NGK SPARK PLUG Group CSR Report2018IndexOur CSR ..................................................................................................................................................... 3
Process for defining materiality and CSR targets ...................................................................................... 8
Management
Corporate Governance ......................................................................................................................... 15
Compliance ........................................................................................................................................... 19
Export Controls ..................................................................................................................................... 24
Security Control / Information Security ................................................................................................. 25
Intellectual Property .............................................................................................................................. 27
Risk Management ................................................................................................................................. 28
With Our Customers
Quality Policy and Implementation Structure ....................................................................................... 33
Initiatives to Improve Quality ................................................................................................................ 35
Communication to Customers .............................................................................................................. 40
With Our Shareholders and Investors ...................................................................................................... 43
With Our Suppliers ................................................................................................................................... 46
With Our Employees
Policy for Human Resources ................................................................................................................ 52
Respecting Diversity ............................................................................................................................. 53
Human Resource Development ........................................................................................................... 57
Human Rights and Labor...................................................................................................................... 60
Occupational Safety and Health Basic Policy ...................................................................................... 64
Occupational Safety Activities .............................................................................................................. 69
Health Promotion Activities................................................................................................................... 73
Social Contribution Policy......................................................................................................................... 75
For Environmental Protection
Global Eco Vision 2020 ........................................................................................................................ 76
Environmental Burdens from Business Activities ................................................................................. 79
Environmental Management................................................................................................................. 81
Environmentally-friendly Products ........................................................................................................ 88
Hazardous Chemical Substances ........................................................................................................ 90
Global Warming .................................................................................................................................... 93
Depletion of Resources ........................................................................................................................ 97
Environmental Communication........................................................................................................... 100
ThirdٕParty Review .............................................................................................................................. 102

1

Detailed Information about CSR
Targets and Results of CSR Promotion Activities ············································································104
Detailed Information about Environment
ISO 14001 Certified Locations ········································································································ 108
Environmental Accounting ·············································································································· 110
Social and environmental information verification report ································································ 112
Editorial Policy
The CSR Report 2018 is edited with the intention of informing all of our various Stakeholders about the
CSR activities of the NGK SPARK PLUG Group.
[Period covered]
From April 1, 2017 to March 31, 2018
Some other very recent activities and cases are also included.
[Organizations Covered]Ɣ Social aspects: NGK SPARK PLUG CO., LTD.
However, this Report may also cover the activities of subsidiaries and affiliates inside and outside
Japan. In such cases, specific company names are indicated.
Ɣ Environmental aspects: NGK SPARK PLUG Group嵣 NGK SPARK PLUG CO., LTD.
嵣 11 consolidated subsidiaries and one affiliate in Japan[Publishing Director]
Shinichi Odo
Representative Director and Chairman of the Board
Chief Executive Officer
President Officer[Editor in Chief]
Yutaka Furukawa
General Manager
Risk Management Department, Corporate Strategy Group[Published]
November 2018 (Publication of the next report is planned for October 2019)2

Our CSRCSR Concept
We view CSR not just as a responsibility but as an opportunity to be accountable through review of the
NGK SPARK PLUG's GROUP's economic, environmental and social activities from a global
perspective, to enhance corporate value, and to contribute to the sustainable development of society inaccordance with our Corporate Philosophy.

Our CSR activities are wide-ranging, and include the following:
Examplesʀ Offering excellent products to customers
ʀ Disclosing corporate information to shareholders and the broader investor community in a readily
understandable way as well as timely and appropriately mannerʀ Collaborating with suppliers for mutual development
ʀ Establishing a safe and employee-friendly working environmentʀ Participating in and supporting activities in the local community
To provide our Group's action guidelines for fulfilling CSR, in April 2011 our CSR Policy wasestablished, which comprises 10 policies, such as the Compliance Policy and others. In line with the
CSR Policy, we intend to review and promote CSR based on a multifaceted approach.

3

CSR Promotion System
The CSR Committee determines the priority themes for each fiscal year, to implement CSR Policy. The
Committee also oversees and evaluates CSR-related activities implemented by the respective
committees, working groups and divisions, and makes appropriate proposals regarding them, so as toachieve full optimization of CSR activities, thereby strengthening our business foundations.
The CSR Committee sets up respective working group as deemed appropriate, each of which holds
discussions on specific themes to develop countermeasures. We have established a company-wide
CSR promotion system by securing close coordination between the CSR Committee, the CSR
Promotion Sub-Committee and expert committees.ne with the CSR Policy, we intend to review andpromote CSR based on a multifaceted approach.

CSR Awareness-raising Activities
We have been running elementary CSR training courses since 2014 as one of our awareness-raising
activities so that every employee feels more familiar with CSR.
The training is expected to lead them to change in attitudes toward work, enhancement of motivation,and higher pride in the company through awareness of their connections with society as well as theircontributions to society. Starting in 2017—wecreatedtraining
courses for employees who work for our
CSR
Promotion
Systemgroup companies in Japan who are now teaching those same courses to other newly incoming
employees.
In addition, we regularly publish the CSR Newsletter and hold lectures by experts, aiming at
continuous CSR awareness-raising activities.

Training (Ceramic Sensor)

4Participation in "United Nations global compact"
NGK SPARK PLUG CO., LTD. Participated in “United Nations global
compact” in November 2016.
“United Nations global compact”is a voluntary corporate citizenship inorder to address various problems such as global warming,
environmental problems, gap-widening society that are progressing ona global scale. They are also initiatives that were proposed by Kofi
Annan, the Secretary-General of the United Nations in 1999, andestablished formally by the U.N. in July 2000.
NGK SPARK PLUG CO., LTD. will uphold ten principles consisted offour issues such as “Human rights, Labour, Environment, Anticorruption” being advocated by the U.N. global compact as good members of society, and will makeevery effort to promote activities in order to contribute to building a sustainable society.

The Ten Principles of the UN Global Compact岧Human Rights岨
Principle 1: Businesses should support and respect the protection of internationally proclaimed
human rights.
Principle 2: make sure that they are not complicit in human rights abuses.
岧Labour岨Principle 3: Businesses should uphold the freedom of association and the effective recognition of
the right to collective bargaining.
Principle 4: the elimination of all forms of forced and compulsory labour.
Principle 5: the effective abolition of child labour.
Principle 6: the elimination of discrimination in respect of employment and occupation.
岧Environment岨Principle 7: Businesses should support a precautionary approach to environmental challenges.
Principle 8: undertake initiatives to promote greater environmental responsibility.
Principle 9: encourage the development and diffusion of environmentally friendly technologies.
岧Anti-Corruption岨
Principle 10: Businesses should work against corruption in all its forms, including extortion andbribery.

5

Our contributions to SDGs
We will work to achieve SDGs (Sustainable Development Goals: SDGs*) that were adopted by theUnited Nations in 2015.
*What are SDGs?
SDGs consist of the 17 goals and 169 targets that were adopted at the UN Summit which aim to solve
worldwide problems such as poverty, inequality and climate change by 2030—pledging that “No one
will be left behind.”6

Progress in our CSR
Nov. 1996

Adopted "Corporate Philosophy"

Feb. 1998

Adopted "Corporate Code of Conduct"

Apr. 1998

Established Ethical Committee
Adopted "Corporate Ethics Helpline System Operation

Feb. 2003

Guidelines"
Revised "Corporate Code of Conduct", published "Code of

Nov. 2004

Conduct Guidebook"Published "Guidelines on the Handling of Personal

Apr. 2005

Information"
Established Export Control Committee, adopted "Export

Aug. 2005

Management Regulations"Feb. 2007

Adopted "Confidentiality Management Regulations"Nov. 2007

Published "Confidentiality Management Guidelines"

Sep. 2008

Established Internal Audit Department

Apr. 2009

Prepared "Corporate Protection Manual"

Apr. 2010

Inaugurated CSR Promotion Department

Oct. 2010

Established CSR Committee

Apr. 2011

Adopted CSR Policy

Nov. 2011

Established Compliance CommitteeJan. 2012

Published "Compliance Guidebook"

Mar. 2012

Adopted "Compliance Regulations"
Adopted "Emergency Response Plan Regulations" andOct. 2012"Business Continuity Plan (BCP) Regulations"May. 2013

Published "CSR Procurement Guidelines"

Jul. 2014

Launched "CSR Awareness-raising Activities"

Nov. 2016

Participated in "United Nations global compact"

Aug. 2017

Published “Integrated Report”

7Process for defining materiality and CSR targets
Defining the materiality of our priority CSR themes
In 2016, we defined the materiality of our priority CSR themes. We also established 10 fields ofactivities and 41 medium-term targets based on the 7th Medium-term Management Plan.
Going forward, we will repeatedly conduct dialog with major stakeholders, including customers,
suppliers, shareholders and investors, employees and the local communities, while pursuing
stakeholder engagement and continuing to review materiality and targets in line with the times. We willcontinue to identify materiality and review our goals according to the needs of the time such as SDGs**SDGs (Sustainable Development Goals) are the goals adopted in 2015 at the United Nations. These
goals are set to be achieved by UN member states by 2030.

Definition process for the materiality of priority themes

Evaluation of Materiality : Policy / Target Setting                              
2010 – 2012z

Establish new CSR Policyz

Set “complete prevalence of CSR” as our medium-term theme for the fifth Medium-termManagement Plan (fiscal 2010 – 2012)2013 – 2014z

Set Complete prevalence of CSR application, and globalize CSR activities as the medium-term
theme in the sixth Medium-term Management Plan (fiscal 2013 - 2015) and established 10 fields ofactivities and 30 CSR medium-term targets.

2015z

Establish 10 fields of activities and 42 targets to aim "Progressive Company" as the 7th Mediumterm Management Plan (fiscal 2016 – 2020)

8

Evaluation of Materiality : Risk (Loss and Opportunity) Analysis              
2010 - 2012z

Implemented CSR fact finding survey (management and performance of principle departments). As
a result, "compliance", "business continuity plan (BCP)", and "information disclosure" identified as
three priority medium-term initiatives.

2013 - 2016z

Implemented risk survey after identifying risk management as the medium-term priority initiative.
As a result, compiled 370 specific examples with 22 classifications and 101 definitions andidentified 21 material risks on two axes of degree of materiality and implementation status.

2017zChoose “Promoting BCM (Business Continuity Management)” and “Preventing corruption“identified as our group’s priority risk management initiatives.

Evaluation of Materiality: Dialogue with Important Stakeholders               
2010 - 2017z Held environmental meetings (local communities, NGK SPARK PLUG)z Gap analysis of our CSR and SRI evaluationz Participated in local disaster prevention meetings (government, citizens, NPOs, corporations)z Participated in information exchange meetings with neighboring companies held at Chamber ofCommerce and Industry

Activity Review
2010 - 2012z CSR Policy determined by the Board of Directors. Three priority initiatives reviewed by CSR
Committee
2013 - 2016
z Important risk responses reviewed by CSR Committee
2013-2017z 41 CSR medium-term targets reviewed by CSR Committee
2017
z Group unified priority risk initiatives reviewed by CSR Committee

9Standards and Guidelines for Reference and Analysis Tools
z Japan Auto Parts Industries Association (JAPIA) guidelines & checklist
z Japan Electronics and Information Technology Industries Association (JEITA) guidelines & checklist
z Japan Business Federation "Charter of Corporate Behavior Action Plan"
z GRIz ISO 26000
z ISO 31000 risk analysis sheets, risk maps, risk management tables

10Mid-term CSR targets
Field of Activities
ManagementCompany-wide
CSRManagement
Compliance
Company-w
ide
Promotion
SystemSecurity
Control

Mid-term Targets (by fiscal 2020)
࣭ Implement PDCA cycle to promote CSR on a globalbasis࣭ Promote CSR awareness-raising activities on a
global basis

Department
in Charge
RiskManagement
Dept.

࣭ Construct a global promotion system࣭ Continue education on helpline content
࣭ Continue compliance awareness and knowledge
training࣭ Continue monitoring of compliance awareness andknowledge and corporate culture change

Compliance
Committee

࣭Deploy educational tools to NGK SPARK PLUG and

Confidentiality
Management
Committee

group companies in Japan and monitor
implementation status and effectiveness࣭ Continuously improve security control, includinggroup companies, and establish system for

ExportControl
Information
Security
Respect forandProtection ofIntellectual
Property
Rightssurveillance of implementation status
࣭ Establish a system for surveillance of
implementation status of appropriate export controls,
including group companies
࣭ Continuously reduce security risk of groupcompanies through deployment of Group Information
Security Regulations
࣭ Implement patent review activities for mainstay
products prior to design review meeting, includinggroup companies
࣭Establish new methods to deal with increasingly
sophisticated counterfeiters, particularly in emerging
countries
࣭ Have at least 15% of submitted patents bedifferentiation patents utilizing a patent portfolio that
adds rivals' information
࣭ Involve trademark aspects in strengthening ourbrandorganization
࣭ Enhance intellectual property education, includinggroup companies

11

Export Control
Committee
Information
Systems Dept.
Intellectual
Property Dept.

Mid-term Targets (by fiscal 2020)

Field of Activities
Management

Risk Management
BCP㸭BCM࣭Expand business continuity management system toCompanywide Risk
Managemen
t
With
Our
Customers

Safety andQualityWith
Our
ShareholdersandInvestors

Information
Disclosure

With
Our
Employees

Employment
and Human
Rightsgroup companies in Japan
࣭Construct a management system that can respond to
not only earthquakes but also other disasters
࣭ Construct a procurement BCP framework andexpand and operate it at group companies࣭ IT-BCP countermeasures for server infrastructure(cloud utilization)
࣭ Build company-wide risk management suited to
NGK SPARK PLUG

࣭ Expand quality assurance to all group companies
with a focus on goods for all customers
࣭ Expand quality management to all group companies
aimed at delivering value to all customers
࣭ Disseminate information that leads to increased
shareholder trust࣭ Disseminate information in an easy-to-understandand approachable manner on a global level࣭ Construct a framework for an IR strategy aimed at
institutional investors
࣭ Disseminate information that captures stakeholders'
expectations and the changes in social trends
Implement fair evaluations that correspond to clear
expectations

Establish educational programs that target theleaders of each group company
Employ diverse human resources strategicallyAchieve personnel and human resources functions
that contribute to the promotion of management
strategy

Further encourage the promotion of active participation
by women

12

Department
in Charge
BCM
Working Group

Procurement
Div.
Information
Systems Dept.
Risk
Management
WorkingGroup
Quality
Committee,
Corporate
Quality
Management
Div.
Public Relations
Dept.
Risk
Management
Dept.
Accounting &Finance Dept.
Risk
Management
Dept.
Strategic
Human
Resources
Dept.
Strategic
Human
Resources
Dept.
Strategic
Human
Resources
Dept.
Strategic
Human
Resources
Dept.

