
and gold (3TG) in the conflict areas of the Democratic
Republic of the Congo (DRC) and neighboring countries
could be a source of capital for armed forces, which
could lead to human rights infringement, illicit mining
and smuggling. In April 2016, we established our
CSR Procurement Guidelines, upholding the policy of“Responsible mineral procurement,” to continuously
monitor whether the mineral resources contained inmaterials and components used in our products are

United Nations Guiding Principles on Business andHuman Rights

Identification andassessment of risks

Sound labor-management relations based on labormanagement consultations
We strive to share the content of each measure between
labor and management in a forum where labor andmanagement can exchange information with each other.
We hold quarterly “Labor-Management Roundtable
Meetings,” in which executive managers provide
thorough explanations about the Business Management
Policy, management environment, and other topics tothe labor union and listen to the views of the labor union.
In addition, we hold labor-management committee
meetings as appropriate according to each measure that
leads to improvement of “motivation to work” and “easeof work,” with the aim of exchanging opinions to deepen
mutual understanding and deciding on work styles thatlead to improvement of attractiveness of a place to work.

NTN Group Information

Based on the two perspectives of “respect” and“remedy” set forth in the United Nations Guiding
Principles on Business and Human Rights, our Groupprioritizes “responding to human rights risks in
employees,” “responding to human rights risks in the
supply chain,” and “building a framework that ensures
access to remedies.” In order to ascertain the actual
situation about negative human rights impacts in ourbusiness activities, we conducted a human rights
questionnaire for our overseas affiliates. Analysis of thequestionnaire results showed a low possibility of risk
occurrence. We will continue to work for human rights
due diligence by conducting a questionnaire regularly.

Respond to human rights risks in employees

Sustainability Management

Human Rights Policy

Value Creation Story

Basic approach to human rights

0

Excerpt from NTN CSR Procurement Guidelines
Responsible mineral procurement
Mineral resources included in materials and components will be checked for any negative social impacts on humanrights, the environment, etc. If a negative impact is suspected or verified to be present, we will substitute a methodthat does not use those conflict materials.
Prohibition of child labor
We will not violate the obligation to protect children and will not employ children that do not meet the minimum
working age of each country and region.
Prohibition of forced labor
We will ensure that all labor is voluntary and that employees can leave their job freely. We will not use forced labor.

67 NTN Report 2023

NTN Report 2023

68

Materiality

Sustainability Management

Strengthen governance

GovernanceThorough compliance1

Fiscal year ending March 31, 2024 (As of June 27, 2023)

Basic approach

Nominating
Committee

Board of Directors

Audit
Committee

Eiichi Ukai
Hideaki Miyazawa
Masaki Egami
Masaaki Yamamoto
Shumpei Kinoshita
Isao Ozako
Ryo Kawakami(Non-standing)Tomonori Nishimura(Non-standing)

Yuriya Komatsu Chairperson(Non-standing)

Akira Murakoshi(Non-standing)Yasuo Kitani*Please note that persons withare Outside Directors, persons withand persons with are members of committees.

Corporate governance structure (as of June 27, 2023)

Management Meeting

The Management Meeting discusses
important matters relating to operational
execution, as a supporting body fordecision making of President, Executive
Officer. The meeting is composed ofPresident, Executive Officer, and Executive
Officers who are designated by him, andheld twice a month in principle.

Appointment/
removal of Directors[Execution Organization]

Report/Propose2[Supervision Organization]

Advise5 Management

1 Board of Directors

Delegate/supervise(Supervise the execution of duties of Directors and Executive Officers)(Decide the management policy, etc.)

Meeting(Decision-making support)
ReportAppointment/removal ofmembers of committees

ReportReportOrganizational design
Directors
Of those, independent
Outside Directors
Term of office of Directors
Executive Officers
Of those, Executive Officers
who have the authority ofrepresentation
Executive Officers
concurrently serving as
Directors
Structure to support duties of
Audit Committee
Accounting auditor

69 NTN Report 2023

Company with
Nominating
Committees, etc.
11

Available (Internal
Audit Department)
Ernst & Young
ShinNihon LLC

Audit Committee

Direct6 Executive

Officers Meeting

Sustainability Committee

3 Compensation Committee(Sharing information)

Fair Trade Monitoring Committee

4 Audit Committee

Audit

Compliance Committee
Audit

1 year11

5Compensation Committee

The Compensation Committee decides
on the policy for determining details ofcompensation for Directors and Executive
Officers, and determines details ofcompensation for individual persons. The
number of members is five as of June27, 2023, and three of them are Outside
Directors. The committee is chaired by an
Outside Director.

4
Report52

3

2 Nominating Committee

Risk Management Committee

Basic information

The Nominating Committee decides
on the content of a proposal regarding
appointment/removal of Directors, which
is submitted to the General Meeting of
Shareholders. The number of members isfive as of June 27, 2023, and three of themare Outside Directors. The committee ischaired by an Outside Director.

SASB Index

Executive
Officers

Nominating Committee

NTN Group Information

Representative
Executive Officer
President,
Executive Officer

Appointment/
removalof Executive Officers

DirectReportDirectInternal Audit
Department

ReportCooperate

Accounting auditor(audit firm)

Executive Officers
Executive Officers are elected by the
resolution of the Board of Directors, and arein charge of executional decision making
and execution of operations delegated by
the Board of Directors. Its term of officeis specified as a year by the Articles ofIncorporation. The number of Executive
Officers is 11 as of June 27, 2023.

Chairperson

General Meeting of Shareholders

Executive Officers Meeting

The Executive Officers Meeting is heldby President, Executive Officer under
the attendance of all Executive Officers.
Matters resolved at the Board of Directors
are instructed, and each Executive Officer
reports about the status of operational
execution. This meeting is held once a monthin principle, to make operational execution
more efficient and effective by sharing
information among Executive Officers.

Outside Director

Appointment / removal

6

Inside Director

The Board of Directors decides the basic
management policies, and supervises
the execution of duties of Directors
and Executive Officers. Except matters
stipulated by laws and regulations or the
Articles of Incorporation to be resolved
at the Board of Directors, the Board of
Directors delegated substantial authority
to Executive Officers with the aim tostrengthen the supervision of management,
and make decisions more promptly.
The Board of Directors is held once amonth in principle, but it is also held flexibly
as needed.
The Articles of Incorporation specify thatthe term of office of Directors shall be one
year, and the number of Directors shall bewithin 15.
The number of Directors is 11 asof June 27, 2023, and five of them are
Outside Directors. The Board of Directors ischaired by an Outside Director.

Sustainability Management

5

are Chairpersons of committees,

Board of Directors

Value Creation Story

Strengthening and enhancing our corporate governance is one of our top management priorities. We take steps to makemanagement more efficient and robust while working to increase management transparency by disclosing information toshareholders and investors in a prompt and accurate manner.
We made a transition from a Company with a Board of Company Auditors to a Company with a Nominating Committee,
etc. in June 2019 with the aim of establishing a prompt decision-making structure and operational execution organization,
strengthening the supervision of management, and improving management transparency and fairness. Under this structure,
we will work on further improvement of corporate value over the medium- and long-term.

Compensation
Committee

About Us

Members composing Board of Directors, Nominating Committee,
Compensation Committee, and Audit Committee

The Audit Committee audits the executionof duties of Directors and Executive Officers,
and decides on the content of a proposal
regarding appointment/removal of theaccounting auditor, which is submitted to
the General Meeting of Shareholders. The
duties of the Audit Committee are supportedby the Internal Audit Department, and theSecretariat of Audit Committee, etc. arestaffed by persons holding different posts
as well. These persons, who have propercapacity and experience for supporting
the Audit Committee, are appointed by the
manager of the Internal Audit Department,with the approval from the Internal Audit
Committee. Regarding matters related topersonal relocation, disciplinary punishment,
evaluation, etc. of such persons, theapproval from the Audit Committee shall be
required for decision.
The number of members is four asof June 27, 2023, and three of them are
Outside Directors. The committee is chairedby an Outside Director.

NTN Report 2023

70

Sustainability Management Governance
About Us

Materiality

Strengthen governanceNominating Committee (from April 1, 2022 to March 31, 2023)
Members, the number of meetings, and attendance

Governance-strengthening transition

2006

CSR Committee is established

2008

Risk Management Committee is established
An Outside Director is appointed for the first time
The number of Outside Directors is increased (from 1 to 2)

2012

Fair Trade Monitoring Committee is established2015

Compliance Committee is establishedThe effectiveness of the Board of Directors is assessed

2016
2018

New corporate philosophy system is established2019

Transition to a Company with Nominating Committee, etc.
The number of Outside Directors was increased (from 2 to 5)
Sustainability Committee is established

2020

Woman appointed as an Outside Director

2021

Flattening Executive Officer System

2022

ESG items set in the Executive Officer evaluation system
Female Outside Director appointed as the chairperson of
the Board of Directors

Approach of Board of Directors

The appointment of Executive Officers

Directors other than Outside Directors are appointed froma wide range of fields, including manufacturing, marketing,technology, and administrative divisions. In addition,
Outside Directors are appointed after considering diversity
and balance, such as being a person with knowledge offinance, experienced management, and being a lawyer.
We believe that the current number of Directors is anappropriate size for strengthening corporate governanceand expanding our global businesses.

The appointment of Executive Officers shall be
determined after careful deliberation by the Board of
Directors, comprehensively considering whether they
possess personalities, insights, capabilities, experience/
performance, etc. that are appropriate for fulfilling theirduties. In addition, if it becomes clear that an Executive
Officer lacks the required qualifications, he/she will bepromptly dismissed by the Board of Directors.

Diversity of Directors

On June 25, 2021, the Company removed theManaging Executive Officers and eliminated hierarchicalrelationships among Executive Officers and made them
one team. It enables all Executive Officers to activate
discussions and respond to various issues quickly towardfurther enhancement of its corporate value.
In line with the flattening of the system, in April 2022
we abolished the conventional system of compensation
by position and shifted to a system of compensation for
Executive Officers based on the responsibilities of thedivision to which they are in charge.

