INTEGRATEDREPORT
2023

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

Contents
Group Philosophy

Proactive. Innovative.
Collaborative.
Making life better throughgas technology.

The Gas Professionals

Introduction
2

CEO Message

Special Feature
9	Medium-Term Management Plan
NS Vision 2026

We aim to create social value throughinnovative gas solutions that increaseindustrial productivity, enhance humanwell-being, and contribute to a moresustainable future.

Governance37

CFO Message

71	Corporate Governance Dialogue:

41

Performance Highlights

Sustainability
46	CSO Message

10

Operational Excellence

1247	Sustainability Initiatives

Total Electronics

1450	TCFD Reporting

Carbon Neutrality

15	Carbon Neutral Roundtable Discussion:
Group Vision

Performance Highlights

		Toward Carbon Neutrality—Discussing NSHD in 2050

Value Creation Story
18

Value Creation Model

20

Value Created

22

Value Creation Drivers

23	Value Creation Example:
Total Gas Centers / Site Services

24

Value Creation Example: Group R&D

26	Value Creation Example:
Group Engineering

28	The Power of Human Resources:
Message from Head of the HR Division

29	The Power of Human Resources:
HR Philosophy

31

The Power of Human Resources:		
Workplace32	Promotion of Women’s Active
Engagement Roundtable Discussion:Female Diversity, Employee Growth

Value Creationin Each Business52

Top Messages from the Five Segments

53	Business Characteristics of

Now Our True Value Is Being Tested

74	Members of the Board of Directors,
Audit & Supervisory Board Members,
and Executive Officers

75

Skills Matrix

76

Corporate Governance

78

Compliance81

Risk Management82	Information Security / Appropriate
Taxation83	Intellectual Property / Dialogues
with Stakeholders

Each Segment

55

Japan

Group Information

58

United States

84

Corporate Data

61

Europe85

Awards64

Asia and Oceania

86

Editorial Policy / Editorial Note

67

Thermos

Appendix
Sustainability Data

88

Environment

90

Society

92

Governance93	Intellectual Property andResearch and Development

94

Independent Assurance Report1Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

CEO Message

Toshihiko Hamada
President CEO

We will continue to pursue
solutions for our customers
flexibly, using the combined
capabilities of our diverse,
individual, free-thinking
human resources.

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Value Creation in
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Appendix

Integrated Report
2023

CEO Message

Second Year of Our Medium-Term Management Plan,
NS Vision 2026

Overcoming the Difficult Period ofHigh Energy Costs to Progress Steadily toward
Our Medium-Term Management Plan
The current medium-term management plan of Nippon Sanso
Holdings (NSHD) covers a four-year period ending March 2026, andwe are now in its second year. We decided on a four-year period
because this amount of time, even if we decide not only strategies
but also the lower-level tactical approaches, would not require many
adjustments. By comparison, with a much longer 10-year time horizon, many adjustments would likely be required. If there were abusiness that did not need adjustments for 10 years, it would bea business that does not grow much.
In the plan, we established five focused fields, and as these havebeen progressing steadily, we don’t see a real need for change.
However, the crisis in Ukraine has been extremely shocking andcould further destabilize the preconditions for our plan. As an example, energy costs have risen dramatically, and for the first three tofour months we were concerned as to the ability to operate andpass through these unprecedented costs to our customers.
Japanese industry has been affected by years of continued
deflation, and there was almost zero acceptance of the notion ofpassing cost increases through to customers via price. Colleagues
were impressed when we managed to pass through a certain portion in electricity costs. Fortunately, the Group’s transition to a holding company structure in October 2020 has been functioning well,and we have been able to spread the European and U.S. practiceof passing through cost increases. At the same time, the situation
has also presented us with an opportunity to increase our valueby showing that we can increase efficiency and profitability. This
example of increasing our value appeal has also been a model for us
in Japan, where we have focused on passing through cost increases inour prices and managed to obtain understanding from our customers.
We have been actively promoting the strong points of each

operating company throughout the Group. Now, we are also sharing
information with all of our operating companies as Nippon Sanso
Holdings, and in this environment of rising prices, not only for industrial gases but for various items, we have thoroughly passed throughthe cost increases in every region. This means that in every region we
have been successful in providing explanations to our customers on
the unprecedented cost increases and the reliability of our service asa supplier. This has given us more confidence to be able to handle
increases in energy prices and other costs in the future.
We need another year or two to see whether the medium-term
management plan is really going as planned. Being able to judge
if a plan is succeeding is the point of formulating a plan in the firstplace. If we don’t set targets, then we cannot judge where things
are proceeding well and where things need to be adjusted. Being ina position where we don’t require any major changes for now is asignificant achievement.

What “The Gas Professionals” Means“The Gas Professionals” Respond to the Needsof the Times, Broadly and Thoroughly
Basically, the NSHD Group’s industrial gases business is not the kindof operation that involves conducting R&D with some objective thencommercializing the results to provide a product. I believe that ourbusiness may be summed up most succinctly as “industrial infrastructure.” We have a responsibility to provide gases to various
industries, and we have the opportunity to supply them; that is
the social significance of the Group’s existence.
At the time of the Great East Japan Earthquake in March 2011,
we continued to supply gases without stopping our plants. We
handle huge amounts of highly flammable substances at our petrochemical complexes and chemical factories, and if they were toleak into the atmosphere then a spark may result in an explosion.
Our first priority is to manage facilities so that gases do not leak.
However, to ensure that combustion-risk substances would not

make contact with oxygen in the air if a fault were to happen at a
facility, it is necessary to continuously supply inert nitrogen gas. This
process must continue 24 hours a day, every day of the year, without
fail. In other words, we are playing a significant infrastructure role.
Industrial gases also play a role in fields that are closer to daily
life. Food pouches can be filled with nitrogen to prevent oxidizationand extend best-before dates, while liquid CO2 or nitrogen canbe used to freeze food rapidly. Another example is in eel farming,
where aquaculture ponds require a constant supply of oxygen to
keep the eel stock alive. Needless to say, these also are a part of“industrial infrastructure.”
However, there is something fateful about what we call “infrastructure.” Although it is widely used in society, its provision is often
taken for granted and its significance is not well recognized. Evenso, it is the mission of the supplier to provide it properly to society.
Naturally, to accomplish this in the case of the NSHD Group, wemust be “The Gas Professionals.” As a model supplier, we should
remain a few steps ahead of our customers, and be able to offer
proposals on how to utilize our offerings more effectively.
We express this with the phrase, “The Gas Professionals,” atagline that can be recognized intuitively by our customers, employees, and all other stakeholders around the world. These words tell
everyone that we have deep knowledge and experience in all
aspects related to industrial gases.
For example, gases are supplied in both liquid and compressed
form, and by supplying them together with the correct containers,
pipes, valves, and systems for processing them after use, we enable
new customers to use gas with confidence. “The Gas Professionals”
speaks of our knowledge not only of the nature of gases but also of
the various structures involved with them (such as valve and piping
construction and materials), and our ability to propose safer andmore effective ways of using gases to customers.
Moreover, the tagline is also designed to be understood in a
flexible and changing manner over a long period, rather than in a
fixed way. The Company grows through the process of explorationin various directions. As the times and our business environment change,

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Value Creation in
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Information

Appendix

Integrated Report
2023

CEO Message

our target value proposal and priorities will also change. The flexibility to grasp these changes accurately and reflect them properly
in our proposals to customers is another essential element of“The Gas Professionals.”

What We Can Do, What We Should Do

Top Priority on Resolving Customer Issues
Added Proposals to Reduce Gas Usage
I worked for many years in the Electronics Division. Our division wasdetermined to do anything to meet customers’ various demands inthe fields of gas, piping, and abatement devices. It became the norm
to call people together internally to discuss and make proposals. The
work I performed as an employee, in a nutshell, was to engage withcustomers to find solutions for them. I furthered my communication
with customers and proposed the best equipment and the best
application in using gases. As I dealt with serious customers, I experienced, first hand, the pressure from them to get more deeply
involved than just a utility or infrastructure gas provider and reallylisten to their needs. Thanks to this experience, I developed theability to seek what we can do to resolve the issues of our customers
in general.
Usually, if a customer installs a major piece of equipment and uses
nitrogen gas as part of the manufacturing process, we can fulfill our
objective of selling them gas. However, we make proposals that goa step further, showing the customer where there is opportunity for
additional changes that would enhance the efficiency in our customers’ processes. If we are unable to identify improvements ourselves,
we may consult with the equipment manufacturer to suggest alternative changes. When we work to gain a more thorough understanding of customers’ issues and to resolve them, sometimes
we may make customer proposals that reduce the amount of gas
usage because it is not the most efficient process for the customer.
Therefore, we provide trust and honest advice, which ultimately
increases customer loyalty.

Proposing high-value solutions to customers from a sustainability
perspective is also the Group’s mission as “industrial infrastructure.”
If resolving a customer’s issue can help to reduce greenhouse gas(GHG) emissions, then we can help to realize a carbon neutral­society even faster.
For example, the Group’s oxygen combustion technologies reduceenergy consumed by furnaces used in the fields of glass, steel, aluminum, and non-ferrous metals. This is because switching from air
combustion to oxygen combustion reduces the ratio of nitrogen
within the furnace, increasing combustion efficiency, which reduces
fossil fuel consumption. This technology also increases the concentration of CO2 in the exhaust gas, making it easier to capture, which
results in lower CO2 emissions. Moreover, introducing an oxygenhydrogen burner in the steel ladle preheating furnace dramaticallycurtails CO2 emissions. Since its foundation, the NSHD Group has
developed its business by supplying customers with gas solutions.
The current shift to carbon neutrality is both a major challenge and asignificant opportunity. The Group needs to leverage its comprehensive capabilities to meet this challenge.

Initiatives to Realize a Hydrogen Society

Combining Our Technologies toSupply Greener Hydrogen
Recently, I am often asked whether we are focusing on hydrogen in
the context of carbon neutrality. With regard to hydrogen, people
are finally coming to recognize the difficulties implicit in the words“green hydrogen” and “blue hydrogen.” In Japan in particular,
the big problem is the manufacturing cost.
The NSHD Group already provides on-site supply of hydrogen in
the United States, and we have accumulated extensive experience andexpertise in this area. However, as this is not green hydrogen, it will not
do simply to expand this business as it is. We need to use technologies
to step grey hydrogen up to blue, and step blue hydrogen up to green,
and we need to supply hydrogen together with our partners.

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Value Creation in
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Information

Appendix

Integrated Report
2023

CEO Message

Such initiatives also require funding. As a company, our initiatives
must generate earnings. The important point is how we will involve
ourselves in the hydrogen business. The Group already has established operations in supplying hydrogen, and possesses supply andcontrol technologies as well, so now we need to consider how toutilize them. It’s important that we capture the opportunities andthe timing to use our knowledge and technology.

The Role of Thermos for NSHD

Thermos’ Knowledge and Sensibilities
Are Strengths for the Group
Along with questions about hydrogen, I am also asked fairly often
the reason for having Thermos as a B2C business in addition to theother segments of the Group, which are involved in B2B industrial
gases supply. Stainless steel vacuum-insulated bottles were createdusing our specialty vacuum-insulation technology and are similar
to a miniature version of the liquid nitrogen tanks used on tanker
trucks. So, they have this technological connection. On the other
hand, in the industrial gases industry, there are fields where we will
shift into spaces that are closer to users like Thermos.
One example is the medical field. During the COVID-19 pandemic,
we saw heavy use of ventilators. Oxygen concentrators for home
medical care are used by the general public so it is important thatthey be safe and secure, as well as light and easy to use. Whendeveloping such products, Thermos has capabilities in design andgathering user information through e-commerce and so forth,which can be deployed across the industrial gases field to become
strengths for the entire Group.
In areas such as the front lines of semiconductor production also,emphasis is being placed on such aspects as how to make valves as
small as possible or what kind of design is easy to use. These kindsof areas that require certain sensibilities are where I would like theThermos business to play a larger role in the future.

Our Approach to Governance

Delegate Decision-Making Authority While
Strengthening Internal Communication
In the case of industrial gases, the volume and method of use
may change even for the same gas, depending on the application.
Moreover, each region has customers concentrated in different industries. Therefore, it is best that the respective operating companies interact
with customers daily to promote their business. It is not necessarily goodfor Nippon Sanso Holdings to take the initiative and issue specific directives to do one thing or another given the local nature of our regions.
Since industrial gases is a business based on the “consumption
on-site” model, where gas industry plants are built in areas ofdemand to provide an efficient supply, I believe that Nippon Sanso
Holdings’ management decision-making is more appropriate to be
decentralized and fast.
The businesses that we acquired in Europe are managed by aEuropean holding company, and there is much to be learned fromits methods and its approach to markets. Europe covers a large
geographic area, and is divided into many countries. Although different languages are spoken, the team basically communicates inEnglish, and everyone moves together under a single policy. In asense, this is the kind of business management that we strive forunder a holding company structure.
I have deeply studied the European approach and learned from it.
I believe that if we skillfully combine the methods of our European
operating companies with the knowledge of our overseas development
to date, where we have respected the autonomy of each company, andapply this approach to Asia and the Company’s overall Group management, it will be unnecessary to make NSHD into a large organization.
The Group Philosophy and Vision have already been shared inevery region. Our overseas personnel are aware that they are members of NSHD. This integrated report will be published simultaneously in English as well as Japanese so that it can be read by our
employees worldwide. Similarly, the Group’s internal magazine is
distributed four times a year in each country. Our publications feature

topics from each operating company as well as stories related
to work, but as “The Gas Professionals,” we always emphasize andshare our initiatives related to safety in particular. Naturally, safety
is an extremely important aspect of our responsibility as a supplier.
In our operations and transport, we strive to ensure that everyone
is strongly aware of the importance of safety as the foremost
consideration in everything.
Furthermore, we have held a large number of meetings of the
Global Strategy Review Committee and the Global Risk Management
Committee, which are attended by senior management of all Group
companies, at which we interact across various time differences.
The internal information and direction of the Group are also sharedat these meetings.
So far, the Company has invested in regions through capital
participation, acquiring local partners and companies that operate
existing businesses locally, and has flexibly incorporated the businesspractices of those countries. The European business was an extremely
large acquisition, and it has shown us an excellent example of passing
energy costs through to pricing, as I described previously, as well as
having beneficial impacts in other areas with regard to management
structure. However, in every case when companies join the NSHDGroup, we always ensure that they have a proper understanding ofessential compliance and governance issues, as well as safety andother issues through the Group Philosophy and Vision.
Many of the Group companies retain their original names to emphasize the history of their business activities over many years in theirrespective region. However, they all have the same corporate symboland share the tagline, “The Gas Professionals.” I believe we should
continue to maintain the current style of management, and further
explore communication through meetings within our Group companies.
At this time, we are not planning any major changes in the governance system in the future. NSHD considers the composition of theBoard of Directors to be important, as it is also a point of contact
with stakeholders. Also, the structure of the Board must enable it tocarefully listen to the opinions of non-majority shareholders, and to
explain them properly to stakeholders. For this reason, the Board

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Performance
Highlights

Sustainability

Value Creation in
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CEO Message

of Directors is composed of a majority of five independent outside
directors, with four directors who also have in-house executive
responsibilities, including myself.
In Japan, people are gaining awareness of Japan’s Corporate
Governance Code, and over the past eight years, two recently retired
outside directors, Akio Yamada and Mitsuhiro Katsumaru, havemade a tremendous effort to help realize the Code here at NSHD.
Meanwhile, we are expecting those directors who have just joined theBoard to provide auditing and advice from a perspective that is closer tooperations and the front lines. When forming a joint R&D organization
with a partner, there are cases overseas where contracts are used asleverage in negotiations. Therefore, it is necessary to have contracts
properly in place in advance. To ensure that we can handle such cases
firmly, we have asked people with expertise in overseas law to join as
outside directors. The roles expected of outside directors are bound tochange with the changing of the times. If you look at the categories inour skills matrix for directors, you will see that we have created a structure suited for NSHD to respond to the situation in the world today.
Furthermore, the Company is a company with an Audit &Supervisory Board, which means that the establishment of anomination committee and remuneration committee is discretionary.
Nevertheless, the Company has established the Advisory Committee
on Appointments and Remuneration, with the intention of incorporating outside views into its business development. The committee
also conducts the selection of important management-level personnel for promoting the medium-term management plan. Our task
now, in my view, is to create a rigorous process for nominating
people for the executive side.

Image of the Next Generation of Human Resources

Next Generation of Managers Will Havea Global Management Perspective
An even more important issue is what kind of qualifications aregoing to be necessary for the next generation of managers.

This topic is currently being discussed in various quarters, while wework to clarify the type and level of skills and experience needed fornomination from the executive team.
What I want is for our next generation of managers to emerge
from a group of people who have accumulated valuable experiences,having actively worked and managed business internationally andlearned through both hard work and adversity.
People with significant experience and motivation are well qualified for management in a global environment in my opinion.
Management means managing not only business but everything,from finance and labor to risks such as disasters. Those who havemanagement experience have had numerous learning opportunities
to prepare them for taking responsibility for the Group’s future.
I want to see the kind of people who will really want to bepresident after experiencing some kind of management roll.
I think that the sooner I can prepare to hand over to the next
generation, the better. I want my successor to have an awarenessthat they will be getting closer to the position over the next year
or two. I want to see a person who can look at what I do andthink how they would approach it themselves, about what works
well, what could be done to ensure something succeeds, and soforth. I’d like to see that person right here and now, rather thanin a year from now.

Stance on the Future

Human Resource Diversity Will Move
the Company in a Better Direction
I do not know what the future holds beyond the current mediumterm management plan. I think that time should be completely up
to the next generation of people, not my generation. Our younger
generation personnel should think about all kinds of things without
being bound by the ideas of the current management team. The
Group has brought together various kinds of companies, and there
are approximately 20,000 employees. It is not necessary for all of

Group
Information

Appendix

Integrated Report2023

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Value Creation
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Performance
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Appendix

Integrated Report
2023

CEO Message

these people to be facing in exactly the same direction. In fact, it
would be a vulnerability for a company if they were. If something
negative were to happen and everyone was perfectly aligned, itwould be difficult to make corrective action.
Instead, as diversity is a driving force for an organization, I believethat companies should draw together people who face slightly
different directions and think about things at different levels. Amongthese, I would like to see many employees who think seriously that,while they recognize the direction that the Company is heading, theywould like to do something a little different. I think that companies
tend to move in the direction in which the majority of people arepressing. It may be extreme but, while the movement may be in a
direction that lies outside the range of “The Gas Professionals,” theshape of the NSHD Group 10 years from now will only emerge after
continuous change.
To continue to be a flexible company like this, in the end everythingcomes down to human resources. The vector of the Company is its
human resources. People cannot be held together by pay alone,so the important thing is the nature of their work, or the degree
to which people with a similar objective to their own, if not exactly

identical, are striving together. This type of environment motivatespeople to work and leads to a sense of fulfillment.
To support this, the Group has been focusing on team building.
Our teams tend to precipitate unavoidably along Japanese lines inJapan and American lines in the United States, but we will work to
open that up a little and let people know that they have like-mindedcounterparts in Japan in order to support Group creation. This is partof operational excellence, and we recognize that it is extremely
important to promote it.
Although they appear to be facing in the same direction,
there are also some small differences to be observed between
Europe and the United States. These differences are not a badthing, and I hope to see some chemistry between them occurring
more naturally and frequently; for example, absorbing the differences between each other to help open up a little, or recognizing that some existing practices are actually inefficient. With
regard to this, the way of providing motivation or raising awareness is also important for ensuring diversity of human resources
and their various approaches, and for developing the Company.
In parallel with this, I want to get a clear picture of employees’

awareness through an employee engagement survey. More thanjust getting a picture, we must organize the issues that emerge andcome up with policies and measures to help resolve them, otherwise,
dissatisfaction will simply build up. Even more than conducting thesurvey, it is critical that we reflect the results properly.
I have covered various topics, but in closing I would like to saythat my most important mission as a CEO is to see that the entire
Group’s employees and their families are well. From the perspectiveof our customers, investors, and all other stakeholders, a company
whose employees enjoy a high level of well-being is a more attractive trading partner or investment.
Therefore, I am always thinking about creating the kind ofenvironment where everyone can live cheerfully and happily,
while working freely.
September 2023

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9Medium-Term Management Plan NS Vision 2026

10

Operational Excellence

12

Total Electronics

14

Carbon Neutrality

15	Carbon Neutral Roundtable Discussion:
Toward Carbon Neutrality—Discussing NSHD in 2050

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Performance
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Sustainability

Medium-Term Management Plan

SloganNS Vision 2026

Enabling the Future

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report2023

In light of the outlook for the external environment and the progression of our strategies to date, in May 2022 we announced the four-year medium-term management plan
NS Vision 2026, covering the period up to FYE2026. Under our business structure of four global regions (Japan, the United States, Europe, and Asia and Oceania) and Thermos,
the plan has set out five strategies aimed at strengthening the Group’s comprehensive capabilities and achieving further growth so as to contribute to the realization of abright and comfortable future for people, society, and the earth. The plan also sets out quantitative targets (KPIs) in both financial and non-financial areas.
Sustainability Management

Focused Fields

R&D themes such as combustion technology, etc.

• Environment: Resource-recycling society, harmonize
with the environment, reduce environmental impact

Sustainability
Management• Safety & Quality: Process safety and security, commu-

Exploring New Businesstoward Carbon Neutrality

DX Initiatives

Total Electronics

stakeholders
Establish communication platform / Communicate

nity based, “selling gas is selling safety,” quality

the Company’s initiatives and enhance recognition

management and assurance

through proactive efforts such as posting carbon• Human Resources: Respect people and their rights,

neutral activities on social media

beneficial work for all employees• Compliance: Sincere and fair manner, international /Total Electronics• Become a global supplier in the semiconductor

regional rules and laws

Operational Excellence• External/internal communication with all

ecosystem
Eight Non-Financial Programs

P.48

Offer robust and updated quality assurances, new(1) Carbon Neutral Program I

products, and technology solutions / Leverage and(2) Carbon Neutral Program II

enhance our Group capability and solutions(3) Zero Waste Program

Numerical Targets (KPIs)
Financial KPIs (FYE2026)
Revenue¥975 billion–¥1,000 billion*
Core Operating Profit¥125 billion–¥135 billion*
EBITDA Margin
Group:≥ 24%

Non-Financial KPIs
Environment
Reduction rate of GHG emissions (Base year: FYE2019)18% (FYE2026)• Target early success by horizontal sharing of best(8) Compliance Penetration Program

GHG reduced emissions through environmental product offer

Exploring New Business toward Carbon Neutrality• Gain some “quick-wins” carbon neutral projects

Safety Management

Human Resources≥ 17–33%≤ 1.6 (FYE2026)≥ 22% (FYE2026)
25% (FYE2031)

Adjusted Net D/E Ratio* Due to uncertainty in the global economy, revenue
and core operating profit are shown in a range.

through global operational excellence events(7) Talent Diversity Program

Lower customer GHG emissions through environmental productofferings and applications > NSHD group GHG emissions (FYE2026)

Rate of female employees≥ 6%• Foster a Groupwide productivity improvement mindset(6) Quality Reliability Program

Compliance
Rate of receiving compliance training

100% (FYE2026)

practices across operating companies• Promotion of standardization and optimization of

Lost time injury rate

ROCE after Tax

Operational Excellence(5) Safety First Program

32% (FYE2031)

Japan, the United States, Europe,
Asia and Oceania, Thermos:≤ 0.7 times(4) Sustainable Water Program

Rate of female management posts≥ 18% (FYE2026)
22% (FYE2031)

operations throughout the Group

Join or capture carbon neutral projects in the steel-DX Initiatives

making, glass, ceramics, aluminum, non-ferrous• Focus on digitization and digitalization efforts

metals, and cement markets / Acquire HyCO projects• Prioritize these three fields: Customer engagement,

for a hydrogen society with a view to becoming alarge-scale hydrogen supplier• R&D and strategic partners
Join various carbon neutral projects and share knowledge within the Group / Find potential strategic partners / Increase resource investment into specialized

Operational excellence, Employee engagement• Local and regional initiatives• Dedicated digital transformation (DX) and centrallyorganized DX organization

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2023

SPECIAL FEATURE

Operational Excellence
By pursuing operational excellence, an activity for increasing productivity of the entire NSHD Group,
we will streamline and optimize our overall operations.