Strategic
Human
Resources
Dept.

Zero workers leaving their jobs in order to provide
nursing careAchieve the mandatory number for employment ofpeople with disabilities
Promote active participation by seniors

Occupational
Safety and

With
Our
Supplier
s

With
Local
Commu
nitiesandInternati
onal
SocietyFor
EnvironmentalProtectionRaise productivity by decreasing the rate of onset ofmental illness

HealthDevelop systems that make it difficult for accidents tooccur aimed at developing a global safety culture

CSR
Procurement

࣭Improve the framework for evaluation aimed at
global optimum procurement and deploy and operate
at group companies
࣭ Reduce risk in the supply chain by thoroughly
establishing CSR procurement
࣭ Promote education and enlightenment aimed at
reducing risk utilizing supplier seminars, etc.

SocialContribution

࣭ Continually enhance the social status of the NGKSPARK PLUG Group through social contribution
activities

Environment࣭ Promote environmental activities aimed at achieving
global Eco Vision

13

Strategic
Human
Resources
Dept.
Strategic
Human
Resources
Dept.
Strategic
Human
Resources
Dept.
Personnel andLabor Relations
Dept.
Safety and
HealthCommittee/Environment &SafetyManagement
Dept.
Procurement
Div.

Procurement
Div.
Risk
Management
Dept.
Public Relations
Dept.

Environmental
Committee.
Environment &SafetyManagement
Dept.

Fiscal Year CSR Target and Results
We carry out CSR promotion activities according to themedium-term targets and fiscal year targets.
Our CSR Committee checked the progress of targets for fiscal
2017 and formulated new targets for fiscal 2018 as part ofachieving our medium-term targets. When formulating policy,
each expert committee and division first confirmed the
expectations and demands of all our stakeholders. They thendrafted medium-term targets in relation to SDGs. Finally, the
CSR Committee approved them.

CSR targets and Results‫ق‬3OHDVHUHIHUWRSDJH‫ك‬

14

Corporate Governance

Basic Philosophy
We believe that it is our foundational and important managerial task to establish and maintain a fair andefficient management system, while securing soundness and transparency in management, in order toenhance corporate value by fulfilling our corporate social responsibilities. We will keep on carrying out
efficient and sound business operations to pursue corporate philosophy by enhancing corporate
governance for fulfilling our responsibilities to stakeholders.

Corporate Governance System
The following framework has been built for decision-making, supervising, and execution ofmanagement.

Corporate Governance System

15

Board of Directors and Directors                                          
Board of Directors is composed of 10 directors, 3 of which are outside directors.
Meetings of the Board of Directors are held regularly once a month as well as whenever necessary fordeliberation and determination with respect to issues as prescribed in applicable laws and regulations
or articles of incorporation as well as other managerial key issues, and also for supervision of businessexecution status in response to reports from the directors. Additionally, Management Meetingscomposed of Directors are held regularly once a month for discussion and pre-grasping about businesschallenges to be addressed, and any possible risk that involves our company for enhancing the systemthat can be flexibly adaptable to change in the managerial environment.
We have introduced Corporate Officer framework on April 2012 for the purpose of prompt execution ofduties based on various policies determined by Board of Directors and clarifying resultant
responsibilities. Board of Directors has nominated 23 corporate officers (7 of them work as directors)
who share information, and exchange opinions on the status report concerning execution of duties in across-sectional way in Corporate Officers’ Meeting to be held once a month. Each term of Board of
Directors and Corporate Officers’ Meeting is one year.

Board of Auditors and Auditors                                           
Board of Auditors is composed of 4 auditors, 2 of which are outside auditors.
Two full-time auditors serve to audit execution of duties by the directors through regular opinion
exchange with the representative director, and auditing of major offices and subsidiaries.
Meanwhile, the outside auditors serve to audit execution of duties by the directors throughattendance of Board of Directors. The auditors will attend various meetings and committee
meetings whenever necessary.

Independency of Outside Director/Outside Auditor                            The outside directors perform supervision while taking the position independent from businessexecution by stating opinions from broad point of view in important meetings such as Board of
Directors. The outside auditors perform audits on the background of technical knowledge while
adopting multilateral viewpoints by stating opinions in important meetings such as Board of Directors.
The outside directors and outside auditors are designated as independent officers. They may be
nominated in accordance with both the criteria prescribed by stock exchange, and our own criteria
in order to ensure that the candidate has no special relationship with management and major
shareholders of our company, and no conflict of interest against the general stockholders.

16Internal Audit
We have established “Internal Auditing Office” as an independent department. Through audits of NGKSPARK PLUG CO., LTD., and its group companies, the Internal Auditing Office reports the audit results
to management and makes proposals to correct problems and improve business operations asnecessary. Departments that receive a proposal for improvement formulate and implement improvement
plans and the Internal Auditing Office monitor the implementation status. The Internal Auditing Officeassesses the effectiveness of internal control over financial reporting in accordance with the internal
control report system pursuant to the Financial Instruments and Exchange Act so as to secure thereliability of financial reporting, thereby working to maintain and improve internal control.
Internal Auditing Office will ensure effective and efficient audit through exchanging views on each of theaudit plans and results with corporate auditors or independent external auditors or both, from time totime on a regular or necessary.

Remuneration for Director and Auditor
We have established optional nomination/remuneration committee on April 2017 for rationality andtransparency of nomination/determination of remuneration for the director. Since June 2017, targetingthe directors and the corporate officers, we have introduced the share-based remuneration system of
performance-based type as the executive remuneration system with high transparency and objectivity
based on business performance for the purpose of raising awareness of contribution to improvement ofbusiness results on the medium- to long-term basis, and enhancement of the corporate value. Thissystem is intended to evaluate the attainment level of business operations in terms of consolidated
sales, consolidated operating profit, and ROIC as indexes for four business years from fiscal 2017 to2020 within our medium-term management plan period.

17Remuneration and bonus paid to directors and auditors in fiscal 2017     
Remuneration (except bonus)
NumberAmount (million

Bonus
Numberyen)

Amount (million
yen)

Director

8

592

8

146

Outside director

3

42

㸫

㸫

Auditor

3

50

㸫

㸫

Outside auditor

3

28

㸫

㸫

Total

17

712

8

146

*Including remuneration paid to one director and two auditors resigned at the conclusion of 117th
annual shareholders meeting (held on June 29, 2017).
*Maximum amounts of remuneration paid to the directors were set by a resolution made at the 117th
annual shareholders meeting (held on June 29, 2017) as follows.
Total amount of remuneration (except bonus)     monthly within 60 million yen
Total amount of bonus               annually within 180 million yen*Maximum amounts of remuneration paid to the auditors were set by a resolution made at the 106th
annual shareholders meeting (held on June 29, 2006) as follows.
Total amount of remuneration (except bonus)   monthly within 10 million yen

Total amount of bonus

annually within 10 million yen        

18Compliance

Compliance Policy
With recognition that our company is a member of society, we enhance corporate ethics andunderstand the spirit and meaning of laws, company regulations, international rules, and social
norms in order to appropriately meet social demand and become a company trusted by theinternational community.

Action Guidelines
z We not only comply with laws and regulations, but also act in good faith with common sense andresponsibility as a member of society.
z We regularly educate and raise the awareness of all our employees to impart a high level of ethics
and correct knowledge, with which they can act voluntarily to prevent a violation.
z Should a violation occur, we will promptly investigate the causes and take remedial actions.
We will strive to take appropriate countermeasures to prevent recurrence and fulfill our
accountability.

Basic Philosophy
We work to increase awareness among employees regarding compliance to act in a sociallysensible manner, helping them to bear in mind that our enterprise is a member of society.

Compliance Promotion System
A Compliance Committee made up of representatives of departments in charge of overseeing
compliance with laws and ordinances and each division, headed by the Representative Director,
holds meetings every three months, carrying out inspections and correcting serious problems.

19

ሗ࿌

ປົ㒊

Compliance Promotion System

Promoting Compliance Education
To raise employees' awareness of compliance, we continue education andedification using the Compliance Guidebook, which collects rules concerning thecompany and society, and the Compliance Newsletter, which gathers examples
of incidents that happen nearby. In addition to the level-specific training we haveused in the past, we also hold training on the themes of competition law, export
control, and business law.

Compliance Guidebook

Compliance Survey
We conduct a compliance survey every year. This identifies employees’ level of understanding
about regulations and systems, the culture of the various workplaces, and compliance risks, andwe work for individual improvements by providing feedback on the results to each workplace.

20

Corporate Ethics Helpline
We have opened the “Corporate Ethics Helpline” as an in-house reporting system that encourages
employees to consult regarding compliance. We have worked to increase convenience by establishingchannels not only inside the company but also with an external expert private company, enabling
consultation and reporting outside of business hours, on holidays etc. Anonymous consultations arealso accepted.
Regarding consultations and reports received, facts are investigated with discretion, so the reporting
employee is not identified and does not feel uncomfortable, and if problems are confirmed, they aredealt with promptly.
We have received 65 cases of consultations/reports in fiscal 2017, including those from employees
for our group companies. The consultations and reports mainly involved with issues such as laborand in-house rules. We immediately took remedial actions upon identification of problems ofaccepted cases. This system will be continuously made known to every employee throughopportunities, for example, by introduction in trainings, display of posters, and distribution of
portable cards.

Flow after report is received via the Helpline

21

Initiatives to Prevent Corruption
The NGK SPARK PLUG Group works to prevent corruption, stating in our corporate code of conduct“we shall promote fair, transparent, free competition and sound trade. We shall also ensure that our
relationships and contacts with government agencies and political bodies are of a sound and proper
nature.”In the Compliance Guidebook we issued in 2012, we set rules concerning the prevention ofcorruption, including the prohibition of involvement in political contributions or bribery, andsubsequently educated employees about these. In 2013, we educated employees about ourConduct Guidelines Concerning the Giving and Receiving of Gifts and Entertainment and areraising awareness to eliminate any misconduct. Further, in 2016 we signed the United Nations
Global Compact, openly reaffirming our commitment to undertaking the prevention of corruption.
While addressing the prevention of corruption in accordance with these and other guidelines, we
respond to any incident of violation primarily through our Compliance Committee. We also accept
information provided through the Corporate Ethics Helpline.
Our overseas group companies are also taking action to prevent corruption, especially preventing
bribery towards civil servants, and conduct education for employees along with surveys of local laws.
Through our CSR Procurement Guidelines, we further require that suppliers refrain from acts ofbribery. In fiscal 2017, there were zero related violations committed by our Group.

Initiatives Concerning Competition Law (the Anti-Monopoly
Act)
Responding with sincerity to violations of competition law (the Anti-Monopoly Act) uncovered in fiscal
2014, the NGK SPARK PLUG Group has established a system to promote compliance with competition
law and ensures legal compliance both inside and outside of the company. In addition, we have formulated
an Anti-Monopoly Act Compliance Manual to educate employees, including holding seminars on the
topic. Furthermore, we have introduced an in-house e-mail inspection system for monitoring andprevention of recurring violations of the Competition Law.
The domestic competition law and compliance measures team visits overseas group companies to
conduct audits on compliance systems and their operational status, and to confirm that rules arethoroughly promulgated and enforced. In addition, we conduct checks of the readiness status ofinternal reporting systems, as a means for quickly discovering the possibility of violations. From fiscal
2015 to fiscal 2016, we conducted on-site audits at almost all overseas group companies. We willcontinue to conduct education and audits both in Japan and overseas and will enforce the strict
observance of competition law.

22

Policies Regarding Taxes
The NGK SPARK PLUG Group has set a compliance policy by which we recognize that we are amember of society, and, with understanding of the spirit and the purpose of laws and ordinances,
respond appropriately to the demands of society and aim to become a company trusted by theinternational community. We also undertake the payment of taxes on the basis of this policy and inaccordance with the following principles.
1. The Group will fulfill its social responsibilities by observing laws on corporate taxationand other tax laws in every country, as well as international taxation standards
including the OECD Transfer Pricing Guidelines and the Action Plan on Base
Erosion and Profit Shifting.
2. In order to ensure compliance with the above laws and ordinances, our Group will
work toward improving our knowledge of, and correct understanding of taxation,and to enhance reliability and transparency with an attitude of sincerity toward
tax authorities.
3. The Group will properly manage taxation risks by working toward appropriate
declaration and payment of taxes in each country, thereby enhancing shareholder
value.

23

Export Controls
Basic Philosophy
Aiming at international peace and security, export management (Security export control) has been
implemented to protect cargo and technology from being utilized by Organizations with some kind ofconnection to Regional conflicts or Nuclear development for military purpose. The demand for proper
export control has been increasing due to worsening international security. To suitably execute export
controls based on the Foreign Exchange and Foreign Trade Control Act, we have drawn up our own
Export Management Regulations and established our in-house export control system. Our logistics
departments have been working to achieve proper cargo control under the background of solid security
management system of export cargoes for terrorism prevention based on various relevant systems. We
will continue to carry out business in compliance with all laws and regulations to fulfill our
responsibilities as demanded by the international community and the government.

Holding Regular Briefings on Different Themes
Responding to needs of continuous education to appeal the importance of security export controls andcargo security management to all through the company, we are planning to hold regular briefings on
various themes for related divisions in the company.