Upon the approval of the General Meeting of Shareholders
in the fiscal year ended March 2020, a female Director(Outside Director) was newly appointed for the first timeat the Company. The female Director with experience in adifferent industry than ours supervises management. This
will enable us to integrate diverse values and acceleratetransformation aimed at achieving sustainable growth.

Assessment of effectiveness of the Board of Directors
We annually evaluate the effectiveness of the Boardof Directors to improve the effectiveness. In the fiscal
year ended March 31, 2023, we conducted a selfassessment of the Board of Directors by sending out
questionnaires to Directors from the viewpoints such as
role/structure/management of the Board of Directors andmanagement of committees. Although this evaluation
was generally positive, it was mentioned, regarding theperformance evaluation of Executive Officers, that thetarget management system has been developed, but its
operation is still in the developing stage. There was also
another comment on reverification of matters resolved
at the Board of Directors. On these matters, we havedecided to continue discussion. We will continue toanalyze and evaluate the effectiveness of the Board of
Directors on a regular basis to make improvements.

Flattening of the system and compensation

Introduction of ESG evaluation
Since April 2022, ESG items have been set as key
individual target measures for Executive Officers involvedin the calculation of annual incentives (bonuses). The
degree of achievement of these ESG items is one of
the evaluation indicators. By introducing ESG items into
the evaluation system, Executive Officers are promoting
active ESG initiatives.

Number of attendances

Outside Director

100%

5 times/5 times

Kouji Kawahara

Outside Director

100%

5 times/5 times

Akira Murakoshi

Outside Director

100%

5 times/5 times

Eiichi Ukai

Director

100%

5 times/5 times

Isao Ozako

Director

100%

5 times/5 times

Noboru Tsuda

Chairperson

Discussions on Nominating CommitteeStandards for Selection of Directors

The committee was held five times for the year ended
March 31, 2023, with discussions mainly on the follow
up on the business execution plans of Executive Officers,
the structure of officers for the fiscal year ending March
31, 2024, and the selection of candidates for President,
Executive Officer, Representative Executive Officers andExecutive Officers and Directors.

Candidates for Directors will be selected from inside andoutside the Company based on standards for selection of
Directors as described below, considering the diversity andbalance of the Board of Directors (including gender andinternationality), after careful deliberation by the Nomination
Committee.
• Must be in good condition both physically and mentally.
• Must have a high sense of ethics and a law-abiding
spirit.
• Must be able to engage in constructive discussion froman objective viewpoint.
• Must be highly motivated to improve their abilities.
• Must have excellent decision-making skills from acompany-wide and medium- to long-term perspective.
• Must have excellent insight and foresight concerningchanges to the overall environment and to society.
• Must have sufficient record of performance andexpertise in relevant fields. (Corporate manager orexpertise)• Outside Directors must (1) have sufficient time toaccomplish their duties, (2) satisfy the standards
regarding the independence of Outside Directors,(3) ensure diversity between the Outside Directors, and(4) have the requisite abilities to accomplish duties as amember of any of the three Committees.

About Outside Directors

As of June 27, 2023, the Board of Directors consistsof 11 members, including six Inside Directors and fiveOutside Directors, and the ratio of Outside Directors is
45%. We will continue to strengthen the supervision ofmanagement and improve management transparency
and fairness. In addition, in order to ensure appropriate
corporate governance, we have established our own
standards regarding the independence of Outside
Directors, stipulating qualification and independence
standards for them. These standards are used forappointing Outside Directors. Also, all of the Outside
Directors are designated as Independent Officers as
defined by the rules of the Tokyo Stock Exchange, Inc.
(TSE), and are reported to TES as such.
For Outside Directors, we have established anenvironment where active discussions can be held at theBoard of Directors through actions such as explaining theissues as necessary by secretariat and others prior to arelevant meeting of the Board of Directors. Moreover, we
continuously provide information necessary to effectively
fulfill the roles and responsibilities of an Outside Director
by creating opportunities to deepen their understandingof our business through on-site inspection of businesssites and other means.

SASB Index

Executive Officers

Attendance

NTN Group Information

Board of Directors

Title

Sustainability Management

2011

Name

Compensation Advisory Committee is established

Value Creation Story

2004

Start of Operating Officer System
The Board of Managing Directors is reviewed andrenamed as the Business Strategy Committee

Background

Outside Director

45%

Management(2 persons)Financial institutions(2 persons)Lawyer (1 person)

71 NTN Report 2023

NTN Report 2023

72

Sustainability Management Governance
About Us

Compensation Committee (from April 1, 2022 to March 31, 2023)

Audit Committee (from April 1, 2022 to March 31, 2023)

Members, the number of meetings, and attendance
Name

Members, the number of meetings, and attendance
Title

Attendance

Number of attendances

Name

Title

Attendance

Number of attendances

100%

6 times/6 times

Kouji Kawahara

Outside Director

100%

15 times/15 times

Outside Director

100%

7 times/7 times

Ryo Kawakami

Outside Director

100%

15 times/15 times

Yuriya Komatsu

Outside Director

100%

7 times/7 times

Tomonori Nishimura

Outside Director

100%

15 times/15 times

Eiichi Ukai

Director

100%

7 times/7 times

Isao Ozako*

Director

100%

11 times/11 times

Masaaki Yamamoto*Director

100%

6 times/6 times

Chairperson

Chairperson

Value Creation Story

Outside Director

Ryo Kawakami

Tomonori Nishimura**The number of attendances after becoming as a member of the Committee*The number of attendances after becoming as a member of the Committee

Discussions at the Compensation Committee

1st∙Points granted by BIP Trust for compensation of Officers∙Bonus for Executive Officers in 2022

2nd

∙Decision of the order of substitution for the chairperson in theevent of an accident∙Basic policy for determination of compensation∙Director compensation∙Changes in compensation for Executive Officers due to organizational change∙Compensation Committee’s annual activity plans∙Executive Officer’s business execution plans

4th∙Review of compensation levels and compensation structure of
Officers∙Winter bonus for Operating Officers

5th∙Punishment of Executive Officer

6th∙Executive Officer compensation

7th∙Basic compensation for Executive Officers∙Executive Officer compensation∙Revision of stock issuance regulations and internal regulations

Basic policy for determining compensation
The system and level of compensation for Officers,
compensation specified for each individual, etc. aredetermined in the Compensation Committee chaired byan Outside Director using objective information including
the level and trends of other companies as reference.
Compensation for Executive Officers andcompensation for Directors are determined separately,
and if a Director also serves as an Executive Officer,
those compensations are added up.

73 NTN Report 2023

Compensation for Executive Officers

Compensation for Executive Officers consists of fixedcompensation and performance-linked compensation
which fluctuates according to performance. The ratio of
fixed compensation to performance-linked compensation
is approximately 6:4 as a standard.
Fixed compensation
6

Performance-linked
compensation
Annualincentives

Medium- tolong-term incentives

4

Fixed compensation
Fixed compensation consists of basic compensation,compensation by responsibility and compensation byrepresentation.
Performance-linked compensation
Annual incentives
For Executive Officers, the Company determines whether or
not to provide payment of monetary compensation that reflects
the performance of a single fiscal year, based on consolidated
financial results indicators, etc. of the previous fiscal year and,in the case of providing such payment, the total amount. The
payment or non-payment of each Executive Officer, and in thecase of payment, the amount, is determined within the total
amount of provision by considering the Executive Officer’s
progress on priority target measures. Indicators related to thecalculation of bonuses are based on consolidated financial
results: net sales, operating income and net income fromthe perspective of emphasizing the achievement of earnings
growth. The provision is made once a year in June after thedetermination of the Compensation Committee.
Medium- to long-term incentives
Company’s shares shall be issued based on the achievementlevel of major target figures in the Medium-term Management
Plan (money equivalent to the converted amount of shares shallbe paid for a certain portion) as incentives to motivate them toachieve the targets in the Medium-term Management Plan andcontribute to raising shareholder value, and in order to promote
the holding of the Company’s shares. Medium- to long-term
performance targets include key performance indicators(consolidated operating margin, consolidated net sales, etc.)that take into account the Company’s management policies.

Discussions at the Audit Committee
Major items to be discussed at the Audit Committee
include the formulation of the Audit Committee’s auditing
standards, the formulation of auditing policies andauditing plans, the evaluation of the content of auditing
plans of independent auditors, and the assessment of theselection of independent auditors, and the assessmentof the status of development and operation of internal
control systems.

Audit Status
The Audit Committee members attend meetings ofthe Board of Directors and other major meetings inaccordance with auditing standards, policies, andplans determined by the Audit Committee. The Audit
Committee receives reports or hears from Directors,
Executive Officers, employees, etc. on the status of theexecution of their duties, and audits the execution ofduties by Directors and Executive Officers. In addition to
the Board of Directors and Executive Officers Meetings,
members of the Audit Committee attend and monitor
the Sustainability Committee, the Risk Management
Committee, the Compliance Committee, and the Fair
Trade Monitoring Committee, which operate internal
control systems.

Internal Control/Internal Audit
Internal control system
We regard risk management and compliance as oneof the most important management issues, and haveestablished a basic approach to internal control system(Internal Control Policy). Based on this basic policy, we
maintain and operate the Group’s internal control system,
and are working to improve the soundness and efficiencyof our management by constantly reviewing our internal
control system in response to changes in the businessenvironment.