Sharing Best Practices across the NSHD Group
Each of the Group’s operating companies has its own productivity
program. We engage in replication initiatives to share best practices
that emerge from these programs with other operating companies.

“Profitability”“The Right Way”

Japan

United States

Productivity
programs at operatingcompanies

Asia and
Oceania

Europe“Shiba Productivity”“Productivity”

Operational Excellence Day
Operational Excellence Day is a biannual event where best practices
for productivity at each operating company are presented withthe goal of accelerating their replication. Due to the impact of the
COVID-19 pandemic, the events have been held online since theinaugural event in 2021; however, in January 2023 the event washeld with participants physically present. This created an atmospherethat enabled accelerated information sharing regarding productivity
activities at each operating company, in addition to the numerous
productivity presentations made throughout the day.

Tomoki Nakamura
General Manager of Corporate
Planning Department,Group Corporate Planning Office
Nippon Sanso Holdings Corporation

Thoughts on Increasing Productivity
Proper management and continuous productivity initiatives
are essential for maintaining and increasing earnings
capability. The four regional hub operating companies are
in different geographical areas, but all have extremely
similar business models of manufacturing, transporting,and selling industrial gases, which means that the bestpractices for increasing productivity of one company iseasily applied and spread to other operating companies.
We will promote the sharing of best practices in the fieldof activities for increasing productivity with a view tostrengthening the comprehensive capabilities of the
NSHD Group.

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Appendix

SPECIAL FEATURE
Operational Excellence

Overview of Activities and Example of Best Practices in the United States and Europe
United States: “The Right Way”

Europe: “Productivity”

Comment from the Person in Charge

Comment from the Person in Charge

The Right Way (TRW) is a program implemented by Matheson Tri-Gas(MTG) to achieve operational excellence and cost reductions. TRW
consists of four principles: (1) full employee participation, (2) setting oftargets for savings, followed by progress measurement, reporting, andreview, (3) training for all employees in the Lean Six Sigma methods
and tools for continuous improvement, and (4) organizational andtechnical support for activities.
Combining full employee participation through both top-down
and bottom-up approaches, target setting and management, Lean Six
Sigma, and a powerful support system ensures the strength of the
TRW program and enables its continuous success. Since 2009, MTG
has generated over 6,500 TRW projects and more than $950 million
in savings.

Hermann Miskelly
Senior Vice President of Quality
Matheson Tri-Gas, Inc.

Best Practice Example
By switching the mode for long-distance transport of liquefied
gas from tanker trucks to rail cars, the distance traveled bytrucks was reduced by 2 million miles, eliminating 4 million
pounds of CO2 emissions.

Productivity is a program that enables us to understand the manner inwhich we are able to more efficiently use resources as a result of
introducing new or improved processes. Nippon Gases Euro-Holding’s
Productivity program contributes to increased customer value by
improving the following five points: (1) reliability, (2) disciplined execution, (3) operation and transaction efficiency gains, (4) environmental
sustainability, and (5) supply chain quality.
The program was started in 2003 with the introduction of the Six
Sigma method. Several years later, new concepts were added, such as
the lean method, the design sprint, and machine learning. Every year
new methods are introduced to further advance the program, which
continues to bring value to the Company.

Gabriel Kiewek
Director of Productivity
and Procurement
Nippon Gases Euro-Holding S.L.U.

Best Practice Example
In the process of manufacturing argon at an air separation
unit (ASU), we introduced an oxygen analyzer to enable
greater capture of argon in air by stabilizing the compressor
and the quality. This has resulted in a 6% improvement in theargon capture rate.
Compressor for long-distance transport ofliquefied gas by rail car

Compressor

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SPECIAL FEATURE

Total Electronics
Aiming to become a global superior supplier in the semiconductor ecosystem, NSHD will uphold the trust of our customers in the semiconductor manufacturing industry,
which is expected to grow going forward, and provide quality assurances. With new products, and technology solutions, we will promote further utilization and strengtheningof the Group's current resources and use our experience to further enhance customer relations.

NSHD Group’s Electronics Business Strategy
Supporting Customers with Total Solutions
The strengths of NSHD’s electronics business is its total capability
to meet a wide range of customer needs, including electronic material gases, bulk gases, and its supply infrastructure in various regions
where semiconductors are produced worldwide.
Total electronics is an important strategy for using these strengths
to support customers’ global expansion and growth with the comprehensive capabilities of the NSHD Group capabilities. By providing
customers with an extensive lineup of services, from supply of raw
materials to the equipment and devices needed to handle anddeliver them, understanding customers’ technical requirements to
help improve our products and services. Moreover, with a global
supply infrastructure and internal coordination within Total
Electronics, we are responding with agility to the recent trend ofincreasing domestic production capability of semiconductors inJapan, the United States, and Europe.
Furthermore, in high-end semiconductor manufacturing, there isa trend toward even greater consumption of energy and materials,
and customers are demanding ways to curb environmental impacts.
We aim to strengthen our initiatives to meet such demands.

Facility and Piping Installation

Technology Development with R&D

Electronic material gases have dangerous characters such as toxicity,
flammability, and corrosiveness, in addition to high pressure. We offer
installation of gases supply systems including gas cabinets, and alsooffer piping work to supply those electronic material gases safely andkeeping high quality. We also provide exhaust gases abatement systems to detoxify gases emitted from semiconductor manufacturing
equipment so that we can reduce environmental impact to exhaustthem environmentally safely. Furthermore, we supply safety monitoring systems to constantly monitor for gas leaks and system faults, aswell as offering refining equipment for oxygen and inert gases such as
nitrogen and argon which are used in large quantities. All thoseequipment is essential for semiconductor manufacturing plants tomake high-quality semiconductors.

Through close communication with customers, we understand theirvisible and potential needs and utilize it in the development of various technologies. For example, we focus on reducing environmental
impact, we have developed exhaust gas abatement system forhydrogen fuel and a system to capture and reuse xenon, which ispresent in the air at a concentration of just 0.0000087%. In addition,
further shrink and refinement of semiconductor manufacturing
processes is driving changing needs for materials, and we are working to develop new materials and supply systems for them in
response to market needs. Moreover, we developed the Intelligent
Gas Supplying System (IGSS), aiming to contribute to smart factories.
This next-generation gas supply system comprehensively monitorsand manages systems related to gas supply, and automatically performs inventory monitoring and management, and container transport as well.

IGSS

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SPECIAL FEATURE
Total Electronics

NSHD Group’s Electronics Business Strategy
Development of New ASUs
for Semiconductor Customers
The semiconductor manufacturing process uses high-purity oxygen
as an oxidizing agent, while also consuming a large amount of
nitrogen for various purposes such as carrier gas, equipment control,and safety applications. State-of-the-art processes require high-purity
oxygen and nitrogen with the lowest impurities of less than 10 parts
per billion. Newly developed air separation unit (ASUs) can meetthese needs by manufacturing high-purity oxygen and nitrogensimultaneously, while the production volume can be adjusted
through flexible operation for a lower environmental impact thanconventional ASUs.

Electronic Material Gases
With manufacturing bases in Japan, the United States, South Korea,
and Europe, NSHD manufactures a variety of electronic material
gases. We also have recent investments in manufacturing semiconductor gases in China and Southeast Asia, providing a structure thatcan meet demand for electronic material gases in each region while
supporting demand in other regions where Total Electronics operates. In response to our customers’ recent vigorous investment plans,
we will continue to make investments to expand our capacity inanticipation of growing demand in Asia including Japan, and inEurope and the United States as well.

Manufacturing electronic material gases

Todd Givens
Senior General Manager,
Total Electronics Strategy,Group Corporate Planning Office
Nippon Sanso Holdings Corporation

Comment from the Senior General
Manager of Total Electronics Strategy
As we saw a slight downturn in production in the
beginning of 2023, NSHD took this as an opportunity
to strengthen its customer relationships and improve its
overall operations as the Total Electronics Team. NSHD iscompleting a global quality policy that will apply to all of
its electronics facilities, and we are continuing to invest in
developing our employees and upgrading our operating
systems. We look forward to continuing to grow ourelectronics business by offering high-quality products
and services.

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SPECIAL FEATURE

Carbon Neutrality
The NSHD Group will help customers to reduce their GHG emissions by providing environmentally friendly products and solutions. We will strengthen
initiatives to develop the necessary technologies to achieve this goal, and promote stronger collaboration with strategic partners on technologies that we lack.

Initiatives of the Carbon Neutral Working Group
With the aim of realizing carbon neutrality by 2050, NSHD hasorganized a global working group to look for ways to contribute as
an industrial gases manufacturer and pursue new business opportunities. Our first initiatives are aimed at capturing “quick-wins” using
core technologies based on the Company’s strengths in four fields(combustion, hydrogen manufacturing, CO2 capture, and oxygen
manufacturing).
Focusing on the steel, aluminum, cement, and glass industries, weare promoting in-house technology development and building relationships with strategic partners who have complementary technologies.

contributing to more effective use of fuel by introducing combustion
exhaust gas monitoring systems to customers’ plant operation systems.

Hydrogen Manufacturing Technology

Combustion Technology•U nites States: In a project for Vertex Energy, Inc., we will manufacture hydrogen from renewable hydrocarbon feedstocks generated
as a by-product from Vertex Energy’s renewable diesel production.
This will enable an unlimited supply of low-carbon hydrogen.
•B elgium: We are participating in the first green hydrogen projectin Belgium, in which we will handle production and sale of greenhydrogen.
• Italy: We are focusing, in collaboration with Hysytech S.r.l., on abiomethane-related project. This type of project has increased
activity and demand in Europe.

CO2 Capture Technology andOxygen Manufacturing Technology
In March 2023, Taiyo Nippon Sanso developed equipment capableof capturing 10 tonnes of CO2 per day, and will now move forwardwith trials to be conducted in various regions, starting in Japan. We
are also designing an oxygen supply plant, which will be needed forthe atmospheric CO2 capture project.

Technology that uses oxygen instead of air to make fuel morecombustible increases the usage efficiency of heat and reduces fuelusage. We are promoting the proposal and introduction of oxygen
combustion to customers who have fuel furnaces, such as steel andaluminum manufacturers. Currently, we are working to develop
combustion equipment for use with hydrogen. In addition, we are

The Company is strengthening its capabilities to handle hydrogenon a large scale globally in order to contribute to the realization ofa hydrogen energy society in the future. In FYE2022, we acquired
long-term, large-scale supply contracts for hydrogen in Peru,
the United States, and India.

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Carbon Neutrality

Carbon Neutral Roundtable Discussion

TowardCarbonNeutrality—Discussing NSHD in 2050
Climate change countermeasures are a pressing
global concern, and there is now an increasing
focus on how companies are approaching sustainability around the world. NSHD has adopted theslogan “We enable a carbon neutral world,” andthe entire Group is taking steps to realize carbon
neutrality by 2050. Four mid-career employees
who are leading these efforts discussed examples
and ideas for new businesses to reduce CO2 emissions, their future potential, and their vision of theGroup in the future after the challenges have beensuccessfully met.

Facilitator:
José Ramón Calvo (Nippon Gases Euro-Holding S.L.U.)
Participants:
Masato Arai (Taiyo Nippon Sanso Corporation)
Ashis Kar (Matheson Tri-Gas, Inc.)
Ruben Pastor (Nippon Gases España S.L.U.)
Tan Wei Sheng Wilson(Nippon Sanso Holdings Singapore Pte. Ltd.)What’s Happening in Your Part of the World?
José Ramón Calvo I’m sure the situation is different in eachregion where everyone is working, but it’s fair to say that carbon
neutrality is an urgent priority in every region. It is a universal objective
for all of us in the NSHD Group, and also the central feature of themedium-term management plan. Could you start by telling us whatkind of initiatives are underway in your respective region? And pleasecomment on the kind of demand being created by these initiatives.
Tan Wei Sheng Wilson In terms of carbon neutrality initiatives,
Southeast Asia and India are still in the developing stage, whereas
Singapore is extremely proactive. A carbon tax has already been
introduced in Singapore, and the government announced a hydrogen strategy in 2022. Most Southeast Asian countries have set atarget of net zero GHG emissions by 2050, and India is aiming toachieve this target by 2070. Overall, the region is seeing innovation driven
by various initiatives and renewable energy is also emerging there.
In Vietnam, for example, approximately 16.4 GW of energy wasprovided by solar power generation in 2019–2020, and ASEAN isaiming to have 23% of energy consumption supplied by renewableenergy by 2025. International initiatives involving Singapore and theother countries in ASEAN started in 2022, and Singapore is importing renewable energy such as hydropower from Laos throughThailand and Malaysia. The industrial gases field appears to havevarious possibilities, and there is a particular focus on the manufacturing industry. Countries with large economies, such as India,
Vietnam, and Thailand, are promoting initiatives across a range offields, including steel, aluminum, glass, and cement. Other initiatives
include the production of green hydrogen through geothermal
power in Indonesia and aviation fuel and offshore data centers usinghydrogen in Singapore. Currently, Nippon Sanso Holdings Singapore(NSHS) has formulated a CO2 strategy and is working hard to capture
the benefits of the carbon neutrality trend.

Ruben Pastor
The European Union is
working proactively to achieve carbon
neutrality, and has set clear targets of reducing GHG emissions by atleast 55% compared to 1990 levels by 2030, and reaching net zero
emissions by 2050. To realize this, the European Commission has
adopted a set of proposals to work over several areas such as climate, energy, transportation, and taxation policies. In May 2022, theCommission announced the “REPowerEU” program, which is a plan
to reduce dependency on Russian fossil fuels and accelerate the shift
to renewable energy. Companies have already proposed a significant
number of products in this direction, and are undertaking various
initiatives.
Nippon Gases Euro-Holding (NGE) is working in several fields
following its own strategy. I think a good example is oxygen combustion. These products deserve mention because they contributedirectly to CO2 reduction, and also involve collaboration between
regions. There are already several installations operating successfully
among our customers, and going forward there is significant potential for them in industries such as steel, glass, ceramics, and cement.
Another important area is the biomethane and biogas market,
which is going to play a key role in a carbon neutral future. The
market shows remarkable economic efficiency in its ability to convert
waste into valuable resources. Our initial project is gradually becoming

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Carbon Neutrality

Carbon Neutral Roundtable Discussiona reality, and the prospects are extremely positive for the near
future. Another important field is green hydrogen production,
another market where our company has started participatingbased on its experience with the aim of adding value. In Europe,
an impressive number of projects have started to promote hydrogen production.
Ashis Kar We are also seeing significant movements in thehydrogen market in the United States. In fact, the U.S. government has just put forward a new hydrogen mission. Interest in
green hydrogen is also stirring in Asia, particularly India, where
the movement is of an unprecedented scale. As you may alreadyknow, the new hydrogen business that we have captured are in
the United States, India, and Peru. Our company is looking atbuilding a number of new hydrogen plants across the UnitedStates and in the Asia-Pacific region.
The Indian government has been extremely proactive in thehydrogen market, and has formulated a new policy of producing
approximately 1.2 million tonnes of green ammonia for export
annually. This is the newest technology to reduce dependency on
fossil fuel-based ammonia, which is a key raw material in fertilizer
and other products. Apart from these particular programs, we arein negotiations with several private-sector companies in fields
such as steel, petroleum refining, and glass, who are in the process of establishing pilot projects.*1
These particular projects are extremely important to us, andwe are looking at partnering with several companies to meetthe massive requirement for green and renewable electricity formaking green hydrogen. Apart from green hydrogen out ofelectrolysis using renewable power, there is also technology that
we are researching in Asia for biofuel-based green hydrogen.

In Indonesia, geothermal power generation runs 24 hours
a day, and there is substantial interest in participating in thisparticular region not only among governments and certain
private-sector companies but by some geothermal power players
as well. A large amount of CO2 can be captured from the geothermal power generation process itself, making it easy to produce green hydrogen and methanol. These could be the main
product categories for export.
Masato Arai In October 2020, the Japanese government
declared a national goal of achieving net zero GHG emissions by
2050. This resulted in a huge expansion in government subsidies.
Currently, a large number of demonstration projects are underway,
including CO2 capture, bioethanol production, and green hydrogen production and use. Taiyo Nippon Sanso (TNSC) supplies
industrial gases and related equipment for these projects. Not only
that, but we are also engaged in technical development of hydrogen and oxygen combustion technology, and a CO2 recovery
system was recently announced on our website. I feel that the
movement toward realizing a carbon neutral society is accelerating in Japan as well.
*1 A
 dvanced and experimental projects conducted with limited functionality scope,
application scope, and user numbers, etc.

Please see here for the full discussion.

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Value Creation Model

20

Value Created

22

Value Creation Drivers

Integrated Report2023

23	Value Creation Example:
Total Gas Centers / Site Services

Value Creation
Story

24

Value Creation Example: Group R&D

26

Value Creation Example: Group Engineering

28	The Power of Human Resources:
Message from Head of the HR Division
The Power of Human Resources: HR Philosophy
29	31	The Power of Human Resources: Workplace
32	Promotion of Women’s Active Engagement
Roundtable Discussion:
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Value Creation Model
The Nippon Sanso Holdings Group has helped to address social issues through innovative gas solutions based on the concept of “The Gas Professionals.”
We will continue to enhance human well-being, and contribute to a more sustainable future through our business activities.

External
Environment

Capitals(Environment and Society)** Recognition of the assumed external
environment set out in the mediumterm management plan NS Vision 2026

Business Activities

Financial capital

Manufactured capital

Consolidated total assets

Number of manufacturing sites(Production plants, filling stations)

2,158.9 billion

¥

Over

Invested capital

Climate impact(Shareholders’ equity +third-party equity (debt))

1,612.0 billion¥

Intellectual capital

Economic uncertainty

Number of R&D facilities

6

Research and development costs

3.5 billion¥
Geopolitical instability

Number of intellectual
properties/patents

Development ofSocial andrelationship capital

1,682

a digital society

Diversification of
thinking and lifestyles

323

Supporting the supply chains of
all industries (customers)
through the supply of industrial
gases and provision of equipment and engineering services,
we contribute to customers’
efforts to realize carbon
neutrality.

950

Amount of capital investment

110.0 billion¥

Human capital

Thermosbusiness

Global workforce(Consolidated numberof employees)

Thermos continues to introduce
new lifestyle products that areagreeable to people and society
and also environmentallyfriendly by combining our
vacuum-insulation technology
flexibly with unique lifestylecomfort ideas.

19,579** The consolidated number of employees
is the figure for all Group companies asof March 31, 2023. The aggregation
method is different from that used in
the non-financial information section
P.44, P.90 later in the report

Operations in
32 countries
and regions

Electronics
business
Through the supply of electronicmaterial gases and provision ofequipment and engineering
services, we contribute toreliable operations in thesemiconductor and LCD industries (customers), andfurther development of thesetechnologies.

Foundation for Creating Value

Natural capital

Preconditions
for the Existenceof an Enterprise

Energy consumption

Number of consolidated
affiliated companies

Industrial gases
business

13,945 GWh• Respect for human rights: Respect for human rights in every region of the world• Safety and security: Reliable supply of gas products (24 hours a day, 365 days of theyear without accident or disaster)• Corporate ethics: Appropriate activities in accordance with the Code of Conduct,laws and regulations, and ethics

Water withdrawal

44,988 thousand m

3

Group
Philosophy

Proactive. Innovative. Collaborative.
Making life better through gas technology.

The Gas Professionals

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Integrated Report
Performance
Value Creation inGroup
Introduction| Special Feature | Value Creation Story | Performance| Business Profiles | Group Information
Special Feature
SustainabilityHighlights | Sustainability GovernanceAppendix | Corporate Report 2023
Story
2023
Highlights
Each BusinessInformation

15
19

Value Creation Model

Using Our Competitive
Advantages
By enhancing the combined capabilities of
the Group and using our competitive
advantages, we will compete successfullyin the market and grow sustainably
in our five segments.

Japan
P.55

The Group’s Strengths• Rapid decision-making throughdelegation of authority from the holding
company to operating companies• Proactive horizontal deployment of bestpractices among operating companies

OUTCOMEOUTPUT

United States
P.58

Shareholders/
Investors
Increase corporate value
through timely andappropriate disclosures andconstructive dialogue.
Ultimately, sustainably
increasing investment returns
for shareholders.

P.10

Strengthening of
Non-Financial Capitals

EuropeP.61• Strengthening of human capital

Future Generations

P.29• Strengthening of manufactured capital
P.23

Asia and
OceaniaP.64• Groupwide operational excellence• Development of products that help
to reduce customers’ GHG emissions
P.14

VisionThermos
P.67

Help customers to resolve
issues and grow theirbusinesses by supplying themwith appropriate products
and services.

Realization of
the Group Vision
We aim to create social value
through innovative gas solutions that
increase industrial productivity,
enhance human well-being,
and contribute to a moresustainable future.

Pass on a sustainableglobal environment to thenext generation, who will
be responsible for the
future.

Society

Increasing Efficiency
and Productivity
P.10

Customers

Help to realize a society
where everyone lives
with a sense of security
and comfort.

Employees
Provide healthy work
environments and engage
in regular dialogue tohelp each individual build
their career and realize
the true extent of theircapabilities.

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Value Created
Under its management direction comprising the Group Philosophy—“Proactive. Innovative. Collaborative. Making life better through gas technology.”—and the tagline“The Gas Professionals,” which is the Group’s brand message, NSHD aims to achieve global expansion of the industrial gases business, total electronics business, andThermos business, and to create value in a sustainable manner.
This section introduces the Group’s value creation through these businesses from the perspectives of Proactive, Innovative, and Collaborative.

01 Proactive
Group Philosophy

Proactive. Innovative. Collaborative.
Making life better through gas technology.

The Gas Professionals

Sensing changes in the external environment, including society’s requirements and evolving needs, theCompany provides optimal solutions to potential challenges facing customers. In industrial gases, air separation gases (oxygen, nitrogen, and argon) have been main products for some time, but their applications,or value, change with the needs of each era. Under the four global regions and Thermos business operation structure, NSHD engages in efficient Groupwide communication to share information on changes inthe business environment and customer needs, as it strives to proactively create new value.

Group Vision

We aim to create social value through innovative
gas solutions that increase industrial productivity,
enhance human well-being, and contribute toa more sustainable future.

FYE2023 Examples Japan CO2 capture: Develop and launch CO2
capture equipment for small to medium-sized
emissions sources to help customers reduce their
GHG emissions
United States HyCO: Promotion of the HyCO
project, which enables large-volume productionof hydrogen with lower environmental impact,
together with Vertex Energy, Inc. P.14
Europe Oxygen combustion: Engagement on
the challenge of GHG emission reduction, such as
exploring collaboration in the biomethane fieldwith Hysytech S.r.l. P.14

Asia and Oceania Strengthening electronicmaterial gases production: Support for thedevelopment of the electronics industry bystrengthening our capacity to supply electronicmaterial gases, particularly diborane P.12 P.25
Thermos New products designed for ease of use:
Sales launch of an easy-to-use portable mug
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Value Created

02 Innovative

03 Collaborative

When customers use our products, we strive not only to meet their demands but also to provide themwith optimal solutions based on our knowledge of the characteristics of the gases, as well as the containers, pipes, and valves for using them, and the disposal of gases after use, offering proposals that aresuited to the conditions under which the gases will be used. To provide the most suitable value for eachcase, such as various technological innovations including digital technology, evolution of customers’ production processes, and changes in the consumption behavior of ordinary households, we take an innovative approach in our efforts to develop gas applications and products.

The gases and equipment that we handle demonstrate their true value when used by our customers.
Customers’ production processes present a wide range of challenges, such as reducing costs (including
efficiency gains through energy and labor saving), ensuring stable quality, and reducing environmental
impact (reducing GHG emissions). Our technologies include product gases and related equipment, such as
supply facilities, as well as gas application technologies and expertise including knowledge and experience.
It is important that we use these in a collaborative effort with customers to resolve their issues.