Themes and Results in fiscal 2017                                 

ThemesNumber of times

participants

14

229

13

219

12

170

1. Foreign exchange laws and security export controls
㸦Includes implementation of classification㸧
2. Customs law, Authorized Exporters’ program (AEO
system)3. Air cargo security management (KS/RA system)

Themes in fiscal 2018                                          
1.

Foreign exchange laws and security trade controls

2.

Customs law, Authorized Exporter’s program (AEO system)

3.

Air cargo security management (Known Shipper / Regulated Agent system)

24Security Control / Information Security

Information Security Policy
We regard all of our own information assets as one of our management resources. Through theproper protection and effective use of our information assets, we pursue healthy maintenance anddevelopment of our business.

Action Guidelines
z We establish rules that clearly define the system and responsibilities for the protection andmanagement of all the information assets including the information we keep for our customers,
the know-how and intellectual properties owned by our Group, and personal information.
z We comply with laws, ordinances, and regulations regarding information security.
z We educate all executives and employees who handle information assets about the importanceof information security, and about specific items to be observed.
z We continuously update the information infrastructure for the maintenance and improvement of
the confidentiality and stability of all the information assets.
z We promote measures to prevent accidents in order to address the risks of information leakage
associated with the continuous advancement and sophistication of information technology.
Should an accident occur, we will strive to minimize the damage and take preventive measuresagainst recurrence.

Basic Philosophy
We have established the Group Information Security Regulations and Confidentiality Management
Regulations, striving for appropriate protection and management of confidential information, including
the information of the NGK SPARK PLUG Group, personal information of customers and suppliers.
Even in the use of electronic information equipment such as wireless LAN and mobile terminals, we willconduct information security management with due consideration in compliance with relevant laws andregulations.
Our privacy policy is available on our website

25

Conducting Continuous Security Measures
We are continuously handling the risk of threats to corporations and organizations dealing withinformation securities. Furthermore, with the increase of the damages caused by recent cyber security
attacks, we are establishing a professional team, including experts outside the company, CSIRIT(Computer Security Incident Response Team) in order to respond to the information security incident.

Carrying Out Periodic Inspections Related to Confidentiality
Management
To ensure that the confidentiality management rules we established do not become rules in name only,
the Confidentiality Management Committee performs annual company-wide inspections of the status ofconfidentiality management. As measures for the inspection, we have adopted a method of carrying out
mutual interdivisional inspections in addition to the self-checks carried out in the past to strengthen the
checking function.
Furthermore, we have not only established rules for confidential information handled in-house, but also
rules to prevent leaks of confidential information taken outside the company, including procedures forthe use of mobile PCs and cloud service, and we carry out checks on the operational status of theserules.

26

Intellectual Property
Basic Philosophy
To protect its existing and newly developed products, NGK SPARK PLUG CO., LTD. takes steps toactively acquire intellectual property rights and make effective use of them. We investigate theintellectual property rights of third parties in all production processes, from early stages of development
to mass production, to avoid the risk of infringing the intellectual property rights of third parties orviolating contracts, laws or regulations. We also verify the appropriateness of the intellectual propertyrelated provisions in various contracts. In addition, we are educating employees on the importance ofintellectual property. In the future, we will strengthen the management of intellectual property across theGroup, as the basis for our continued evolution as a “Monozukuri ‫ق‬Manufacturing‫ك‬Company.”

Promoting Measures to Stamp Out Counterfeit Goods
As for NGK SPARK PLUG CO., LTD.’s measures against
counterfeit goods, our various overseas group companies andlocal law firms have been proceeding with activities through tieups. Until now, we have been working primarily in China, but wewill be strengthening activities in the ASEAN and India, where
economic growth continues.
The counterfeit goods that threaten the safety of customers exhibit
the trend toward further trickiness and smaller lot through the

Seized counterfeit goods

Internet trading. We have been continuously engaging in activities for uncovering and stamping out thecounterfeit goods in close cooperation with the police, the customs, and relevant administrative
agencies.

27

Risk Management

Risk Management Policy
We will identify the risks that could have serious impact on our business activities based on
the comprehensive understanding of the risks related to our Group and take necessary
measures to prevent the occurrence and recurrence so that the risks are reduced to an
acceptable level. Even if such a risk should occur, we will also strive to restore and continuesmooth business operations, thereby maintaining trust from our stakeholders.

Action Guidelinesz

We conduct our activities with top priority on the protection of human life.

z

We strive to prevent factors that could affect business continuity.

z

We minimize impact on related parties.

z

We strive for rapid restoration of business operations and stable supply of products andservices.

z

We take measures to prevent the recurrence of risks.

Basic Philosophy
We are promoting construction and operation of the companywide risk management system as thestrategy coping with the complex and diversified business environment and risk. Based on the following
basic ideas, we will continuously make our efforts to affect the system integrated with groups insideand outside Japan.
1.

Sharing of idea/procedure of raising awareness of risk, evaluation, and formulation of
measures;2.

Construction and operation of the management system adapted to individual groupcompanies;

3.

Skill-up of risk assessment and measures28

Promotion system
Appointing the President of NGK SPARK PLUG CO., LTD to “Chief Administrator” of risk
management, and appointing the Director of Risk Management Department to “Promotion
Manager”, the CSR Committee including all Directors as members is expected to evaluate
operation/results of group-wide activities based on the following items for review on the
management in the next term.
1.

Classify the risk into hierarchies including management level, Department/Division level,
and working level for clarifying the respective coverages of risk management. For thegroup management risk level, “Unified priority risk measure for the whole groups” isselected for evaluation on the countermeasure status.

2.

Evaluate each status of risk management system construction/operation in the respective
group companies.

3.

Instruct correction of descriptions as described in the items 1 and 2.

Classified risk
Human rights andHarassment

Fair trade andInfringement oflabor practiceDiscrimination

Ethicsintellectual property rights

Long hours of work

Product

Export management

Labor dispute, Strike,

Accounting problems

Demonstration
Safety and HealthOccupational accidents

Procurement

Traffic accident

Defective productMental health
Environment

Accident

Environmental pollution

Product liability
Natural disaster

Violation of laws

Fair trade andInfectious disease

Information

Information system failure

EthicsFire and explosion

security andCyber attack

Confidential

Leakage of confidential

information

information and personal

management

information

Infringement of29

Establishment and implementation of company-wide risk
management<Group unified priority risk initiative handling>
In Fiscal 2017, we have strengthened the work to promote BCM (Business continuity management) andto prevent corruption and made it a top priority.

<Expanding to group companies>
In Fiscal 2017, in regard to company-wide risk management, we have organized the formulation of arisk management system and formulated a program which handles important and urgent issues. We
have also expanded our formulations of risk management to include group companies.

<Overall review by the CSR Committee>
Our company president reviewed our risk management with the CSR Committee.

BCM Advancement (Business Continuity Management)
Formulation of various BCPs (Business Continuity Plan)                
In preparation for possible damage caused by earthquakes, we have been implementing BCM(Business Continuity Management) including taking steps to mitigate the effects of natural disasters andto ensure production can resume as soon as possible after a disaster. For departments such as
business, IT, and procurement which are required to take timely measures against disaster, initial
responses and restoration procedures are specified in BCP (Business Continuity Plan), clarifying thetime-limit for resuming service to our customers.

<Business Department>
As for production recovery, we set a time limit for recovering our main products and established asystem for early recovery by formulating an action plan for the recovery team.

30

<IT Department>
We are continuously working to minimize the damage to IT systems and improve recovery time whendisaster occurs. To minimize damage, we have been transferring the working environment for theinternet base and workload system respectively to a highly isolated data center. To improve recovery
time, we will be utilizing cloud services for backups so that we can recover and restart systems in an
undamaged environment. By implementing more effective, practical and regular education and training,
we are taking measures to better respond when disaster strikes.

<Procurement Department>
We have promoted countermeasures that include multiple purchasing for key products including
materials and parts. A diverse range of materials and parts is required for manufacturing NGKSPARK PLUG CO., LTD.’s products. Therefore, we are trying to secure systems that respond to
the BCP through sharing our objectives with each supplier and making efforts across the entire
supply chain.

31

Making preparations for large-scale earthquakes                             
There have been concerns over large-scale earthquakes in the Chubu region and the various possible
damages that are expected. The “Earthquake BCP Guideline” specifies the initial measures in responseto earthquakes and business continuity actions. The initial measures cover employee actions likeevacuation and confirmation of employees’ safety, provision of emergency response headquarters, anin-house fire brigade and stockpile management. These initial measures will be rehearsed throughemergency drills held by the respective plants, business offices of our company and group companies
in Japan on the same day in November every year. Business continuity actions cover setting of target
times for recovery of important business operations, drafting recovery plans, organization of teams forrecovery work, and exercise of BCP and we conduct BCP drills in December every year for improving
the effectiveness of business continuity plans. Also, considering the concern over pandemics such as
new strains of influenza, we created BCP guidelines for new strains of influenza, etc. to prevent
second-hand infections and formulated business continuity plans.

Collecting disaster information drill

Transportation drill

Power generator operation drill(Companywide disaster prevention drill)(Companywide disaster prevention drill)(BCP drill)32

Quality Policy and Implementation Structure

Corporate Quality Policy
We are committed to "Customer focus", "Involvement of all members", "Continuous
Improvement", to provide "Quality Products" to the society, and create new value.

Action Guidelinesz

We strive to take a customer௅oriented approach to provide quality products and services,aiming to ensure greater customer satisfaction in all our business activities.

z

We are engaged in quality improvement activities through the companywide cooperation andencourage our employees to achieve higher goals by making the best use of their individual
abilities and creativity and uniting their efforts to address problems and challenging issues.

z

We strive to continue improving our processes, systems, products, and services, aiming to
respond to ever changing social/market environments and the diverse expectations andneeds of customers.

Basic Philosophy
NGK SPARK PLUG CO., LTD. regards all the value, expectations, and evaluations provided tocustomers through products and services, and all the people, goods, processes, and arrangements
involved in producing them as "quality."
We are always conscious of making the best value for customers, and, aware that we are the ones who
support quality, we continue to grow, ambitiously applying creativity and imagination to all operations.
We create value for customers in accordance with our Corporate Quality Rules and Corporate Quality
Policy. We will continue to contribute to society with safe and trusted manufacturing, as well as thedevelopment of human resources who effectively and efficiently implement total quality management(TQM), which enables us to respond flexibly and promptly to the evolving internal and external businessenvironment.

33

Quality Management System
In order to meet the demands of our customers and various industries which handle our products, NGKSPARK PLUG CO., LTD. are strengthening quality assurance operations for providing new values toour customers. Also, we strive to operate good quality management systems by gaining outside
certifications which are required in various business areas as well as international regulations such as
ISO9001.
The quality assurance committee, as a part of corporate governance system, formulates and decides
policies and instructions to optimize our various functions from the whole company’s point of view.
Furthermore, the Quality Assurance Conference has a quality exhibition room inside the company toshare issues and findings regarding quality problems outside and inside the company. By exhibiting
panels of all past issues, we educate ourselves, avoid forgetting them and show our commitment
towards quality held by our founder and current management. We constantly strive for better quality
and to provide better services.

Quality Management Promotion System (FY2017)34

Initiatives to Improve Quality
Basic Philosophy
NGK SPARK PLUG CO., LTD. is working to share and practice the concepts of TQM (Quality
Management) in order to become a group company that creates value for all stakeholders and has asystem that can respond flexibly and swiftly to change.
Based on our CSR Policy, we have updated NGK SPARK PLUG CO., LTD.’s Corporate Quality Rules
and identified the following five areas as the mainstays of total quality management (TQM).

1)Quality assurance
In order to provide products and services that meet the needs of our customers and society, NGKSPARK PLUG CO., LTD. will establish all operations and guarantee their safety and reliability andpromote development activities aimed at creating new value.

2)Daily management
NGK SPARK PLUG CO., LTD. will consider methods and indicators to measure the quality of all
our operations and promptly investigate the causes when results that differ from normal are
obtained as well as taking countermeasures to maintain and improve quality.

3)Policy management
NGK SPARK PLUG CO., LTD. will further improve and innovate activities to maintain and enhancequality. We will establish strategies and objectives for creating new value for customers andresponding to the evolving internal and external business environment and explicitly identify issues
and problems that need to be tackled as we work towards achieving our strategies and objectives.

4)Small group improvement activities
NGK SPARK PLUG CO., LTD. will use small group teams to solve the various issues and problems
identified through daily management and policy management, thereby developing humanresources.

5)Quality control education
NGK SPARK PLUG CO., LTD. will create the understanding and awareness of the mainstays of
TQM, which are the prerequisites for maintaining and enhancing quality and activating
improvements and innovation and then establish and implement a grade-specific education
system.

35

Running “Quality Activity Events” Year RoundWe run quality management events year-round, not only in Japan’s
Quality Month which is held every November. Our quality expos
are held at all the sites of group companies in Japan and arevisited by more than 6,000 employees each year. We establishedthe expos as an opportunity to share our approach to quality as
well as the diverse quality-related initiatives in workplaces.

Quality exhibition

We also promote activities to maintain and enhance quality while
engaging all employees in a range of events such as raisingawareness about quality through collection of quality slogans andattendance of lectures on quality, expansion of QC circle activities
through presentation and attendance at lectures including our
suppliers at our QC circle workshops, and promotion of problemsolving through inspections by local senior management including
overseas business sites.

NGK SPARK PLUG GroupQC circle workshops

SDCA Activity
Standardizing our work and operations plays an important role in supporting TQM (quality
management). As a manufacturer, we are promoting the manufacturing worksite SDCA
(Standardize, Do, Check & Act) activity to stably and reliably conduct daily management at our
manufacturing worksites. We are working to improve quality of our manufacturing while being
susceptible to any abnormal state in the worksites and maintaining the worksite without muri, muda
and mura (unreasonableness, waste and inconsistency) as a daily routine through goodcommunication.