Internal audit activities
The Internal Audit Department reports directly to the
President, Executive Officer and is in charge of internal
audit operations independently from the divisions to
be audited. The Internal Audit Department conducts
internal audits of the execution status of execution
organizations from the perspectives of compliance withlaws and internal regulations, appropriateness, and theeffectiveness and efficiency of business activities.
For internal audits, audits are conducted by eachorganization of the execution organization (operational
audits) and cross-organizational audits by risk andbusiness function (thematic audits). Based on the resultsof these audits, we provide advice and recommendations

for improvement to divisions subjects to audits, aswell as conducting follow-up audits to confirm theimplementation status of improvement measures until
their completion.
Overseas, we have established the Administration &Internal Control Department within the General Manager’s
Office of each region. The Internal Audit Department andthe Administration & Internal Control Department work
together to strengthen internal controls while taking into
account the circumstances and characteristics of eachregion. In the fiscal year ended March 2023, we resumed
operational audits by visiting overseas affiliates, which
had been voluntarily restrained due to the COVID-19
pandemic.
The results of internal audits are reported to the
President, Executive Officer and to the Audit Committee,
and are shared also with all Executive Officers. In
addition, the Audit Committee, the Internal Audit
Department and the Accounting Auditor hold regularmeetings to exchange information and opinions about
the audit policies, audit plans, audit results, etc., andstrive to improve efficiency and effectiveness of audits.

NTN Report 2023

SASB Index

3rd

Compensation for a Director consists only of fixedcompensation.
Fixed compensation shall be calculated by increasing
basic compensation (which is determined based on
his/her concurrent duties as an Executive Officer andwhether he/she works full-time or part-time), taking into
account a committee to which a Director belongs andhis/her role at the committee.

NTN Group Information

Compensation Committee (from April 1, 2022 to March 31, 2023)

Compensation for Directors

Sustainability Management

The Compensation Committee was held seven times
from April 2022 to March 2023.
The Compensation Committee aims to improve
fairness, transparency, and objectivity of procedures
regarding the decision making of compensation for
Directors and Executive Officers and enhance corporate
governance. Also, the committee passed resolutions
regarding the details of compensation (such ascompensation specified for each individual) of Officers.

74Sustainability Management Governance
About Us

Overview of the Committees

Risk Management
Basic approach to risk management

The Compliance Committee, chaired by the Executive
Officer in charge of Legal Department (Overall Control
Administrator of Compliance Promotion Activities),
handles global compliance risks, excluding violation
risks of the antimonopoly law and the Subcontracting
Act. The committee members are comprised primarilyof the heads of related risk management divisions.
The committee members formulate and implement
risk mitigation measures in cooperation with theCompliance Promotion Activity Supervisors appointed
at each business site in Japan and the Administration& Internal Control Department established at each
Office of General Manager in five overseas regions, andreport to the committee on action plans and the statusof implementation. The committee deliberates on thecontents of such reports and then reports the findings to
the Board of Directors.

Risk Management Committee

Fair Trade Monitoring Committee

We have developed a Risk Management Policy thatoutlines our basic approach to prevention and handlingof risks that may hamper the execution of the Group’sbusiness, and the Risk Management Regulations thatset forth risk management organizations and their roles.
Through these measures, we promote group-widerisk and crisis-management and BCP/BCM (BusinessContinuity Planning/Business Continuity Management).
We convene the Risk Management Committee
as an advisory body for risk management twice ayear, in principle. The committee regularly checks risk
management process including identification, analysis,
evaluation, and treatment with regard to risks that havea major impact on the management of the NTN Group inlight of changes in the internal and external environmentand other factors. We have classified risks into thefollowing 12 categories from the perspective of ensuring
completeness. After that, an administrative manager

To respond to various risks surrounding the business of
the Group, we have established the Risk Management
Committee, chaired by the Executive Officer (Chief
Management Officer of risk management), who is incharge of the ESG Promotion Department, as an advisory
body on risk management to prevent risks from occurringand to minimize damage in the event of a crisis. The
committee mainly consists of the General Managers of
the Promotion Departments of the risk management.
The committee regularly checks activities including
identification, analysis, evaluation, and treatment
with regard to risks that have a major impact on the
management of the NTN Group. The result of discussion
at the Risk Management Committee is reported to theBoard of Directors and instructions are fed back to therelevant departments.

The Fair Trade Monitoring Committee is chaired by
the President and Executive Officer and consists of
Executive Officers in charge of sales and procurement
divisions, an Outside Director, external lawyer and soon. In principle, this meeting is held twice a year to
discuss the implementation plans and the performance
reports for compliance with the Antimonopoly Act andthe Subcontracting Act, and to provide supervision andguidance on effective control for fair trade practices
along with education and awareness-raising activities. In
addition, we have established the Fair Trade Promoting
Group in Legal Department as an overall supervisorydepartment for compliance with antimonopoly law. Under
the direction of the Fair Trade Monitoring Committee, theGroup conducts various activities (such as education,
instruction and audit) for relevant divisions in Japan.
Additionally, overseas subsidiaries are monitored for the
implementation status of compliance with antimonopoly
law in cooperation with the Administration & Internal
Control Department in each region.

and a promotion department have been determinedfor each specific risk that will have a significant impact
on the management of the NTN Group. Through thesemeasures, we endeavor to reduce risks. The results ofthe discussion at the Risk Management Committee arereported to the Board of Directors.

Promotion of BCP/BCM
We have been developing a BCP/BCM structure
designed to respond to major earthquakes in Japan andare working to strengthen our disaster response systems,
including those of our group companies.
We have completed the formulation of BCP to enable
early disaster recovery at all domestic production sites.
Now we have also implemented BCP training to assess
the effectiveness of the formulated action plans and havetaken necessary advance measures. In doing so, we aremoving ahead with development of BCM.

Sustainability Management

Compliance Committee

Under an ever changing environment surrounding ourGroup’s businesses, we are promoting sustainability
activities to solve environmental and social issues andenable our Group’s sustainable growth, as well as torealize a “NAMERAKA Society.”
As an advisory body on sustainability activities, wehave established the Sustainability Committee, chairedby the Executive Officer (Chief Management Officer ofsustainability activities), who is in charge of the ESG
Promotion Department. The committee mainly consists of
the General Managers of ESG-related departments anddeliberates on risks, opportunities, and initiatives related
to sustainability. The status of our initiatives is checked
regularly as materiality measures associated with risks
and opportunities. Risks, opportunities, and initiatives
discussed at the Sustainability Committee are reported to
the Board of Directors as necessary.

Value Creation Story

Sustainability Committee

Risk management process
NTN Group Information

1

Risk Identification

Identify risks fromthe business environment
surrounding the NTN Group
4

Risk Treatment

2

Countermeasuresagainst risks selected
through risk evaluation

Risk Analysis

3

SASB Index

Analyze the degree of
impact of risks extracted
by identifying risks

Risk Evaluation

Select preferential
responses to risks, analysisof which has been completed
Risk Category

1

Risks related to technology and R&D

5

Risks related to sales and marketing

9

Risks related to finance and accounting

2

Risks related to procurement and logistics

6

Risks related to personnel and labor

10

Risks related to legal affairs and compliance3

Risks related to production and inventory

7

Risks related to the environment and health & safety

11

Risks related to fire and disaster prevention, etc.

4

Risks related to quality

8

Risks related to information systems

12

Others

Structure
Risk Management Committee
NTN Corp.
Individual business sites of NTN
Domestic subsidiaries
Overseas subsidiaries

75 NTN Report 2023

Composition

Chairperson Executive Officer in charge
Secretariat ESG Promotion Department
Members
Departments in charge ofpromotion of Risk Management

Board of Directors
ReportNTN Report 2023

76

Sustainability Management Governance
About Us

Materiality

Thorough compliance

Basic approach to compliance

Compliance Committee
Chairperson: Executive Officer
in charge
Secretariat: Legal Department

NTN business sites anddomestic subsidiaries
Compliance promotion
activity supervisors

77 NTN Report 2023

Helpline (whistle-blower system) andeducational activities

Domestic subsidiaries

Officers
Employees
Chairperson: President,
Executive Officer
Secretariat: Legal Department

Administration &Internal Control Department,
Office of General Manager
in five overseas regions

Our overseas subsidiaries have developed and have been
operating in-house rules and regulations that are localized
to reflect relevant laws, regulations, and generally
accepted standards and practices in each country. They
also conduct audit activities related to these rules andregulations as needed. The Legal Department is regularly
sharing information and exchanging views with the
Administration & Internal Control Department at the Officeof General Manager in each region on related initiatives,and maintaining and managing a structure in whic h theGroup unites as one to prevent bribery.

NTN business sites

Board ofDirectors
Fair Trade Monitoring Committee

Overseas initiatives

Overseas subsidiaries

In Japan, the whistle-blower system called Helpline
has been established within and outside the Company
and has been operated as a contact point for providing
consultation regarding violations of laws, Business Codeof Conduct, and in-house regulations. Helpline provides
consultation for cases such as suspected violationsof labor-related laws, including harassment, as well
as violations of in-house regulations, and conducts
investigation in accordance with Helpline Management
Rules that stipulate ensuring the confidentiality andChief Management Officer
Executive Officer in chargeof Legal Division

Chief Management Officer
Executive Officer in chargeof Legal Division

Chief Management Officer
President, Executive Officer

Compliance Committee

Helpline Management
Department: Legal
Department

Fair Trade Monitoring
Committee

Internal Helpline

External Helpline

NTN Group company officers, employees, business partners, etc.
SASB Index

Structure

We have established and have been applying in-houserules and regulations based on domestic and overseas
anti-corruption laws and social norms. Our in-houserules and regulations not only prohibit bribery from andto domestic and overseas public officials and business
partners, but also specify the rules and procedures
regarding provision of property or profit by our officers
or employees, and rules and procedures to prevent
bribery via our business partners. In addition, under thecircumstance that some countries even impose restraints
on the transfer of property or profit between privatecompanies, we have established rules and proceduresfor the receipt of property or profit in order to prevent
bribery by our officers and employees, to thoroughly
ensure the conduct of fair trade, and to prevent our
officers and employees from engaging in conflicts ofinterest. Furthermore, we have made it a policy to refuse
to receive gifts and entertainment from our business
partners in principle. We conduct in-house training ande-learning programs to raise awareness of the contentsof our in-house rules and regulations, and conduct selfaudits once a year to ensure thorough awareness of
the anti-corruption rules and regulations. Domestic
subsidiaries have also established and have been
applying their own internal regulations that are consistent
with the Company’s policies.