FYE2023 Examples 

FYE2023 Examples Japan Saving labor in cylinder transportation:
Sales launch of CLifter® high-pressure gas cylindertransport system to save labor
United States Efficient cell cryopreservation
system: Lowered liquid nitrogen consumption by
30% through increased efficiency of cell cryopreservation system using liquid nitrogen
Europe Participation in green hydrogenproject: Participation in Belgium’s first greenhydrogen production project in Zelzate,
Belgium P.14

Asia and Oceania Introduction of green electricity: Installed solar power generation systems at
23 Supagas offices and plants to assist with reduction of CO2 emissions
Thermos Lightweight tumbler: Launched a

new tumbler approximately 35% lighter than
products with the same capacity (class-leading
lightness)

Japan Algae biotech: Investment in Algal BioCo., Ltd., a microalgae start-up, and start of business alliance P.25
United States Reduction of in-house GHG
emissions: Supply of electricity generated using
renewable energy from Central Line Solar in
Arizona
Europe Participation in hydrogen combustion project: Participation in the HyInHeat project, which aims to resolve heating process issues
in energy-intensive industries

Asia and Oceania Contribution to regional
industrial development: Establishment of Long
Son Plant in Ba Ria–Vung Tau Province of Vietnam,
contributing to industrial development of neighboring regions P.26
Thermos Promotion of personal bottles:
Ongoing initiatives to reduce environmental
impact with Alvark Tokyo, a Japanese professional
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Value Creation Drivers
With our business operation structure of four global regions (Japan, the United States, Europe, and Asia and Oceania) and Thermos, we will mutually share excellent operational practices in each region and business within the Group to strengthen our global comprehensive capabilities and demonstrate our competitive advantage.

Value Creation Core
Under our philosophy of “Proactive. Innovative. Collaborative.
Making life better through gas technology. The Gas Professionals,”
the Nippon Sanso Holdings Group has stated its Group Vision, “We
aim to create social value through innovative gas solutions that
increase industrial productivity, enhance human well-being, and contribute to a more sustainable future.”
As our customers’ supplier of choice, we strive to correctly understand the objectives of our immediate customers, and demonstrateprofessionalism by making maximum use of our technologies,
knowledge, and experience; offer reliability in products, services, andengineering so that they can be used safely and with confidence;and supplemented by our continuously evolving technologies. In
addition, it is vital that our diverse human resources, who share our
Philosophy and Vision, link organically in their respective regions andbusinesses, and cooperate to create new value.

Toward Further Value Creation
Accelerating Globalization
The Company’s main story began in 1910 with the founding of
Nippon Sanso Ltd. In 2004, the former Nippon Sanso Ltd. mergedwith the former Taiyo Toyo Sanso Co., Ltd. to become Taiyo Nippon
Sanso Corporation (now Nippon Sanso Holdings Corporation). Thismerger was the beginning of an aggressive globalization effort. Asof March 31, 2023, the Group has operations in more than 30 countries and regions worldwide, the result of many years of initiatives
powered by our human resources, the drivers of our value creation.
In December 2018, following the merger of the former Linde Gas
North America with the former Praxair, Inc., the Company acquired
Praxair’s European industrial gases business and in February 2019acquired Linde’s U.S. HyCO business, which has led to the current
structure of NSHD’s four global regions.

Consolidated Net Sales and Revenue/Sales Composition
10%
11%

FYE2005*1(When Taiyo Nippon Sanso
was launched)¥¥

300.0 billion

FYE2023468.3 billion

23%(Japanese GAAP)

79%
North America*2

13%

FYE2013

17%(Japanese GAAP)

Japan

3%

12%

Japan

1,186.6 billion(IFRS)

26%

70%
Others*3¥

35%

North America*2

Others*3

Japan
United States
EuropeAsia and Oceania
Thermos*1 O
 n October 1, 2004, the then Taiyo Nippon Sanso Corporation was launched through the merger of the former Nippon Sanso Ltd. and the former Taiyo Toyo Sanso Co., Ltd.
Consolidated financial results for FYE2005 do not include the first-half financial results of the former Taiyo Toyo Sanso Co., Ltd. (April 1 to September 30, 2004).
*2 United States*3 Singapore, Malaysia, China, Taiwan, etc.

In October 2020, the Company adopted the current holding company structure (changing its name from the former Taiyo Nippon
Sanso Corporation to Nippon Sanso Holdings Corporation), and built
a competitive Group operation structure as a global gas major fromits previous Japan business-oriented structure. Moreover, the Japanbusiness was transferred to a newly established corporate split preparation company, which was then renamed to the current Taiyo
Nippon Sanso Corporation, and the Group operates as the Taiyo
Nippon Sanso Group.

Main Initiatives
Five Focused Fields
Our transition to the holding company structure had several objectives; namely, to increase decision-making speed and appropriately
allocate management resources by delegating authority, to clarify

responsibility for business execution and performance, and tostrengthen the Group’s comprehensive capabilities by sharing thecharacteristics and strengths of each area. With these in mind, in
May 2022 we announced the medium-term management plan NS
Vision 2026, a four-year plan covering the period until FYE2026,
under which we are currently executing five focused fields P.9
As part of “operational excellence,” the Group holds periodic operational excellence events aimed at raising the entire Group’s awareness to increase cooperation between businesses. In addition, theGroup is actively promoting operation standardization and optimization through horizontal sharing of best practices. In January 2023,
the Group held a global, cross-regional conference on the theme ofpricing action, in which we shared the cost situation, trading practices, and thoughts on pricing, and policy on price-setting in eachregion. We are also continuing global human resource exchanges.

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Value Creation Example: Total Gas Centers / Site Services
At customers’ sites or adjacent to them, the NSHD Group offers various services to support customers and gases supply security by 24-hours by Total Gas Centers equipped withultra-high-purity nitrogen manufacturing units, supply equipment for bulk gas such as oxygen and argon, and warehouse for semiconductor specialty gases.

Providing Total Solutions

The Spread of Site Services

Semiconductor manufacturing requires massive capital investment
and fine processing technologies. Therefore, it is of utmost importance that equipment operations be stable and efficient. Furthermore,
there are risks that tiny defects may damage an entire silicon wafer,
which was developed through multiple processes by several hundred
to thousand steps. Therefore, all production processes are conductedunder strict quality management.
Stationed at or adjacent to our customers’ sites, we can offer
high-quality, reliable gas supply by providing a wide range of gasrelated services. These include inventory management, transportation, or cylinder replacement for our electronic material gases
products, as well as maintenance and management of gas-related
equipment and on-site production and quality management of bulk
gases.
Through offering these services, we build close relationships withour customers. We offer them total solutions that goes beyond manufacturing and selling electronic material gases and providing equipment and facility construction by ascertaining customers’ potential
technical challenges and proposing strategies to resolve them.

The NSHD Group has more than 20 site service locations in Japan,
the United States, Taiwan, and Singapore, and is also expanding its
services in China.
Demand for semiconductors keeps expanding which is used in awide range of applications, including household appliances, smartphones, PCs, and other electronic equipment, as well as in data centers, which support digital societies, autonomous driving, andindustrial automation.
Meanwhile, semiconductor manufacturers are continuously expanding their production capacity to keep pace with those social needs.
As “The Gas Professionals,” we have accumulated technologies
for plant engineering, gas handling, and quality and safety management, which we will use to provide safe and reliable supply of highquality gases. In this way, we aim to help our customers to conduct
stable, highly efficient operations to produce high-quality semiconductors, and to expand our site service business further.

Total Gas Centers established adjacent to customers’ sites

Site in Japan

Lander Zhu
Site Manager
TNSCI Wuxi Co., Ltd.

Comment from the Manager of TNSCI Wuxi’s
Site for Shanghai Huahong Grace Semiconductor
Manufacturing Corporation
Our responsibility is to continuously
supply chemicals and industrial gases,
continuously improve and optimize
equipment operation capabilities, andunify and standardize daily equipment
maintenance. We complete paperwork
on consumption and record of Periodic
Maintenance, etc., and change(Left) Commemorative
award for 1,000
container of gas & chemical, orderconsecutive days without
containers, and spare parts routinely. accidents(Right) Commemorative
We have not had an interruption in award for 2,000 consecutive
supply or a safety incident since 2016. days without accidents
We are proud that we conscientiously complete every task
to ensure a stable and safe production environment at thecustomer’s site as a member of “The Gas Professionals.”
We insist on monthly safety and operation training andassessment for employees to meet the various needs ofcustomers. There are few professionals engaged in thisfield, and new employees are trained from scratch, witha relatively long training cycle.

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Value Creation Example: Group R&D
The NSHD Group’s continuing rigorous pursuit of gas and R&D applications and technologies will help to create new demand for gases. We will continue striving topropose total solutions for our customers’ needs, cooperating as a Group supported by a wealth of expertise and experience.

Development Strategy for Basic Technologies
We will cultivate and expand basic technologies andpursue sustainability while deploying innovations at all
Group companies to help increase operational efficiency
and profits.

Masahiro Takeuchi

Overall
PolicyComment from the Head of the
R&D Unit of Taiyo Nippon Sanso

Strategies• Expand existing technologies to strengthen our fundamental business• Establish a portfolio strategy of concentrating resource
investment in growth fields where the Group can leverage its core competencies to explore and expand new
business domains• Use open innovation to complement technologies,
accelerate development, and expand channels• Contribute to operational efficiency through effective
use of digital technology

Group R&D Execution
Matheson Tri-Gas
U.S. market
Japan
domestic
marketTaiyo
Nippon
Sanso
R&D

NSHD
R&D

Nippon Gases Euro-Holding
Europe market
Operating company groups in
Asia and Oceania
Asia and Oceania market

To promote efficient and optimal R&D for the Group, in collaboration with partners, activities are carried out mainly by the R&D facilities within the Group’s
Japanese operating company, Taiyo Nippon Sanso Corporation.

Executive Officer, Head of the R&D Unit
Taiyo Nippon Sanso Corporation

R&D is the engine of innovation, and the wellspring ofcorporate growth. Under the development strategies on
the left, we are making a dedicated effort to promote
the NSHD Group’s R&D to help the Company make further forward progress.
Our contributions to realizing a carbon neutral society,to the development of an electronics industry to support
a carbon neutral society, and to labor savings and theachievement of the United Nations (UN) Sustainable
Development Goals (SDGs), show that we are focused on
global issues. By integrating and further cultivating technologies that we have developed in Japan, the UnitedStates, Europe, and Asia and Oceania, deploying themappropriately for the characteristics of each market, andso forth, we will promote more effective development
and operational efficiency gains for the Group overall,and contribute to increasing profits.

Cultivating and Expanding BasicTechnologies and Pursuing Sustainability
We are promoting R&D to support the industrial gases business,
electronics business, plant business, medical business, and fundamental businesses that support business development. We are working to cultivate and expand basic technologies such as oxygen
combustion technology, gas separation, capture, and purification
technology, air separation-related technology, and stable isotope
separation technology, given their prominent contribution to carbon
neutrality and sustainability.
In relation to ASUs, in addition to cultivating basic technologies,
we are also working on the application of DX to plant manufacturing, plant operation, and logistics. Specifically, we have set a goal tocreate a plant operation system with advanced remote monitoring
systems and plant operating condition control systems, that will
enable increased productivity (high performance, high quality, lowcost) and effective utilization of human resources for large-scale
ASUs that produce industrial gases. From FYE2024 onward, we will
begin opening Remote Operation Centers (tentative name) featuring
these functions to contribute to sustainable manufacturing of industrial gases, which is the Company’s core business.

Innovation

Oxygen combustion technology

Water-18O (Water-18O stable isotope)

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Value Creation Example: Group R&D

Innovations

Contribution through Electronics

Contribution through Gas Applications

By realizing innovations based on gas usage to provide customers
with high-value-added solutions, we will continue to explore andexpand new business fields.
Recently, we have been promoting initiatives in the additive manufacturing (AM) business, a new business based on the atmosphericgas control technologies cultivated in the welding business, the gas
purification technologies cultivated in the semiconductor business,and high-purity gas supply technologies. We are promoting collaboration with metal 3D printer manufacturers and metallic powder
manufacturers to develop technologies related to AM printing technologies in general, and we have also launched our 3DPro® solutions
for contributing to the practical application of metal AM.
One of the new business domains that we are focusing on
is microalgae cultivation, which has the potential to be a nextgeneration industry that aligns with the SDGs. Rich in protein, vitamins, and amino acids, microalgae is familiar as a nutritional supplement; and it also has promising applications for environmental
improvement, energy, and carbon sequestration, with the additional
property of being cultivated using CO2 as a raw material. In
December 2022, the Company invested in microalgae start-up Algal
Bio Co., Ltd., and the two companies have started a business alliance promoting R&D and establishing large-scale microalgae
cultivation technologies.

We are contributing to the accelerating spread of digitalization
throughout society and to the advancement of electronics industries
that will support a carbon neutral society through our sales of­electronic materials gases and related equipment and our global­provision of services, while also strengthening our technology­development. In particular, we have commercialized BRUTE®Hydrazine and Peroxidizer, using the proprietary technologies of
U.S. company RASIRC, Inc. These products are completely new gas
sources that can safely supply anhydrous hydrazine gas and peroxidegas, respectively, in high concentrations. The development of Atomic
Layer Deposition (ALD) technologies has been shown to enable abetter process than that of the existing nitride and oxide materials.
In addition, diborane manufacturing technology developed by Taiyo
Nippon Sanso has been expanded to Group companies in South
Korea and China, contributing to a worldwide increase in diborane
production capacity.

Gas application technologies are also being expanded across a wide
area including Japan, Asia, Europe, and the United States.
(1) O xygen combustion technologies(product names: SCOPE-JET® and Innova-Jet®)• F or the steel, glass, and aluminum industries, etc.: Contribution toCO2 emission reduction through fuel reduction(2) G as atmosphere control technology(product names: Sanarc®, MG Shield®, and Bistranza®)• F or the automobile and construction machinery industries:
Contribution to yield improvement, productivity increases and
GHG emission reduction through heat treatment of components• F or the food industry: Contribution to extension of shelf lives andreducing food loss through food packaging(3) C ooling and freezing technology(product names: Bistranza® and sub-zero treatment equipment)• For the food industry: Contribution to productivity increase
through high-quality freezing and rapid freezing• For metal component manufacturers: Contribution to quality
improvement through rapid cooling

An AM Advanced Room established inside
the Yamanashi Laboratory to serve as
the global center for AM technology
development

Conducting R&D on algae with Algal Bio(Left) BRUTE®-Hydrazine and(Right) Peroxidizer, which were commercialized through proprietary technologies of
U.S. company RASIRC, Inc.

Liquid nitrogen tunnel freezer Bistranza-FZT

25

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Value Creation Example: Group Engineering
The NSHD Group collaborates internally to offer a full line of services, from basic to detailed design of plants, to manufacture, procurement, construction, trial operation, andmaintenance. In this example, we present the Long Son project undertaken by Nippon Sanso Vietnam Joint Stock Company (NSVN) and Taiyo Nippon Sanso Corporation (TNSC).

Overview of the Long Son Project
NSVN started supplying nitrogen gas from an ASU made by TNSC to
Long Son Petrochemicals Co., Ltd. (LSP) in 2022. Work started on
the project in 2019, after over 10 years of talks with LSP, including aperiod of approximately two years when all activity was severely
restricted due to the COVID-19 pandemic. However, the engineering
teams of NSVN and TNSC worked closely to overcome this difficult
phase and contributed to the customer’s production operations.

Planning Stage

01

The Long Son project differed from projects in developed industrial areas in that the plant was constructed in an area that was
devoid of such infrastructure as access roads, electricity, watersupply, and drainage facilities. This made the project extremely
challenging for NSVN. Moreover, since the plant facility location
was subject to limitations due to the shape of the land,
repeated consultation was undertaken with TNSC to determine
a suitable plant layout.

02

New Ideas:
Introduction of First Remote IO System
In this project, NSVN deployed remote technology for input/
output signals between equipment (IO) for the first time.
Conventionally, plants have required installation of multiple
analog wiring systems; however, the introduction of IO technology enables an IO panel at a remote location to be connectedto the main control system via a single fiber-optic cable forcommunication. To align with the customer’s production operation schedule, the plant construction period needed to be
shortened, and the introduction of this technology enabled asignificant reduction in the amount of work required for wiring.

Nippon Sanso Vietnam

Undeveloped land prior to plant construction

Plant using remote IO technology

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Value Creation Example: Group Engineering

Construction Stage03

The project had started andthe fabrication of the mainequipment of the plant wasunderway when the global
COVID-19 pandemic
occurred. Fortunately, thesituation in Vietnam was not
as extreme as in other countries, so construction delays
NSVN staff present a project status update to the customer
at the site were managed toa minimum. However, production was halted at major equipment suppliers in Japan, China, and Europe,and the situation made it difficult to dispatch engineers to the site. With nosign of the pandemic abating, and the customer’s production start date drawing closer, TNSC managed to ship the rectification tower, which is the primary
piece of equipment, with a delay of only about two months, but delivery of
the other main units was heavily delayed. To address this situation, the engineering teams of NSVN and TNSC searched for the best way to proceed withsite work so as to get the plant up and running within the remaining construction time while also ensuring product quality. For example, previously an engineer had been dispatched to provide support and verification when installingmajor equipment; however, this time we provided remote support for Japan byusing wearable cameras. Moreover, to ensure the overall quality of the plant,
we proceeded with on-site construction by arranging the schedule so that final
trial operation would take place after pandemic travel restrictions were lifted
and it was again possible to dispatch an engineer.

Trial Operation Stage04

For a project of this size, we would usually dispatch two supervisors fromJapan. However, due to the impact of COVID-19, we were obliged to conduct
the trial operation with a single director. The trial operation of a plant isbroadly divided into (1) trial operation preparation, involving standalone checksof each gauge, and standalone testing of various rotating machinery, and (2)comprehensive ASU trial operations and associated rectifications.
The trial operation preparation was completed smoothly, even with only asupervisor dispatched from Japan, due to careful sharing of information andcooperation with the members of NSVN’s engineering team, which is composed of specialists with experience in rotating machinery, electricity and control, piping installation, and operation.
Comprehensive trial operations also required a supervisor to work overnightfor a 24-hour operation period. Therefore, this time, we tried a new approach,conducting the supervisor’s work remotely from Japan. Faults that arose during
trial operations were discussed by the engineering teams in both countries
through a teleconference, and with both teams working together, solutions
were quickly identified.
Initially, we were apprehensive about communication
issues due to performing theoperations remotely, butwith the high skill level of
NSVN operators the comprehensive trial operations werecarried out without a hitch.
Opening ceremony of the plant

Key Points in the Project’s SuccessThis project was the eighth in a seriesof plants for NSVN, and was built in
response to the new construction of oneof Vietnam’s largest petrochemical complexes. Since this plant is located on asite with no existing infrastructure, manydifficulties arose in its design and construction. From the initial stages of the
project, the NSVN’s engineering teamshared information with TNSC’s engineering team, and after discussing manytechnological options, they formulated
the optimal plan. While COVID-19 was
spreading, the teams held online discussions and coordination meetings, andmade use of the latest technologies toenable them to carry out the projecton schedule in line with the customer’s
wishes. Although the teams were separated by a great distance, they worked
together and cooperated to overcome
seemingly impossible hurdles to get theplant operating, helping to build theenergy infrastructure in Vietnam.

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The Power of Human Resources:

Message from Head of the HR Division

We will create an environment that enables the Group’s diverse human resources togrow and take pride in their work as “The Gas Professionals” or Thermos professionals.
Basic Approach
The industrial gases business is part of the infrastructure of industry,
while the Thermos business handles lifestyle products that people
use daily. I believe integrity is the most important foundation for ourhuman resources. Integrity underpins the Group’s most important corporate activities in the areas of respect for human rights, safety &security, and corporate ethics. Without integrity, we cannot earn thetrust of all our stakeholders including customers and investors.
FYE2023 was the first year of our medium-term management
plan NS Vision 2026, and we made a strong start during the year,
despite an adverse business environment with soaring raw materials
prices such as energy costs. It was also a year to reaffirm the powerof the NSHD Group’s human resources. In particular, amid ourintense focus on price management, I believe that our success in
obtaining customers’ understanding to proceed with price changes
was due to our stable provision of value in the form of products andservices that customers require. This was the result of our humanresources working together with integrity to perform various functions, from production and sales to the back office.
Our organizational culture ensures that we fulfill our social responsibilities as a company in line with the Group’s Code of Conduct. We
have been working to increase employee engagement through empathy with the Group Philosophy and Vision. In this way, I believe that
the Group can make an even greater contribution to society.

Developing Human Resources through Exchanges
Each operating company takes measures to secure and develop its
human resources appropriately for the situation of the company andregion. Meanwhile, to address common issues that need to be handled at the Group level, we have found it effective to build networks
and organizations across operating companies. These enable humanresources throughout the world with expert knowledge and experience in their respective fields to make connections, sharing each
operating company’s best practices to strengthen the comprehensive
capabilities of the entire Group. We have already formed these kindsof structures for projects in areas such as IT security and carbon neutrality, as well as networks for enhancing productivity, and these arefunctioning effectively. The HR Division has also created a Group network centered on personnel affairs for Nippon Sanso Holdings. It is
used for mutual sharing of the status of progress on promoting
active participation and comfortable working environments for
women, along with promotional case studies. It has also been used
to conduct an exchange of opinions regarding action plans developed as a result of the first Groupwide engagement survey, conducted in 2022. Looking ahead, we will use what we learn throughthese opportunities to enable discussion of new personnel measuresand revisions of systems to suit the respective situations in eachcompany and region.
In addition, we recognize that human resource exchanges
between regions are not only useful for immediate business operations but are also extremely effective opportunities for employees toacquire the necessary skills, such as communication, autonomy, proactivity, and cultural understanding, and to develop the global mindset needed to lead the Group in the future. We will actively promote
human resource exchanges, including remote and on-site assignment.
The Group has excellent talented human resources all over theworld. We will work to prepare an environment in which all employees will be able to commit themselves deeply to the Company’s
Vision and Mission and carry out their duties toward the achievement of NS Vision 2026, thereby growing as people and contributing to society and the earth, working with pride as “The Gas
Professionals” or Thermos professionals.

Yasukazu Takada
Head of HR Division
Nippon Sanso Holdings Corporation

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The Power of Human Resources:

HR Philosophy
The NSHD Group’s business is operated through the collective individual efforts and capabilities of approximately 20,000 employees worldwide. We aim to encourage evendeeper understanding of the Group Philosophy and Vision at the industrial gases business Group companies in the four global regions and the Thermos Group.
By promoting the development of human resources sharing the same values globally, we aim to promote the development of our businesses and the achievement of
medium-term management plan NS Vision 2026.

“The Gas Professionals”
Increasing engagement by sharing and understanding the Group Philosophy and Vision
Nippon Sanso Holdings’ Philosophy and Vision

Taiyo Nippon SansoGroup

Matheson Tri-Gas
Group

Nippon Gases
Euro-Holding GroupOperating company
groups in Asia andOceania

Thermos Group

Human resource exchanges and promotion of best practices
Basic values of health, integrity, and resourcefulness
HealthUnderstands the Importance ofOccupational Health and Safety: Looks
after their own health and helps create
positive working environments
Displays a Positive Attitude: Has a positive
attitude and sees projects and work throughto completion
Demonstrates Organizational
Capabilities: Uses communication to overcome limited personnel levels and maximize
teamwork

Integrity

Resourcefulness

Earns Customer Trust: Exhibits a dedication
to reliable supply and quality assurance andresponds with sincerity

Knows the Customer: Responds to customers’
expectations and interests

Exhibits a Well-Formed Character:
Maintains an agreeable temperament andpromotes mutual trust and respect
Endeavors to Fulfill Responsibility toSociety: Works to comply with safety,
security, and environmental standards,
as well as with social norms

Knows Himself/Herself: Works to realize
personal goals and acquire knowledge andskills crucial to a professional and strives toact independently
Knows Society: Strives to be open, graspchanges, and looks to the future

In February 2021, the Company formulated the Global Policy
on Respecting Human Rights, Contributing to Communities,
Employment, Labor, and Health, which is applied across the entire
Group. Under this policy and the Group Code of Conduct, all Group
officers and employees are involved in respecting human rights andproviding appropriate working environments. They develop awareness through internal training and other such opportunities, so thatthey can contribute to society through business activities underpinned by an awareness of fulfilling our corporate social responsibility.
Furthermore, the Group Philosophy has the tagline “The Gas
Professionals.” To nurture such professionals with a sense of mission
and a desire to contribute to society and the earth, it is important tofocus on the qualities of health, integrity, and resourcefulness. These
values have been inherited by the Company from the time of its predecessor, the former Taiyo Nippon Sanso Corporation, and they arealso shared by the Thermos business. The essence of health, integrity, and resourcefulness is also shared in an easily understandable
form by all Group companies and this is supplemented with eachcompany’s own individual values.