36

Quality Training Raising the Quality of Our Manufacturing
We are working to develop our human resources as developing
things is developing people. We have established fulfilled training
programs that include quality control and QC Circle Activities, andmany of our employees attend these programs. We are also
further strengthening more advanced support activities at sites. We
expect that training participants will improve their skills byimplementing their techniques through familiar themes in addition
to spreading the awareness to the employees around them. We
also offer quality training and practical support for problem solving
for suppliers so that they provide us with consistently high-quality
parts and materials based on continuous quality improvement

37

Quality Training

QC Circle Activities (Small Group Improvement Activities)
We are implementing QC Circle Activities aimed at advancement of personnel training and workplacecapacity by continually solving problems and issues we face in daily work. We call this activity "NQC
Activities." (N denotes an initial letter of Nittoku).

Presentation and Sharing of Results of NQC Activities

NQC activities are working to spread and hold improvement
activities in domestic offices as well as overseas offices. Since
fiscal year 2015, we have invited the best overseas teams to jointly
hold a presentation for the best improvement practices at ourannual presentations of domestic NQC activities. In 2017, we
invited every group from the offices in Siam and other offices inThailand to improve our group activities through giving direct
instruction and supporting their presentation practice. Furthermore,

2IILFHJURXSVLQ7KDLODQG

office groups in Thailand won 2nd place for their presentation
regarding office improvement at New Born Class in Thailand
Quality Prize 2018, which is the largest QC group competition in
Thailand. People in all industries participate in Thailand Quality
Prize from all over Thailand.

Measurement Management
Appropriate measurement management in order to obtain reliable measurements is vital in
manufacturing.
In order to protect the NGK SPARK PLUG brand, we support our group companies in the way adapted
to individual tasks by making importance of measurement known to the entire group.

Expanding measurement management system into NGK SPARK PLUG CO.,LTD.
When new products are put to market, we must maintain the same level of the quality of existingproducts. The same thing can be said when we introduce new equipment internally.
In order to provide value new markets, it’s necessary to nurture personnel assets who areknowledgeable about accurate measurement systems and crisis management, which is why we are in
the process of selecting a precise and verifiable measurement system.

38

Development of Measurement Management System for Group Companies inJapanWe have established the unified criterion for the measurement management system so that such
system is implemented at higher operation level. We believe that the unified criterion will lead us toenhancement of quality assurance system. We are performing audits of measurement management
systems and confirmation of manufacturing worksite measurement at each company and have beenworking to unify standards and enhance the quality of frameworks and management.
We will offer the support to voluntary level-up through key person development for the jobsite
confirmation and human resource development conducted in each company

Support of Overseas Group Companies in regard to Measurement
We visit the plants of overseas group companies on a regular basis to support the quality assurance
system from the viewpoints of measurement and contribute to the improvement of accuracy andconsistency.

<Calibration Certification>
We educate the local people who conduct inspection, calibration and certify them according to the sills
they acquire. In order to improve measurement skills and further motivate measurers, we plan to hold ameasurement skill competition among factories to upgrade the whole NGK group.

<Measurement management system audit>
In order to check if the right measurement machines are in the right condition, we conduct ameasurement management system audit. The in-depth confirmation is intended to further improvemeasurement management levels directly linked to manufacturing. We will work on localization so thateach company is able to perform skill certifications, training, and process confirmations on their own.

39

Communication to Customers
Basic Philosophy
For the reliable supply of our products and services to our customers all over the world whilesatisfying their demands and requests, we have been making efforts to perform high-levelcommunication with customers in various ways. We are offering correct and appropriate
information on the website or in exhibition always from the customer-oriented point of view.

Providing Services Demanded by Customers from a Customeroriented Perspective
We also provide high quality services based on the appropriate technology and knowledge as well
as long experience in the automobile aftermarket and promote diverse activities responding torequests of customers from a customer-oriented perspective around the globe. We put efforts into
technical knowledge training for marketing staff in Japan and overseas as well as the training ofoverseas technical marketing staff to enhance the communication with users by holding training
sessions for mechanics working on the automobile maintenance site, or students as would-be
mechanics, or running an event for arousing interests of end users in the spark plug inspection.
In addition, we promote market research activities as well as feedback by collecting and providing
technical information and new car and model information, and work on initiatives to further increasecustomer satisfaction by responding to customer inquiries, and to our website, and providing
diversified services including technical support to cope with complaints.

OJT activities in maintenance shop

Plug setting experience using VR at

Training session for mechanics(India)the exhibition. (Japan)(Japan)40

Responding to Inquiries and Complaints
Inquiries and complaints on our products received
from customers are first accepted at our sales
division. Then the quality assurance division
works together with the technical division toquickly respond and take necessary actions to
the inquiries and complaints.

Response to Inquiries orComplaints

Sending Information on Website“PLUG STUDIO” is a website that disseminates detailed information about our products including
NGK spark plugs. Customers can also search for the part number that matches their vehicle andmodel. The website also features information on motor sports, primarily teams supported by NGKSPARK PLUG CO., LTD. as well as upcoming exhibitions and events.
We have set up an official Facebook account for NGK SPARK PLUG CO., LTD. to further inform
more customers of the NGK spark plug brand.

41

Communication through Exhibitions and Events
We make sure to have PR booths at exhibits and motor sports events.
These provide valuable opportunities that allow us to meet with customers and explain our products
and technologies directly, and we also use these opportunities to identify constantly evolving needs.

PR booth exhibits at racing venues                                        
In fiscal 2017, we exhibited a total of six times in PR booths at
racing venues while motorcycle and automotive racing events werebeing held. In addition to introducing our products to motor sportfans, we held stage events many customers participated in. On
April in that year, we supported SUZUKA 2&4 race, the greatest
form of motorcycle and automotive racing events held in Japan as
the title sponsor. We succeeded in making close link between thee
NGK spark plug brand and the motor sports known to a wide rangeof customers

Participation in Automotive Engineering Exposition 2017                    
We participated in “Automotive Engineering Exposition 2017” inYokohama and Nagoya, as the exhibition specializing in
automotive technologies. We introduced our key products including
spark plug, glow plug, and various types of sensors all contributing
to improved fuel efficiency and emission reduction. We also
introduced our latest technologies to visitors by demonstrating the“compact multi-gas measurement device (NCEM®)” capable ofmeasuring exhaust gas of the traveling vehicle, and the “hydrogenleakage detection sensor” as the requisite component for the fuelcell vehicle.

Responding Product Defects
We make it a rule that any product defect we have detected and found to possibly cause harm tocustomers be immediately announced to the public through our websites, newspapers, trade
journals and other media as appropriate and that we simultaneously implement countermeasuresagainst such defects to protect all users.

42

With Our Shareholders and Investors

Information Disclosure Policy
Aiming to become an enterprise capable of receiving great support and popularity from people
around the world, we strive to conduct transparent business operations and fair information
disclosure.

Action Guidelinesz

We disclose any corporate information required to be disclosed by the Financial
Instruments and Exchange Act and other laws and regulations, in an accurate and timely
manner.

z

We actively disclose our corporate information, which is not subject to laws and regulations
however deemed to be important for stakeholders, through our daily actions, such as
issuance of press releases and updates of our website.

z

We focus on enhancing communication with our shareholders, investors, and otherstakeholders to further promote mutual understanding with them.

Basic Philosophy
At NGK SPARK PLUG CO., LTD. we are well aware that promoting transparent and fair information
disclosure is indispensable to having all our stakeholders better understand and evaluate our business
operations. To achieve this goal, in addition to meeting the legal standards of information disclosure, we
also strive to strengthen information disclosure through various media and promptly release informationon our website, with the aim of ensuring stakeholders' greater trust in our business operations.

43Facilitation of exercise of rights in shareholders’ meeting
We send out the notice of convocation for our Ordinary General
Shareholders’ Meeting even earlier than the legal deadline so thatshareholders can give adequate consideration to the reports andresolutions. Additionally, we try to carry out earlier disclosure by
releasing the information on the company website before sendingout of the notice. We also translate part of the notice ofconvocation into English for overseas shareholders and post it on
the company website in parallel with the Japanese version.
Furthermore, we are striving to create a suitable environment for

The 117th general meeting ofshareholders (June 29, 2017)

the exercise of shareholders’ rights, including making it possible toexercise rights from a PC or a mobile phone in addition to theexercise of rights in writing.

Hosting a Technology Orientation
We host a technology orientation for the investors and analysts todeeper understand our technologies. We also invited them to see
the actual manufacturing process. We will continue to work on tomeet our shareholders and investors’ needs, focusing on “active
communication” and “fair information disclosure.”

Technology Orientation

Engaging in Activities to Make Shareholders and Investors
Familiar with NGK SPARK PLUG CO., LTD.
We hold company briefing sessions for shareholders and investors. In fiscal 2017, in order to make ourcompany highly recognized nationwide, we visited areas all over Japan to try to hear “real opinions”.
We will continue to value dialogue with all investors and our shareholders.

44Returning Profits to Shareholders
Returning profits to our shareholders is one of the most important policies for our management andhave consistent and stable payment of dividends as a basic policy. We also consider the return ofprofits in line with earnings as important. Therefore, with the total return ratio on our mind, we plan tocontinue the payment of interim and year-end dividends with a target consolidated payout ratio of atleast 30%, giving comprehensive consideration to a stable dividend level, which is our basic policy, andinternal reserves to allocate capital expenditure and investment for the R&D required for our future
growth, and business expansion and streamlining.Based on these policies, the dividend per share
during fiscal 2017 was 60 yen.
Furthermore, we also recognize that repurchase of own shares is effective for increasing capitalefficiency, and we hope to carry out such acquisitions as necessary. In fiscal 2017, we repurchased
about 1.9 million of our shares (Total sum of repurchase: about 5 billion yen)45

With Our Suppliers

Procurement Policy
We aim to realize globally optimal procurement based on our quality products principle. To this end,
we focus on strengthening cooperation with suppliers and promoting our CSR efforts throughout our
supply chain system, while at the same time striving to carry out proper purchasing transactions
when procuring materials and parts, based on the following guidelines.

Action Guidelinesz

We conduct rational transactions based on fair, transparent, and open competition.

z

We select suppliers based on comprehensive assessment of product quality, technology,
prices, deliveries, and efforts to continuously make improvements.

z

We will enhance mutual trust with our suppliers, which are good partners for us, and strive torealize mutual development.

z

Aiming to become a good corporate citizen, we engage in business operations that comply
with applicable national and international laws and regulations.

zAiming to procure more eco-friendly products, we strive to promote our green supplier system.

Basic Philosophy
It is indispensable to establish healthy partnerships with our suppliers to procure better quality raw
materials and parts in a more timely and stable manner. We will carry out activities for mutual growth
while competing with one another with a rather tense atmosphere through our supply chain system forenhancement of the mutual trust.

46

Promoting CSR-Oriented Procurement
We promote the following activities for suppliers and our employees respectively, for the purpose of
ensuring fair transactions with suppliers and the establishment of mutually beneficial sound partnershipwith suppliers.

For suppliers z

We explain our “CSR procurement guidelines” on our websites.

z

We implement our CSR program with supplier’s self-checklist and provide feedbackon the overall results.

z

We explain our “Green Procurement Guidelines” on our websites.

z

We visit the premises of suppliers for practical onsite activities, such as 5S* kaizen(improvement) and Total Productive Maintenance (TPM) and hold various seminars.

z

We actively communicate with our suppliers to explain our corporate policy through corporate
policy conferences, etc.

*5S denotes five primary phases of workplace organization technique each starting from “S”,
including “Seiri (Sort)”, “Seiton (Set in order)”, “Seisou (Shine)”, “Seiketsu (Standardize)”, “Shitsuke(Sustain)”. The workplace where 5S is thoroughly practiced may be regarded as being of highoperation management level.

For our employees     z We hold seminars for our procurement personnel to ensure their compliance with the
Subcontract Act.

47

CSR Procurement Guidelines
In order for the NGK SPARK PLUG Group to put CSR into practice, it is necessary that ourbusiness partners understand and cooperate with us on a daily basis. Toward that end, in the
procurement policy that we established in April 2012, we indicated that we would promote our CSR
efforts throughout the supply chain. In May 2013, we established the NGK SPARK PLUG GroupCSR Procurement Guidelines and subsequently extended it to our business partners.
The “CSR Procurement Guidelines” describe the content of our initiatives in seven areas: human rights
and labor; occupational health and safety; environment; fair trading; product quality and safety;
information security; and contribution to society. We ask our business partners to understand the
purpose of these guidelines and to put them into practice as well as to allow suppliers to develop theguideline.
In the field of the environment, we have established content for overall initiatives such as environmental
conservation activities and the effective use of energy resources. With respect to the details of chemical
substance management, we have separately established, and request cooperation with, our Green
Procurement Guidelines.

Japanese version: Text of CSR Procurement GuidelinesJapanese version: ࠙ Appendix ࠚ CSR Self-Check List
48

Green Procurement Guidelines
These guidelines explain the basic concepts of our green procurement based on our environmental
policies. We reviewed the list of related chemical substances in August 2018 and released version
10.04 of the guidelines. We ask our suppliers to study the guidelines and cooperate with our green
procurement.
Japanese version: Green Procurement Guidelines
survey sheet
Japanese version: appendix table-1 Survey regarding thepresence or absence of "substances of environmental concern"Japanese version: appendix table-2 Non-use DeclarationsGreen Suppliers
We certify suppliers that meet our system and material standards prescribed in “Green Procurement
Guidelines” as "green suppliers," and give priority to these in purchasing.
In fiscal 2017, we certified 131 suppliers involved in facilities/jigs and tools, building/incidental facilities,
and 263 suppliers involved in raw/subsidiary materials, parts, processing and outsourcing.