NTN Group Information

We have established and have been operating theCompliance Committee and the Fair Trade Monitoring
Committee to promote compliance through the activities
of both committees. (See page 75 for Overview of theCommittees.)
Aside from the efforts made by the two committees, theLegal Department conducts the rank-based training andthe topic-specific training for officers and employees as partof compliance-related educational and awareness-raising
activities. In addition, we hold a group training session forCompliance Promotion Activity Supervisors in Japan oncea year. By sharing information and exchanging opinions onimportant issues, we are enhancing the promotion activities
at each business site and providing support for the initiatives
at each business site. Furthermore, with regard to activities
for global compliance risks such as corruption prevention,
we regularly exchange information and opinions with the
Administration & Internal Control Department at each Officeof General Manager in five overseas regions and legal/
compliance departments of overseas subsidiaries, thereby

As part of its fraud prevention activities, the Group has
investigated employee evaluations for the attitudes of thepresidents of affiliated companies and their corporate
culture related to compliance, since the fiscal year ended
March 2018.
It is said that there is a high probability of occurrenceof fraudulent acts in a company when motives/pressures,
opportunities, and rationalization triangles are formed.
While advancing the development of regulations, rules,
and penalties, it is important to develop an internal
corporate culture and environment. Therefore, we
regularly confirm changes in the organizational culture ofaffiliated companies through employee evaluations.
By disclosing the results of this survey to thepresidents of affiliated companies, we are making use of
the results to create an internal corporate culture of not
being motivated to conduct fraudulent acts, based on theawareness that fraudulent acts are constantly seen within
the company and at the head office. Also, such results
are used to create better relationships with employees.
In the fiscal year ended March 2023, we conducteda survey of approximately 680 employees of 12 affiliatedcompanies (6 in Japan and overseas, respectively) wherea change of the president or other event occurred.

Initiatives in Japanprohibition of detrimental treatment against the whistleblower and collaborators of the investigation. Throughprovision of information in various compliance training
sessions and in the Code of Conduct Guidebook, wehave established a structure where all employees canutilize Helpline, not only as a tool to report misconduct,
but also as a means of raising questions and expressing
opinions and complaints regarding the Business Codeof Conduct, and maintaining satisfactory relationships
between the company, officers, employees, and business
partners. In 2022, we revised our Helpline Management
Rules in line with the implementation of the amended
Whistleblower Protection Act. According to the purposeof the act, we are performing proper operations,such as increasing persons eligible for protection andstrengthening protection. Whistle-blower systems
are being progressively created and operated also inoverseas regions, where they are tailored to local needs
and circumstances.

Sustainability Management

Promotion structureInternal corporate culture survey

Corruption prevention initiatives

Value Creation Story

We believe that earning the trust of society is essential for
us to contribute to the realization of a sustainable society
and to continue to be a company needed by society.
Accordingly, we are placing importance on compliancein our Management Policy. We formulated the Business
Code of Conduct to specify the policy of actions which
officers and employees should observe so that we canconduct business activities in accordance with laws
and regulations and generally accepted standards andpractices in each country, and our internal rules. We havealso established and have been operating the compliancepromotion structure that includes rules related tocompliance, a whistle-blower system, the Compliance
Committee, and the Fair Trade Monitoring Committee.

confirming each other’s ongoing activities and setting newagendas.
In addition, we have established the Fair Trade Promoting
Group in Legal Department of an overall supervisorydepartment for compliance with antimonopoly law. Under
the direction of the Fair Trade Monitoring Committee, theGroup conducts various activities (such as education,
instruction and audit) for relevant divisions. Additionally,
overseas subsidiaries are monitored for the implementation
status of compliance with antimonopoly law in cooperation
with the Administration & Internal Control Department at the
Office of General Manager in each region.

Antimonopoly law compliance initiatives
We regard any antimonopoly violations represent a
potential risk for the whole NTN Group. To ensure
thorough antimonopoly compliance, the Legal
Department and the Administration & Internal Control
Department in each region conduct training andawareness-raising activities related to antimonopoly
law compliance in accordance with local laws andcircumstances in each region.
In addition, any officer or employee who might
potentially contact competitors at an exhibition or
meeting or any other event is obligated to apply for
permission in advance and/or report it subsequently. Thismeans we have in place a system with which we canidentify the status of contact by officers and employeeswith competitors. Furthermore, we strengthen thecompliance system by conducting annual self-audits andinternal audits. Based on those results, each department
proactively plans and implements improvement
measures.
We work to put fair and free competition into practiceby continuing to upgrade our educational activities andraising the awareness of officers and employees.
Please refer to our website for other initiatives related to “Thorough compliance.”https://www.ntnglobal.com/en/csr/governance/compliance.html

NTN Report 2023

78

Sustainability Management Governance
About Us

Officers (As of June 27, 2023)
Internal Directors

Members of Nominating Committee
Members of Audit Committee

Members of Compensation Committee
Chairperson of each committee

Hideaki Miyazawa

Yuriya Komatsu

Akira Murakoshi

Number of years as Director
6 years
Number of shares of theCompany held
93,900 shares

Number of years as Director
9 years
Number of shares of the97,100 sharesCompany held

Number of years as Director
Number of shares of theCompany held

Value Creation Story

Eiichi Ukai

Number of years as Director
1 yearNumber of shares of theCompany held
1,200 shares

2 years and
11 months
10,000 shares

Sustainability Management(Significant concurrent positions)
Outside Director, Dream Incubator Inc.
Outside Director, Daicel Corporation
Director, IA Partners Inc.
Advisor, Otsuka Chemical Co., Ltd.

Masaaki Yamamoto

Masaki Egami

Yasuo Kitani
Number of years as Director
Number of shares of theCompany held

2 years and
11 months
30,700 shares

1 yearNumber of years as Director
Number of shares of the
38,700 sharesCompany heldNew
0 shares

NTN Group Information

Number of years as Director
Number of shares of theCompany held

Please see our website for past experience.
https://www.ntnglobal.com/en/csr/governance/structure.html

Shumpei Kinoshita

Isao Ozako
Skill matrix representing the main areas of experience of the Director candidates
1 yearNumber of years as Director
Number of shares of the37,100 sharesCompany held

Main areas of experience required of Directors

Name

Corporate
management

Manufacturing

Technology,
R&D

Sales

Corporate
and businessplanning

Finance andadministration

Legal affairs,
internal
controls,
compliance

Globalexperience

SASB Index

Number of years as Director
New
Number of shares of theCompany held
33,800 shares

Experienceof otherindustries,
diversity

Eiichi Ukai
Hideaki Miyazawa
Masaki Egami

Outside Directors

Ryo Kawakami
Number of years as Director
Number of shares of theCompany held

Tomonori Nishimura
4 years

Number of years as Director

0 shares

Number of shares of theCompany held

(Significant concurrent positions)
Attorney at law (Osaka Nishi Law Office,Legal Professional Corporation)

2 years and
11 months
6,300 shares(Significant concurrent positions)
Business Owner, NT Consul Biz.

Masaaki Yamamoto
Shumpei Kinoshita
Isao Ozako
Ryo Kawakami
Tomonori Nishimura
Yuriya Komatsu
Akira Murakoshi
Yasuo Kitani

79 NTN Report 2023

NTN Report 2023

80

Sustainability Management Governance
About Us

Directors

HideakiMiyazawa

100% Nominating Committee

Board of Directors 15/15
5/5
7/7
Compensation Committee

Mr. Eiichi Ukai possesses operational experience in areas such as
the Quality Assurance Division and Overseas Division, and broad
knowledge of the management of the Company promoting businessglobally based on these achievements, among others, and has served
as President, Executive Officer of the Company since April 2021. The
Company selects him with an aim to continuously improve corporate
value, utilizing his experience and knowledge, etc. for management.

100%

Board of Directors 15/15

Mr. Hideaki Miyazawa possesses operational experience inareas such as the Business Division for the automotive market
and Overseas Division, and broad knowledge based on theseachievements, among others. The Company selects him with an aim
to continuously improve corporate value, utilizing his experience andknowledge, etc. for management.

100%

Board of Directors 15/15

Masaaki
Yamamoto

100%

Board of Directors 11/11
6/6
Compensation Committee

Akira
Murakoshi

Yasuo
Kitani81 NTN Report 2023

100%

100%

Mr. Isao Ozako possesses operational experience in areas suchas the Manufacturing Division and Quality Assurance Division, andbroad knowledge based on these achievements, among others. The
Company selects him with an aim to continuously improve corporate
value, utilizing his experience and knowledge, etc. for management.

Board of Directors 15/15
Audit Committee 15/15
7/7
Compensation Committee

Although Mr. Ryo Kawakami has not been directly involved incorporate management, he possesses broad knowledge, etc.
based on extensive experience as a lawyer familiar with corporate
legal affairs. The Company selects him with an expectation tocontinuously improve corporate value by conducting supervisionfrom the viewpoint to increase transparency and fairness ofmanagement through his duties such as providing appropriate
opinions on the independent standpoint from business executors.

Board of Directors 15/15
Audit Committee 15/15
6/6
Compensation Committee

Mr. Tomonori Nishimura possesses broad knowledge, etc. based on
extensive experience in the management of other companies. The
Company selects him with an expectation to continuously improve
corporate value by conducting supervision from the viewpoint toincrease transparency and fairness of management through his duties
such as providing appropriate opinions on the independent standpointfrom business executors.

Board of Directors 15/15
100% Compensation
7/7
Committee

Ms. Yuriya Komatsu possesses broad knowledge, etc. based on
extensive experience in the management of other companies. The
Company selects him with an expectation to continuously improve
corporate value by conducting supervision from the viewpoint toincrease transparency and fairness of management through her
duties such as providing appropriate opinions on the independent
standpoint from business executors.