Employee Engagement
Human resources are the starting point for all value creation. In orderto respond to a rapidly changing business environment, labormarket, and other factors, as well as achieve our objectives in thefive focused fields and segment specific strategies, we need tosecure and retain diverse human resources, such as people withvarious experiences and mid-career hires, of any gender, nationality,
or age group, and create comfortable working environments thatenable them to deliver their full potential. To create such an environment, the NSHD Group started conducting the Groupwide engagement survey in 2022, to gauge whether employees empathize with

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The Power of Human Resources:
HR Philosophy

the Company’s Vision and work proactively with a voluntary desire
to contribute, and to determine their state of well-being (physical,
mental, and social health). The results of the survey are analyzed
by region, organization, and priority to assist with the continuous
examination and revision of various initiatives.

Promotion of Diversity
In a post-COVID-19 era, the Company needs to respond to diversification of social and work-related values, and changes in the populationand labor market. We also need to incorporate new insights for increasing customer satisfaction and productivity. It is therefore necessary tocontinuously promote measures for accepting diverse human resources.
(1) Initiatives to Promote Women’s Active Participation
As a particular focus for the diversification of human resources,
the NSHD Group has been promoting women’s active participation
across the entire Group. We have set targets for FYE2026 of a rateof female employees for the Group of at least 22% and a rate offemale management posts of at least 18%. The degree of active
participation by women is different by region in the Group, even
within the same industrial gases business. Therefore, we will deploy
measures suitable for the situation in each region. We will also workto accelerate our progress by sharing information on the measures
deployed between HR departments within the Group.
Examples of Initiatives:
Japan Launched Promotion Project Team for Women’s Active Engagement

at Taiyo Nippon Sanso Corporation (plan to propose measures to management in the second half of FYE2024)
United States Strengthened recruitment competitiveness by presenting therate of female management posts/employee activity statususing social media
Europe Conducted sponsorship program for women in management,

female support network, led by female managers
Asia (Southeast Asia)

P rovided webinars on promoting women’s active
participation

Thermos Conducted career advancement training for female employees
NSHD

Introduced female employees working in each region in the Group’s
internal bulletin(2) Employment of People with Disabilities
We are promoting the creation of workplaces where employees withdisabilities can work in their own way with peace of mind, while tailoring these efforts to the situation in each region. Our Japanese
operating company, Taiyo Nippon Sanso Corporation, has been
actively promoting the employment of people with disabilities forsome time, and they are active across a wide range of positions,
including general duties, management, accounting, sales, logistics,
technology management, production management, R&D, and­engineering. As of April 2023, the employment rate was higher than
the government’s statutory employment rate at 2.44%. Furthermore,
we are also taking steps to employ people with disabilities overseas,in line with local laws and regulations.

Human Resource Exchanges
Global human resource exchanges are extremely effective for promoting strategies targeting the entire Group and the sharing of technologies and expertise, as well as for developing global human resources
to lead the Group. As of March 31, 2023, more than 80 employees
had transferred between countries and regions worldwide, where they
are working in various positions and roles. Furthermore, the current
ratio of non-Japanese employees working at NSHD is approximately
5%, and we believe it is necessary to promote human resource
exchanges between the holding company and overseas operatingcompanies from a perspective of developing executives for the holding
company who will supervise global business. We will continue to promote human resource exchanges across regions with a view to bothbusiness promotion and human resource development.

Initiatives for Work–Life Balance
Corporate growth is driven by people working with motivation, and
it is essential to encourage individuals to look after their health. Froma perspective of promoting diversity, including women’s active participation, we believe it is necessary to provide an environment whereindividual employees can maintain a balance between work and­personal life, while demonstrating their full potential. Based on thisidea, we are working toward flexible working systems and environments to facilitate work–life balance in view of the customs and lawsof each country and region.

System for Promoting Groupwide Initiatives
Each operating company is engaged in measures to secure anddevelop human resources in accordance with their local situation.
However, for responding to universal issues that the entire Groupneeds to address and sharing best practices between operating companies, as a pure holding company, NSHD’s HR Division coordinateswith the HR divisions of each operating company to promote a
united effort.

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Value Creation Story
Performance Sustainability
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Business
ProfilesGovernance
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Group InformationAppendix Corporate Report 2023
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The Power of Human Resources: Workplace

Employees Working in Various Regions

The Gas Professionals: Employees Doing Their Jobs at Various Operating Companies

As “The Gas Professionals,” we will carry out our
mission and realize the social significance of theCompany.
The Company has adopted the tagline “The Gas Professionals” for
its Group mission. In more than 30 countries and regions worldwide,
individual employees demonstrate their capabilities to create newvalue. Through their efforts, we aim to remain the preferred choicefor customers as a corporate group.
To be the ideal industrial gases supplier for our customers, theNSHD Group must be a professional, stay one or two steps ahead sothat it can propose even better ways to use gases, and continue its
tireless efforts to improve the reliable supply and quality of products.
To achieve this, we will listen to customers, correctly discern what
they require, and provide them with the value they expect using our
products and services, while constantly striving to increase efficiency
and productivity, and to hone our internal operations.
We are proud of the role that industrial gases play as part of theinfrastructure for industry. Industrial gases are widely used in society,and their safe and reliable supply is taken for granted. To carry out
our mission and realize our social significance as one of the companies that supplies vital industrial gases to a society where individuals
live abundant lives, each of our employees in the regional segmentsof Japan, the United States, Europe, and Asia and Oceania is committed to doing their job.
In this section, employees responsible for working in sales, logistics, operating process improvement, and supply chain management
relate memorable episodes from their work.

Eita Echigo

Marie Robertson

Japan

United States

Sales Development, Industrial Gas Unit
Taiyo Nippon Sanso Corporation

ROC Manager
Matheson Tri-Gas, Inc.

I think that creating demand for gases, and understanding and maximizing the benefits and effects that customers can obtain throughindustrial gases, is an example of “The Gas Professionals.”

Matheson Tri-Gas is making a concerted effort to promote continuous improvement and innovation at the Remote Operation Center sothat it can promote remote operation in the industrial gases industry.

Please see here for details.

Please see here for details.

Álvar Pescador Calleja

Nguyen Huong Thao

Spain

Vietnam

Productivity Technician, Productivity
Department-Iberia
Nippon Gases España, S.L.U.

Supply Chain Management
Nippon Sanso Vietnam
Joint Stock Company

My core value is discerning what is efficient. To make improvements,
it is important to extract and analyze objective information and work
toward actionable decisions.
Please see here for details.

The main objective of supply chain management is to reduce corporate operating expenses while maintaining a reliable supply of theindustrial gases vital to customers’ production activities.
Please see here for details.

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Promotion of Women’s Active Engagement Roundtable Discussion: Female Diversity, Employee Growth

Promoting Active
Participation of Womenon a Global Scale
Part2
What Opportunities Do NSHD Group Employees Havein Order to Realize Their Personal Goals through Business?
Continuing our discussion from last year on the theme of“What opportunities do NSHD Group employees have in orderto realize their personal goals through business?” from theperspective of human resources, we held a roundtable discussion with representatives from our four geographic hubs andthe Thermos business.
This time, all five of the participants are women,each in a managerial role. With “rate of female employees”
and “rate of female management posts” as KPIs in themedium-term management plan NS Vision 2026, the participantsconsidered the nature of an organizational culture in which
women participate actively and achieve their personal
aspirations.
Please see here for Part 1 in Integrated Report 2022.

Being Undervalued Made Me Stronger
Shingo Noguchi Please tell us about some of the barriers that you
have come up against in your careers to date.
Tracy Chou I suppose the main one for me is having to look after
my household and children while working. In my case, my mother-­inlaw helped me with childcare, and stepped in when I had to worklate; but in Taiwan, company support systems are not well developed.
To be frank, I could say that even Nippon Sanso Taiwan (NSTW) has
almost no support for working women. During the COVID-19­pandemic, we used telework for roughly three months, but this wasreally the only time when there was any flexibility in the work system.
I would love to see NSTW join those that have introduced support
systems to make it easier to handle housework and childcare.
Tomoko Hayakawa I think that many women really struggle withthe worry that they may not be able to take on the responsibility andwork of a management role in the same way as a man. For myself,
as the first woman to have a management role in Thermos, I worriedeach day if my performance was good enough. However, I realizedthat eventually the issue would be resolved naturally as I accumulated experience. There are probably many women who think that amanagement role would be impossible for them, so I hope that bysharing my own experience I might be able to help in promoting
active participation of women.

Facilitator:

Participants:

Shingo Noguchi

Toshie Furuumi

Leah Hull

Kathleen Sels

Tracy Chou

Tomoko Hayakawa

HR Division
Nippon Sanso Holdings Corporation

Executive Officer,
Head of the Medical Unit
Taiyo Nippon Sanso
Corporation

Vice President,
Production Operations,Continental Carbonic
Products, Inc.

Sales Manager,
Sales BNF
Nippon Gases
Belgium NV

Director, Financial &Accounting Division
Nippon Sanso
Taiwan Inc.

General Manager,
Administration Division
Vacuumtech Philippines Inc.
(on assignment from
Thermos K.K.)

Toshie Furuumi I am actually wondering if I even encountered any
barriers. It’s probably that once you’ve overcome it, you no longer
feel it. Having said that, one of my colleagues recently became
unable to continue working due to needing to take care of a parent,
and so she decided to take a leave of absence for a time. She has
said to me in an email that she definitely intends to return to work,
and we definitely want her to return. She has a strong passion forthe company and for her work, and I look forward to being able towelcome her back.
Leah Hull There is so much I want to say. I feel that it is the samein the United States, with the general trend being that women takeon the burden of housework and childcare, and then have to makea career on top of that. Without any support, it becomes extremely
difficult to maintain work–life balance. Luckily for me, my leadershipis understanding and we have trust, so I’m able to be flexible when
the need arises. However, if there are systems that enable people tohave flexible work styles and to balance work with their personal
life, then I think it’s important to introduce them.
Kathleen Sels I agree completely. I have also experienced challenges with work–life balance, and am constantly searching for agood balance between work and my personal life. I also encountered various barriers when I was starting out in my career.

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Promotion of Women’s Active Engagement Roundtable Discussion: Female Diversity, Employee Growth

Back then there were only a few female managers in the company
and men dominated the industrial gases industry. As a young
woman, I was not always taken serious and sometimes needed
to prove I was able to do the same work as my male coworkers.
However, being undervalued made me stronger, and I developed aspirit of self-reliance. It is easier to succeed when you are undervalued by those around you than when you are over-valued.

 egional Disparities in the Level ofR
Active Participation by Women
Noguchi Ms. Furuumi, you are leading the Promotion Project Teamfor Women’s Active Engagement at Taiyo Nippon Sanso, aren’t you?
Furuumi Yes, that’s right. The project was set up in October 2022
and has nine members. All of us are women, with a wide age range
from 20s to 50s. The main objective of the project is to examine a
range of perspectives regarding what should be done to foster anorganization where women can participate with enthusiasm, andto provide recommendations. We have just started an awarenesssurvey, and plan to hold various events such as interviews withexternal experts and roundtable discussions.
Hayakawa As part of this initiative, I heard that your team has
visited Thermos to conduct interviews. Thermos has many female
employees, and the numbers are also increasing in the engineering,product development, and sales divisions, which were previously
made up mainly of men. However, even so I still feel that there areissues to be addressed at Thermos Japan. I am the first female manager at Thermos, and we have continued by adding a second and athird; however, it would be great if the company selected women for
management roles more actively and became a place where female
employees could achieve their aspirations.
Noguchi Currently, you are on assignment in the Philippines. Whatis the situation like there?
Hayakawa I am posted in the role of director, but I don’t thinkthat the employees are thinking about the fact that I am a woman.
Approximately 60–70% of the company’s 1,200 employees are
women, and half of the 10 local managers are women. The managers of human resources and general affairs, accounting, and logistics

are also women. The environment is far less gender conscious thanin Japan.
Kathleen The situation in Europe is also quite advanced. At
Nippon Gases Europe (NGE) they are currently supporting efforts tobuild a women’s network throughout all areas of Europe as part ofa women’s sponsorship program. This network initiative is called
WING, which stands for Women’s IKIGAI Nippon Gases. Do you all
have similar initiatives in your own regions?
Leah We don’t have one in the United States yet, but I think an
initiative could be extremely beneficial.
Kathleen I’m sure it would. Actually, it’s unfortunate that some saythat this initiative isn’t necessary because women already have plentyof opportunities for development and growth. While it is true that NGE
has already done a lot to encourage active participation of women,
we still need women’s networks in every region to encourage both
men and women to support the diversity and inclusion goals and tocreate awareness in the gender challenges that still exist. We have tokeep striving toward that goal; change won’t happen if we wait for it.
Noguchi Tracy, how is the situation in Taiwan? I imagine that in
Asia, as in Japan, there still tend to be few female managers.
Tracy There are many women in management roles at NSTW, andthere is no disparity, including in pay. The hiring standard for new
recruits is only ability; gender is not a consideration in the decision.
I believe that men and women are also treated equality in promotion, and that they have equal opportunities.
Furuumi It sounds like things are really advanced in Taiwan. Herein Japan, which is to say Taiyo Nippon Sanso, there are still a lot of
issues to address. I would really like to hear all about the different
initiatives from everyone.
Noguchi At NSHD, we have just set the rate of female employees
and the rate of female management posts as KPIs for the first time.
Could you all share what you think about this and how it has been
received in your region?
Furuumi Setting specific numerical targets is really a step forward.
However, the task now is to consider what specific actions will betaken toward achieving these targets. In some cases, it may benecessary to communicate the idea through a top-down approach.

Through the Promotion Project Team for Women’s Active
Engagement, we are working to propose ideas with the hope that atleast one of them will be adopted. We would like to propose ideasthat everyone can get behind and support.
Leah When a new metric or standard is introduced, I always ask
myself, “what kind of behavior will this indicator drive?” I think that
the KPIs are good, and that the initiative is desirable, but I want to
pay careful attention to whether it will ultimately produce the kindof behaviors and results that I want.
Tracy KPIs in an integrated report are nothing more than numbers
to us. How do they translate into reality? For example, we have tolook at them by region and by position. Is there a target for the rateof women holding higher positions? Maybe the rate of womenamong ordinary employees is quite high, but is low at the higher
levels. Even if the proportion of the number of people is high, theimpact could be seen as low. In other words, I think we need toknow the specific breakdown of the KPIs, and the types of initiatives
being carried out in each region and organization.
Hayakawa I agree. The targets may have been set, but if we don’t
clearly spell out what we should do to move toward them, thenno progress will be made. As such, we need to think about more
­specific measures.
Kathleen For me, I have somewhat mixed feelings about it. These
recent KPIs will probably have some effect in terms of increasing thenumbers of female employees and managers. But in the future, I
would like the organization to be one that doesn’t require such KPIs.
That would be ideal.

Increasing Employee Engagement
through the Mentoring System
Noguchi The next item I’d like to ask you about is increasing
employee engagement. What kind of measures do you think weshould take? And do you have any expectations of NSHD?
Kathleen We already have several programs in place at NGE. The
women’s sponsorship program that I mentioned before is a good
example. There is also a Growing Our Leadership (GOL) and a talentpipeline program, which have been set up to develop, improve, andIntroduction

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Promotion of Women’s Active Engagement Roundtable Discussion: Female Diversity, Employee Growth

grow the skills of future leaders. In addition, we also conduct anemployee engagement survey. Analysis of the results is used tocreate action plans, and we strive to extend the good results andcorrect the bad ones. These initiatives are increasing employee
engagement by enabling smooth communication and synergy
effects inside the company.
Hayakawa I think employee engagement surveys are an effective
measure, as it is extremely important to analyze the current statusof the organization and employees. The role of management is also
important. In a situation where remote working has become established and communication is insufficient, we need to look at how we
can improve the workplace environment, how we can bring teams
together, and how we can build trust with our team members.
I believe this is the key to team success.
Furuumi I agree that the engagement survey is important; and as
Kathleen said, it is also important to consider what action to takebased on the results, and that we need messaging not only frommanagers but also from senior management. NSHD has an event
called Operational Excellence Day, and I think it would be interesting
to try holding an engagement version of this event as well.
Leah It is important to increase the engagement score, and it
would be ideal to have a system for doing this. Even if we don’t
introduce it companywide, the introduction of a mentoring system,
for example, could also be extremely effective. Employees could
consult from time to time with their mentors, providing a real senseof support. It may be difficult to make it work for the entire organization, but it could boost communication significantly.
Noguchi Last year the NSHD Group conducted an employee
engagement survey. Looking at the results, engagement appears
to be extremely high at NSTW. Tracy, what do you think is behind
this result?
Tracy First of all, it might be because many of the employees havebeen working there for over 20 years. They know each other well,and I imagine that they will be able to continue working together
going forward. Communication between departments is good, andpay is also not bad, which is also a factor. Another important factor
is that many of NSTW’s customers are high-performance companies,

which has boosted our earnings in turn. The high level of employee
engagement is possibly also due to the effects of a low-pressure
environment.

Toward Further Diversity
Noguchi Considering your own position, how would you all like tocontribute to diversity and promote active roles for women?
Leah I would like to conduct an initiative to communicate to juniorand senior high school students that this career path and industry
exists. In the past, we had opportunities to visit schools and talkabout which classes students should take if they want to work in thisindustry in the future. I would like to increase this kind of engagement.
Kathleen As a mentor to a junior female employee in anotherdepartment, I offered advice and support extending beyond her daily
work duties, and found it extremely fulfilling. I would like to continue
this mentoring role. I am also one the founders of the WING
Network in the BNF (Benelux & France) region. The activities of thisnetwork are focused on growing the female talent pipeline, improving the results of the next employee engagement survey regarding
gender topics, and actively encouraging everybody to create an
inclusive workplace with diverse teams.
Tracy I think that there are various things that I could do as well.
Many of the employees at NSTW have been working there for a longtime, so we have an atmosphere where it is easy to talk to teammembers and there are strong links between employees. As such,even if we encounter some difficulty, we are able to support eachother, and in most cases we all work together toward achieving
the target. These kinds of individual personal bonds are importantwhen thinking about issues such as diversity and promoting active
participation of women, so I want us to continue to value them inthe future.
Hayakawa When I think about what I could do to contribute,
I can do my utmost to offer junior women advice and support basedon my experience, and consult with them about various matters.
I intend to make a dedicated effort to these kinds of activities now
and in the future.
Furuumi In thinking about what I should do in the Promotion

Project Team for Women’s Active Engagement that started last year,
I will make a proposal about this to senior management in
September, but my role as leader is to get approval from senior
management for the initiatives that everyone in the project comesup with and to work toward realizing them. Right now, I am having
interviews with various people, talking at roundtable meetings, andconducting awareness surveys using questionnaires. In the process,I am hearing many people say that we need to change the awarenessnot only of women but also of the male management-level employees. I also believe that mentoring is important for changing theawareness of women. For female employees in the future, rather
than a rigid mentoring system, I think that we should create anenvironment where they can communicate easily. It’s not so muchthat it will take time to prepare a robust system, but that we needto try and make a start on it.
Noguchi Thank you everyone for giving up a lot of your time forthis discussion. Your valuable contributions today will be posted on
the Group’s website, where I hope that it will be read by people inthe younger generation, particularly young women.

Facilitator:

Shingo Noguchi

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Promotion of Women’s Active Engagement Roundtable Discussion: Female Diversity, Employee Growth

Leah I have also found it very interesting to hear what everyone
had to say. It was extremely valuable to learn that while each region
has its own unique culture, we all face the same kinds of difficulties.
Kathleen I feel the same way. It was a very enjoyable conversation.
I was really glad to hear about people’s different approaches, activities, and other information from regions outside of Europe. I hope
we have other opportunities like this so we can share best practices
on a global scale.
Noguchi Thank you, everyone. This discussion has also been very
valuable for me in terms of hearing about your expectations of
NSHD. In the engagement survey held in November–December 2022,

one of the questions asked if the Company is promoting diversity.
Unfortunately, the score for the NSHD Group was relatively low
compared to the global manufacturing and chemical industries
overall. Looking ahead, the human resources department will referto the feedback we have received from everyone as we strengthen
our hiring process and training to increase the rate of female
employees and the rate of female management posts. We will also
work to create environments where women and people from the
LGBTQ community can work with a sense of ease and security,
promote diversity, and increase employee engagement. All of you
female managers who have participated in our discussion today

represent our operating companies, and you are also role models for ourless experienced employees. I really feel that as you work proactively
with integrity in your respective roles, you will help to foster a better
corporate culture and promote the further development of the
NSHD Group. Let’s continue working together as fellow members of
the NSHD Group.

Please see here for the full discussion.

Toshie Furuumi

Kathleen Sels

Tomoko Hayakawa

After studying pharmacology at university, Ms. Furuumi
joined Taiyo Nippon Sanso Corporation. Although thecosmetics business that she wanted to work in was halted,
she built her career through sales, marketing, and planningproposals in the medical field. After serving as General
Manager of the Marketing and Planning Department in the
Medical Division and the Bio-Medical Division, among
others, she was appointed to her current role in 2023. She
has led the Promotion Project Team for Women’s Active
Engagement since 2022.

Ms. Sels held various positions in the Sales Division of Linde
Gas in Benelux over 18 years from 2001. In 2019, shetransferred to Nippon Gases Belgium NV, where she worked
as a key Account Manager in the BNF (Benelux & France)
region. She was appointed Sales Manager for the Belgium
region in December 2022.

Ms. Hayakawa joined Nippon Sanso in 1994 when she
graduated from university, and was assigned to the
Thermos Business Department. In 2003, she was transferredto Thermos K.K., where she was appointed manager of the
Administration Department in 2011. In July 2019, she took
up her present assignment at the company’s third overseas
stainless steel vacuum-insulated bottle plant, Vacuumtech
Philippines Inc. She is currently stationed in Manila,
the Philippines.

Leah Hull

Tracy Chou

With a career of over 20 years mainly in the defense
industry, Ms. Hull has worked in diverse roles including plant
operation support, safety, quality and cost control, businessstrategy, and R&D activities. In August 2022, she transferred
to Production Operations at Continental Carbonic Products,
Inc. as Vice President seeking opportunities to use her career
experience in a larger organization.

Ms. Chou developed her career in the MIS Department,Internal Audit Department, and Accounting Department
for more than 10 years. In 2004, she joined Nippon Sanso
Taiwan, Inc. She currently serves as General Manager of
the Financial & Accounting Division. In 2012, she acquired
an EMBA.

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CFO Message

41

Performance Highlights

36

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CFO Message
Summary FYE2023 and High Level MTP Update:We, Nippon Sanso Holdings (NSHD), performed very well financially this past FYE2023. Despite a challenging macro and geopolitical environment, our nearly 20,000 employees delivered
another record financial year. Here are some of the team’s key
financial achievements compared to prior year:• Sales increased +24% to ¥1.186T• Core Operating Income (COI) increased +19.9%
from ¥102.7B to ¥123.1B

We will continue to focus on 5 key• Operating income increased +18.1% from ¥101.1B
to ¥119.5B

fields outlined in our MTP, and we will

• Net income attributable to owners of the parent
increased +14.0% to ¥73.0B

drive improved profitability throughour strong project pipeline, solid pricing
management, expanded productivity
programs, enhanced globalization
benefits, and business portfolio
optimization.
Alan David Draper
Senior Executive Officer
Group Finance and Accounting Office, and CFO• Operating cash flows increased to ¥187.9B, an increase of+26.4%• Free cash flows increased to ¥89.8B, an increase of +15.4%• Adjusted net D/E ratio continued to reducefrom 0.94 times to 0.81 times• Dividend increased for the 9th consecutive year to¥38 a CAGR of 14%• Return on Capital Employed after Tax (ROCE after Tax)
increased 60bps from 4.8% to 5.4%

We are on track to achieve the key financial metrics outlined
in our medium-term plan (MTP) NS Vision 2026. Not unexpectedly, due to unprecedented energy pass through, inflation, cost
recovery, and surcharges, our ratio-based margins, EBITDA
percent sales and Core Operating Income percent sales, arelagging our MTP expectations. Energy cost pass-through andpricing surcharges increase sales and costs on a yen for yen
basis while having no impact on absolute yen profits, but adeteriorating impact on margin percentages. We expect over

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CFO Message

the course of the MTP that energy costs will moderate andnormalize, and with this normalization the margin percentages

ROCE after Tax and NOPAT

will be in the expected range outlined in NS Vision 2026.

(Billions of yen)

However, if higher energy pass-through and surcharges remain

5.4%

in place, we will work hard and do our best to drive the abso-

4.5%

lute yen profits higher regardless of pass-through and inflation-

4.6%

4.4%

NOPAT (Net Operating Profit After Tax)

ary factors.