49Implementing Activities to Pull out Potential Capabilities(Seminars and Practical Onsite Courses) for Suppliers
NGK SPARK PLUG CO., LTD. holds seminars for suppliers on themes that include process
improvement, quality control, industrial safety and health, and the environment, as well as practical
onsite courses in which we visit the production sites of suppliers to work for improvements. We
implement the activities to help with human resource development at our suppliers, enhancing thecapabilities of their companies. In fiscal 2017, we held a total of 31 lectures. We aim to work in
partnership with our suppliers in the future to enhance their manufacturing capabilities.

Promoting Follow-Up Activities for Regular Supplier
Assessments
Once a year, we conduct regular assessments of targeted suppliers and inform them of the results. We
visit suppliers where follow-up is particularly required to consult about difficulties, carry out onsite
confirmation, consider together what to improve so as to overcome weaknesses and implement
improvement activities. We will continue to further deepen our relationships of trust with suppliers not
only through day-to-day purchasing transactions, but also through follow-up and support activities.

Sharing Corporate Policy
We hold a corporate policy conference with our main
suppliers, offering them an opportunity to deepen theirunderstanding of the present situation of our company and ourgoals. At the conference held in May 2017, we introduced ourbusiness results, the company’s policy and the policies ofeach department, which are based on the basic policy,
procurement policy and initiatives, and asked for further
cooperation to enhance quality, reduce costs, and promote
CSR initiatives.

50

Corporate Policy at Supplier ConferenceHandling of Conflict Minerals
Our Group promotes procurement activities taking full consideration of social problems, such as humanrights and environment. Conflict minerals have been mined in the Democratic Republic of the Congoand its surrounding countries, and it is feared that they are a source of financing for armed factions. We
see this conflict minerals issue as a serious social problem for procuring resources and raw materials.
We conduct surveys tracing back through the supply chain to find out whether conflict minerals areused or not, and if there is a risk as a result of the use, we make efforts to avoid using them.

51

Policy for Human Resources

Human Resource Policy
We acknowledge that employees are the most important management resources. In light of this, we
respect the diversity and individuality of our employees and promote the cultivation of physically andmentally healthy human beings, striving to promote the further development of our Group as awhole.

Action Guidelinesz

Respecting the rights of our employees, we eliminate discrimination and harassment in
employment, and avoid the use of forced labor or child labor.

z

We secure and foster human resources who help pass down our quality products principle tothe following generations. To this end, we provide learning opportunities and other programs
to support the career development of our employees.

z

We strive to smoothly introduce a personnel system that ensures that people with different
qualities can fully realize their own capabilities into our Group.

Basic Philosophy
Human resources are the most important management resource. We promote the sustainable growth of
the NGK SPARK PLUG Group by striving for human resources development that respects the diversity
and individuality of our employees and by encouraging individual employees to reach their own fullpotential, to grow and to participate actively in a state of physical and mental health.

52

Respecting Diversity
Basic Philosophy
We consider diversity to be one of our most important management strategies as we believe thatdiversity and inclusion are essential for companies to attain sound growth and ensure happiness for all
employees. We strive to promote diversity in order to utilize new values and ideas coming from an
employee-friendly workplace that accepts different people regardless of their gender, age, disabilities or
nationality.

Strengthening and Maintaining Initiative to Promote Active
Participation of Women
As a first step to promote diversity, we started building a more female-friendly working
environment in 2013. We believe the active participation of women is a driving force to change
corporate culture and the minds of management and other female employees. One example ofour efforts is that one female employee and her supervisor tried working together on higher
level tasks nine months. To accomplish these tasks, the supervisor helped the employee by
giving advice throughout the process. We also held lectures and training sessions for all
managerial staff to deepen their understanding of diversity management. Furthermore, in all
departments including our domestic group companies, general managers formulated actionplans that suited their own departments. We gave awards to the departments with outstanding
initiatives. We are also expanded systems to create more female-friendly working
environments.
Receiving approval for those activities, NGK SPARK PLUG CO., LTD. was selected as one of the
New Diversity Management Top 100 in fiscal 2017 (sponsored by the Ministry of Economy, Tradeand Industry), won the Outstanding Performance Award 2014 for Women’s Empowerment, Honorable
Mention for Women’s Empowerment “Powerup” Award 2015 from the Japan Productivity Center, andwas chosen for the Aichi Women’s Brilliance 2018 Award for Excellence. Our company’s initiatives
have been recognized throughout the industry.

53

Proportion of female employees to thewhole workforce corresponding to regularfull-time position

in a Managerial Posts by Fiscal Year㻌

Utilizing Retired Employees
Since a labor shortage is expected due to a declining
birthrate and an aging population, providing job
opportunities for senior citizens has become an important
issue since the minimum age for receiving national pension
has increased.
Starting in 2001, we have introduced a post-retirement reemployment system for retired employees so that theirwealth of knowledge and expertise are effectively utilized.
In fiscal 2017, 38 seniors began took advantage of thisopportunity and 223 senior employees in total are working.
We are also working hard to prepare an environment thatmeets the needs of senior workers; our company has taken
into consideration the aptitudes, motivation and abilities ofour senior employees.

54

Number of Retirees Reemployed under the
SystemEmployment of the Disabled
We established Nittoku Smile Co., Ltd. in order to promote
employment of handicapped workers and it was certified
as a special subsidiary in January 2018. We aim to create
a comfortable environment for our handicapped. The
percentage of handicapped employees in fiscal 2017 rose
to 2.17%, reaching the mandated employment rate of
2.0%. Furthermore, in June, we have met the fiscal 2018
mandated employment rate of 2.2%, and we continue tocreate a better working environment by expanding ourbusiness accordingly.
Percentage of Disabled Employees

Next Generation Management Global Development
In order to foster leaders for the next generation, we have held a “Global Next-Generation Management
Personnel Development Program” for discovering and developing people eligible as candidates for the
next-generation of management regardless of nationality since 2016. We hire and recruit employees
regardless of nationality and provide opportunities and environments that enable every employee to domeaningful work.
In these recent times of great change, the program is intended to offer learning opportunities topersonnel who represent the next generation, and is called “HAGI” after the “Shokasonjuku” cramschool located in the city of Hagi in Yamaguchi prefecture, from where many talented people went out
into the world at the end of Edo period. The program operates with our company president as its
principal.

Focus on Employing Non-Japanese Nationals
We have been working on human resource recruitment adapted to the global organization in responseto rapid globalization.
Since 2013, we have started putting a particular focus on employing non-Japanese nationals in our new
graduate recruitment and have consistently employed at least three non-Japanese students each year.
Moreover, recently we have not only been putting efforts into employing foreign students at Japanese
universities, but also non-Japanese students who have learned Japanese at universities overseas andwish to find work in Japan.

55

Initiatives that Consider Work-Life Balance
We are promoting initiatives improve the work-life balanceof employees. As a part of it, we have launched a “Labor
Reform Committee “with both employees and employers
and reviewed the work-life balance of our employees
aimed at becoming a company where every employee isable to work energetically. The number of employees onchild care leave is approximately 50, and 98% of female
employees are eligible for paid family leave.
Recently, male employees take leave every year as well.
Almost all employees returned to work after the leave. In
2015, we changed the short working hour system byextending availability from the conventional term of the first

Number of Employees
Using the Leave Schemes

grade of elementary school to the end of the third grade. This makes it possible for the employees bothto work and spend time with their children. We introduced another short working hour system fornursing care since 2017. We will continue to work creating an environment that allows our diverse staff
to continue to be active in their respective workplaces.

56

Human Resource Development
Basic Philosophy
We aim at the development of those who can communicate the company's traditional attitude ofemphasizing quality-oriented principle to younger employees, and also those who are dependable
and have the ability to cope with changes inside and outside the organization and follow throughreforms. To this end, we implement diverse education and training programs systematically, basedon our corporate Human Resources Development Concept, with the aim of ensuring continuous
capacity building of employees.

Education / Training Programs
Our education and training activities consist mainly of OJT (on-the-jobtraining), through which employees are trained to acquire technologies andknowledge in their normal working situation. We also offer OFF-JT (off-thejob-training), providing employees with new technologies, knowledge, andskills outside their respective workplaces.
We have a wide range of OFF-JT programs that include training byorganizational level and role to provide necessary knowledge and skills,
product quality education, environment and safety education,
manufacturing education, education in global business and career

Education and training

development support.
During fiscal 2017, 7,782 employees participated in OFF-JT programs.
The Strategic Human Resources Department is promoting the ETP (Education & Training Planning)system which is intended to improve the ability of employees necessary for individual departments
besides provision of the education programs. In reference to the abilities needed by the company in the
expected role evaluation of the newly introduced personnel management system, those necessary forthe individual departments are specifically defined. Then the system will be implemented by conducting
the education and training systematically for improving the specific ability. Evaluation and education in
the respective departments for the ability improvement are coordinated so that the system is operated
to achieve the companywide improvement for competitiveness.

57

Education and Training System Diagram

Implementation of training

Total hours of training*

FY2015FY2016FY2017

82,05984,81686,252*The total hours of training: the hours x the number of students, for training (level-specifictraining, global training etc.) conducted by the Strategic Human Resources Dept.

58

Efforts to Upgrade Monozukuri Skills
NGK SPARK PLUG CO., LT. is a manufacturing company,
maintaining and creating a new manufacturing site whichhelps to connect both values and information by utilizing
IoT and AI. We continually provide education and training
on necessary skills at the appropriate time at the
Monozukuri (Manufacturing) Education and Training
Center.
Monozukuri Education andTraining

At the Monozukuri Education and Training Center, we prepare practical experience kits and have theelaborated curriculum corresponding to the level of knowledge and skills of the trainees (levels 03) so that they can complete the work on an interactive basis in the small group. The educationand training are centered on “safety, quality, maintenance, and improvement”, based on which weestablish rules to be observed by the trainees. We place importance on development of humanresources through the education and training so that they are well adapted to social life.
Since establishment of the system in 2014, we are providing education for new employees (Level0), education for departmental transferees, seminars for suppliers, education for generalapplicants, and education for manufacturing departments. We have upgraded those programs to
support overseas business activities and enhance the curriculums. Recently, we have engaged indeveloping on-site learning environment in order to maintain and enhance manufacturing skills at
the overseas factories.

59

Human Rights and Labor
Basic Philosophy
The NGK SPARK PLUG Group respects the Universal Declaration of Human Rights and otherinternational norms and has made respect for human rights a part of our corporate code of conduct andour human resource policy. In addition, the group rules that we share throughout the NGK SPARKPLUG Group forbid discrimination on the basis of nationality, race, ethnicity, religion, sex, marital status,
pregnancy, ideology, sexual orientation (LGBT), disabilities, and participation in labor unions, as well as
all forms of harassment, child labor, and forced labor. In hiring and employment, too, we stipulate thegranting of equal opportunity without discrimination.
Principles concerning human rights and labor are incorporated in the ten principles of the United
Nations Global Compact which we joined in November 2016.The Group supports these principles andwill connect them to our further activities.

The Status of Employees
NGK SPARK PLUG Group, total number of employees
Non-

FY2013

FY2014FY2015FY2016FY2017

5,809

5,823

5,829

5,719

5,727

12,76013,197

14,524

14,92615,322

consolidated
Consolidated

NGK SPARK PLUG Group, form of employment (as of March 31, 2018)
Regular employees

Temporary employees

5,727

303

60

NGK SPARK PLUG Group, status of employees㸦FY2017㸧
Men

Women

Total

No. of employees

4,699

1,028

5,727

Average age

38.6

35.9

38.2

No. of years of service

16.4

15.2

16.2

Turnover rate

ʊ

ʊ

2.1

Average annual salaryʊʊ¥6,570,683

Education and Awareness-Raising of Human Rights
Our Compliance Guidebook, issued in 2012, establishes matters including respect for human rights andthe prohibition of harassment. The guidebook has been disseminated to employees to raise awarenessof these issues.
Drawing on the United Nations Global Compact, which we signed in 2016, we will increase
opportunities to offer education and information on human rights to raise awareness among employees.
In our CSR Procurement Guidelines, we also require that business partners engage in respect forhuman rights.

Anti-harassment Measures
The company management and the labor union are working together to prevent any harassment and toprotect the human rights of all employees.
Work Rules explicitly prohibit all sorts of behavior that constitute harassment, and we have an antiharassment committee responsible for the prevention of such behavior by raising awareness throughthe company newsletter and provide level-specific training programs.
We have also prepared an environment that facilitates consultation, with consultation desks set up bylabor and management in every factory and have also enabled consultation through our Corporate
Ethics Helpline.

61Labor-management Relations
Labor-management relations should be oriented to the combined employer-employee effort tocontribute to society through the provision of good products and services. At NGK SPARK PLUG CO.,LTD., both labor and management understand their respective responsibilities and strive to improve thework environment through mutual trust and cooperation.
Labor-management conferences are held three to four times a year on individual workplace andcompanywide bases, providing communication opportunities. These are chances to discuss various
topics including the company's situation and how to improve the labor environment, and opportunities
for employees to have their opinions heard.
NGK SPARK PLUG Group labor union
The number of NGK SPARK PLUG

6,430

Group labor union members(As of March 2018)

Since October 2017, our group company, Ceramic Censor, Nittoku Supertech Tounou, and Nittoku
Supertech WKS made a labor union and became a branch of NGK SPARK PLUG labor union. As apart of NGK SPARK PLUG Group, we raise our spirit and work to tackle the problems at each
workplace as a whole.

Reduction in Working Hours
We are working to reduce overtime in order to reduce total working hours. When pre-planned overtime
is known about, the company management and the labor union confirm the situation in the workplaceand engage in consultation designed to keep working hours within the target. As a result of addressing
the issues discussed at the labor reform committee, we are starting no-overtime Wednesdays andprohibiting overtime in excess of five hours per day.
In fiscal 2017, we added a new regulation for having 10-hour intermission between working hours, andfailing to comply with the rules is expected to be subject of the labor-management consultation as a
strategy for suppressing overtime work.