100%

Mr. Akira Murakoshi possesses broad knowledge, etc. based on
extensive experience in the management of other companies. The
Company selects him with an expectation to continuously improve
corporate value by conducting supervision from the viewpoint toincrease transparency and fairness of management through his
duties such as providing appropriate opinions on the independent
standpoint from business executors.

Board of Directors 11/11
5/5
Nominating Committee

Mr. Yasuo Kitani possesses extensive experience in banking overmany years and broad knowledge including finance, among others.
The Company newly selects him with an expectation to continuously
improve corporate value by conducting supervision from theviewpoint to increase transparency and fairness of management
through his duties such as providing appropriate opinions on the
independent standpoint from business executors.

Representative Executive Officer,
Executive Officer

CEO (Chief Executive Officer)
Corporate General Manager, Group Management HQ.

Corporate General Manager,
Automotive Business HQ.

Hiroyuki Ichikawa

Masaki Egami*

Executive Officer

Executive Officer

Deputy Corporate General Manager,
Automotive Business HQ.
Composite Material Product Division

CTO (Chief Technology Officer)
Research Division
New Product & Business Strategic Planning HQ.

Takanobu Ozawa

Masayuki Kaimi

Executive Officer

Executive Officer

Americas Region
Legal Dept.
Internal Control Dept.

Corporate General Manager, SCM Strategy HQ.
China Region
Production Engineering Development HQ.

Yasuhiro Kawabata

Shumpei Kinoshita*

Executive Officer

Executive Officer

Deputy Corporate General Manager,
Group Management HQ.
Human Resources Strategy Dept.
Personnel Dept.
General Affairs Dept.

Deputy Corporate General Manager,
Group Management HQ.
Corporate Strategy Dept.
ESG Promotion Dept.
Carbon Neutrality Strategy Promotion Dept.

Koji Takahashi

Etsu Harima

Executive Officer

Executive Officer

Green Energy Products Division
ICT Strategy Dept.

Aftermarket Business HQ.
Industrial Business HQ.
Quality Assurance HQ.
NTN KOREA CO., LTD.
ASEAN, Oceania, and West Asia Region
India Region

SASB Index

Outside Directors

YuriyaKomatsu

100%

Board of Directors 11/11
Nominating Committee
5/5
Audit Committee 11/11

Hideaki Miyazawa*

Representative Executive Officer,
President, Executive Officer

NTN Group Information

Tomonori
Nishimura

Mr. Masaaki Yamamoto possesses operational experience in areas
such as the Finance Division and Overseas Division, and broad
knowledge based on these achievements, among others. The
Company selects him with an aim to continuously improve corporate
value, utilizing his experience and knowledge, etc. for management.
Mr. Shumpei Kinoshita possesses operational experience in areas suchas the Overseas Division and Finance Division, and broad knowledge
based on these achievements, among others. The Company newly
selects him with an aim to continuously improve corporate value,utilizing his experience and knowledge, etc., for management.

Shumpei
Kinoshita

Ryo
Kawakami

Mr. Masaki Egami possesses operational experience in areas such as
the Engineering Division and Research and Development Division, andbroad knowledge based on these achievements, among others. The
Company selects him with an aim to continuously improve corporate
value, utilizing his experience and knowledge, etc. for management.

Eiichi Ukai*

Sustainability Management

Internal Directors

Masaki
Egami

Isao
Ozako

Responsibilities of Executive Officers (as of April 1, 2023)
Reasons for selection

Value Creation Story

Eiichi
Ukai

Number of Board of Directors andCommittee attended

Masaaki Yamamoto*Executive Officer
CFO (Chief Financial Officer)
Deputy Corporate General Manager,
Group Management HQ.
Financial Strategy Dept.
Accounting Dept.
Europe & Africa Region*Executive Officers concurrently serving as Directors

NTN Report 2023

82

Sustainability Management

Outside Director Dialog
About Us

Akira Murakoshi

Every year, the NTN Report provides an opportunity for Outside Directors to discuss NTN’s management andsustainability issues. The contents of discussion is published as “Outside Director Dialog.” This year, Director Komatsu
and Director Murakoshi, who took office June last year, held a frank and honest talk.

The second year of the Medium-termManagement Plan “DRIVE NTN100” Phase 2 forrevitalization of NTN has ended. Please look backover the year in which we tackled ourrevitalization with firm resolve.
Komatsu: Essentially, any Medium-term Management
Plan should first draw a big picture of how to convert thebusiness portfolio and then discuss which businesses tofocus. However, under our current Medium-termManagement Plan, we have proceeded with the reformfrom the beginning by positioning the three years as theperiod of “in-house arrangement” for the next leap
forward, by getting out of the red, increasing the profit
ratio, and improving our cash flow and financial structure.
In that regard, compared to the fiscal year ended
March 31, 2021, our operating margin, cash flow, and83 NTN Report 2023

financial structure have been improved. I think this canbe highly evaluated as the results of efforts of all
employees. On the other hand, I recognize that there areissues in the content and speed of improvements,
including the operating margin and the cash conversion
cycle. Rapid changes in the external environment suchas soaring material and transportation costs may be oneof the causes, but that also posed an opportunity forprice increase negotiation, so I think the results may havebeen better if there had been a little clearer intention.
President Ukai has repeatedly delivered in-housemessages saying that employees are allowed tonegotiate, with a strong will, for any business notprofitable enough, with possible discontinuation of thebusiness in mind, and the entire company has been
engaged in price increase and reduction of unprofitablebusinesses. As a result, the profit ratio has been
improved smoothly in the industrial machinery businessand the aftermarket business, while the automotive
business was hit by an operating loss again in theprevious year. By taking into account that the employees
in the automotive business have made equivalent efforts

Topic 2

SASB Index

Achievements of our efforts for
Topic 1 revitalization of NTN over the
past year

NTN Group Information

Yuriya Komatsu

Sustainability Management

Outside Director

hand, progress has not been made as expected for what
I have been saying for the three years after being
appointed as an Outside Director, including inventory
reduction and how to plan elimination and integration ofplants. These are still issues, I think.
Murakoshi: With regard to plants, I have visited plants in
Iwata and Kuwana after being appointed as a Director.
These plants are old and have been extended again andagain. I think these plants have issues in terms of theefficiency. At present, our capital expenditures are
restricted, so the reality is that there are limitations on
investments for efficiency improvement, manpowersaving, and no-man operation. Nonetheless, it is still
indispensable for us, as a company in the manufacturingindustry, to refine manufacturing facilities andtechnologies and maintain our competitiveness in termsof high productivity and product quality. From now on,
the trend of decreasing birthrate and aging population
will continue, as well as labor shortage, I think. Under
these circumstances, it is time for us to consider
seriously what to do with plants and where to invest
toward our new Medium-term Management Plan.
Komatsu: The current Medium-term Management Plan
will end in one year. Discussion has started for the next
Medium-term Management Plan, includingorganizational restructuring. Rather than setting
numerical targets achievable in three years, I hope that
the Medium-term Management Plan will present
medium- to long-term numerical targets, for example,
ROE and ROIC of 10% or higher, and serve to achieve
those challenging targets. I also want each Executive
Officer to show, regarding the action plans for each year,
how much the ROE and ROIC will be improved if theplans are met, together with what backup plans havebeen prepared in case they are not met.

Value Creation Story

Outside Director

to those in the other businesses, I assume that the
management of the Automotive Business Headquarters
failed to share the road map and KPIs for profitability
improvement and communicate their clear intention. I am
also concerned that employees unconsciously takeorders that will lead to an operating loss to cover the
fixed cost. First, it is necessary to stop bleeding bychanging the criteria for judging businesses to a cash
flow that will lead to the operating margin and better
inventory level, not to sales and gross profit. At the sametime, I expect that a plan for converting the businessstructure to enable a proper profit to be recorded in asustainable manner will be finalized promptly and sharedinside and outside the company.
Murakoshi: I was just appointed as an Outside Director
last year, so I’ll talk about what I have felt while watching
NTN over the past year. As Director Komatsu said, any
business has a certain lifecycle, and I think that we must
consider how to change the business portfolio at eachpoint of the cycle. With this viewpoint, I think our biggest
challenge is how to do with the automotive business, ourbiggest business division. Most of our automotive
business is for OEMs, but the business has notnecessarily contributed to profits due to recent high raw
material cost and unstable automotive production. Eachbusiness site has been dedicated to cost reduction andreflection of high raw material cost in product prices, but
in reality, it is not always easy to reflect our added values
such as products and technologies in product prices.
Regarding whether this is a problem that can be solvedin the short term or a structural problem, I feel itnecessary to watch carefully as for how our management
should be in the future.
President Ukai and other Executive Officers have astrong will to transform NTN. An agreement has also
been reached on what our main axis should be. For
example, when changing the direction of a large ship,even if you turn the steering wheel fully, the ship changes
its direction only slightly. Before the direction is changed
completely, it will take a while even if you keep fullsteering. Likewise, I think it requires determination andpatience to transform a large company. Reform of a largeorganization also brings strain and pain to theorganization. I think the President and other Executive
Officers, who are in control of the steering, understand it,
but I wonder if it has been known throughout thecompany. I feel that a challenge lies in whether people
other than managers are able to commit themselves tothe fact that we are in the middle of such a large reform.
Komatsu: In this dialog last year, I said that “we are
motivated, the direction is not wrong, the only concern is
speed.” As for this “speed,” I appreciate our success inraising sales prices faster than expected. Probably, thatis partly due to the general trend for price increase andstrong messages from President Ukai. On the other

NTN’s governance structure

NTN transitioned to a Company with aNominating Committee, etc., which is chaired byan independent Outside Director. Could you
share your impression about this major reform inour governance?
Murakoshi: As a result of becoming a Company with aNominating Committee, etc., we are certainly on theforefront in terms of a “structure.” But I have an
impression that our substantive reform is still halfway.
Personally, the design of a Company with a Nominating
Committee, etc. will work well in a system in which there
is a market of professional corporate managers withmobility and optimal managers are selected from themarket, like those in Western countries. On the other