87.4
64.6

FYE2024 Targets, Outlook, and Key Lever

ROCE after Tax(Return On Capital Employed after Tax)

4.8%

62.8

73.0

=

(Interest-bearing debt + Total equity attributable to owners of parent)** The average of the amounts at the end of the comparative fiscal years of theprevious and current fiscal years is used.

47.9

Headwinds and challenges remain in FYE2024. Some of ourlarger concerns are: volatile energy, trade and geopolitical ten-

Indicator based on profitability and investment efficiency

sions, electronics slowdown, recessionary pressures, elevated2019

inflation, tight labor markets, and upward interest rate trends.
Excluding the impact of currency and an accounting deconsoli-

NOPAT

2020

2021

2022

2023
(Years ended March 31)

ROCE after Tax

dation of a Japan entity (¥33B), NSHD revenues are expected to
grow approximately 2%. COI excluding currency is expected to
grow over 5%. Our target is for profits to grow faster than sales

Mar 31, 2023 balance sheet and therefore without the conver-businesses which excited and energized the commercial teams

as it assists our margin expansion efforts. We expect higher

sion, our adjusted D/E ratio would be down approximately 7 bps

and motivated them to be more confident and successful withinterest expense in the coming quarters due to our debt struc-from FYE2023.

price initiatives. The price actions taken were paramount in orderture. Our variable interest rate Euro based debt and to a lesser

Our ROCE after Tax has improved significantly over the past

to recover unprecedented energy and inflation costs from ourdegree, our U.S. based debt, are the main drivers of the antici-

year. The year ended at 5.4% ROCE, an improvement of 60 bps

customers via pass through, cost recovery, surcharges, and price.

pated interest expense increase of approximately ¥11B. As ofover FYE2022. We are on track and approaching our MTP goal

Looking forward, we need to maintain price even if energy costs

time of this writing, we have 37% variable debt and 63% fixedof >6% in FYE2026. Actions in process to further improve ROCE

moderate, because wages, maintenance, contract services,

debt. We will continue to monitor market conditions and adjust

are: solid project pipeline with good financial and economic

materials, crude feed, and nearly all cost types have continued

our debt structure as appropriate. Given the significantly higher

returns; strong pricing management; expanded productivity

inflation.

interest expense, net income attributable to owners of the

programs; globalization advancement; and a continued focus onparent is expected to contract 3.5% in FYE2024.

improving low profit businesses by either restructuring them to

NS Vision 2026 Medium-Term Comments

achieve improved profitability or exiting those which are neither

Our target is to generate ¥730B of accumulated operating cash

profitable nor a strategic fit into the NSHD Group.

flows throughout the four years of our MTP NS Vision 2026. We

Our adjusted D/E ratio is expected to temporarily increase in
FYE2024 to 0.85 times. This is due to the expected conversion
of a tranche of hybrid debt to clean debt during the year. Since

Pricing management is an important aspect of our successexpect 60% of operating cash flow generation to be reinvested

hybrid debt has 50% characteristics of equity and 50% charac-

and will remain a key focus going forward. During the last year,

into the business through capital investments and acquisitions.

teristics of debt, the refinancing has a negative impact on our

we learned to raise prices in more flexible, efficient, effective,

Capital investments will be split with approximately 45% on

D/E ratio. The impact of the conversion is about 11 bps using

and timely manner. Our team shared best practices acrossunderlying base capital and the remaining 55% primarily onIntroduction

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CFO Message

growth and strategic initiatives. The remaining 40% of operating

and special needs. Our dividend increased 9 consecutive years at

cash flow generation will be used toward debt reduction anda 14% CAGR. We will continue to increase our dividend steadily

payment of dividends consistent with the approach of the last

over time and expect to maintain a dividend net income ratio in

few years.

the 20–30% range. The payout ratio will trend higher as debt isSince March 2019, the NSHD Group reduced its adjusted D/E

reduced and our adjusted D/E ratio improves.

ratio by 47% from 1.54 times to 0.81 times and during the mostOur vision, “We aim to create social value through innova-

recent fiscal year, the ratio improved with a 13 basis point decline.

tive gas solutions that increase industrial productivity, enhance

Reducing our debt and improving our adjusted D/E ratio remains

human well-being, and contribute to a more sustainablea significant objective of the organization and we will continue

future” is at the core of our MTP NS Vision 2026 where we areto reduce our debt consistently over time. I am confident that

focused on 5 fields to help propel our business forward com-we will achieve our MTP target adjusted D/E ratio < 0.7 times.

mercially and financially over the coming years. The fields are

We do not have plans nor do we expect any material change

Sustainability management, Exploring new business towardin our capital structure. Our capital and human resource alloca-

carbon neutrality, Total Electronics, Operational excellence, andtion remains consistent with the last several years. Capital proj-

DX initiatives. We are moving forward favorably in all five pil-ects are assessed and prioritized globally to ensure projects withlars, but I want to call special attention to Exploring new busi-

the best returns are prioritized higher than lower financiallyness toward carbon neutrality. What does this phrase mean? It

carbon emissions. Approximately 50% of the ¥120B of project

returning projects. Human resources are allocated across themeans that our NSHD Group is using our products, technolo-back log at March 31, 2023 have sustainable traits. Project back-business based on growth, opportunities, strategic initiatives,

gies, expertise, and applications to help reduce our customers’

log consists of approved projects which exceed –¥500MM in
expected capital spend or the approximate local currency
equivalent.

Dividend Trend

There are many sustainable opportunities for industrial gases

Net Interest-Bearing Debt

(Yen)because our customers and the industries in which they partici-(Billions of yen)

24.3%

27.1%

26.2%

24.9%
23.9%

16

12

13

6

7

6

6

7

2014

2015

2016

Japanese GAAPIFRSInterim dividend

20

28

25

30

14

16

34

electronics, are all moving toward carbon neutrality. In addition,

18

38

9

11

12

14

14

16

18

2017

2018

2019

2020

2021

2022

2023

Dividend payout ratio

government stimulants and subsidies for companies that engage
0.94

in sustainability projects provide further incentive towards faster

0.81

and more economical adoption of carbon neutrality initiatives.

20

13Year-end dividend

pate, such as steel, chemical, cement, glass, automotive, and
1.45
1.15

12

11

9

+14%

23

1.54
22.5%

22.7%

20.3%
CAGR

23.5% 23.0%

695.7

648.3

608.1

585.5

559.5

250.0

250.0

250.0

250.0

250.0

2019

2020

2021

2022

2023

We are working with our expansive customer base across theseindustries to identify industrial gas applications and solutions(Years ended
March 31)

which enable our customers to reduce their GHG emissions and(Years ended
March 31)Hybrid Finance (HBF)Net debt excluding HBF
Adjusted net D/E ratio** Adjusted net D/E ratio: An indicator of safety (financial soundness) calculated inconsideration of this part due to 50% of the amount raised by HBF is permitted as“Equity” by rating agencies.

environmental footprint. These projects are exciting for us
because they contribute to the benefit of society and are positive
for our business performance.

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We have four large approved projects that will contribute

Closing Remarks

towards our future growth. They include three HyCO projects

Over the past several years, we have purposely increased ourand an air separation unit supporting a Direct Air Capture (DAC)

transparency and the details provided to the investment com-project. We are proud of our team in winning these projects andmunity. This will continue to expand over time as we introduce

I know they will continue to identify and compete for similar

new reporting aspects across the Group. In addition, the number

projects in the future. We analyze project assumptions, market

of investor meetings that we hold with Japanese and non-Japaneseconditions, and ensure the estimated internal rate of returns areinvestors continues to expand and we attribute a portion of thereasonable and exceed the respective regional hurdle rates soincrease as a result of increased non-Japanese stock ownership.

that once the project is on stream, it will have an accretive

Going forward, we will increase the number of new investor

impact on profit and ROCE. In addition to the solid economics,

meetings and touch points and will focus on delivering meaningfulthese 4 projects are contracted with tier 1 financially stable

information to all existing and potential investors.

customers with long term supply contracts and take or pay

We will continue with our successful business model, we will

obligations. The construction period varies by project, but arecontinue to focus on 5 key fields outlined in our MTP, and wetypically in the 24 to 30 months range from contract signing.

will drive improved profitability through our strong project pipe-

These large projects will comprise a large portion of the capitalline, solid pricing management, expanded productivity programs,

spend over the course of NS Vision 2026.

enhanced globalization benefits, and business portfolio optimization.

TSR 10 Years (%)—Compared to Same-Industry Competitors in Japan and Overseas—

354.1

Average251.7%

Company A

NSHD

Company B

Company C

Company D

Company E

Source: Refinitiv EIKON(Note) Total Shareholder Return (TSR) = Investor’s rate of return for the 10 year
period April 1, 2013 to March 31, 2023; includes both stock price change
and dividends earned. Note that the calculation includes reinvested dividends

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Performance Highlights
Overview of Business Results for FYE2023

Consolidated Business Performance for FYE2023

In the current year under review (from April 1, 2022 to March 31, 2023), the NSHD Group has faced achallenging and unpredictable business environment as a result of geopolitical issues in Ukraine, trade tensions between the United States and China, unprecedented global energy costs, global inflation, and yen
depreciation. These items resulted in shipment volume of air separation gases (oxygen, nitrogen, andargon), our main product, decreasing from the previous fiscal year. However, due to solid price management such as pass through, and various productivity initiatives, the NSHD Group achieved the following
results for the fiscal year under review.
Revenue on a consolidated basis was ¥1,186.6 billion, core operating income was ¥123.1 billion, operating income was ¥119.5 billion, and net income attributable to owners of the parent was ¥73.0 billion.
As for the impact of foreign exchange rates year-on-year, JPY depreciated against the USD from¥113.04 to ¥136.00 (+¥22.96, or +20.3%), against the EUR from ¥131.11 to ¥141.62 (+¥10.51, or +8.0%),
and against the AUD from ¥83.33 to ¥92.67 (+¥9.34, or +11.2%). As a result, overall revenue and core
operating income were favorably impacted by approximately ¥79.6 billion and ¥9.9 billion, respectively.

Unit

FYE2022

FYE2023

YoY

Revenue

Billionsof yen957.1

1,186.6+229.5 (+24.0%)

Core operating income*1

Billionsof yen

102.7

123.1

+20.4 (+19.9%)Core operating income margin

%

10.7

10.4

(0.3)

EBITDA margin*2

%

20.4

19.3

(1.1)

Times

0.94

0.81

(0.13)

%

4.8

5.4

+0.6

Adjusted net D/E ratio*3
ROCE after Tax*4* Please see the following pageP.42 for notes.

(Forex rate (full-term) / Average Forex rates)

Unit

FYE2022

FYE2023

YoY

USD

Yen

113.04136.00+22.96EUR

Yen

131.11141.62+10.51Figures of Revenue and Income (Loss) by Reportable Segment for FYE2023
Reportable segment

Revenue

Segment income*5

YoY factors for increase / decrease(Unit: Billions of yen)

FYE2022

FYE2023

FYE2022

FYE2023

Japan

372.0

420.4

30.9

31.6

Volume decreased on air separation gases and LP gas / Increase in revenue due to higher selling prices resulting from higher costs / Shipment
volumes for electronic industry were firm / Continued increase in manufacturing and logistics costs due to the impact of rising energy prices andgeneral inflation, etc.

United States

224.8

303.0

27.3

37.0

Shipment volume of air separation gases was flat with prior year / Price revisions in conjunction with cost increases / Revenue from carbon
dioxide gas was strong / In equipment and installation, revenue increased significantly in hard goods for welding, and cutting-related products /Electronics-related revenue turned slightly negative

Europe

209.7

272.8

26.3

34.9

Shipment volumes in air separation gases declined due to lower customer requirements / Significant cost increases due to rising energy prices andgeneral inflation, etc. / Absorbed by sales price revision / Productivity initiatives and cost reduction efforts contributed to the positive performance

Asia and Oceania

123.5

159.9

12.8

15.4

Shipment volume in air separation gas remained firm / Sales revenue increased. In LP gas, of which a large portion of sales are in the Australia
region, revenue increased due to price increases linked to higher purchase costs and firm trends in shipped volume / In electronic-related business, revenue increased from robust sales for both gases and equipment

6.0(Japan) Milder restrictions for outside activities from spring 2022 / Both sales of portable mugs and sports bottles increased / Sales for the kitchenware products such as frying pans were strong / Segment income decreased because of both rising raw material prices due to inflation andproduction costs increasing due to the weak yen(Overseas) Revenues are generally firm

Thermos

26.8

Adjustments
Total

0.1

0.0

(1.1)

(2.0)

957.1

1,186.6

102.7

123.1

30.1

6.4

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Performance Highlights

Main Financial Indicators (FYE2014 to FYE2023)* Up to FYE2015, results are presented under Japanese accounting standards (Japanese GAAP), and from FYE2016 onward, results are presented under International Financial Reporting Standards (IFRS).

Operating Income / Operating Income Margin / EBITDA Margin

Revenue
Billions of yen

Oparating income (Left scale)Billions of yen 

1,186.6

1,200

120

1,000

100

800

80

600

60

400

40

200

20

Oparating income margin (Right scale)

EBITDA margin (Right scale)
%

119.5

25

19.3%

20
15

0

2015

2016

Japanese GAAP

IFRS

2014

2017

2018

2019

2020

2021

2022

2023

Cash Flows from Operating Activities / Cash Flows from Investing Activities
Cash flows from operating activities
Billions of yen

0(Years ended
March 31)

10.1%

10
5

2015

2016

Japanese GAAP

IFRS

2014

2017

2018

2019

2020

2021

2022

2023

0
(Years ended
March 31)

Basic Earnings per Share (EPS)

Cash flows from investing activities
Yen

187.9

200

200

168.85

100
150
0

-98.0

-100

100

-200

50

-800
2015

2016

Japanese GAAP

IFRS

2014

2017

2018

2019

2020

2021

2022

2023

(Years ended
March 31)

0

2014

2015

2016

Japanese GAAP

IFRS

2017

2018

2019

2020

2021

2022

2023

(Years ended
March 31)

*1 Core operating income is calculated as operating income excluding certain gains and expenses attributable to non-recurring factors (non-recurring items*).
* Non-recurring items are costs of structural reform (cost for withdrawal or downsizing business operations and special retirement allowances), losses caused by disasters or serious accidents, and other gains and expenses (such as disposal of idling assets).
*2 Indicator that shows profitability based on Cash Flow, excluding the impact of M&A and CAPEX. Calculation formula: Earnings Before Interest Taxes, Depreciation and Amortization (Core operating income + Depreciation and amortization) / Revenue*3 Indicator of financial soundness. Calculation formula: ((Interest-bearing debt – equity-type debt*1) – cash and cash equivalents) / (equity attributable to owners of the parent + equity-type debt*1)*1 Equity-type debt: The amount of debt procured by hybrid finance that has been recognized as equity credit by rating agencies. In this fund procurement, rating agencies have recognized equity credit for 50% of the procured amount.
*2 Hybrid finance: A form of debt financing that has features resembling equity, such as voluntary deferral of interest, extremely long-term redemption periods, and subordination during liquidation or bankruptcy procedures. This kind of financing does not cause stock dilution, and a certain
ratio of the funds procured in this way can be recognized as equity credit by rating agencies provided that certain conditions are met.
*4 Indicator of capital efficiency. Calculation formula: Core operating income after Tax (+ Dividend received) [NOPAT] ((Core operating Investment income/loss from Equity in earnings (losses) of affiliated companies included in Core operating income) × (1 – effective tax rate) + Investment income /loss from Equity in earnings (losses) of affiliated companies included in Core operating income + Dividend received)) / (Interest-bearing debt – Total equity attributable to owners of parent)*1 [Capital employed]*1 The average of the amounts at the end of the comparative fiscal years of the previous and current fiscal years is used.
Note that return on capital employed (ROCE) had been disclosed and utilized until FYE2022. However, for the purpose of comparability with our peers, ROCE after Tax is disclosed and utilized from FYE2023. Calculation formula: ROCE = Core operating profit / (outstanding interest-bearing debt
+ equity attributable to owners of the parent*2)*2 Equity attributable to owners of the parent is calculated as net assets – non-controlling interests.
*5 Segment income represents core operating income, which is calculated by excluding from operating income certain gains or losses attributable to non-recurring factors such as losses arising from business withdrawal or downsizing.

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Performance Highlights

Performance by Segment (FYE2021 to FYE2023)

Revenue
Billions of yen
500

Japan

United States

EuropeAsia and Oceania

Thermos

420.4
400

372.0
341.9
303.0
272.8

300

224.8

209.7

189.9

200

160.0

159.9
102.0

123.5

100

0

2021

2022

2023

2021

2022

2023

2021

2022

2023

2021

2022

2023

23.9

26.8

30.1

2021

2022

2023

Core Operating Income / Core Operating Income Margin / EBITDA Margin(Years ended
March 31)Core operating income margin (Right scale)
EBITDA margin (Right scale)Billions of yen

40

31.2%

14.5%
60

8.7%

13.5%

12.1%

8.3%

7.5%

27.5%

26.4%

25.7%

12.2%

12.2%

12.2%

13.1%

27.7%

27.1%

25.6%
16.0%

12.5%

16.8%

12.8%
8.7%

10.4%

15.5%

21.6%

28.9%

24.8%

24.0%

20

19.9%

9.7%
0

37.0

40

29.8

30.9

31.6
23.1

34.9

27.3

26.3
21.0

20

8.9
0

2021

2022

2023

2021

2022

2023

2021

2022

2023

2021

12.8

2022

15.4

2023

5.1

6.4

6.0

2021

2022

2023

(Years ended
March 31)

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Indicators with

44

Integrated Report2023

Appendix

mark have been assured by KPMG AZSA Sustainability Co., Ltd.
Please see here for detailed data.
Sustainability Data:

Main Non-Financial Indicators (FYE2021 to FYE2023)

Please see here.

Japan
United States
EuropeAsia and Oceania
Thermos
Reporting boundary: Nippon Sanso Holdings and its main consolidated subsidiaries

Environment

GHG Emissions

Energy Consumption

Electricity Consumption

Water Withdrawal

Thousands of tonnes CO2e

GWh

GWh

Thousands of m3

6,000
5,000

5,651
511

11

1,049

5,921
638
885

15

5,868
632

15,00015

12,570
20
1,002

916

4,000
3,000

10,000

2,066

2,130

1,000
0

5,000

2,014
2021

2,253
2022

2,054
2023

0

(Years ended
March 31)

13,945
1,167 26

3,180

2,889

2,753

2,251

2,000

14,273
1,171 27

5,215

12,00010,000
8,000

5,917

4,000

3,978

3,757

2021

2022

2023

2,000

(Years ended
March 31)

0

1,094

23

10,475
1,066

2,762

2,585

3,114

3,249

3,402

3,783

3,552

2021

2022

2023

2,442

6,000

6,106

3,580

10,776
9,592
908 162,824

50,00023

10,000(Years ended
March 31)

Number of Employees by Gender (Consolidated)

Number of Employees by Segment (Consolidated)

Number of individuals 

Number of individuals

20,00020,00014,715

14,352

2,366
758 395

2,371
1,399

5,691

15,392%

19,155

19,172

19,541

3,848

3,939

3,890

15,000

2,398
602
3,068

20.1
10,000

2,909
3,486

5,000

20.5

19.9

14.6

14.8

14.5

15,307

15,233

15,651

5,415
5,000

5,505

25,136

7,074

7,293

8,464

6,760
6,760

7,464

0

7,445

2021

2022

2023
(Years ended
March 31)
Reporting boundary: Gas production plants operated by consolidated
subsidiaries of Nippon Sanso Holdings in Japan, business locations with facilities
specified under the Water Pollution Prevention Act, and main overseas
consolidated subsidiaries

Society

Tonnes

10,00027,02927,29220,000Waste Generated (Including Valuable Materials)

15,00044,9883,744 199

30,000* Due to a revision in the method of aggregation, the figures
presented in previous fiscal years have been retrospectively amended.

Environment

40,00045,911
3,929 196

43,3452,049 170

4,187

3,909

0

0

2021
2022
2023
(Years ended
March 31)
* Waste generated by the consolidated subsidiaries of Nippon Sanso Holdings
in Japan is the volume for which the Company issued a manifest.
* Due to restrictions on availability of information, of the consolidated
subsidiaries presented on P.91, Continental Carbonic Products, Inc. is notincluded among the aggregated total.

2021

2022

2023

40.0

20,00030.0

15,00020.0

10,000

10.0

5,000

0.0
(Years ended
March 31)0

Male (Left scale)
Female (Left scale)
Female employees as a percentage of the total number of
employees (Right scale)
Female managers as a percentage of
total managerial positions (Right scale)* Numbers above are aggregated from actual figures of the Nippon Sanso HoldingsGroup companies as of the end of each fiscal year. Due to differences in thereporting periods, part of the data includes figures as of the end of December.

Frequency Rate of Occupational
Accidents Resulting in Lost Workdays*

19,155
1,328

19,172
1,287

19,541
1,338

4,114

4,102

4,267

2,884

2,912

3,013

4,534

4,406

4,532

2.00

6,295

6,465

6,391

1.00

* The frequency rate expresses the frequency of accidents resulting in lost
workdays in a fiscal year, calculated as the number of injuries / fatalities
due to occupational accidents per million work hours
3.00

2.51

2021
2022
2023
(Years ended
March 31)* Numbers above are aggregated from actual figures of the Nippon Sanso
Holdings Group companies as of the end of each fiscal year. Due todifferences in the reporting periods, part of the data includes figures asof the end of December.

2.14

0

1.56

0.81
0.64

2021

Taiyo Nippon Sanso Group

0.52

2022

2023

(Years ended
March 31)

Nippon Sanso Holdings Group

Reporting boundary: Consolidated subsidiaries with production divisions inJapan and overseas* To improve the accuracy of data aggregation, values presented in previous
fiscal years have been retroactively amended.

GHG emissions: GHG emissions in Japan are calculated using emission factors provided in Japan’s Act on Promotion of Global Warming Countermeasures (for electricity, up until FYE2021 the basic emission factors for each electricity provider and from FYE2022 the adjusted emission factors for each provider). For GHG emissions overseas, Scope 1
emissions are calculated using emission factors set forth in Japan’s Act on Promotion of Global Warming Countermeasures. Scope 2 emissions are calculated using country-specific emission factors published by the IEA. However, for electricity in Europe, beginning FYE2021 a separate emission factor for each electricity provider is used, andemissions are calculated making reference to the Guarantee of Origin. Furthermore, from FYE2022, emissions from electricity use at Taiyo Gases Co., Ltd. and Top Thermo Manufacturing (Malaysia) Sdn. Bhd. are calculated using emissions coefficients for each electricity provider, while emissions from electricity use in the United States,
China, Taiwan, and Singapore are calculated using published grid coefficients for each country.
For information on main subsidiaries, please see Sustainability Data.

P.91

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46	CSO Message
47	Sustainability Initiatives
50	TCFD Reporting45

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2023

CSO Message
By leveraging the technology of NSHD, “The Gas Professionals,” we will help find solutions for environmental
and social issues with a vision extending beyond 2050.