62

Greeting Campaign
We have been engaging in our "greeting campaign"continuously since September 2008, encouraging
employees to greet with each other, motivating them forwork in the positive environment.
Once a month, in the morning and after work,
representatives of the labor union and the company’s
officers and management stand on the sidewalks at thepremises to greet arriving or leaving employees in an
active manner.

Greeting Campaign

Group Company Response to ComplianceGroup companies as a whole have been addressing the issue of information sharing for company
compliance with the latest applicable laws and regulations. In the quarterly exchange meeting where,
general managers of the group companies attend, the briefing is made with respect to the policy basedon current trends in applicable laws and regulations. We have been working to develop the group-widerisk management system by sharing the problems raised by the individual group companies as thosethat they face and presenting case examples. The entire group continues to join hands in complianceissue.

63

Occupational Safety and Health Basic Policy
Basic Policy on Industrial Safety and Health
We strive for occupational safety and health as the starting point of business activities on the basisof respect for human life and dignity.

Action Guidelinesz

Observe the laws and regulation, and voluntary standards on industrial safety and health.

z

Prevent occupational injury and decrease risks by continuously improving on the management
system and performance of industrial safely and health.

z

Conduct efforts to increase physical and mental health and prevent health disabilities of
employees.

zDisseminate this policy to all employees, promote awareness by education and enlightenment,
and expand the industrial safety and health activities by involving all employees.

Basic Philosophy
Occupational safety and health are the most familiar theme for employees in their daily duties. It is themost important theme for enterprises as well in their efforts to provide a working environment in which
employees are encouraged to do their best in operations. We are well aware that offering a secure andsafe workplace is our important corporate responsibility.
To this end, we established our occupational safety and health management system (OSHMS) in 2006,
aiming to realize "zero injuries" and secure safety at all workplaces. We will continue strengthening oursafety and health management activities at a company-wide level, aiming to establish a corporate
culture of "safety first."

64

OSHMSWith the aim of eliminating on-the-job injuries and creating a comfortable, safe work environment, wehave established and implemented an in-house occupational safety and health management system(OSHMS) while introducing OHSAS or an entire system such as manual and standard, and JISHA*1 foractual application and activities. We are accredited as complying with JISHA OSHMS Standards.
Each plant and office set safety goals and safety plans in accordance with our OSHMS guidelines,
aiming to conduct OSHM activities based on a "total involvement" principle. To attain a step-by-step
improvement of our safety status, these progress and results of such OSHM efforts are verified by ourinternal safety and health auditors as well as the plant safety and health committee and the central
safety and health committee.
*1 JISHA: JISHA system is a standard examined by Japan Industrial Safety and Health Association(JISHA), and organizations accredited by JISHA, incorporating items as the incidence typicallypracticed in Japanese workplace, for example, KY activities, Hiyari-Hatto (near-miss) activities, and 4S
activities.

6DIHW\DQG+HDOWK3URPRWLRQ2UJDQL]DWLRQ

65

Targets & Results for Fiscal 2017
1. Elimination of Work-related injuries
Fiscal 2017 Target

Fiscal 2017 Result

Evaluation

Fiscal 2018 Target

Elimination of injuries in

We reviewed our work methods‫س‬嵣Check and review work

trouble shooting

and upgraded our work (non-relating to major issues

structural measures) andat work by leaders.

maintain factory safety(structural measures) byunderstanding current the statusof troubleshooting through safety
observations and by recognizing
risks through risk assessment.
‫س‬嵣Confirmation and

Full understanding of the

Risk assessment was conductedrisk level of workplaceas scheduled at each workplace

understanding of risk

for full understanding of risk

management results.

levels.
Also, risk management was
implemented according to how
serious the risks are.
ż

Daily safety management

Promoting safety

Safety observation wasobservation byimplemented by management

practice

management supervisors.

supervisors and safety

5-5 observation* isobservation was improved in

implemented.

every workplace.

*”5-5 observation” is the activity which management supervisors at work do fixed point observations
both in the morning and the afternoon for five minutes every day.

66

2. Improvement of Work Environment
Fiscal 2017 Target

Fiscal 2017 Result

Evaluation

Fiscal 2018 Target

Improvement of work

Conducted working environment‫س‬嵣 Improvement of work

environment of workplacemeasurement, based on which

environment of(Health aspect/ Safety

the working environment wasworkplace (Healthaspect)improved. Continued Stop! fall

aspect / safety aspects)

disaster PJ related activities forpromoting improvement.

3. 3. Promotion of Health
Fiscal 2017 Target

Fiscal 2017 Result

Self-management

Conducted checking on

promotion of a healthy

employee's stress tolerance.

Evaluation‫س‬

Fiscal 2018 Target
嵣 Self-management
promotion of a healthy

mind and bodymind and bodyStrengthen collaboration

Held health promotion fair, andbetween healthy

lecture on health.

‫س‬Strengthen collaboration
between healthy

employees and employees

employees andwith suspected physicalemployees with

and/or mental healthsuspected physicalproblems at workplace.

and/or mental healthproblems at workplace.

674. Enhancement of Education, Training, and Enlightenment
Fiscal 2017 Target

Fiscal 2017 Result

Evaluation

Fiscal 2018 Target

Promotion andWe hold various seminars for‫س‬Promotion and practice

implementation ofhealth safety and healthof safety and healthworkplace safety andeducation and handlingeducation at thehealth education

chemical substances. In fiscal

workplace.

2017, we continue to hold aconference for safety andhealth, and environment at
every factory.
‫س‬

Familiarization with “On-Through workplace patrollingthe-spot risk prediction.”and greeting activities, “On-the-the-spot risk

*1and “Po•Ke •Te• Na •shi”

spot risk prediction” and “Po•prediction.”*1 and “Po•program. *2

Ke •Te• Na• Shi”*2were

Ke •Te• Na •Shii”

implemented.

program.”*2‫س‬

Familiarization with “On-

Promotion of traffic safety

Implementation of traffic safety

awareness activities by

campaign through joining local

awareness activities byconducting risk prediction

traffic safety activities andconducting risk prediction

driving.

taking actions to raise traffic

driving.Promotion ofsafety awareness.

traffic safety awarenessPromotion of traffic safety

activities by conducting
risk prediction driving.

*1: “On-the-spot risk prediction” refers to the activity performed in our company for confirming
hazardous spot and procedures prior to work that is infrequent or has not been performed for along time.
*2: “Po嵣Ke嵣Te嵣Na嵣Shi” (Pocket-Phone-Handrail-Shortcut-Pointing”) is a general term indicating
precautions to protect workers from being involved in an accident during walking on theworkplace, for example, “Do not walk with hands in Pockets.”, “Do not use the cell Phone during
walking.”, “Make sure to hold the Handrail while ascending or descending stairs.”, “Avoid obliquecrossing (Shortcut)”, and “Never fail to conduct Pointing and calling at the point specified for
conducting such practice.

68

Occupational Safety Activities
Basic Philosophy
We have been conducting various safety activities for prevention of accidents besides recurrence
prevention. Aiming at establishment of safety culture from the viewpoint of “personnel”, “object”,“mechanism”, we are taking the initiative to give the first priority to safety.

Toward Elimination of Occupational Accidents
In fiscal 2017, the total number of accidents was 8 (fiscal 2016 : 9 cases), and the total frequency rate
was 0.63.
One out of the 8 cases were the accident requiring leave from work (fiscal 2016 : 1 case). In this case,the employee whose hand was crushed during the operation. As a result of the accident, our company,
along with our domestic and overseas group companies conducted full inspections of equipment andadditional inspections for older equipment starting in April 2018. We will continue to take the lead insafety observations, pointing and calling, “Po•Ke•Te•Na•Shi” program, and on-the-spot risk prediction
for eliminating occupational accidents.

6DIHW\REVHUYDWLRQ㻌)UHTXHQF\UDWHRI1*.63$5.3/8*&2/7'FRYHUVWKHFDVHRIWHPSRUDU\ZRUNHUV)UHTXHQF\5DWHRI
$FFLGHQWV㻌Our calculation of occupational accident frequency rate in 2017 was reviewed by Japan Quality
Assurance Organization (JQA) and we received the following verification report.

6RFLDODQGHQYLURQPHQWDOLQIRUPDWLRQYHULILFDWLRQUHSRUW‫ق‬3OHDVHUHIHUWR SDJH‫ك‬69

Risk Assessment (RA) Initiatives
Risk assessment (RA) is the core activity of our occupational safety and health management system(OSHMS). We have reviewed diverse potential risks resulting from workplace equipment, chemical
substances, and work at every workplace and evaluated them to take hardware/softwarecountermeasures (residual risk management), prioritizing the most dangerous risks. Also, the director of
the operations department has conducted operation observation for higher potential risks to improve theworking environment. In accordance with trends towards strengthened regulations, we have reviewed
and implemented a new approach for evaluating chemical substances.

Improvement of Working Environment
We conduct working environment measurements based on laws and regulations, targeting workplaces
that handle chemical substances and workplaces subject to significant dust pollution and severe noise.
Plants and operational sites that have been classified in the second or third management category areespecially encouraged to implement effective solutions so that they can be reclassified in the firstmanagement category.
We also take measures to prevent cases of heat stroke in the summer by measuring the humidity andtemperature in hot workplaces, encouraging an adequate intake of water and salt, providing coolinggear and the like.
In our offices, we appropriately control the level of lighting, temperature and humidity to ensure that theenvironment is suited to the work. In winter, we install humidifiers to help prevent the spread of colds
and influenza. Continuously engaging in the activities under the “STOP! Falls Project” being run byJapan’s Ministry of Health, Labor and Welfare, labor and management united as a company to promote
activities aimed at eliminating falls, including coping with fall hazard areas and separating pedestrians
and vehicles, obtaining input and countermeasures through the themes at workplace meetings, andraising awareness.

70Enhancement of Education, Training and Enlightenment
We provide safety education to match each organizational level, including safety and healtheducation for new employees, third-year employees, tenth-year employees, leaders,
subsection chiefs and managers. Most of these educational trainings are now available toemployees in domestic group companies.
We also hold a safety, health and environment conference at each plant every year as anawareness-raising activity for all employees. During the conference, we work to raise
employees’ awareness of safety and health through such means as introducing safety andhealth initiatives and providing experiences with risk simulators. We also hold the conference
for our suppliers to inform of our safety and health initiatives.
We revised the “Handbook for Safety and Health Management” distributed to all employees
asa tool for building a safety culture at NGK SPARK PLUG CO., LTD. Reading throughthe handbook and other uses of it in each workplace translate into safe conduct by individual
employees. Managers and supervisors on the workplace also carry out workplace patrols,
risk prediction and share examples of Hiyari-Hatto (near misses), acting as the leaders ofworkplace safety and health management. The status of these workplace activities isconfirmed through internal audits and other means.

Safety and Health Education and Training in Safety Training Dojo
In order to provide education with a policy of cultivating thesensitivity of employees to be aware of risks and avoid accidents,
we established the Safety Training Dojo in part of the Monozukuri
Training and Education Center in March 2013.
With the simulation equipment, employees can virtually experience
accident risks and the circumstances in which they occur throughsimulations of industrial accidents that are difficult to communicate
verbally. There are 35 different kinds of equipment which makes
you experience pinching or entanglement with accident scenariosthat could happen in the workplace. In fiscal 2017, about 2000
employees of NGK SPARK PLUG CO., LTD. and groupcompanies took the course. Ever since we started operating thevirtual reality simulation equipment, many participants havelearned the potential danger of fall and overturn. In fiscal 2018, we
intend to improve education aimed at the zero occupational
accidents.

71

VR experienceStanding sentry activity for observance of rules led by Safety and
Health Committee
Safety and Health Committee promotes the activity for observing
rules joined by the directors and the factory directors in order tohave safety-minded employees and a safe working environment.
To avoid accidents especially while walking, we focused on“Po•Ke•Te•Na•Shi” system and all of us work together to eliminate
labor-related accidents.

“Po•Ke•Te •Na •Shi”
awareness poster72

Health Promotion Activities
Basic Philosophy
We announced "Being your best physical and mental condition to your workplace and bring them toyour home with good smile" as our company slogan. Self-discipline is a key to the maintenance of one's
condition, and we promote employee's autonomous health management efforts. We also include healthinformation in the company newsletter to raise employees' health consciousness and promote selfmanagement.

Health Checkups
Our industrial physicians, general practitioners and public health nurses always follow up with
employees with respect to findings in their health checkups and refer them to medical institutions whennecessary. These coordinated efforts allow employees to maintain and improve their own health.

Strengthening of Mental Health Care
We are working on in-house and external LineCare educational programs for managers andimplementing to read the Self-care hand book in
our workplace to make our employee prevent
awareness of disease and self-management ofhealth. Also, we are strongly working on in-house
lectures and setting up the Support-line for
employees who feel stress and problems
mentally.
7KH6HOI&DUH+DQGERRNWe also carry out stress checks and analyze the mental and physical impacts that the workplaceenvironment has on employees for prevention of mental illness among employees due to stress in ourefforts to create a safe and secure workplace environment.
Thanks to the evaluation with respect to our activities, we have been certified as “Corporate HealthAchievement Award Winners – White 500” sponsored by Ministry of Economy, Trade and Industry, andNippon Kenko Kaigi.

73

Initiative to prevent infectious diseases
To protect employees from the seasonal influenza every year, we strive to prevent the spread of
infection. Particularly regarding group infection at workplaces, which may affect our daily operations, weare ready to cooperate with the relevant divisions to implement immediate and intensive measures.
During the flu season, we issue weekly reports so that all employees can share the information andtake effective countermeasures. In addition, we are attentive to information on candidate viruses fornovel influenza at all times by collecting relevant information.

Efforts by NGK SPARK PLUG CO., LTD. Health Insurance Society Working
together with the company and the labor union, the health insurance society provides a wide variety of
programs to support the mental and physical good health of member workers and their families.
Specifically, health management and disease prevention efforts conducted by the health insurance
society include: metabolic syndrome improvement / prevention programs; subsidies for flu vaccination;and other health management promotion programs such as walking tours and bus-hiking tours.