NTN Report 2023

84

Sustainability Management Outside Director Dialog
About Us

Topic 3

Strengthening the managementfoundation

SASB Index

Komatsu: I highly evaluate the establishment of the
Carbon Neutrality Strategy Promotion Department tosucceed the Carbon Neutrality Promotion Project, which
had been promoted across divisions until last year. For aproject promoted across divisions, a problem may occur
later because it is often less visible and overlooked which
division is responsible for solution. This concern does notexist anymore. In this regard, however, again as with theMedium-term Management Plan, I want action plans tobe prepared and the PDCA cycle to be implemented,
rather than just responding to issues and tasks at hand.
In doing so, it is necessary to make it known to businessdivisions, including deciding who will be in charge ofeach plan.
Murakoshi: In my understanding, strengthening themanagement foundation means strengthening thecorporate functions. I feel that NTN has necessary
divisions in place, but some of them are still weak asfunctions. This may be a characteristic of manufacturers,
but I think a certain independence exists at eachmanufacturing site, or each plant, which inevitablycauses a tendency to increase the centrifugal force as anorganization. Conversely, the corporate division at thehead office is not used to having a centripetal force. To
ensure the total optimization, it is necessary for the
President and Executive Officers to strengthen and utilize
the divisions at the head office with a company-wide
viewpoint. A challenge in management is to prevent asituation where the head office organization exists, but
nobody listens to it. It is important for us, Outside
Directors, to monitor this carefully.

improving employee engagement to organize a task
force across all generations and divisions and discuss
how to interpret the results and what to change. The
true significance of employee awareness survey is tohave each department think for themselves, instead of
merely checking the result.
Komatsu: Also in previous dialog, I expressed myopinion on the issue of diversity at NTN. After having
opportunity to talk with female managers, I had an
impression that not so many women are motivated somuch for career advancement. Of course, it is naturalthat some women do not want to be promoted
considering the balance between work and life. However,there should be women who want to get promoted, and I
think a system should be in place that evaluates those
women fairly. I think it is acceptable that there is a female
manager working for reduced hours and all members in
the department finish work early and go home. Including
appointment of foreign employees, I want to speak up forthese issues this year as the COVID-19 pandemic has
calmed down.
Murakoshi: I am concerned that the age group of
executive candidates at NTN is pretty high. NTN is
implementing an initiative to foster candidates for nextgeneration management called NNLP (NTN Next Leader
Program), but the age group of participating employees
is also high. Unless starting selection and fostering ataround mid-40s, we will face a crisis of insufficientmanagement at a critical moment.
Komatsu: I completely agree with you. We have talked
about variety of issues, and I strongly feel responsibility
that we, Outside Directors, have to monitor management
and continue encouragement for purposes such as
revitalizing NTN.

NTN Group Information

How do you evaluate NTN’s initiatives forstrengthening the management foundations,
including establishment of the Carbon Neutrality
Strategy Promotion Department and reform of
the personnel system?

Komatsu: In terms of strengthening the managementfoundation, reform of the personnel system is also
required. Earlier, Director Murakoshi mentioned that
employees may not understand that a large reform isbeing underway. Every company has a difference in asense of crisis between top management and frontline
staff. I think the shortcut is to make realistic KPIs,
including personnel evaluation, known to frontline staff
and change the company using a system, rather than toblindly share a sense of crisis. For example, we may evenset the operating margin as a KPI for personnel
evaluation and say that it will be reflected in evaluation ofpromotion and bonus. At first, everyone may first blame
others, the head office or the production division for
example, but eventually, they will start to think how to
improve and take actions by themselves.
Murakoshi: As for the personnel system, I have heardthat review of the personnel system for managers is inprogress. I think a structure is in place but the systemdesign alone does not suffice to make the personnel
system function smoothly. The Personnel Department
itself is required to actually know each site and evaluate
whether personnel at each position work properly. For
achievement-based evaluation, a harder part comes after
a structure is established.
By the way, I think that employee awareness survey
can be used as one of indicators. I have heard that thesurvey was conducted also at NTN, but only in thecorporate divisions. I think expanding the scope to all
employees would help the management understand theactual conditions of the company. Based on the result,
we may be able to extract and solve issues forrespective departments, or extract company-wideissues in some cases. As for the latter, it is one way for

Sustainability Management

85 NTN Report 2023

from full-time Directors, but I feel an asymmetry of
information, partly due to a time constraint. I think the
key point for making the Board of Directors function iswhether there is a system in place to enable external
officers to obtain information sufficiently, rather thantransitioning to a Company with a Nominating
Committee, etc. as a “structure.”
Komatsu: I have been talking about similar things forsome time. I think this will be improved gradually in the
future. Now, the recognition of Outside Directors isincreasingly being enhanced. By keeping our current
active encouragement, I expect NTN to function well as a
Company with a Nominating Committee, etc.

Value Creation Story

hand, in a social environment in which new graduates
are employed en masse and move up the corporate
ladder to become managers, as in Japan, I have an
impression that we have a long way to go in terms ofwhether a Company with a Nominating Committee, etc.
can really function.
I don’t know how NTN had been like before thereform, so I cannot make a comparison, but I think
Outside Directors actively express their opinions.
However, that is because Executive Officers reach an
agreement at the management meeting before the Boardof Directors, which naturally leads to many opinions from
Outside Directors, so I feel there is an asymmetry of
information here. Anyway, I am very interested in NTN’s
initiatives, as a Japanese-style Company with aNominating Committee, etc., and I feel it necessary forme, as a member of the company, to further search forthe best solution.
Komatsu: As Director Murakoshi mentioned, I also feelthe difficulty of a Company with a Nominating
Committee, etc. I was appointed as the chairperson of
the Board of Directors last year, and regarding whether
the chairperson has overwhelming power or not, I don’t
feel being granted so much power.
But I think this is a “better” choice than before. The
major reason why I think so is related, in the first place, toan increased number of Outside Directors. We, Outside
Directors, are required to play a role of monitoring thecompany’s execution so that the company can grow andimprove its corporate value in a sustainable manner. As aresult of an increased number of people who monitor
corporate management with such recognition, we receive
many critical opinions, unlike at the Board of Directors
consisting of internal members only. Also, as achairperson, I am able to ask revision of the businessadministration structure based on Outside Directors’
opinions, and reporting to monitor the progress. In
addition, there are many cases in which internal Directors
and Executive Officers consider requests and opinionsfrom Outside Directors, so I think this means thegovernance has improved.
Murakoshi: I have also served as a Director at a
Company with a Board of Company Auditors, and I think
what matters, irrespective of the organizational design, isthe recognition and the amount of information each
Director has. For example, at the company I previously
worked for, people at the corporate general manager ormanager class explain the details of relevant projects
about three days before the Board of Directors, andenough discussion is held there. So the difference in theamount of information on the executive side is reduced
to a certain degree also at the Board of Directors. I haveattended NTN’s Audit Committee as much as possible
and was briefed about the contents of discussions at the
Executive Officers Meeting and the Management Meeting

Message from a new Director

Yasuo Kitani

As an Outside Director, I will do my best to contribute to the sustainable growth of
NTN by making the most of the knowledge I have gained through my many yearsof business experience in Japan and overseas as a banker and my experience as
an executive.
First of all, I will value communication with as many executives and employees
as possible, and speedily learn about the Company as it is, along with its history.
And then, I will appreciate what I see from a bystander’s vantage point, and while
correctly understanding the changes in the environment surrounding the Company,
I will make proposals in line with my responsibilities to help the Company grow in ahealthy manner.
Although I am an Outside Director, I am appointed to work on a full-time basis,
so I will work hard together with executives and employees to earn the support ofmany stakeholders and contribute to the development of NTN.

NTN Report 2023

86

Sustainability Management

Communication with Stakeholders
About Us

Stakeholders

Shareholders

Environment

87 NTN Report 2023

Nationwide Distributors’ Meeting
We invite distributors from across Japan to briefing sessions on accountsettlement overview and aftermarket business measures to strengthen ourbond with distributors.
Technical service units
We run completely-tailored, multi-functional technical service units
worldwide, equipped with teaching materials and exhibits to introduce our
products, and hold bearing technical seminars for our customers.

NTN Group, in a fair andfree environment, builds
good partnership with its
business partners andworks together for mutual
growth and development.

Briefing for suppliers
We share information on our globalization initiatives and the businessenvironment surrounding our company with our business partners and haveexternal lecturers deliver lectures targeting the business partners.
Promotion of CSR procurement
Through CSR questionnaires based on the CSR Procurement Guidelines,
we promote activities with our business partners to help them understandthe importance of CSR procurement.

NTN Group respects
cultures and customs in
the local communities
and builds long-term
trust relationships bymeeting their
expectations through its
business activities.

Activities that contribute to the local community(family tours, summer festivals, etc.)
We hold family tours and summer festivals at each business site as anopportunity to interact with employees’ families and neighboring residents.
NTN Rotating School
As an environmental education program for children who will lead the next
generation, mobile-type schools have been opened in various places todeepen friendships with the local community.
Conservation of biodiversity
In cooperation with local residents and NPOs, we are working to protect theenvironment of Satoyama (village forest) areas around our business sites
and to protect endangered species.

NTN Group focuses on
return for shareholders bysustainable profitable
growth and builds longterm trust relationships
with shareholders throughactive communications.

Shareholders’ Meeting
The Shareholders’ Meeting is a forum for communication to build long-term
relationships of trust with shareholders.
ESG briefing
In addition to holding results briefings for investors, we also hold ESG
briefings to promote understanding of our ESG initiatives. The opinions we
receive at the briefings are used to strengthen our activities and information
disclosure.

NTN Group harmonizes
its business activities
with nature andcontributes to preserve
the global environment
by providing its
technologies, products
and services.