Progress on ESG Essential for the Next 100 Years
Our fundamental approach to sustainability is to balance economic
value with social and environmental value, enhancing both values
at the same time. With global environmental problems and various
social issues in need of solutions, the importance of contributing to
the attainment of the SDGs as a corporation is increasing. Additionally,
initiatives on the non-financial front have become as important for a
corporation’s sustainable growth as financials, and the promotion ofenvironmental, social, and governance (ESG) initiatives is also essential. With a history of more than 100 years, NSHD sees a need togear up for the next century.
With the transition to a holding company structure in October
2020, the NSHD Group, active on the global stage, has broadened
its horizons to further enhance efforts at sustainability, revising its
Code of Conduct and other policies. In 2021, we reorganized thesustainability framework and established the Group Sustainability
Management Office. Moreover, NSHD endorsed the Task Force on
Climate-related Financial Disclosures (TCFD) in 2019, signed theUnited Nations Global Compact (UNGC) in 2022, and has participated in other initiatives. Regarding governance, as of 2022, fiveof our nine directors were outside directors, including two women.
These ESG-related initiatives have been given high marks by external
entities that evaluate sustainability, raising NSHD’s score on ESG
matters.
In formulating our medium-term management plan for 2022, wehave revisited our materiality related to sustainability. Including thethree preconditions that form the premise of our corporate existence, namely respect for human rights, safety and security, andcorporate ethics, we have identified 24 key issues (materialities). In
light of this, in the medium-term management plan NS Vision 2026,
we have prominently featured non-financial initiatives, launchedeight non-financial programs, and set Group KPIs for major

materialities.
Climate change, water security, effective resource utilization,
biodiversity, and other global environmental sustainability issues areof paramount importance. While advancing our initiatives, we will
support our customers in their global environmental initiatives
through our business solutions (i.e., industrial infrastructure). To
reduce GHG emissions, NSHD will further improve the energy efficiency of its production equipment and expand the use of renewableenergy. Through our four core technological domains—combustion,hydrogen manufacturing, CO2 capture, and oxygen manufacturing—
we will assist our customers in their environmental contributions,aiming for a carbon neutral society by 2050 and an eye on the
future beyond 2050.
As a corporate group that handles industrial gases, delivering toour customers a safe, secure, and reliable supply of gas is the cornerstone of our business. With the mindset that “selling gas is sellingsafety,” we will ensure safety and security while contributing to ahealthy, safe, and secure society and lifestyles.
NSHD possesses many advanced technologies cultivated over theyears. Moreover, Thermos contributes to lowering environmental
impact by reducing the use of plastic by encouraging people tocarry their own bottles, and by conserving energy with its superior
vacuum-insulation technology (for maintaining hot or cold temperatures). The Company also proposes a more abundant lifestyle byoffering sustainable products through its wide range of contact
points with consumers. Moreover, we believe there is still vast potential for innovation in the industrial gases sector. We will addressenvironmental and social problems through our products and services that utilize these technologies.
A year has passed since the start of the medium-term management plan, and we have had a smooth start on the non-financialside of the plan. NSHD has been able to achieve the KPIs ahead ofTakeshi Miki
Senior Executive Officer,
Group Sustainability
Management Office, andChief Sustainability Officer(CSO)schedule in safety (Safety First Program) and global environmental
contribution (Carbon Neutral Program II).
As “The Gas Professionals,” NSHD aims for sustainable growthand further expansion of corporate value on the path to a pleasantfuture for people, society, and the earth, as outlined in its vision, by
providing innovative gas solutions.

46

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For more on our initiatives related to sustainability, please refer to here.
Sustainability Topics:

Please see here.

In NS Vision 2026, NSHD identified sustainability management as one of its most important priorities. Based on our fundamental approach to balancing and enhancing both
economic value and social and environmental value, we have identified materialities (priority issues) related to sustainability, set targets, and created programs and KPIs toachieve these targets. We cover issues related to enhancing our non-financial value, such as the Ten Principles of the UNGC, as well as the risks and opportunities identified in
TCFD scenario analysis.

List of Materialities and Key Initiatives
In the materialities we reviewed in 2021, we identified 24 priority issues based on the preconditions for our existence as an enterprise, namely respect for human rights, safety and security, and corporate ethics.
To address these identified priority issues, we created eight non-financial programs for the entire NSHD Group to undertake. Under our medium-term management plan, we contribute to the realization of a sustainable
society by reinforcing and augmenting initiatives to advance these eight programs.
Materiality

Principal Initiatives

E

Providing products and services that contribute to resolving environmental andsocial issues / Climate change mitigation and adaptation / Effective use ofresources and prevention of pollution / Conservation of water resources /Conservation of biodiversity

Development and sales expansion of products that contribute to solutions for environmental
and social issues / Reduction of GHG emissions / Further promotion of energy conservation andefficiency of energy use / Promotion of the use of renewable energy and green power / Carbon
capture and offsets / Appropriate waste management and recycling / Efficient utilization of waterS

Safety and Security / Product and service safety and quality / Respect for Human
Rights / Sustainable supply chain / Diversity and inclusion / Development andmaintenance of human resources / Employee and family health / Improvementof employee engagement / Contribution to regional and industrial development
as social infrastructure / Provision of comfortable and prosperous lifestyles /Coexistence with local communities / Improvement of productivity and promotion of production optimization / Technology and R&D capabilities that support
the creation of customer value and social value / Pursuit of customer satisfaction /Promotion of initiatives for digital innovation / Protection and effective utilizationof intellectual property

Initiatives to ensure safe and reliable supply / Reinforcement of quality assurance and management systems / Sharing information on workers’ and other accidents and best practices / Safety
education / Investment for safety / Creation of environments to promote innovation and diversity / Embrace and motivate diversified talents / Promote cross-regional talent exchanges /Enhance successor development plans / Health management initiatives / Contribution to the
medical field / Initiatives for resolving social issues / Provision of comfortable and prosperous
lifestyles / Promotion of sophisticated ICT use / Strategic acquisition of intellectual property andpromotion of use in business

G

Corporate Ethics / Strengthening communication with stakeholders /Strengthening information security measures

Rigorous employee education and training / Prevent compliance violations / Detect complianceviolations through disseminating and operating the whistleblowing system / Dialogue withshareholders and investment analysts / Enhancement of information disclosure / Maintenanceand improvement of information security systems

Relevant SDGs

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48

For more on the eight non-financial programs, please refer to here.
Eight Non-Financial Programs:

Please see here.

NSHD Group’s Eight Non-Financial Programs
The global movement toward sustainability is gaining momentum, as represented by the SDGs and ESG. Amid discussions on how to address new challenges such as climate change, corporations need to quantify these
problems in order to measure progress on resolving them. The NSHD Group has established eight non-financial programs to pursue under sustainability management, one of the key strategies in the medium-term management plan NS Vision 2026. By steadily executing these eight programs, we will steadily advance the Group’s sustainability initiatives.

(1) Reduce GHG Emissions of the NSHD Group
Carbon Neutral Program I
Aiming for carbon neutrality by 2050, and consideringinternational social demands for GHG reduction, NSHD
has set the following GHG emission reduction targets:(2) Lower GHG Emissions of Customers
through Environmentally Friendly
Product Offerings
Carbon Neutral Program II• 18% reduction (target for FYE2026)• 32% reduction (target for FYE2031)

We are working toward a goal of recording the GHG
reduction contributions that exceed the GHG emissionsof the NSHD Group through FYE2026. To this end, theNSHD Group is moving aggressively to help its customers
reduce their GHG emissions.

Main Measures

Environmentally Friendly Products and Services

GHG emission reduction targets (compared to
FYE2019)(3) Reduce Waste(4) Effectively Use Water Resources

Zero Waste Program

Sustainable Water Program

NSHD is keen to reduce waste emissions, landfill disposal, etc., by promoting the 3Rs (reduce, reuse, recycle)of waste disposal at each operating company.
For example, in Japan, we started an initiative called
Halve Amount of Landfill Disposal (HALD) last fiscal year,
aiming to halve the amount of industrial waste disposedof in landfills by the Taiyo Nippon Sanso Group by
FYE2026. We aim to achieve this goal by reducing industrial waste and through more recycling.

The NSHD Group regards conservation of water
resources as one of its materialities, and is committed
to conserving water resources in its corporate activities
through the more efficient use of water.
Since the operation of ASUs requires the use of cooling water, we are specifically working on ways to more
effectively use water resources and mitigate water risks
by thoroughly recycling cooling water and replacing equipment with higher-efficiency plants.

(1) Further promotion of energy conservation andimprovement in energy efficiency, (2) Promotion ofrenewable energy use and greening of electricity, and(3) CO2 capture and carbon offsets(1) Manufactured products and services: GHG reduction
contribution through gas applications developed by the
NSHD Group, and (2) Industrial gases: GHG reduction
contribution utilizing the properties of industrial gases(5) Nurture a Safety Culture(6) Initiatives Aimed at Improving Quality
and Reliability(7) Diversification of Human Resources andEnhancement of Engagement(8) Permeation and ThoroughImplementation of Compliance

Quality Reliability Program

Talent Diversity Program

Compliance Penetration Program

To improve quality and reliability, we endeavor to permeate a quality-oriented culture and further improve theawareness of quality in our employees. We also advancethe introduction of automation technologies, such aslaboratory information management systems. Currently,
we are focusing on our quality audit program* thatbegan in FYE2022 and is being implemented across theentire NSHD Group.

The NSHD Group proactively welcomes diverse talents,
cultures, and values as it strives to train employees into
“The Gas Professionals.” We are particularly focusedon promoting the active participation of women in theworkplace, for which we have set KPIs, and are promoting the exchange of personnel across regions.

The NSHD Group positions respect for human rights,
safety and security, and corporate ethics as preconditions
for its corporate existence. Each operating company
offers various compliance training courses aimed at getting employees to expand their awareness of complianceand acquire correct knowledge.
With a shared understanding that ensuring all
employees take compliance training is the basis forestablishing compliance, we have set rate of receiving
compliance training as one of the non-financial KPIs in
our medium-term management plan.

Safety First Program
For the NSHD Group, which handles various highpressure gases, safety forms the foundation of its corporate existence. With the mindset that “selling gas is selling safety,” we have designated the frequency rate ofaccidents resulting in lost workdays as an essential safety
KPI for maintaining a safe and reliable supply of gases.
Lost time injury rate: 1.6 or lower (target for FYE2026)* Each operating company conducts quality audits of applicablebusiness sites in three-year cycles based on the priority audit
items decided by NSHD.

Women’s Participation KPIs
Rate offemale employees:

Rate offemale management posts:

22% (target for FYE2026)
25% (target for FYE2031)

18% (target for FYE2026)
22% (target for FYE2031)

Introduction

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Performance
Highlights

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Value Creation in
Each BusinessGroup
Information

Governance

Sustainability Initiatives

49

Integrated Report2023

Appendix

For more on the eight non-financial programs, please refer to here.
Eight Non-Financial Programs:

Please see here.

List of Non-Financial Programs and Non-Financial KPIs
Management monitors KPIs related to the eight non-financial programs in our medium-term management plan. Through this monitoring, we aim to strengthen and enhance the NSHD Group’s sustainability management
and move toward the realization of a sustainable society.

E

FYE2023 Results

Reduction rate of
GHG emissions*1

18%

12.3%

Lower customer
GHG emissions

Lower customer GHG emissions
through environmental productofferings and applications >NSHD Group GHG emissions

Initiative

Non-Financial KPIs

Carbon Neutral Program I

Reduce the Group’s
GHG emissions

GHG Emission Reduction Targets
GHG emissions (Thousands of tonnes CO2e)
Results

10.1%
12.3%
18%
reduction reduction reduction

6,000 –

from FYE2019

32%

reduction
5,000 –

from FYE2019

ard

7,308,000 >
5,868,000 t-CO2e

Results
7,000 –

Tow

4,000 –

bocar

Reduce customer
GHG emissions through
Carbon Neutral Program II
environmental productofferings and applications

Carbon Neutral Program I

NS Vision 2026
Final-Year Targets (FYE2026)

Non-Financial Programs

≤ 1.6

1.56

2,000 –
1,000 –
0–S
Talent Diversity Program

G

Compliance Penetration
ProgramRate of female employees

≥ 22%

19.9%

Rate of female management posts

≥ 18%

14.5%

Utilization of diverse talent

Compliance educationand enforcement

Rate of receiving
compliance training

lity

Lost time injury rate*2

traReduction in lost time
injury rateeu

Safety First Programnn

3,000 –

FYE
2019

FYE
2022

FYE
2023

FYE
2026

FYE
2031

2050

* FYE2019 reference year: Addition of GHG emissions at U.S. HyCO business, European
business, U.S. transportation, Asia and Oceania transportation, U.S. subsidiaries (CCPI:
Continental Carbonic Products, Inc., Western: Western International Gas & Cylinders, Inc.)
to actual emissions in FYE2019
FYE2022: Addition of GHG emissions at U.S. subsidiaries (CCPI, Western)

Carbon Neutral Program II
Realize a Reduction in GHG Emissions through Environmental
Products, Offerings and Applications*
100%

99.7%

GHG Emission Reduction Contribution
Total: 7,308 thousands of tonnes CO2e

*1 Reduction targets for a fiscal year are set with reference to the base year of FYE2019, with figures adjusted to reflect the acquisition of the European industrial gases business.
*2 This is an indicator that represents the frequency of occupational accidents. It is calculated as the number of employees injured in accidents that resulted in lost work time, divided by the total
number of work hours, multiplied by one million hours.

FYE2023

Products and services
3,556 thousands of tonnes CO2e

FYE2022

Products and services
3,176 thousands of tonnes CO2e

FYE2021

Products and services
2,892 thousands of tonnes CO2e

Industrial gases
3,752 thousands of tonnes CO2e

Total: 6,865 thousands of tonnes CO2e
Industrial gases
3,689 thousands of tonnes CO2e

Total: 5,066 thousands of tonnes CO2e
Industrial gases
2,174 thousands of tonnes CO2e

* Please refer to here for a breakdown of environmental products, offerings, and applications.

Introduction

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Story

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Highlights

Sustainability

Value Creation in
Each BusinessGovernance

TCFD ReportingGroup
Information

Integrated Report2023

Appendix50

For more on the report in line with the recommendations of the TCFD, please refer to here.
Report in Line with the Recommendations of the TCFD:

Please see here.

NSHD is committed to realizing a comfortable future for people, society, and the earth by engaging in activities to reduce environmental impact, conserve energy, and expand
the number of products that contribute to the reduction of GHG emissions. Furthermore, in November 2019 NSHD endorsed the TCFD* and has since endeavored to improveinformation disclosure. Going forward, we will strive to enhance corporate value across the Group through not only internal improvement activities but also dialogue withstakeholders while augmenting information disclosure in line with the TCFD recommendations.
* The TCFD announced its final recommendations report in June 2017, which recommends that all companies and other organizations disclose information about governance, strategy, risk management, and indicators and targets regarding climate change-related risks and opportunities.

GovernanceRisk Management

The Company has established a governance structure for climate change issues, and the entire Group is
engaged in initiatives on climate change. Up until now, sustainability activities have been promoted under
the supervision of the CSO. Moreover, the Company established the Group Sustainability Management
Office in November 2021, and the Sustainable Development Committee in July 2023, to provide general
oversight of sustainability activities, such as deliberation and formulationof climate change-related strategies and risks.

We will construct a Groupwide risk management structure, and will identify, assess, and manage climaterelated risks.
Climate Change Risk Identification, Assessment, and Management Process
Risk Identification, Assessment, and Management Process• Global Strategy Review
Committee• Global Risk Management
Committee

Strategy• Based on the TCFD recommendations, we identified opportunities and risks under the transition scenario(under 2°C scenario) and the physical climate scenario (4°C scenario), then performed an assessmentof the opportunities and risks, mainly for the gas business, in each region based on an indicator of“potential for impact” × “magnitude of impact.” Significant negative financial impacts to the Company
were considered to be risks, while positive impacts were treated as opportunities.
• For the transition scenario, the Sustainable Development Scenario (SDS) of the International Energy
Agency (IEA) was used, and for the physical climate scenario, the Fifth Assessment Report (RCP8.5) of
the UN’s Intergovernmental Panel on Climate Change (IPCC) was used as a reference for impact analysis.
• Our website discloses the results of our analysis and synthesis of the NSHD Group’s opportunities andrisks and their possible impact on our procurement, operations, and products and services.

• Technological Risk Liaison
Committee• Construction of risk management system in Nippon Sanso HoldingsGroup companies to enable early discovery of long-term risk, prevention,and rapid response in cases of risk materialization• Risk importance determined by occurrence frequency × Financial or
strategic impact• Annual Global Strategy Review Committee meeting (Chairperson:
President CEO) to determine financial or strategic impact on business• Specific countermeasures for items determined by the Global Strategy
Review Committee determined at the Technological Risk Liaison
Committee meeting held between Nippon Sanso Holdings and operatingcompanies, then deployed globally

Indicators and Targets
In the medium-term management plan, we will set out indicators and targets to be used for assessing andmanaging risks and opportunities, then use them to evaluate our progress.
Initiatives

Signatory to the UNGCNSHD signed the UNGC and was registered as a participating company in January 2022.
For more on the UNGC, please refer to here.

Participation in Initiatives:

Committees

Disclosed Details• We disclose Scope 1, Scope 2, and Scope 3 GHG
emissions. P.88

• Sustainability data

• We disclose non-financial KPIs in our medium-term
P.9
management plan.

• Eight non-financial programs and non-financial
KPIs P.48

P.87• Independent assurance report

P.94

Please see here.

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Value Creation in
Each BusinessGovernanceValue Creationin EachBusinessGroup
Information

Appendix

Integrated Report
2023

52

Top Messages from the Five Segments

53

Business Characteristics of Each Segment

55

Japan

58

United States

61

Europe64

Asia and Oceania

67

Thermos

Note: Changes in Names of Reportable Segments
The names of reportable segments were previously “Gas Business inJapan,” ”Gas Business in the United States,” “Gas Business in Europe,”“Gas Business in Asia and Oceania,” and “Thermos Business.”
Effective from FYE2023, these names were changed to “Japan,”“United States,” “Europe,” “Asia and Oceania,” and “Thermos,”respectively.
There is no impact on the segment information from this change.
The names of reportable segments for the previous fiscal year
(FYE2022) have been changed to conform to the current fiscal year’s
presentation.

51

Introduction

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Highlights

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Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

Top Messages from the Five Segments

Japan

United States

EuropeAsia
and Oceania

Thermos

Kenji Nagata

Scott Kallman

Eduardo Gil Elejoste

Tsutomu Moroishi

Yuji Kataoka

Member of the Board,
Nippon Sanso Holdings Corporation

Member of the Board,
Nippon Sanso Holdings Corporation

Member of the Board,
Nippon Sanso Holdings Corporation

Senior Executive Officer,

President, Thermos K.K.

President, Taiyo Nippon Sanso Corporation

Chairman and CEO,Matheson Tri-Gas, Inc.

Chairman and President,
Nippon Gases Euro-Holding S.L.U.

As The Gas Professionals, our vision isto remain a company that advancesindustries and helps solve issues insociety by maximizing the potential ofgas, beginning with industrial gas.
To this end, we are reinforcing corebusinesses, mainly industrial gas,
while pursuing business optimizations. TNSC provides solutions that
improve productivity, efficiency, safety,
and security for its customers by
supplying not just industrial gas, but
the functions and benefits it offers.
Moreover, we are keen to growthrough the provision of new products and solutions that contribute to
the realization of carbon neutral
society and surpass the borders of thegas business while innovating with afocus on gases. We strive to enhance
corporate value through sustainablebusiness management that enhances
employee engagement from a solid
foundation in compliance that we arestrengthening along with initiatives
for the environment, safety, security
and quality.

The Matheson Tri-Gas (MTG) businessmodel is supported by our strategicpillars of Safety, Quality, andProfitable Growth, all aligned with
the NSHD Strategic Focus Fields. Our
Safety and Quality Processes promote
the implementation of best practices
in which we strive to achieve
Operational Excellence resulting insafer, more efficient operations andrelated cost reductions. This foundation of Safety and Quality is leveraged
to support sales growth to the semiconductor market sector through the
Total Electronics Focus Field and to
capture new growth opportunities
across the business in support of the
NSHD Carbon Neutral goals. Thiseffort, along with ongoing growth in
our industrial market sector, presents
exciting future prospects to expand
the sales and profitability of MTG andNSHD to the benefit of our mostimportant Customer, the NSHD
Shareholders.

Nippon Gases continues to attain newcarbon neutral business opportunities,
amid having dealt with soaring
energy prices and other significant
economic and political challenges in
FYE2023. Building on biomethane,green hydrogen, and greening combustion, these new business opportunities allow us to continue providing
the highest-quality industrial gas
solutions, while contributing our partin achieving a carbon neutral world.
Additionally, we work tirelessly todeserve and keep the trust of society
and the communities in which we
operate, by improving the performance of our organization withpeople and operational excellence—ensuring that our employees
adhere to the highest standards ofsafety and compliance and by continuing to promote diversity andinclusion.

Group Corporate Planning Office*In Asia and Oceania, we operate in
12 countries and regions. We willcontinue to invest aggressively in newplants because of the strong growthpotential in these markets. Whilecontinuing to expand our productlineup, we aim to become a major
player in each country and region.
Beginning in the current fiscal year,
we changed our organization into afour subsegment structure with theaim of managing our operations moreclosely attuned to trends in eachregional market.
While thoroughly ensuring safetyat our plants and managing quality
and governance, we aim to create
workplaces where our diverse
employees can thrive through thebuilding of regional networks.
We propose solutions to our customers that utilize Group technologies, and aim to reduce power use at
our factories as part of our efforts torealize a carbon neutral society.
* The Oceania and Asia Management Division has
been established within the Group Corporate
Planning Office to oversee business promotion
for companies in Asia and Oceania.

At Thermos K.K., we propose newideas for products and services withhigh levels of safety and quality inresponse to changes in lifestyles
throughout the pandemic, and we
endeavor to expand recognition of
the Thermos brand by expanding
business overseas.
Moreover, we are focused on
training personnel who can take on
new challenges. At our factories, weare reducing the amount of electricity
and water used by improving manufacturing efficiency. We are also
committed to collecting used stainlesssteel vacuum-insulated bottles withan eye toward realizing a circular society.
Through our business activities,
we aim to reduce the burden on the
global environment while facilitating
abundant lifestyles in society.

52Introduction

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Group
Information

Appendix

Integrated Report
2023

53

For more financial information, please refer to our results briefing materials.
IR Information:
Business:

Please see here.

Please see here.

Japan

Characteristics of Each Segment (Business Operation Structure of Four Global Regions and Thermos)

Our aim is to maximize value
by focusing on measures tooptimize profitability, alongwith an emphasis on“strengthening core businessthrough profitability improvement” and “growth exploration and expansion.”

FYE2023

Breakdown of Sales by Industry(Billions of yen)

(FYE2023: Cumulative basis)

Revenue:

420.4
Segment operating profit:

31.6
Segment operating
profit margin:

7.5%

Steel and metals .................. 15%
Automobiles and othertransportation equipment ...... 5%
Electronics ........................... 27%
Food and foodstuffs .............. 1%
Healthcare ............................. 9%
Chemicals and energy ......... 26%
Other .................................. 17%

Business Environment*
Segment Strategy* Key considerations as of the start of FYE2024

Growth Strategy• Strengthen new products
and services• Expand the solutions
business• Advance development ofcarbon neutral-related
products• Develop business in domestic
growth markets (electronics,
stable isotopes and biotech)

Anticipated Opportunities• Equipment and installation projects inelectronics business• Demand for electronic materials gases fornext-generation semiconductors
Concerning Risks• Shrinking industrial gas market scale• Sharp increases in energy prices• Supply chain disruptions due to procurement difficulties
and raw material shortages

EuropeUnited States

Business Changes• Review low-earnings businesses

Matheson Tri-Gas will aggressively tap into new business
opportunities through a combination of its vertical integration and cross-selling
strategies, based on a culturethat prioritizes best practices
in Safety, Quality, andProfitable Growth.

Revenue:

Nippon Gases aims to growfurther through its strategicpillars, namely Reinforced
Governance, People
Excellence, Optimized BaseBusiness, Operational
Excellence, and Profitable
Growth.

Revenue:

303.0
Segment operating profit:

37.0
Segment operating
profit margin:

12.2%

272.8
Segment operating profit:

34.9
Segment operating
profit margin:

12.8%

Growth Strategy
Steel and metals .................... 8%
Automobiles and othertransportation equipment .... 10%
Electronics ............................. 7%
Food and foodstuffs ............ 13%
Healthcare ............................. 7%
Chemicals and energy ......... 13%
Other .................................. 42%

Steel and metals .................. 19%
Automobiles and othertransportation equipment ...... 1%
Electronics ............................. 3%
Food and foodstuffs ............ 19%
Healthcare ........................... 10%
Chemicals and energy ......... 18%
Other .................................. 30%• Achieve operating leverage:
Establish vertical integrationin targeted markets allowing
cross-selling through all modesof gas supply• Develop the on-site portfolio:
Offset economic volatility withthe stable in-flow of fees
related to these projects• Pursue select M&A opportunities: Acquire independent
distribution businesses that
supplements existing bulk
capabilities again achieving
market vertical integration

Growth Strategy• Focus on resilient markets,
optimize base business• Invest in application
technologies• Evaluate marketing mix andproduct portfolio• Efficiently allocate resources
to business needs

Anticipated Opportunities• Cross-selling of cryogens, dry ice and freezing equipment to
the food processing market• Expanded gas sales to semiconductor manufacturers due tothe CHIPS and Science Act• Capital projects in support of carbon neutral initiatives related
to the Inflation Reduction Act
Concerning Risks• Trends in overall U.S. economy toward a possible inflationinduced recession• Continued cost increases related to production anddistribution• Labor shortages of key skill sets necessary to sustain overall growth

Anticipated Opportunities• Growth in demand when European economy rebounds• Business development and new business creation throughmarketing activities• Investment projects with and without government subsidies
related to carbon neutrality• Geographical expansion and M&A opportunities
Concerning Risks• Current trends in overall European economy• High volatility in energy prices• Supply shortages due to supply chain disruptions

Introduction

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Integrated Report
2023

Business Characteristics of Each Segment

Thermos

Asia and Oceania

Characteristics of Each Segment (Business Operation Structure of Four Global Regions and Thermos)
FYE2023

Breakdown of Sales by Industry(Billions of yen)

(FYE2023: Cumulative basis)

Business Environment*
Segment Strategy* Key considerations as of the start of FYE2024

NSHD aims to be a major
supplier of industrial gaseswith a diverse lineup of
products, while efficiently
operating its businesses incompliance with laws andregulations and constantly
working to improve
productivity.