74Social Contribution Policy
Social Contribution Policy
As a good corporate citizen, we at the NGK SPARK PLUG Group aim to contribute to society
through the effective use of management resources.

Action Guidelines
z We focus on the following activities:¾ Activities closely related to our business fields and also to local communities¾ Activities that respect the cultures of individual countries and local communities, as well asactivities that contribute to society such as traffic safety education programs¾ Activities that contribute to the next generation society, focusing on environmental
conservation, science, and education, as well as cultures to be bequeathed to the next
generation, etc.
z We strive to create a corporate culture that encourages executives and employees toparticipate together in social contribution activities as social citizens. We also respect andsupport their active involvement in society.

Basic Philosophy
The NGK SPARK PLUG Group respects local culture and customs in our established sites of therespective regions in the world while engaging in smooth communication with local communities. As
members of those communities, we aim to work together in building a comfortable society, while striving
to participate in regional development, environmental preservation, and other activities that contribute tosociety.

75

Global Eco Vision 2020
Environmental Policy
As a globally developing core manufacturing corporation, we are aiming to simultaneously realize
environmental preservation and corporate growth, based on the participation of all our employees,
in order to contribute to the construction of a sustainable society.

Action Guidelines
z We strive to utilize our unique technology to develop and offer environmentally-friendly
products.
z Through all of our business activities, we make particular efforts to prevent global warming,
make efficient use of resources, and control chemical substances, in order to conserve theenvironment.
z We strive to raise the awareness of the environment among our employees to ensure that they
all make positive efforts to conserve the environment.
z We observe the laws, ordinances, and agreements concerning environmental conservation.
z We aim to substantiate our information disclosure and communication activities, and also carryout environmental contribution activities aimed at coexistence with the regional community.
z In order to achieve these targets, we will strive to make ongoing improvements to ourenvironmental management system.

Basic Philosophy
Environmental issues are a common challenge for all mankind. Every member of the NGK SPARK
PLUG's GROUP will work towards reducing environmental burdens from our business activities asmuch as possible and developing and providing products and technologies that contribute to improving
the environment. We will also endeavor to communicate in greater depth with our stakeholders
including our local communities so that we may all work together to contribute to creating a sustainable
society.

76

Global Eco Vision 2020
In our activities for environmental conservation, we set
medium-term environmental targets. From fiscal 2016, wehave drawn up a vision for our company and have beenworking under “Global Eco Vision 2020”.
We set four important environmental tasks, "Natural
resources", "Global warming", "Toxic, hazardous
chemicals" and "Key quality (Environmentally-Friendly
products)", under Global Eco Vision 2020. By tackling thesetasks through our business activities while defining“Education”, “Compliance”, “Open communication” as foundation, we will work to enhance ourmanufacturing power, increase our brand value, and contribute to sustainable development of society.

77

Global Eco Vision 2020 Environmental Action Plan and Results
Major items

Minor

Targets for fiscal 2020

Results for fiscal 2017

CO2 Basic unit 15%

࠙TargetࠚCO2 basic unit: 2% decrease fromreduction compared tofiscal 2015

fiscal 2015

࠙ResultࠚCO2 basic unit: 8.7% decrease(Average yearly reduction

from fiscal 2015

of 1%)

Conducted energy saving activities across*As of April 2018, Upward

the department by energy saving promotion

adjustments to the targets

sub-committee.

Promotion of efficient

Optimized product transportation between

logistics

plants.

Promotion of reduction of

Reduced astes by lessening the defective

waste material by reducing

products generated in production.

items
Global

Production

Warming

Logistics

Depletion of

Waste

Resources

defective products
Promotion of productControl wastes by improving the production

design which takes into

structure.

consideration minimizationof waste
Water

Resources

Eco-friendlyʊ

Products

Promotion of efficient water

Reduced water usage amount by modifying

utilization

facilities.

Promotion of manufacturing

Reviewed the ecological impact of ourwhile taking resource usage

products’ lifecycles from a production

into consideration

standpoint

Create a certification

Strengthened commitment to the energy-system for eco-friendly

efficient development

products and expand eco-

Hazardousʊ

Substancesʊʊ

friendly products

Began plans for eco-friendly products

Compliance with rules

Implemented sharing and handling of cross-regarding ELV࣭RoHS࣭

department regulations drafted by the

REACH

Chemical Management Committee.

Promotion of alternatives to

Implemented an alternative to Phthalic acidenvironmentally hazardous

which will become restricted under RoHS in

substances

2019.

Elimination of HCFCs

Implemented plans to replace HCFCs with R22 refrigerant.

78

Environmental Burdens from Business Activities
Environmental Burdens from Business Activities
Knowing what impacts our business activities have on the environment is the first step in carrying out
environmental preservation activities. Our material balance, which expresses the amounts of our inputs(such as the raw materials and energy used by our Group) and the amounts of our outputs (such as the
products shipped, and the wastes emitted outside the Group as the result of our business activities), is
as follows.

79

*1 The covered scope of each amount reported in INPUT and OUTPUT is indicated with Ɣ.
*2 Domestic group companies: (scope of consolidated certification) NITTOKU ALFA SERVICE CO.,LTD., NITTOKU UNYU CO., LTD., CERAMIC SENSOR CO., LTD., NTK CERAMIC CO., LTD.,
CERAMIC SENSOR NAKATSUGAWA CO.,LTD., NANSEI CERAMIC CO., LTD., KAMIOKACERAMIC CO., LTD., Spark Tec WKS CO., LTD., NICHIWA KIKI CO., LTD., Spark Tech TONO
CO., LTD., (outside the scope of consolidated certification) NITTOKU Smile NITTOKU DENSHI
CO., LTD., NTK CERATEC CO., LTD.
*3 Overseas group companies: (manufacturing & sales organization) NGK SPARK PLUG
岩 SHANGHAI 岪 CO., LTD., CHANGSHU NGK SPARK PLUG CO., LTD., WOOJIN INDUSTRY
CO., LTD., NTK TECHNICAL CERAMICS KOREA CO., LTD., NGK SPARK PLUGS (THAILAND)
CO., LTD., SIAM NGK SPARK PLUG CO., LTD., NGK SPARK PLUGS (ASIA) CO., LTD., NGKSPARK PLUGS MALAYSIA BERHAD, PT NGK BUSI INDONESIA, NGK SPARK PLUGS (INDIA)
PVT. LTD., NGK SPARK PLUGS (U.S.A.), INC., WELLS VEHICLE ELECTRONICS, L.P.,
CERAMICA E VELAS DE IGNICAO NGK DO BRASIL LTDA., NGK SPARK PLUGS (FRANCE)S.A.S., NGK SPARK PLUGS SA (PTY) LTD, (sales organization) TAIWAN NGK SPARK PLUG
CO., LTD., NGK SPARK PLUGS (VIETNAM) CO., LTD., NGK SPARK PLUGS (PHILIPPINES),
INC., NGK SPARK PLUG (AUSTRALIA) PTY. LTD., NTK TECHNOLOGIES, INC., NGK SPARKPLUGS CANADA LIMITED., BUJIAS NGK DE MEXICO S.A. DE C.V., BUJIAS NGK DELECUADOR CIA LTDA., NGK SPARK PLUG EUROPE GmbH, NGK SPARK PLUGS (UK) LTD.,
LIMITED LIABILITY COMPANY NGK SPARK PLUGS (EURASIA), NGK SPARK PLUG MIDDLE
EAST FZE*4 Overseas companies only collect results of CO2 emissions.

We have received third party verification report below by Japan Quality Association (JQA) on
calculation of Greenhouse gas emissions by energy usage, and the amount of water usage/waste
generation in fiscal 2017.

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LQIRUPDWLRQYHULILFDWLRQ

80

Environmental Management
Basic Philosophy
Our environmental management system, operating on the environmental policy shared by the entire
Group, ensures systematic and effective environmental preservation activities. Under this system, allGroup companies strive to achieve the Eco Vision.

Promotion system
Our group has a matrix-type structure including business departments and respective regions,promoting environmental activities while having individual roles clarified. Each department is expected
to manage its own targets on items relevant to business activities, for example, “Global warming”,“Natural resources”, “Toxic, hazardous chemicals”, and “Key quality” under the Global Eco Vision 2020
for the practice along with business activities. Meanwhile, we take the initiatives to such activities ascompliance of regulations, and communication with local society mainly on the region basis inaccordance with action plans. Various sub-committees are set up as the cross-functional team acrossthe department for promoting activities.
The activities will be confirmed with respect to the progress toward the target, and task in Central
Environmental Committee at which President, directors, department managers, environment control
managers in the respective regions, and chairpersons of the sub-committees are present for continuous
improvement.

Environmental Activity Promotion Organization

81

The Establishment Status of our Environmental Management System
We received ISO 14001 consolidated certification for NGK SPARK PLUG CO., LTD. and 10 groupcompanies in Japan. In fiscal 2016, we received ISO14001:2015 certification on December throughupgrade audit.
Other domestic and overseas group companies have already been certified for environmental
management systems including ISO14001 certification, individually, resulting in 18 overseas groupcompanies which have received the certification in the end of the fiscal 2017.

ISO 14001 Certified Locations‫ق‬3OHDVHUHIHUWRSDJH‫ك‬

Environmental Risk Management
Inherent in business activities are various risks including environmental incidents and pollution. NGKSPARK PLUG's GROUP identifies these risks and endeavors to reduce and/or prevent them

PCB Control
PCB wastes have been stored at our Headquarters Plant, Komaki Plant, and CS Nakatsugawa understrict control for proper disposal.
We plan to complete proper disposal of PCB waste stored at the Headquarters Plant and Komaki plants
in fiscal 2018.

On-site Confirmation of Waste Material Treatment
We regularly visit our waste disposers to confirm that consigned waste materials are being processed inaccordance with our agreement. In fiscal 2017, we visited 74 companies.

Handling of Asbestos
We have been taking appropriate measures to prevent health hazards from asbestos. All asbestos
used in our facilities has been completely removed. Some asbestos is still present in buildings as
insulators, and we will continue to adhere to stringent control measures and periodical confirmation.

Preventing Chemical Leaks
In order to prevent soil and water contamination caused by chemical leaks, we have been
implementing countermeasures involving equipment that includes preventing leaks through thedevelopment of double layered storage tanks and the early detection of leaks by installing pipes
above ground. Wastewater treatment facilities of the respective plants discharge the wastewater
only confirmed to be harmless through monitor measurement under routine management.

82

Drills for Emergency Situations
We hold regular drills for emergency situations to prepare for unforeseen accidents, etc. Eachdepartment identifies potential environmental accidents to prevent associated adverse environmental
impacts.
Ceramic Sensor held drills for blocking drainage assuming that wastewater in excess of the maximum
limit value accidentally flows outside the premise.

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17.&HUDPLF&R/WG 

Compliance Status
To ensure compliance with environmental laws and regulations as well as agreements with local
municipalities, etc., we set stringent voluntary standards to prevent violations and complaints. In fiscal
2017, there were zero violations of laws or regulations in Japan, and one instance that demanded
improvement concerning noise. Since we found problems on how we worked regarding noise
complaints, we immediately carried out countermeasures, working to prevent recurrence.

Numbers of Violations (cases)
Company

2014

201

2016

2017

NGK SPARK PLUG CO., LTD.

1

3

0

0

Affiliates (Domestic)

2

2

2

0

Affiliates (Overseas)

0

0

0

0

ভ঺

2014

2015

2016

2017

NGK SPARK PLUG CO., LTD.

2

0

2

1

Affiliates (Domestic)

0

0

0

0

Affiliates (Overseas)

ʊ

ʊ

ʊ

ʊ

Numbers of Complaints (cases)

83

Handling Violations and Complaints in Fiscal 2017
Company
Complaint

Komaki Plant

Situation

Countermeasures

Received complaints from

We setup soundproof sheets in theneighborhood residents aboutnorthwestern part of factory No. 14

the noise caused by lawn

to avoid noise from idling engines.

mowing on site in

We also changed to electric lawn

Northwestern corner of factory

mowers.

No14.

Environmental Accounting
What is important in promoting environmental management is to gain a grasp of the costs andeffectiveness of environmental preservation activities. We have been adopting environmental
accounting since 1999, and in 2003 the accounting scope was expanded to include the entire Group.
In fiscal 2017, our environmental conservation costs were 14,281 million yen on a non-consolidated
basis, and 15,172 million yen for the Group, an increase of 5,9% over the previous fiscal year. The
economic benefit associated with environmental conservation activities totaled 255 million yen on a
non-consolidated basis.

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(FRQRPLF%HQHILWV QRQFRQVROLGDWHG (QYLURQPHQWDO&RQVHUYDWLRQ&RVWV JURXS 

Environmental Accounting㸦Please refer to page 110-111㸧

84

Eco-efficiency
We calculate eco-efficiency by determining net sales per unit of CO2 emissions and generated waste,
and endeavor to improve it.
In fiscal 2017, figures of CO2 emissions and generated waste were lessen compared with those of theprevious fiscal year resulting from modifying the plants and etc.

:DVWH,QGH['RPHVWLFJURXS 岧FRQVROLGDWHGFHUWLILFDWLRQ岨 &2㻌,QGH['RPHVWLFJURXS 岧FRQVROLGDWHGFHUWLILFDWLRQ岨 

85

Environmental Education
Environmental education is conducted to deepen employees’ understanding of environmental issues
and raise their environmental awareness.
In fiscal 2017, in addition to rank-specific education, we held four courses on “Environmental basics”,“Environmental management system”, “Calculation methods for substances with an environmental
burden”, and “Environmental laws and regulations (for facilities).
Furthermore, we went to the departments related to these four laws and regulations and beganproviding on-site environmental law training focused on the necessary compliance.
In regard to the “Environmental Handbook” for employee education, we will enhance the content of thehandbook to take in consideration the latest trends around the world.