Reducing environmental impact in business activities
We are working to minimize harmful environmental impacts by monitoring
and reducing emissions of CO2 and regulated chemicals in our businessactivities.
Sustainable use of resources
We are striving for sustainable resource utilization by reducing the use ofresources such as raw materials and water, and by thoroughly
implementing the 3Rs (reduce, reuse, and recycle) of waste.
Developing environment-contributing productWe are contributing to the realization of a carbon-free society by developing
products that help reduce energy loss in finished products and naturalenergy-related products.

Overview of the system
Teams of several members from any group companies
can apply for the award. Activities that have connecteddaily jobs to the materiality, identified their own values,
and produced certain outcomes are to be awarded, withthe period from January to the end of December eachyear. Application is made directly by each team on the“NTN PROUD AWARD” page on our intranet. After theapplication period, the excellent awards, special awards,
and materiality awards are selected first in each global
region. Then, the top two teams selected for the excellent
awards and special awards in each region make theirpresentations at a global convention. Out of them, theprojects recognized as the most excellent activities are
granted with the president awards in the three divisions of“E: Environment,” “S: Society,” and “G: Governance.”

Holding of a global convention

SASB Index

Local communities

NTN Group seeks tomaximize customer
satisfaction and trust byproviding products andservices of superior
quality, safety andreliability.

Basically, we aim to develop it into an award system thatwill lead to improved employee engagement, which inturn will lead to the further improvement of ourorganizational strength and corporate value, throughESG activities practiced by employees working in theGroup in their daily jobs and awarding their activities. The
Group’s materiality is closely linked to our corporate
philosophy. We will aim to realize our vision with our
employees doing daily jobs in connection with 13 items
of materiality identified by the company.

NTN Group Information

Business partners“NTN PROUD AWARD” as ESG Corporate Award“NTN PROUD AWARD” is a system that encourages employees’ ESG
activities and commends outstanding initiatives linked to 13 items ofmateriality responding to SDGs identified by the Group. The system aims topromote understanding and awareness of SDGs among employees andfosters their motivation and engagement.
Employee engagement survey
Based on the survey result, we conduct activities to improve workplace issues,
activate workplace communication and work to develop an environment inwhich each employee has a good reliable relationship with each other.
Global QC Circle Convention
We strive to improve safety, quality, and productivity on a global basis, andwith the convention as a forum for international exchange, we exchange
information on a variety of activities.

To commemorate our 100th anniversary, we established“NTN PROUD AWARD” for all global employees in theGroup to encourage practicing our corporate philosophy,
but no convention has been held since 2019 due to
COVID-19. This time, “NTN PROUD AWARD” has been
newly started as an in-house award system to encourageand promote ESG activities for our sustainable growth inmedium to long term and solution of social issues.
Through this system, we aim to realize a “NAMERAKA
Society” by improving the employees’ understanding andawareness of ESG and enhancing their motivation andengagement, which will lead to improvement of our social
value and solution of social issues.

Basic approach to NTN PROUD AWARD

Sustainability Management

Customers

NTN Group respects
diversity, individuality
and a safe and healthy
workplace environment
where employees canwork successfully.

Main Activities

New NTN being created through NTN
PROUD AWARD

Value Creation Story

Employees

Stance to
Stakeholders

On June 14, 2023, the first global convention for the new system
was held on the Web. This time, 69 teams made applications fromJapan and abroad, and 12 teams awarded through local screening
participated in the global convention. At the beginning of theconvention, President Ukai greeted by saying ‘Please gain a new
insight at this global convention. I hope that aggregation of yourgrowing powers will enable us to address our big challenge ofrevitalizing NTN and realize a “NAMERAKA Society.”’ The convention
was started with the president’s praise for the award winners fromeach region and expectation for this convention.
Each team presented their project activities and as a result of consideration, the president awards were granted
to Xiangyang NTN-Yulon Drivetrain Co., Ltd. in the environment division and NTN BEARING CORP.OF CANADA
LTD. in the society division. In addition, to express appreciation for a joint European team supporting Ukrainian
refugees, a president special award was set up and presented to the team.
Teams winning the president awards

Environment division
Society division

Team winning the president special award

Environment improvement andpromotion team

“Environment improvement and promotion team” (Xiangyang NTN-Yulon Drivetrain Co., Ltd.)“Team CANADA” (NTN BEARING CORP. OF CANADA LTD.)“NTN Europe team” (NTN Europe S.A., NTN Wälzlager (Europa) G.m.b.H., NTN-SNR RULMENTI S.R.L.)

Team CANADANTN Europe team

NTN Report 2023

88

Sustainability Management

9th Stakeholder Dialog
About Us

Topic 1

How to proceed with ESG management

Topic 2

Carbon neutrality

Akira
YamadaToshiya
ChikadaMichitaka
Shimizu

Eriko
Nashioka

Professor, Kobe
University Graduate
School of Business
Administration

Senior Consultant
JMA Consultants Inc.

Executive Officer
Chief Manager
Global Warming
Prevention Promotion
Office Environment
Improving Department
Sekisui House, Ltd.

Senior Director
ESG Management
Promotion Headquarters
Sekisui House, Ltd.

(Facilitator)
Representative Directorof Institute forEnvironmental
Management
Accounting, CPA.

NTN
Executive Officer
Deputy Corporate General Manager, GroupManagement Headquarters/Corporate Strategy
Department/ESG Promotion Department/Carbon
Neutrality Strategy Promotion Department

Shumpei
Kinoshita

Executive Officer
Deputy Corporate General Manager, GroupManagement Headquarters/Human Resources
Strategy Department/Personnel Department/
General Affairs Department

Yasuhiro
Kawabata

Deputy Corporate General Manager, SCM
Strategy Headquarters

YasuakiTakahashiManager, Corporate Strategy Department, GroupManagement Headquarters

Takashi
Nishigaito

Manager, Carbon Neutrality Strategy Promotion
Department, Group Management Headquarters

Masayuki
YamazakiManager, ESG Promotion Department, GroupManagement Headquarters

TetsuyaIshimoto(*Assignment and title of participants are as of the dialog held.)

89 NTN Report 2023

Kokubu: I see that NTN has set specific strategies and isgoing ahead along them. In your industry, the externalpressure toward sustainability is strong, but I don’t think
there are any deficiencies or issues in your target setting
for carbon neutrality, identification of materiality,
disclosure of related information, and initiatives. In otherwords, I can say that there are no problems in the“foundation.” However, as I also said last year, thefoundation is easy to build because it is a “form.” What is
important is to link it to the creation of actual corporate
value. It is necessary to focus on ESG activities becausea framework for evaluating them has already been
established and a low evaluation may affect investment,
but too much alignment with evaluation may make itmere a formality. Therefore, it is necessary to figure out
how not to make it mere a formality. In that point, I
strongly hope that “NTN PROUD AWARD” will be
successful as one of your systems for value creation. It
would be a good idea to bring out and deploy new
businesses from it. But it will not work out if you try toearn quick profit. Instead, you need to think it asinvestment for the future, even if certain time and cost
are required. The difficulty in creating value through ESG
management lies in not being able to set a goal soon
because you cannot tell what you can do. However, evenwhile you are uncertain, it is important to continue tothink what you can do by utilizing your bearings andrelated technologies and know-how, and to establish asystem that enables you to invest currently available
resources for that purpose. Otherwise, ESG

Nashioka: The importance of strategies was justmentioned, so please share how ESG has been
integrated into strategies at Sekisui House.
Shimizu: We announced our sixth Medium-termManagement Plan in March this year. This project wasstarted in June last year, and business divisions andcorporate divisions have repeated discussions together
for it. More specifically, regarding our global vision of“make home the happiest place in the world,” we haveconsidered our priority measures, or what we will achievewith the next Medium-term Management Plan.
With regard to ESG management, we have createdthe foundation through the fifth Medium-termManagement Plan, and we think the key for it is to“personalize,” as previously mentioned. “Participation of
all employees” was one of the pillars of ESG
management also in the fifth Medium-term Management
Plan, but we determined to further enhance the initiativeand promote the “ESG management throughparticipation of all employees,” unique to the Sekisui
House Group. This was set as our ESG management
strategy in the sixth Medium-term Management Plan.
Besides, to “build an organizational culture that fosters
innovation,” we established an award system called“SHIP (Sekisui House Innovation & PerformanceAwards)” and have implemented initiatives to develop
autonomous persons and organizations that will continue
to produce innovations. We are also working to “set andimplement ESG indicators” to utilize ESG indicators for
ensuring the transparency and effectiveness, including
setting ESG indicators easy to be understood byemployees and establishing a system to link ESG
indicators not only to compensation for directors but also
to awarding for business sites. Our strategies also

NTN Report 2023

SASB Index

Katsuhiko
KokubuNTN: Based on the various recommendations we
received in last year’s dialog, we are now promoting
activities for ESG management through not only bottomup but also top-down approaches to communicate
messages on risks and opportunities specifically linked to
management strategies with the timeline fixed in themedium to long term in an easy-to-understand manner.
Establishment of the “Carbon Neutrality Strategy
Promotion Department” was also part of it. Besides, wethink “NTN PROUD AWARD” was successful as the first
convention after system renewal, with participation of 69
teams from all over the world.
With regard to materiality, NTN is considering
incorporating the current materiality for achieving SDGs
into the next Medium-term Management Plan as themateriality for achieving the company’s purpose, while
proceeding with establishment of a system that enables
each employee to “personalize” sustainability activities.
We hope to obtain tips on our ESG management
promotion in the future in reference to initiatives
promoted by Sekisui House, Ltd. (hereafter, Sekisui
House), a company going ahead of us, though in anindustry different from ours, and opinions from experts.