Revenue:

Growth Strategy

Anticipated Opportunities

159.9• Acquire large-scale
on-site projects, expand
production capacity in
ASUs• Expand new products
and sales areas• Win opportunities in
global HyCO business• Management: Move to
new management
structure• Robust ongoing demand in emerging countries• Stronger demand for electronic materials gases

In the Thermos business, we area pioneer in vacuum-insulatedbottles. We propose ideas for
new lifestyles and develop
products in tune with thecustoms and cultures ofpeople living in unique markets in countries around theworld.

Revenue:

Growth Strategy

Anticipated Opportunities• Expand new products,
directly managed storesand e-commerce platform business• Develop reciprocal
communications systems
with users of vacuuminsulated bottles• Improve Thermos brandawareness and maximize
brand equity• Demand for economization as prices increase forbottled beverages• Demand from foreign tourists visiting Japan• Attention and interest in sustainable products amid
heightened environmental awarenessSteel and metals .................... 3%
Automobiles and othertransportation equipment ...... 5%
Electronics ........................... 44%
Food and foodstuffs .............. 2%
Healthcare ............................. 3%
Chemicals and energy ......... 24%
Other .................................. 19%

Segment operating profit:

15.4
Segment operating
profit margin:

9.7%

30.1

Breakdown of Sales by Region(FYE2023: Cumulative basis)

Segment operating profit:

6.0
Segment operating
profit margin:

19.9%

Japan .................................. 84%
Asia ..................................... 16%

Concerning Risks• Increase in electricity and logistics costs (costs related to
production and transportation of gas products)• Impact from trade friction• Changes in government political and economic policies

Concerning Risks• Higher prices for raw materials and energy due tothe weak yen• Increase in labor costs at overseas manufacturing plants

54

Introduction

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Strategy by Segment

Japan
Position in Final Year of

NS Vision 2026
Core Business:
01 Strengthen
Profitability Improvement
Enhance profitability by rationalizing andoptimizing existing base business

02 Growth Strategy: Exploration and Expansion

Start new business lines by advancing development in newmaterials for semiconductor, production processes and related
equipment, stable isotopes, and carbon neutral fields

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

55

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56

Strategy by Segment: Japan

Market Position and Business Strengths

over

40%
(Market share in Japan)• Founded in 1910
• Employees: About 6,300• R&D: 5 bases,
Plant engineering: 1 baseBusiness Environment (Opportunities and Risks)
Opportunities:• Stronger demand as new production facilities are commissioned for electronics market• Opportunities to supply electronics materials gases fordomestic next-generation semiconductor production• Expansion in demand related to CO2 capture, storage,
and handling• E xpansion in fields using oxygen combustion as measure
to conserve energy
Risks:• Impact on earnings from increase in energy costs•U nreliable procurement of rare gases (helium, neon, krypton, etc.)• S evere labor shortages in Japan

Short-Term Initiatives
TNSC works tirelessly to improve productivity, increase margins, and advance thedevelopment of new products with “Profitability” as its slogan.
• Thoroughly manage prices of products in response to increases in costs for raw materials and fuel• Ongoing initiatives to minimize costs in each division• Shift management resources to core and growth businesses, optimal business portfolio

Future Initiatives
Sustainability 
Diversity and Inclusion

Safety• Support employee work–life balance andincrease options for flexible work styles• Create education and training systems linked
to corporate philosophy and vision• Double the number of employees who
have attended the Technical Academy by
FYE2026, reduce the number of accidents
and occupational injuries• Bulk gas production: 33 bases• Electronic material gases
production: 4 bases• Total Gas Centers: 17 bases• Supply gas and meet customer
needs with extensive sales andoperational network and throughmore than 220 partner companies

Key Aspects of Sustainability
Safety• Conduct safety management and training
at the Technical Academy
Environment• Growth in sales of products that help the environment
exceed our own GHG emissions
Oxygen combustion burners, hydrogen and ammonia
combustion burners• Reduction in electricity consumption
Diversity and Inclusion• Proactively hire and promote diverse human resources• Launch of project to empower women• Reduce overtime and increase ratio of employees taking
paid vacation

NS Vision
2026

Maintain and Improve Profitability
Optimal Business Portfolio

R&D• Monitoring of business portfolio basedon capital efficiency• Focus on R&D and delve deeper into
untapped markets for realizing a carbon
neutral society• R&D into new materials for electronics
marketElectronics• Organize the team in response to recovery indomestic semiconductors, strengthen marketing and supply chain
Expand sales of products designed specifically for semiconductor customers

Position in
Final Year of

Innovation• Launch projects to improve potential andpracticality of developing new products andbusinesses in fields that could emerge as
new core businesses

Operational Excellence•A dvance automation and efficient operations through DX and AI initiatives at production plants• Improve business with advanced digitalization of order systems

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2023

57

Strategy by Segment: Japan

Market Position and Business Strengths

Key Aspects of Sustainability

Short-Term Initiatives

Taiyo Nippon Sanso Group (TNSC), the predecessor to NSHD, is anoperating company that was founded in 1910 to support Japan’s
manufacturing industry, which was still in its early stages, throughthe supply of domestically produced industrial gas. With over 110
years of business history, TNSC currently employs approximately
6,300 domestic group employees. The TNSC Group’s sales networkis spread across the whole country with more than 220 contracted
sales agencies, giving it a domestic industrial gas market share ofover 40%, No. 1 in the industry. To ensure reliable supply for thesesales, TNSC has 33 bulk gas production bases, four semiconductormaterial gas production bases, and 17 Total Gas Centers that directly
supply customers.
Additionally, we have five R&D sites and a plant engineering
center for the manufacture of ASUs, a core product in the industrial
gases business. These facilities play a crucial role in supporting not
only domestic operations but also the global operations of the NSHDGroup in both R&D and plant fabrication.

TNSC in particular identifies (1) safety, (2) the environment, and (3)diversity and inclusion as three key aspects of sustainability.
(1) Safety: Various safety measures are of the utmost priority in ourbusiness, and we provide safety training aimed at eliminating
accidents. The Technical Academy has been established as ourcenter for preparing to implement safety management and training, and where we hold danger-sensing courses. A variety ofsafety training videos have been made available for viewing
internally and externally via the internet, thereby contributing tosafety management for employees and customers.
(2) Environment: As an initiative to reduce our own GHG emission
levels, we are replacing old plants with more efficient ones toreduce power consumption. We are also installing solar panels
at filling stations and pressure test sites to also reduce energy
consumption. In addition, we promote the TNSC Carbon Neutral
Business Project for various industries, such as steel (blast­furnace, electric arc furnace), aluminum, non-ferrous metals, andglass. We are also involved in a project to develop oxygen
combustion technologies that use hydrogen and ammonia as fuel,while utilizing government subsidies. Through these initiatives,
we are keen to make GHG reduction contributions through our
products that help the environment on a level that exceeds ourown GHG emissions.
(3) Diversity and inclusion: We are actively recruiting people andpromoting diverse personnel in various aspects, and we launched
the Promotion Project Team for Women’s Active Engagement as
an internal project. In addition, we are also advancing activities
aimed at reducing overtime hours and increasing the percentageof paid holidays taken.

Considering our current environment, our short-term initiatives
continue to focus on improving productivity, increasing profitability,and promoting the development of new products under the slogan“Profitability.” With disciplined product price management to counter the rising cost of raw materials and fuel, we continue to takesteps to cut costs thoroughly in each business unit. As well, we aim
to achieve an optimal business portfolio, shifting management
resources from non-core businesses to both core and growthbusinesses.

Background to Strategy (Business Environment)
The Japanese economy is exiting its long historical deflationary
environment. There are more opportunities to install equipment andfacilities in projects for growing companies that are benefiting fromstronger demand for semiconductors. U.S.–China trade friction inadvanced industries and a return to domestic production has led
to increased demand for electronics materials gases, an area ofstrength for the group, and opportunities for new material gas
development. In addition, in the context of carbon neutrality, we
expect demand related to CO2 capture, storage, and handling equipment, in light of the government’s hydrogen strategy unveiled in theGreen Innovation fund project.
On the other hand, business risks currently include fluctuations
in electricity costs, which affect future energy price trends, and theimpact of unreliable procurement of rare gas on the operationsof customer factories. We also need to respond to issues that include
severe labor shortages and the entrenchment of a weak yen.

Future Initiatives
As for sustainability, amid an aging population and declining birthrate, we will improve our work environment and employment
models to be friendlier to women and senior citizens, and strengthen
personnel training by expanding our educational system that is
linked to our corporate philosophy and vision.
For maintaining and improving profitability, we intend to reinforce
our marketing and supply chains through a review of internal organizational systems in order to appropriately seize business opportunities
in the expanding electronics market. In our exploration efforts
toward realizing carbon neutrality, we have launched a project team
to fortify our efforts to identify and nurture core businesses for the
future.
In operational excellence, NSHD continues to improve the efficient
operation of production plants through the use of DX and automation, and promote even more efficient business management withthe advanced digitalization of order entry and order placement
systems.

Introduction

Special Feature

Value Creation
Story

Strategy by Segment

UnitedStatesPosition in Final Year of

NS Vision 2026
benchmark for Safety, Quality, and
01 Industry
Profit Growth
major supplier to the food processing,02 Amanufacturing,and semiconductor industries
program that delivers profit
03 Sustainability
growth and related shareholder value

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

58

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

59

Strategy by Segment: United States

Market Position and Business Strengths

9%(Market share in the United States)• Market shares
Major market share in
Dry ice
Nitrous oxide

Business Environment (Opportunities and Risks)
Opportunities:• Growth in the food processing industry and its demand for
dry ice, liquid carbon dioxide, liquid nitrogen, and freezing
equipment• Expansion of business opportunities in electronics industry
due to U.S. CHIPS and Science Act• New carbon neutral projects related to
the Inflation Reduction Act
Risks:• Slowdown in economic growth and related impact on
metal fabrication and manufacturing• Further increase in power, fuel, wages, and logistics costs• Shortage of labor in key skills including distribution drivers

Welding fuel gases
Key semiconductor gas mixes• More than 300 locations andover 4,500 employees in the

United States• Over 100 production facilities
including ASUs, on-site generators,
liquid carbon dioxide plants, dry ice
plants, HyCO, nitrous oxide plants,
and major industrial, specialty, andelectronics cylinder fill plants• Over 100,000 customer

accounts with more than 2,000

delivery vehicles, trailers, and rail cars

Key Aspects of Sustainability
Environment• Continue to research and implement latest technology insafety systems on our delivery vehicles• Development of gas analysis capabilities to support supply
to next-generation semiconductor devices• Comprehensive implementation and maintenance of CO2
recovery systems in Continental Carbonic Products’ dry ice
operations• Identification of renewable energy sources to be used in
our ASUs
Diversity•G ood progress in placing diversity candidates in key administrative and leadership roles through our Mid-Term Plan.
•C ontinued focus on development of junior diversity candidates for future senior roles.

Short-Term Initiatives• Complete large-scale projects underway as planned while competing for new opportunities in
our On-site & Pipeline and HyCO businesses• Continue to invest in the liquid carbon dioxide and dry ice business and maximize profitability

Future Initiatives
Sustainability •A ssess and implement actions aimed at reducing water usage in high-stress regions as identified
by the World Resources Institute (WRI)• P ursue large-scale oxygen plant projects in support of CCUS (CO2 capture, use, and storage)
processes• Identify and realize opportunities for production of green hydrogen

Maintain and Improve Profitability•A chieve cost reduction goals through productivity improvement and optimized asset utilization•C ontinue price management to offset uncontrollable cost increases• E xpand plant network, on-site business, and HyCO along with capture of profitable M&A
opportunities• S trengthen production capacity of strategic electronic gases and related equipment

Operational Excellence•M anage and reduce our controllable costs through our companywide cost reduction program• F ocus on DX of our distribution operations with continued enhancement of our logistics management, our delivery vehicles digital capabilities, and development work to automate material
handling in our dry ice and cylinder fill plants

Position in
Final Year of

NS Vision
2026

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

60

Strategy by Segment: United States

Market Position and Business Strengths

Key Aspects of Sustainability—Safety and Quality

Matheson Tri-Gas (MTG) was established in 1927 as a specialty
gas company, acquired by Nippon Sanso in 1983, and merged withanother Nippon Sanso-acquired industrial gases company, Tri-Gas, in1999 to form MATHESON TRI-GAS, Inc. Multiple acquisitions andcapital construction projects grew MTG to its present form. Notably,
MTG operates 43 ASUs and is the largest supplier of dry ice andwholesale acetylene and propylene in the United States.
In 2019, MTG acquired HyCO sites divested due to the mergerof Praxair and Linde, rounding out its product lineup. MTG is in 44
states and employs more than 4,500 people at over 300 locations.
MTG has an approximate 9% share of the U.S. market, ranking
fourth among the major U.S. industrial gas suppliers.

The MTG Management Team works tirelessly to enhance the safety
consciousness of our employees and reduce the incidence of workrelated accidents. Indicative of this effort are numerous industry
Safety awards from the U.S. Compressed Gases Association. Also,a priority of management focus is our Quality performance andmeeting our commitments to Customers. Our Quality Management
System includes certification by independent external auditors of ourFood Safety System and ISO standard compliance. We constantly
strive for greater efficiency in our power and fuel consumption andto achieve zero waste, as seen in our dry ice operations deployment
of CO2 gas recovery systems.

Short-Term Initiatives
Background to Strategy (Business Environment)
The U.S. economy is experiencing historically high rates of inflation
due to higher energy prices partially related to the Russia–Ukraine
war and compounded by rising wages due to labor shortages andrelated higher logistics costs. Near-term decline in semiconductor
demand after the pandemic is slowly recovering and is expected tobe supplemented by U.S. production capacity expansion due to the
CHIPS and Science Act.
Ongoing demands of the food processing market and third-party
logistics contractors is supporting a growing demand for dry ice.
There is an increase in environmental business opportunities following the enactment of the Inflation Reduction Act which is likely to bea noteworthy tailwind during this time.

Against this background, we are focusing on the following threepoints as short-term initiatives:(1) Deliver the business case returns on capital projects underway
as we compete for new on-site & pipeline and HyCO projects(2) Manage total costs through our formal cost reduction program
delivering hard dollar savings to offset expenses that areuncontrollable(3) Continue to invest and maximize profits in the liquid carbon
dioxide and dry ice business

Future Initiatives
In the areas of sustainability and the environment, we will leverage
our recent success being selected to supply large-scale oxygen plants
for direct air capture of CO2 for new project wins. We will also look
for additional green production opportunities in hydrogen as­demonstrated by our HyCO project supporting production of­renewable diesel.

To successfully go forward in efforts to improve our sustainability,
we recognize the value of new and diverse thinking and are working
to further increase the ratio of women in key management roles andto increase the overall diversity of the Team.
Lastly, MTG will continue to assess investment opportunities suchas our current expansion of strategic electronic materials production
and development efforts in digital transition in the form of automating material handling activities to improve the safety, repeatable
quality, and cost-effectiveness of those operations.

Introduction

Special Feature

Value Creation
Story

Strategy by Segment

EuropePosition in Final Year of

NS Vision 2026

01 Optimize core businesses
systems that focus on outstand02 Organizational
ing human resources

03 Strengthen governance
04 Pursuit of Operational Excellence
application technologies that satisfy
05 Acquire
requirements of customers

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

61

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

62

Strategy by Segment: Europe

Market Position and Business Strengths

9%(Market share in Europe)* 12% for countries where we havea business presence

Business Environment (Opportunities and Risks)
Opportunities:• Increase in gas demand as the European economy recovers• Business development through marketing activities andnew business creation• Carbon neutrality investment projects(such as biomethane and hydrogen)• Growth in resilient industries, such as food & beverage andhealthcare

Short-Term Initiatives•D isciplined price management to mitigate impact from cost increases• S trengthen project replication and training in productivity improvement activities• Increase sales in resilient markets, such as food & beverage, healthcare, and the environment• F ast response to the demand for carbon neutral-related products. Focus on greening combustion
biomethane, green hydrogen, CO2 capture

Future Initiatives• Business presence
in 13 European countries• Network for supplying
each region in Europe

Risks:• Current trends in the broader European economy• High volatility in energy prices• Supply shortages due to disruption of supply chains• Ammonia plants shut down due to rising natural gas prices,
tighter supply–demand conditions for CO2

CO2 carrier (ship for transportingliquefied carbon dioxide): 3 vessels
Pipelines: 14 lines
Trucks: More than 1,000• Number of customers:
About 150,000 companies• Operational plants: 195• Number of employees:
About 3,000

Sustainability • E ducational training related to the environment, safety and quality• P romote renewable energy use (purchase EAC* for electricity)•A cceleration of carbon neutral measures(1) Oxy-fuel combustion technology(2) Biomethane-related business(3) Green hydrogen production projects(4) CO2 capture opportunities• Continuous monitoring of governance guidelines, compliance policies•C ontinue to promote women sponsorship programs, community engagement programs, andyoung employee communities

Key Aspects of Sustainability
Safety• Ongoing safety education, such as “Safety First: Everyday,
Everywhere”
Environment• Our GHG emissions have decreased by 36% from the baseyear (FYE2019). Energy-saving measures, such as reducing
ASU power consumption and installing solar panels• Carbon neutrality support projects for customers inaluminum, non-ferrous metals, glass, and steel (electric arc
furnaces) industries• R&D projects related to green hydrogen• Promotion of refrigerants with low GWP (Global Warming
Potential)
Diversity and Inclusion• Continue to strengthen diversity and inclusion• Promote “Women Sponsorship Programs”

Maintain and Improve Profitability • T imely and strong price management in response to cost trends• E xpand in electronic material gas sales and resilient markets•R elentlessly pursue operational excellence• L everage DX (process automation, transportation, production planning, etc.)•D iversify sources of CO2 from fossil fuels to natural or biogenic origin* Energy Attribute Certificates: Certificates related to environmental attributes
such as power generation methods and energy sources

Position in
Final Year of

NS Vision
2026

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

63

Strategy by Segment: Europe

Market Position and Business Strengths

Key Aspects of Sustainability

Future Initiatives

The Nippon Gases Euro-Holding Group (NGE) became a part of the
NSHD Group in December 2018 and has been operating in Europe
under the NIPPON GASES brand. In Europe, NGE has a market shareof 9%, and it boasts a 12% market share in the
countries where it has a business presence (13 countries: Belgium,
Denmark, France, Germany, Ireland, Italy, the Netherlands, Norway,
Poland, Portugal, Spain, Sweden, and the United Kingdom).
With three CO2 carriers (liquid carbon dioxide transport ships),
14 pipelines and more than 1,000 trucks, NGE has a network able
to supply a variety of industrial gases to over 150,000 customers
throughout Europe.

We identify (1) safety, (2) the environment, and (3) diversity as key
aspects of sustainability.
(1) Safety: In addition to our own employees, we provide safety
training to delivery service providers in a bid to eliminate accidents. We continue to improve safety through campaigns like
“Safety First: Everyday, Everywhere”.
(2) Environment: As a result of reducing the power consumption of
ASUs and installing solar panels at filling stations, our GHG emissions have decreased 36% compared to the base year (FYE2019).
In addition to projects to help customers become carbon neutralin the fields of aluminum, non-ferrous metals, glass, and steel(electric arc furnace), we are also working on green hydrogenrelated R&D projects with and without government subsidies.
(3) Diversity: We also continue to promote Women Sponsorship
Programs, and young employee communities.

In terms of sustainability, we continue to provide environmental,
safety and quality-related education and training, and promote theuse of renewable energy and reductions in CO2 emissions by­purchasing EAC for electricity (certification of environmental­attributes such as power generation methods and energy conservation) and considering the use of biogas and biomethane. From an
employee diversity perspective, we will continue to strengthen­diversity and inclusion and monitor diversity-related KPIs. An analysisof the gender pay gap and training on unconscious bias will also be
carried out.
For maintaining and improving profitability, we will continue tomanage prices (pricing activities) in accordance with trends in costs,
while also working on reducing electricity and transportation costs.
We are also keen to expand sales of electronic materials gases andin resilient markets.
In terms of operational excellence, we will continue to deploy DX
in process automation, transportation, production planning, etc.,
while also creating synergies with other NSHD Group companies.

Background to Strategy (Business Environment)
The European economy has been recovering from the downturncaused by COVID-19, and is likely to continue growing in the future,especially in resilient industries (food & beverage, health and medicalcare, the environment) that are less exposed to economic trends.
Moreover, investment in environmental-related areas is gaining
momentum towards achieving a carbon-free society. We arealso actively engaging in marketing and new business development
activities while utilizing government subsidy programs in various
countries when possible.
As a current issue to watch, we are keeping an eye on trends inenergy prices. The historical surge in natural gas and electricity prices
triggered by the Russia–Ukraine crisis seems to have settled down
somewhat since the second half of 2022, but the impact on selling
costs and supply chains is likely to linger for some time.

Short-Term Initiatives
With these in mind, as short-term initiatives, we will relentlessly
pursue operational excellence by strengthening projects replicationand training in Europe to improve productivity while engaging inprice negotiations to offset rising costs.
In addition, we will focus on sales to resilient markets and strive
to fast respond to the demand for carbon neutral-related projects,
centered on the combustion and biomethane businesses.

Introduction

Special Feature

Value Creation
Story

Strategy by Segment

Asia and
Oceania
Position in Final Year of

NS Vision 2026
an industrial gases supplier with a
01 Becomediverse product lineup, and become a major
player in each country and region
efficient and disciplined operations
02 Conduct
through activities to enhance productivity
growth in revenue while
03 Strong
improving the operating profit margin

04 Rebuild our business platform

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

64

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

65

Strategy by Segment: Asia and Oceania

Market Position and Business Strengths

Developing
the industrial gases
business andelectronics businessin a four subsegment
structure• Operations in 12 countries
and regions

Business Environment (Opportunities and Risks)
Opportunities:• Solid demand in emerging countries (brisk demand forinfrastructure and automobiles in Southeast Asia, likelihoodof reduced transportation costs as logistical congestion
alleviated)• Growth in demand for electronic materials gases (expansionof semiconductor production in anticipation of stronger
demand)• Expect increase in LPG and CO2 demand in Australia
Risks:•R isks associated with insufficient price management
versus rising costs• Impact on regional economies from U.S.–China trade
friction•U nstable natural gas costs and increasing logistics costs• Average annual growth rate of

10% over past 10 years• Over 4,000 employees
in the region• Operating more than 25 ASUs,

Key Aspects of Sustainability
Safety• Conduct risk simulations, review daily operations froma safety perspective

as well as carbon dioxide plants,
nitrogen plants, and hydrogen plants• Special gas production bases:

6 facilities• Special gas supply services: 3 sites

Short-Term Initiatives
Australia

Southeast Asia and India

East Asia• Manage procurement costs
and price• Expand business portfolio
through related equipment
and device sales, maximize
synergy with existing
businesses• Build regional networks
and promote collaboration• Manage price and work toincrease productivity• Explore new opportunities
for setting up ASUs
• In electronics, tap into
regional demand forspecialty gases and optimize production plants

Future Initiatives
Sustainability
SafetyHuman Resources• Improve safety indicators, including thosefor occupational accidents, by 10%
annually• Strengthen human resource functions ofeach company through development ofregional networks

Quality

Governance• Thoroughly manage quality based on Groupquality management standards• Strengthen compliance and risk management while preserving organizational
culture of individual companies

Environment• Utilize oxygen combustion, argon welding, etc.
Environment• Reduce power consumption through plant efficiency
improvements and installation of solar panels• Propose ways to improve fuel efficiency for customers withelectric arc furnaces and glass melting furnaces where GHG
emission reduction is a challenge
Diversity and Inclusion• Host Women Empowerment network meetings,
hold internal events for International Women’s Day
Compliance• Compliance training, internal control training,labor law training, and more

Maintain and Improve Profitability•C oncentrate investment in in-house products, such as electronic materials gases, and growth
sectors (collaboration in Japan, enhancing supply capacity, and efficient factory operations)• E xplore new businesses for a carbon neutral society

Operational Excellence • T horoughly control costs, including working capital management (enhance business operations interms of both price management and cost controls)•D X strategy (unify IT security levels and promote labor-saving and cost reductions throughautomation)

Position in
Final Year of

NS Vision
2026

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

66

Strategy by Segment: Asia and Oceania

Market Position and Business Strengths

Key Aspects of Sustainability

Future Initiatives

The NSHD Group’s business in Asia and Oceania was launchedin Singapore in 1982. Today, our industrial gases business spans
Australia, Southeast Asia (seven countries), India, and China, while
our electronics business primarily covers China, Taiwan, and South
Korea. East Asia in particular, where global semiconductor manufacturers have a significant presence, is a crucial market area for ourelectronics business.
In April 2023, we revamped the management structure of our
Asia and Oceania business, transitioning to a subsegment structure.
In light of the business environment and our strategic direction, we
divided our management structure into four subsegment: Oceania,
Southeast Asia & India, East Asia electronics, and China, and thenembarked on a new journey under this structure.