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Status of course participation (FY 2017)
Item

Number of times

Number of persons taking
courseCourse on environmental basics

11

134

Course on environnemental management

15

229

6

99

9

126

SystemCourse on calculation methods for
substances
Course on environmental laws andregulations (for facilities)86Support for Suppliers
We offer our suppliers environmental education and support for establishing environmental
management systems to acquire third-party certification. Since 2007 there have been applications forassistance from 43 companies, and 42 of them have obtained ISO 14001 or Eco-Action 21 certification.
We continue to provide assistance to four companies configuring environmental management systems.

Environmental Management Classes Held in Fiscal 2017
Topic

No. of Companies

No. of People

AttendingAttending

ISO14001

7

9

Eco-Action

5

7

EMS Third-Party Certification Support Conducted
Topic

No. of Companies
Attending (total sum)

ISO14001

6

Eco-Action

37

87

Environmentally-friendly Products
Basic Philosophy
As a manufacturing company expanding globally, we strive to meet the expectations of customers
around the world and, in order to contribute to the global environment, to develop and provide
environmentally friendly products. At the same time, we also work to constrain the environmental
impacts generated during production and aim to reduce environmental impacts over the entire productlife cycle.

Product Assessment
To reduce the environmental burden of a product over its entire life cycle, we carry out productassessments during design and when changing specifications.
During a product assessment, the existence of substances of environmental concern, the amount ofenergy used, etc. are confirmed at each stage of product design, process design and package design.
If the assessment determines that there is a significant environmental impact, countermeasures will betaken before development is continued.

88

Developing Environmentally Friendly Products
Our company provides products that contribute to the environment, including spark plugs andautomotive oxygen sensors that help improve fuel efficiency and purify exhaust gases fromautomobiles, as well as LED packages and cutting tools that are long-lasting and help conserve energy
and resources. We are also undertaking development of new products in the environmental area, suchas solid oxide fuel cells (SOFCs).
Since 2017, we have been enhancing activities to promote energy and resource conservation morethan ever in the manufacturing process, by working these into the design stage. Through this, we will
advance development of products that contribute to the environment in terms of both product functions
and manufacturing processes.

89

Hazardous Chemical Substances
Basic Philosophy
In association with the growing public awareness of environmental issues, regulations regarding
hazardous chemical substances have become increasingly severe year by year. Taking appropriate
measures to such concern has become vital to the continuation of business. We have a three-step
management system for handling substances of environmental concern:
1. Answering requests from customers, 2. Handling within the Group, and 3. Procurement fromsuppliers.
Naturally we ensure compliance with laws and fulfill customer requests. More than that, we aim to
reduce the use and emission of substances of environmental concern so as to minimize their effect on
the environment and human health.

Answering Requests from Customers
With the reinforcement of regulations on chemical substances contained in products, requests from
customers in the automobile, electrical and electronics industry regarding improved compliance are
increasing. The REACH Regulation of the EU has triggered an increase in the status of chemical
substances contained in products; we are taking all the appropriate measures including submission of
Non-Containing Declarations, submission of various data with IMDS, AIS, etc., and handlinginvestigations and audits regarding our management systems.

90

Handling within the GroupTo respond appropriately to increasingly
strict chemical substance regulations
worldwide, we perform non-containment
management for products and usage
management within plants.
For hazardous chemical substances, we
set hazard rankings according to toxicity
and the strictness of regulations andestablish handling standards for eachrank.
From here on out, we will work toward
substitution of hazardous chemical
substances and the strengthening of
0DQDJHPHQW6\VWHPmanagement, to assure compliance withlaws and with the demands of customer

Hazard Rank
Rank
Prohibited

Handling standard

Substances covered

Use is prohibited.

Substances prohibited from use or strongly
restricted by regulations.

Restricted

Safer substitutes will be sought, while

Hazard level and toxicity are equivalent tosubstances

making efforts to reduce the use of current

prohibited substances, but an immediate

substances.

changeover is impossible due to its special
characteristics.

Monitored

Supplies need to be examined to findThose not prohibited or restricted but that

substances

existence / non-existence of applicablerequire monitoring.

substances.

91

Managementof PRTR substance
Aiming at optimized management, the respective divisions have ensured to identify and totalize PRTR
substances for clarifying handling volume, release volume, and transfer volume.

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Procurement from Suppliers
To manage chemical substances contained in products appropriately, it is imperative that we gain thecooperation of our suppliers. For this reason, we request in our Green Procurement Guidelines that our
suppliers not use hazardous chemical substances banned by NGK SPARK PLUG CO., LTD. We
designate suppliers that meet our system and material standards as Green Suppliers. In collaboration
with our Green Suppliers, we promote appropriate management of hazardous chemical substances.

92

Global Warming
Basic Philosophy
Major climate change could cause the risk of hindering the establishment of a sustainable society. As apart of our activities to aid in mitigating climate change from medium and long-term perspectives, we
set targets for CO2 emission basic unit in fiscal 2020 under Global Eco Vision 2020. Aiming at
achievement of the targets, we have been proceeding with fractionalization of energy management, andreduction in energy consumed by air conditioning system while focusing on building ventilation amount.

Achieving Target CO2 emission basic unit in fiscal 2017
The CO2 emission basic unit in fiscal 2017 was 1.18 tons/million yen, meeting the eco-vision target for2020 of 1.23 tons/million yen in advance. (decrease by 5% as compared with fiscal 2015). This isbecause we used less energy by renovating factories and etc., in addition to our regular activities ofenergy conservation.
In fiscal 2018, we have made changes to the eco-vision 2020 targets in upward, and we will promote
more energy saving aimed at improving the CO2 emission by 15% (1.10 tons/million yen) compared tofiscal 2015.

Transition of Emission Volume of Energy-Origin CO2 (Domestic group岧consolidated certification岨)*The denominator of the basic unit has been changed from sales to amount index in accordance with production
sum.

93

Transition of Emission Volume of Energy-Origin CO2 (group)

Energy Conservation during Transportation
As a Specified Consigner designated under the Act on the Rational Use of Energy, we endeavor to
reduce CO2 emissions during transportation, proceeding with reduction in shipping distance byreorganizing/integrating plants, and reconsidering the waste-disposal service vendor.
In fiscal 2017, our energy usage basic unit was 0.99 kl/100 million yen, improved by 5.5% as comparedwith the previous fiscal year.

94Trends in Volume of CO2 Emissions as Energy
Resources (group)

Energy Conservation in Office
We implement daily energy-saving measures in our workplaces, including turning off lights andcomputers during breaks and keeping office air conditioning at moderate levels, 28ºC in summer and
20ºC in winter, to which we adjust by dressing lightly or adding layers of clothing in addition to setting
our regular ventilating standard at offices by reviewing the amount of ventilation. We are also creating
green curtains, installing arched sunshades and thermally insulating the outdoor units of air
conditioners to reduce power consumption for air conditioning in the summer.

95

Use of Natural Energy
We promote the use of natural energy.
We installed three solar power generation units and one solar water heater at our Headquarters
Factory. The Komaki Plant has a solar power generator unit that can generate a maximum of 107 kW ofelectricity. In overseas, the solar power generation units have been introduced into Woojin Industry Co.,
Ltd., and NGK Spark Plugs (India) PVT. LTD.
In fiscal 2017, we generated a total of 391,000 kWh sourced from natural energy in both domestic andoverseas companies, which is equivalent to reduction of 225 tons of CO2.

96

Depletion of Resources
Basic Philosophy
Our Group contributes to society by lowering defect rates in our manufacturing processes, reducing
waste generated and further treating wastes to enable recycling, as measures to combat the depletionof resources.
And we contribute to the resolution of water resource issues by recognizing the tap water and well
water used in our business activities as water resources, and by undertaking the reduction of usage,
as measures to combat the depletion of resources.

Reduction of Waste Generated
In fiscal 2017, the waste emission basic unit was 0.052 tons/million yen, improved by 15 % ascompared with fiscal 2016.
In addition to our regular waste emission activities, we were able to reduce the amount of waste by
updating the factories and etc. in fiscal 2017.

Trends in Volume of Waste Generated(domestic group 岧consolidated certification岨)97

Trends in Volume of Waste Generated (group)98Reducing the Amounts of Tap and Well Water Used
In fiscal 2017, our water usage basic unit was 5.68 m3/million yen. Water usage basic unit was
improved by 10% compared with fiscal 2015, which resulted from conserving water by renovating
factories.

Trend in Volume of Tap Water/Well Water (Domestic
group 岧consolidated certification岨)

Trend in Volume of Tap Water/Well Water (Domestic group 岧consolidated certification岨)99

Environmental Communication
Basic Philosophy
It is essential for the NGK SPARK PLUG's GROUP to realize close coordination with local communities
and become highly reliable for continuous business operations. For achievement of the goal, sharing
information on the Group's environmental activities is regarded as the best approach. We have beenendeavoring to disclose information and improve communication in an accurate and easy-tounderstand way.

Plant Tours
On plant tours which our group company planned, you can observe our environmental efforts andfacilities.
A deeper understanding of our Group's activities and better communication are achieved by listening to
the comments and seeing our facilities and engaging in question and answer sessions. In fiscal 2017,
we hosted 14 tours and welcomed 1,445 visitors at our plants.

Environmental Meeting
We host environmental meetings with local residents as a venue for communication. At these meetings,
we explain our daily environmental activities as well as hear opinions and comments from participants
on how we can further improve things. In fiscal 2017, we hosted 9 such meetings, with a total of 252
participants

Local Clean-up Activities
We regularly hold clean-up activities in the areas near the offices to preserve the local environment. We
also continue to participate in beautifying activities hosted by local municipalities, etc. In fiscal 2017, a
total of 525 people participated in such activities.

Clean-up activities

Clean-up activities (Komaki)(Main Plant, Spark Tec WKS CO., LTD.)

100

Conservation of Biodiversity
NGK SPARK PLUG’s GROUP defines preservation of biodiversity that has become increasingly
important around the world as one of our environmental themes as essential as global warming control
and recycling of resources.
In April 2013, we established the NGK SPARK PLUG Group Biodiversity Action Guidelines whichindicate our policy and action plan regarding biodiversity.
Based on the guidelines, recognizing that activities such as the use of energy and resources have aneffect on biodiversity, we will work in cooperation with business partners and external organizations to
reduce the impacts of our entire business activities

System for Environmental Commendations
Based on our target to “Improve Environment Consciousness” set under the Global Eco Vision 2020,
we have established an environmental commendation system for the NGK SPARK PLUG's GROUP tocommend outstanding environmental initiatives.
The environmental commendation system was launched in 2014 aimed at environmental activities andinitiatives in all divisions and departments of the company groups. The outstanding case will becommended by the President during meetings of the Central Environmental Committee.
In fiscal 2017, the fourth year of the system, commendations were given to 6 cases with respect to, forexample, reduced CO2 emissions during production by improving productivity and quality along withreviewing the production plans, prevented water pollution from industrial waste water.

101ThirdٕParty Review
We have edited CSR Report 2018 to serve as an easily understood and trustworthy report, on the basisof information disclosure policies. So that we may hear objective opinions with the aim of creating abetter report, we requested a third-party review from Mr. Tomohiro Tokura of SGS Japan Inc.

Third-Party Review of CSR Report 2018
We have heard of the steps that you have taken to promote
BCM (Business Continuity Management) and prevent
corruption (especially bribery) as a top priority for
responding to potential risks as a group. We confirmed that
it was a decision based upon risk assessment considering
the impact on the management and transition of the social
trends at CSR committee in organizations and as a result of
proper procedures which manage the social responsibilities
of organizations.
Even though what we heard on these processes was clear,
it would be more reliable if details of risk assessment
execution and its schedule were included, in addition to theevaluation and standards managed by the organization and

Mr. Tomohiro Tokura
Chief Inspector Sustainability Service
Division
SGS Japan Inc.

how they were illustrated in the report. Also, promoting
BCM and preventing corruption which are designated in the report are related to social responsibilitiesof the organizations in various ways; for example,, lack of human resources has a negative impact on
any business continuity, and if we cannot afford to have personnel resources or provide education,
corruption will be inevitable.
To maintain suppliers and establish mutually beneficial relationships with them also relates to social
responsibility. It is important to give continuous reports on the same social subjects in terms ofpossibilities and comparisons, but we believe there is room for consideration of reporting prioritized risk
handling statuses in related issue reports while keeping those possibilities and comparisons.

102

We checked the implementation of disaster prevention drills for the BCM promotion report andconfirmed that it was conducted on the same day including domestic groups. In this drill, collaborative
training between offices for unexpected catastrophes was conducted and we believe it was effective.
This deserves special mention as we were able to mobilize everyone unison. We have also confirmedthat you have signed the United Nation Global Compact(UNGC) in November 2016, showing that you
committed yourself to fulfill social responsibilities outside the organization. Not only outside theorganization, but continuous training in order to promote CSR inside the organization has been
conducted as well. Furthermore, the fact that these initiatives are stretching out into domestic groupcompanies is noteworthy. We believe that it should be the first priority for each and every employee tohave more awareness for his/her social responsibility as part of the organization. It is always people
who fulfill social responsibilities of the organization and how it’s done that depends on the way people
think and act. These CSR activities don’t have immediate effects and cannot be achieved by just onetime implementation. However, we affirmed that new advanced courses for CSR training wereintroduced and we expect that this while expand to the whole supply chain by continued activities fromnow on.
In the CSR report, non-financial disclosures relating to social responsibilities of the organization were
provided, but financial aspects of non-financial disclosures were not reported. We assume there aresome ways to disclose the information to the stakeholders.
While the demand on organizations from society is increasing every year due to disclosure from CDP in
regards to information on greenhouse gas emission and water stress, we have heard your company
fulfilled their demand by disclosing information appropriately and took it as your benchmark. Your
company also began external verification of the amount of greenhouse gas emissions to enhancetransparency. We hope to see continued implementation and further expansion of this externalverification.
This comment renders no judgment on whether the data presented in the report is accurately
measured and calculated and is free from omissions, in accordance with standards for the
preparation of environmental and other reports generally deemed to be fair and reasonable.

103

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