NTN Group Information

Experts

How to proceed with ESG management

management will soon turn into a mere formality. In thisregard, “personalization by managers,” sited as one ofyour future issues, is an important aspect. It is
recommended that managers will proceed with it as atask, with more specific targets.
Meanwhile, who will bear the cost is another very
important issue. It is also related to the next topic,
carbon neutrality, and I think there are two vectors for
how to view the cost. One is to promote carbon
neutrality strongly with advanced technologies, ask
customers to understand the cost, and reflect the cost in
product prices. The other is to pursue carbon neutrality
at a level considered necessary and sufficient in theindustry and control the cost within the scope. It
depends on each company’s level of technologies which
strategy is reasonable, but it is necessary to refinestrategies through validation. It is also unpredictable how
fast and in which direction the external pressure will
move on. The pressure also differs depending on theregion, so it is necessary to set strategies by proactively
considering where you are located in the move toward
carbon neutrality.

Sustainability Management

Topics of the dialog

Topic 1

Value Creation StoryTo reflect the opinions of our stakeholders in our corporate activities, we have annually held dialog with academics
and experts in various fields of sustainability since 2015. For this fiscal year, the 9th dialog was held in May.
In last year’s stakeholder dialog, while we listened to how sustainability has actually been promoted in companies,
important viewpoints of “not making it a task for disclosure” and “making sure that employees can personalize
sustainability” were proposed. It was also recommended that we should confirm individual purposes while promoting
activities because the company’s purpose is an aggregation of purposes of each employee.
By referring to these recommendations we had received, NTN started a “Carbon Neutrality Promotion Project” inlast July to set targets and strategies toward achievement of carbon neutrality. In addition, to promote this project froma location closer to management, the organization was changed in April 2023 to the “Carbon Neutrality Strategy
Promotion Department” and turned to a department in the Group Management Headquarters.
Also, “NTN PROUD AWARD,” originally started in 2018, was revised into an ESG activity award system and newly
restarted on a full scale last year. Through these activities, we are steadily getting closer to achievement of ourmateriality targets.
In this dialog, we exchanged opinions with experts about the status of our activities and how to proceed in the
future. Based on the recommendations we received, we will promote company-wide initiatives for realization of a
“NAMERAKA Society.”90

Sustainability Management 9th Stakeholder Dialog
About Us

include reduction of capital cost through further
promotion of ESG management and improvement of ourcorporate value through the synergy of ROE
improvement and ESG management promotion.

Carbon neutrality

Yamada: I feel that a structure has gradually beenorganized toward a challenging goal. In establishing aroadmap, it is better to estimate first how much energy
consumption can be reduced. To do so, you need toaccumulate expertise from in-house energy-saving
specialists and set energy-saving control points andcompleteness evaluation standards for each equipment.
This will roughly clarify how much more energy can be
reduced at each plant. Once the potion of energy saving
is made clear, you can see how much more reduction isrequired using renewable energy, which makes therelated cost visible. With regard to energy saving, it canbe said that the Energy Conservation Promotion Group91 NTN Report 2023

Yamada: The most important thing in renewableenergies is “energy creation.” The first thing you should
consider after reaching complete energy saving is where
you can create electricity. You should first look for on-site
locations, and then off-site locations. This initiative should
be given a high priority. If this is not enough, purchaseCO2-free electricity. I recommend this sequence.
Nashioka: In summary, I think true carbon neutrality is to
ask each company to create electricity on-site. Could
you share a related business case at Sekisui House?
Chikada: For the past one year, we have focused on net
zero energy houses (ZEHs) for rent. While ZEHs for saleare gradually gaining popularity, those for rent are still far
from becoming popular.
There are two types of ZEHs for rent: building-wise
ZEHs and house-wise ZEHs. For our rental houses, we
promote the latter, in other words, the type of ZEHs that
aim at zero energy balance at each house. The former
has a high energy-saving performance as the whole

Chikada: That’s right. In 2009, we commercialized
houses with a pretty high energy-saving performance atthe time, the predecessor to ZEH. At the same time, wechanged our sales policy from “price-based” to “valuebased.” We started our journey in the direction ofpresenting high value-added products to customers,
making them understand the value, and selling our
products at adequate prices. At first, some sales
representatives felt uncomfortable, but once successful
experiences started to emerge, an increasing number ofrepresentatives followed suit. All of us studied quite hardbecause we needed to learn to talk about product value
in order to convince customers. I think this led topersonalization of carbon neutrality.
NTN: We understand it’s a good business model in thefood, clothing and housing industries, in that added value
is recognized by customers, which in turn creates a
positive chain reaction. Then, what initiatives should we
implement in our industry, which is far away from food,clothing and housing.
Chikada: We also have suppliers. And we communicate
to suppliers our expectation for them to use carbon-freebuilding materials. In the construction industry, a trend
toward using such materials even with higher costs has
also emerged. Likewise, demands for carbon-free
products may emerge at various bearing user companies.
Still, I think this should not be tackled by a single
company, but requires movement across industries.

Nashioka: Could each of you summarize today’s dialog?
Chikada/Shimizu: We have been engaged in ESG
management for three years, and realized that successwill be brought only through steady and diligent effort. At
the beginning, it was mentioned that “a form can becreated,” but we, having no form, were hit by the wave of
ESG after launching our products. We now feel thedifficulty of creating a form. We hope to continue ourengagement while sharing information each other.
Yamada: NTN has declared reduction of energy loss.
Bearings reduce energy loss caused by friction ofrotating objects, etc., but certain loss still remains. I think
you can increase the importance of and interest in
bearings by clearly explaining, for example, how much
impact automotive hub bearings have in global scale, or
your current effort to reduce the loss as much as
possible. I also feel it important to increase the sales ofenvironment-contributing products.

SASB Index

NTN: Through our Carbon Neutrality Promotion Project
started in July last year, we have been considering how
to materialize each initiative with the following threeteams organized: “visualization of power consumption,”“planning and consideration of purchasing renewableenergy power” and “consideration of internal carbon
pricing (ICP).” The activity period ended on March 31
this year, and the initiatives were taken over to the
Carbon Neutrality Strategy Promotion Department
organized in April.
Through each initiative, a rough roadmap was
prepared in Japan. In the future, we plan to establish a
Carbon Neutrality Promotion Committee structure for
global engagement in regional units. Could you give us
advice on challenges such as setting intermediate annual
targets and how to check a global CO2 reduction
roadmap once prepared.

Nashioka: I heard that something had motivated youremployees to personalize carbon neutrality.

Yamada: Recently, we are increasingly asked for advice
also from the supplier side. For example, one of ourcustomers asked us to show the result of LCA (Life Cycle
Assessment) of their products. If products are produced
completely with renewable energy, that would be a big
differentiator. If you can launch initiatives ahead of othercompanies, I think that will become your strength in the
future society.

NTN Group Information

Topic 2

Kokubu: Achievement of carbon neutrality is
unavoidable, but if you don’t understand what carbon
neutrality is, you may still be able to set a plan, but
unable to understand its meaning. For example, youhave a plan to reduce most of the emission by utilizing
renewable energy, but NTN seems to cover a higher ratio
by purchasing CO2-free electricity at present. If going to
extremes, you can achieve carbon neutrality if allelectricity you purchase is renewable energy. However,that means you practically make no efforts. Rather, it isimportant to try to generate the source of green
electricity as much as possible. When thinking ofelectricity self-sufficiency, carbon neutrality will probably
take on new meaning.

building, but you can’t tell whether each house is ZEH ornot, so we cannot convince residents of the advantagesof ZEHs, such as the comfort and lower utility costs. But
advantages of the latter are convincing, so we can evenraise the rent. Anticipating an increased number of ethicalconsumers decades later, we are now proposing wouldbe owners to build house-wise ZEHs, which will require
higher initial cost but remain competitive in the longer
term, and this proposal is being accepted. Also,
according to our survey on former residents of ZEHs forrent, 80% answered that they want to live in ZEHs again.
That means we are increasing ZEH fans. We are trying tocreate a trend toward ZEHs for both sale and rent.

Sustainability Management

Shimizu: The cost is partly absorbed in-house, butbasically, we ask the customer to understand the added
value and reflect the cost in product prices.

Value Creation Story

NTN: Thank you very much. “Cost” was mentioned
earlier, and that is the very thing we are also concerned
about. Our products reduce energetic load inthemselves, which contributes to sustainability, but ofcourse, their production process consumes water andelectricity. It is difficult to reduce the environmental load
to zero in production of all products, but we sometimes
think that it would be easier to reflect cost increases in
product prices by segmenting each product. For
example, it may be effective to produce products using
only natural energy such as wind and solar power andconvince customers of the value. How do you regard theenvironmental cost at Sekisui House?

organized in the Carbon Neutrality Strategy Promotion
Department has a large role to play. “Visualization ofenergy consumption” is listed as one of your measures,but is it clear how and what to “visualize”? One possible
first step is to visualize how effectively energy has beenutilized in each process. This will quantify the total loss
and visualize the limit. Even if it is impossible to eliminate
all losses, I think the seriousness in engagement will differ
between energy-saving activities conducted blindly withthe limit unknown and those conducted, for example,
with knowledge that 80% of energy consumption in theprocess is loss. It is also necessary to think about fixedenergies. Energy-saving should always be discussed inconnection with production activities. By thinking thatenergies not contributing to production are all losses, it isbetter to proceed with initiatives for thoroughly reducing
fixed energies. In QCD activities, the lead time, manhours, quality standard, etc. are documented andmonitored for each product and process. Controllingenergies also at the same level will probably show theroute toward achieving your goal more concretely.

Kokubu: I have an impression that we had many talks
that lead to management during today’s dialog. This
reflects the fact that, although environmental initiatives
surely lead to management, each company has been
confused with the gap. Carbon neutrality is not an issue
that can be addressed through conventional methods ofproduction and sales. I think it is important to view it assomething you need to tackle strategically in a top-down
approach.
NTN: Thank you very much for your precious
recommendations. This is an opportunity for us to gain
insights. We’d like to reflect recommendations we
received today in our future initiatives. We will move
forward step by step while sharing the significance of ourinitiatives within the company. We would highly appreciate
your continued advice. Thank you very much for today.

NTN Report 2023

92