First, in the field of safety, we continue to focus on periodically holding safety meetings, conducting risk simulations, and revising routine
work from a safety perspective. Concerning the environment, alongwith reducing power consumption through efficiency improvements
in plant operation procedures, we are advancing proposals to enhancecombustion efficiency for customers with electric arc ­furnaces andglass melting furnaces. In Australia, we are also ­working on the
installation of solar panels at our business locations.
From a diversity perspective, we are planning and implementing
internal events for Women Empowerment network meetings andInternational Women’s Day.
In compliance, we conduct regular training on compliance, internal controls, and labor laws, addressing various key topics and with
the intention of improving employee understanding.

We will strive to improve various safety indicators, such as
RI (Recordable Injury), PVA (Product Vehicle Accidents), andPPD (Property Damage), by 10% annually and rigorously manage
products in line with NSHD’s quality management rules. From agovernance perspective, while maintaining each company’s uniqueorganizational culture, we will strengthen their compliance and risk
management systems.
For the environment, along with the introduction of technologies
that increase efficiency in production and logistics, we will focus on
activities that utilize Group technologies in oxygen combustion andargon welding, for example. We will also make environmental
proposals for realizing a carbon neutral society.
In terms of revenue, we will concentrate investment in the­construction of production facilities for our own products, such as
electronic materials gases and helium, and in other growth fields.
Through collaboration with the East Asia electronics subsegment andbetween countries like Japan and the United States, NSHD willproactively work on improving the responsiveness of the electronics
business, such as by expanding its supply capacity in electronicmaterials gases and through more efficient plant operations.
For operational excellence, while referring to initiatives in Japan,
the United States, and Europe, we are keen to increase efficiency inplant operations in tune with regional demand, while advancing
business operations in terms of both price management and cost
controls. As a part of our DX strategy, we are unifying IT security
levels and using automation to save labor and lower costs.

Background to Strategy (Business Environment)
The outlook for economies in Australia and the Asia region in 2023,
though marred by concerns about weak semiconductor demand anda downturn in the steel industries in China and Vietnam, generally
calls for a recovery to pre-pandemic levels.
In China, exports are brisk but there are concerns over slowing
growth in domestic demand due to the rapid aging of the population. In emerging countries, especially in Southeast Asia, demandremains strong and regional growth is being driven by digitalization,such as growth in the e-commerce market.
In the electronics business, centered on East Asia, we see thepotential for further growth in semiconductor production as demand
increases in the future. In Australia, population growth is likely todrive growth in demand for LPG and CO2.
Risk factors include the possibility of being unable to reflect inprices the entire amount of increased electricity costs, and a possible
impact from U.S.–China trade friction.

Short-Term Initiatives
In Australia, we aim to strengthen the management of procurement
costs and price while expanding our business portfolio, including
medical devices and LPG container sales, in order to maximize synergies with existing businesses.
In Southeast Asia and India, we are focusing efforts on building
intra-regional networks, promoting collaboration, and strengthening
activities in price management and productivity improvement inresponse to rising costs and inflation.
In the electronics business, we aim to create synergies by sharing
best practices across companies through the creation of a total
electronics network.

Introduction

Special Feature

Value Creation
Story

Strategy by Segment

Thermos
Position in Final Year of

NS Vision 2026
aim to achieve sustainable growth and
01 We
become a value-creating company trusted
by everyone.
• Improve customer satisfaction, brand value, and productcompetitiveness• Deepen and expand core businesses, product lineup, and sales
channels• Develop and strengthen human resources

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

67

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

68

Strategy by Segment: Thermos

Market Position and Business Strengths• Established in 1980 in Japan• Approximately 300 employees• Bases in 15 countries worldwide,
including Japan• Manufacturing plants in Malaysia,
the Philippines, and China• THERMOS brand is available in over
120 countries worldwide• Customer satisfaction about 95%
for our best-selling JNL series ofportable vacuum-insulated mugs
• Launch more than 100 new products every year, with a new productsales ratio of about 20%• The Thermos Group produces
37 million products per year globally

Business Environment (Opportunities and Risks)
Opportunities:• Increase in savings mentality among consumers due torising bottled beverage prices (stronger demand for stainless steel bottles)• Recovery in foreign tourist demand after the lifting of
COVID-19 border controls• Growing environmental awareness among consumers(more attention on sustainable products)
Risks:• Higher prices for raw materials and energy due toyen depreciation• Increase in labor costs at overseas production plants• Rising logistics costs and a shortage of logistics personnel

Short-Term Initiatives
Japan

South Korea• Introduce new products that differentiate
from competitors• Expand lineup of tumbler products andbroaden target user base• Improve brand recognition and market sharein frying pan market• Enhance brand awareness throughe-commerce sites• Introduce children products channels
Southeast Asia

• Integrate brand strategies and raise brandawareness• Introduce common products within regions

Future Initiatives
Sustainability

Key Aspects of Sustainability
Safety• Continuously improve through product safety reviews andnew product assessments• Safety training for all employees
Environment• By optimizing the production division, reduced waste by
410 tonnes and water usage by 20,488 m3 by December2022• Prohibited the internal use of PET bottles and plastic
containers
Diversity and Inclusion• Educational activities for female managers• Promote employment of people with disabilities
Quality• Hold quality improvement meetings twice a year for major
overseas factories• Update quality audit procedures

SafetyQuality• Safety training for all employees, thoroughchecks of safety devices, and proper operation of production equipment• Disclose customer opinions received bycustomer service department• Strengthen quality audits

Environment

Diversity• Reduce energy consumption, and defective
products (waste) through efforts to improve
efficiency in plant production• Start collection of used bottles at directly
managed stores• Employ people with disabilities, promotewomen into management positions, etc.

Maintain and Improve Profitability• S trengthen development of new products• Expand number of directly operated stores and increase sales through online channels• Expand kitchen products and bring them to market

Operational Excellence • S trengthen activities to improve productivity centered on production plants (reduce raw material
procurement costs, review production processes)

Position in
Final Year of

NS Vision
2026

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

69

Strategy by Segment: Thermos

Market Position and Business Strengths

Key Aspects of Sustainability

Future Initiatives

Thermos, the pioneer of vacuum-insulated bottles, has a history ofover 100 years since its brand inception and is loved in over 120
countries worldwide.
Thermos has bases in 15 countries worldwide, including Japan,
and produces 37 million products annually at its manufacturing
plants in Malaysia, the Philippines, and China.
Thermos launches more than 100 new products every year, andthe level of customer satisfaction for its best-selling JNL series ofportable vacuum-insulated mugs is a high 95%.

In terms of safety, which is crucial for the continuation of our operations, we conduct product safety reviews and new product assessments in our ongoing efforts to ensure safety and improve quality.
We also regularly conduct safety training for all employees.
In terms of the environment, NSHD has been working hard toincrease efficiency in manufacturing while reducing power consumption, waste, and water usage. As of December 2022, we reduced
waste by 410 tonnes and water usage by 20,488 m3.
Internally, we prohibit the use of PET bottles and plastic containers, and have initiated activities to collect used stainless steel bottles
at Group company offices. We are advancing SDG activities in all
internal departments, and disclose the content of these activities on
our website.
As for diversity initiatives, we are concentrating efforts on training
female managers and hiring people with disabilities.

Looking ahead, we will improve our work environment bytraining employees on safety and the proper operation of production
equipment. In addition, while strengthening quality audits, we will
share customer opinions received by our customer service department
with the aim of maintaining and improving product quality. We alsoplan to reinforce new product development with a focus on expanding our lineup of kitchen products.
In our directly operated stores, we will initiate the collectionof used bottles, thereby contributing to the reduction ofwaste in society as a whole through the sale of sustainable
beverage containers.
From the perspective of diversity in personnel, we will actively
promote the employment of people with disabilities and the trainingof female managers.
Furthermore, through activities to reduce costs centered on
manufacturing plants, we will further strengthen our efforts to
reduce procurement costs for raw materials and review production
processes, while also working to reduce the loss rate in defective
products.

Background to Strategy (Business Environment)
The rapid rise in raw material prices appears to have reached a plateau.
In overseas markets, concerns are mounting about the growing
weakness in private consumption due to monetary tightening.
However, the Japan market looks likely to recover to the pre-pandemic
level of 2019 after the lifting of restrictions on movement during
COVID-19, and foreign tourist demand is gradually returning after
the removal of border restrictions.
Due to restrictions on movement over the past few years inJapan, people still tend to cook at home, and opportunities forcooking at home are increasing. Amid inflation, however, demand islikely to increase for low-priced products like those offered by private
brands. Furthermore, consumer awareness of the environment isincreasing every year, giving a boost to environmentally friendly
consumer spending habits.
In these circumstances, demand for stainless steel bottles has
increased owing in part to price hikes for bottled beverage, but wealso recognize the risk that higher energy costs, labor costs at overseas manufacturing plants, and logistics costs will lead to higher
product costs.

Short-Term Initiatives
Domestically, we intend to expand our lineup of tumbler products
and broaden our target user base, and endeavor to improve brandrecognition and market share in the frying pan market. Another key
initiative is the introduction of customization services and limitededition products at our directly operated stores and online shops.
Overseas, especially in South Korea, we are keen to increase
brand awareness through e-commerce sites and introduce children
products channels business in emerging countries in Southeast Asia.

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

Point
Director Scott Kallman and Director
Eduardo Gil Elejoste attended the shareholders meeting in June 2023 in person,
having been unable to attend 2020–2022
shareholders meetings in-person due to theimpact of the spread of COVID-19 after
they were elected as directors at the­shareholders meeting in June 2019

Governance71	Corporate Governance Dialogue:
Now Our True Value Is Being Tested
74	Members of the Board of Directors,
Audit & Supervisory Board Members, andExecutive Officers
75

Skills Matrix

76

Corporate Governance

78

Compliance81

Risk Management

82

Information Security / Appropriate Taxation

83	Intellectual Property / Dialogues with
Stakeholders

70Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

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2023

71

Corporate Governance Dialogue

Now OurTrue Value Is
Being Tested
Taiyo Nippon Sanso Corporation was launched in 2004 as
the result of the merger of Nippon Sanso Ltd. and Taiyo Toyo Sanso
Co., Ltd. In 2014, the Company became a consolidated subsidiary of
Mitsubishi Chemical Holdings Corporation (now Mitsubishi ChemicalGroup Corporation), and changed its name to Nippon Sanso Holdings
Corporation in 2020 along with its transition to a holding company
structure. Even during the stormy period of the past 10 or more years,
the Board of Directors has been steadily building a structure that has
now essentially reached an ideal form. What kind of governance was
the Group aiming for? And, how is the Group’s governance going tofunction going forward? Outside Director Katsumi Nagasawa, who
has many years of experience as executive of a global company, andExecutive Officer Yutaka Okuda, who has been involved with theBoard of Directors’ Secretariat for many years, had an open discussion
about these questions.

Katsumi Nagasawa
Outside Director

Yutaka Okuda
Executive Officer,
Group Legal OfficeIntroduction

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Information

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2023

72

Corporate Governance Dialogue

Discussion
at Board of Directors’ Meetings Has
Become More Active
Okuda I joined the Company in June 2008 as a mid-career hire.
I have worked as the Board of Directors’ Secretariat since that time,and have seen some significant changes in the Board’s composition
over these 15 years. I believe that these changes were driven by theCompany’s continuous governance reforms based on the introduction of Japan’s Corporate Governance Code in 2015. Mr. Nagasawa,what is your impression of the current composition and activities of
the Board of Directors?
Nagasawa My impression is that Nippon Sanso Holdings’ corporate
governance is highly advanced, and I think it is one of the leading
companies on the Tokyo Stock Exchange (TSE) Prime Market in thisarea. Last year, when Masako Miyatake and I joined, the outside directors became a majority, which brought the Board of Directors’ structure
into perfect compliance with the Corporate Governance Code. In
addition, it has broadened the Board’s skills matrix, and I hear that
Board discussions have become more active than they were before.
In the course of merging, becoming a subsidiary of Mitsubishi
Chemical Group, and transitioning to a holding company, I am able
to easily understand that the Company’s governance system has
undergone some rapid transformations. I am sure this has meant
hard work for the people involved, but the changes in the businessenvironment have also served as a driving force for reform. In 2018,
the Company acquired the European business, and later it transitioned
to a holding company structure, which completed the businessstructure of four global regions and Thermos.*1 The people responsible for the four hub businesses are participants in the Board of
Directors, and with a majority of outside directors, the management
structure is extremely well balanced. So far, we have been building
the structure, and now I see us as entering the execution phase.
Okuda Our current directors have a broad makeup, including
people with experience in business and in international law, as well
as tax expertise. As a result, our discussions have been extremely
active. Outside directors are provided with a pre-briefing of items
for discussion at Board of Directors’ meetings, to ensure that they
understand them thoroughly. These briefings are also to addressquestions and allow various opinions, which we use to revise andenhance the Board of Directors’ meeting materials compared to theoriginal versions. From the perspective of the Secretariat, enhancing
the materials promotes more active discussion.
Nagasawa That’s right. This year, we have added new members
and they have offered questions and comments from new perspectives. The skills matrix is very important.
Okuda As I mentioned before, our acquisition of the European
business in 2018 was an extremely important turning point for theGroup. Adding Europe to the Company’s business domain forced
us to think about how to manage global governance. I think theanswer was the holding company structure.
Nagasawa The primary characteristic of NSHD is surely its structure of four global regions and Thermos. From the perspective ofan outside director, the post-merger integration (PMI)*2 has been
extremely successful. Sometimes PMIs might involve forcing companies to adopt a Japanese approach, but in the case of the NSHDGroup, each region is delegated its own authority. All of the companies have similar business styles, but as you would expect, the business practices differ by region, and there are also some differencesin working environments. Getting these regions to operate smoothly
together starts with respecting their different environments andcharacteristics. I think the Group has been doing extremely well on
this point.
Okuda By the same token, there is also much to be learned
from each region. For example, when the Company acquired theEuropean business of U.S. company Praxair, after the acquisition I
was deeply impressed by their quarterly reports on business conditions. Specifically, the first item reported on by the person responsible for the European business was not earnings, but safety.
Naturally, as “The Gas Professionals,” we have always emphasized safety, but I was surprised to see safety always at the front of
the business condition reports. After that, other regions also began
to report on safety first.
*1 F our global regions and Thermos: Refers to the NSHD Group’s business in Japan,
the United States, Europe, and Asia and Oceania, and the Thermos business.
*2 Refers to the process for maximizing integration effects after an acquisition or merger.

A Simple Holding Company System
Nagasawa With Japanese management only, I believe that thestandard for making judgments would be too narrow. So, we now
have two international CEOs on the Board. This is extremely beneficialfrom the perspective of information sharing, including with Kenji
Nagata of Japan, and everyone is very quick to understand any topic
discussed.
This information includes hard realities, and sometimes we hear
about cases where the situation on the ground is quite different
from what it should be in theory. This kind of information sharing is
extremely beneficial. On the other hand, from a governance perspective, the matters that are discussed and decided by the Board of
Directors are always communicated properly throughout every partof the Group. This gives me the impression that the current governance system is in really good shape.
Okuda One example of a hard reality would be during the first halfof the previous fiscal year, when the worldwide rise in energy prices
such as crude oil and natural gas caused a surge in electricity charges,
which make up a significant portion of the Company’s production
cost. At the time, the Board of Directors treated this as its top priority issue, but I think that the rapid sharing of the response status ineach region at Board of Directors’ meetings provided an extremely
useful reference to which our countermeasures were built.
Nagasawa Nippon Sanso Holdings today is what you might
describe as “lean.” Its structure doesn’t have any excess. That is one
answer, I think. In addition, another debate might emerge when thebusiness environment changes, but for now at least, I think that thecurrent system is working well: that is, delegating authority to eachregion over whatever matters can be handled locally, while Nippon
Sanso Holdings retains control over essential matters. One of theissues to be addressed was how to go about grasping the practicaloperations of each region, but currently the Audit & Supervisory
Board visits each region and reports to the Board of Directors. I thinkthat this is an important part of the governance system.
Okuda At the time when we transitioned to the holding company
structure, we started with the concept of conducting the bare minimum of operations with as few people as possible. However, itIntroduction

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2023

73

Corporate Governance Dialogue

remains a subject of debate as to whether such a structure is capableof exercising governance over the entire Group, and whether it would
be possible to leverage the comprehensive capabilities of the Group.
Right now, we are implementing an activity called Operational
Excellence, in which the regions present their best practices to one
another so that we can incorporate them globally. Moreover, we intend
to develop a new business by responding to carbon neutrality, butthere are various nascent businesses in each region. We have started
work on sharing these effectively and developing them Groupwide.
Nagasawa Another important characteristic is that the Company’s
parent company is Mitsubishi Chemical Group. Naturally, we must
respect the approach and business management policies of our parent
company, but I hear from President CEO Hamada that ultimately theCompany considers independent management to be fundamental.
As an outside director, I must take care to ensure fair and equitable
management for minority shareholders, who make up just under 50%.
Okuda Currently, there are no directors dispatched from Mitsubishi
Chemical Group, and the Advisory Committee on Appointments andRemuneration also comprises outside directors and the President
CEO, so the Company has retained its independence in terms ofstructure as well.
Nagasawa In that sense, I think that making independent outside
directors the majority in June 2022 also sent a clear message.

 aving Diverse Judgment Criteria Enables a Strong
H
Response to Change
Okuda Mr. Nagasawa, you are also the chair of the Advisory
Committee on Appointments and Remuneration. One of the main
missions of the committee is selection of the CEO. Can you tell me
anything about the current status of this mission?
Nagasawa We are not at the stage where I can announce details,
but the discussion of the process at the Advisory Committee on
Appointments and Remuneration has almost concluded, and weare about to move into the concrete execution phase.
Up until now, Japanese companies have been organized for anincumbent president to select his/her successor. However, this alsomeans that arbitrary selection can occur, and recently various guidelines

have emerged. It is important to construct a process for selecting
and developing CEO candidates that have external accountability.
In this case, rather than serving CEOs being the ones to select anddevelop successors, the fundamental idea is to have outside directors
also get involved in the selection and development processes.
Okuda In a global company, it is not enough to have the CEO
be the one talented person; rather, there must be a pool of global
human resources from which the CEO is selected. What do you
think is necessary to develop such global human resources?
Nagasawa That is an extremely difficult problem. It is really a discussion about how to select and develop a CEO not only from the perspective of business in Japan but also from a global perspective.If a truly
talented person is available, it is not necessary that they be Japanese.
In other words, we need to accept diversity. It is important for the
Board of Directors or the Advisory Committee on Appointments andRemuneration to have this awareness when they engage in this process.
Okuda Speaking from a global perspective, I don’t think thatcountermeasures against cyberattacks were as pressing an issue in2020 as they are now. Recently, this has become an urgent priority for
all companies, and the Company has established a global IT Security
Council based primarily in Europe. This means that Europe has themost advanced cybersecurity capabilities. I therefore think that it isnatural for each region to lead in its field of expertise, not only Japan.
Nagasawa The Company has set up a number of global committees such as the Global Strategy Review Committee and the Global
Risk Management Committee to pick up various expertise and generate synergies. I imagine that such committees will also continue tobe used going forward.
Another important thing when considering the future of theCompany is diversity, such as promoting active participation of
women. Based on my experience, I have come to think of diversity as
fundamental to a strong organization. Uniform, cookie-cutter typeorganizations can be very strong in a certain environment. They
have the power to make rapid breakthroughs. However, they are
extremely weak in the face of change. Without diversity, companies
can end up unaware of risks. The basis of diversity is in humanresources, and this gives rise to various different opinions.

Okuda We have an American CFO, and our discussions withhim have taught us a lot about the differences through his senses,
perceptions, and experiences compared with those of a Japaneseperson. This is another way in which we can directly realize theimportance of diversity.
Nagasawa My various overseas experiences have led me to thinkthat by spending time with diverse people you develop diverse judgment criteria. This is extremely important in the world of management, and I think it is good to adopt a slightly different judgment
criteria when looking at work overseas. I’ve often found that thiscan enable you to better understand what others are thinking.
Okuda Along with sending Japanese employees on assignment
overseas, I think we need to increasingly bring overseas employees
here on assignment at the head office as well.
Nagasawa Sharing know-how and creating synergies is not possible by staying still. Exchanges of human resources and global
communication are essential. Isn’t the Board of Directors quiteadvanced in this regard?
Okuda Yes, I think the Board is leading the way in terms of diversity.
Nagasawa However, just having the structure in place is no guarantee that it will work well. People also need to observe the spirit ofdiversity. By spirit I mean that people should be constantly aware ofdiversity and the ideas behind Japan’s Corporate Governance Code,and reflect this in their actual behavior. Presently, I am certain that
it is working well. However, we are about to enter the execution
phase, where our true value will be tested.

Introduction

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Information

Members of the Board of Directors,
Audit & Supervisory Board Members, andExecutive Officers

Appendix

Integrated Report2023

The careers of each officer can be viewed here.
Members of the Board of Directors,
Audit & Supervisory Board Members, and Executive Officers:
Please see here.

Members of the Board of Directors 
1

2

3

4

Toshihiko Hamada

Kenji Nagata

Scott Kallman

Eduardo Gil Elejoste

President CEO

Member of the Board

Member of the Board

Member of the Board

5

Miri Hara
Member of the Board(Outside Director)


6

7

8

9

Executive Officers 
Tsutomu Moroishi
Senior Executive Officer

Takeshi Miki
Senior Executive Officer

Katsumi Nagasawa

Masako Miyatake

Hideo Nakajima

Katsuhito Yamaji

Alan David Draper

Member of the Board(Outside Director)

Member of the Board(Outside Director)

Member of the Board(Outside Director)

Member of the Board(Outside Director)

Senior Executive Officer

Yutaka Okuda
Executive Officer

Audit & Supervisory Board Members 
1Satoshi Wataru
Audit & Supervisory Board Member

74

Kazuhiko Nishikawa

2

3

4

Akihiro Hashimoto

Masahiro Osada

Kazuya Kobayashi

Audit & Supervisory Board Member(Outside Auditor)

Audit & Supervisory Board Member(Outside Auditor)

Audit & Supervisory Board Member(Outside Auditor)

Executive Officer

Introduction

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Integrated Report2023

Appendix

Skills Matrix

Members of the Board of Directors

In order for the Board of Directors to function effectively it must consist of a diverse team of directors who have a broad range of knowledge and experience in corporate management. To this end, we have defined the knowledge and experience that play important roles in Group management across the following categories: (1) Corporate management,(2) Finance and accounting, (3) Legal and risk management, (4) Sales and marketing, (5) Development and technology, and (6) Production and procurement. We will strive to enhancethe effectiveness of the Board of Directors further by assigning employees with knowledge and experience in these categories to the right positions and at the appropriate times.
Name

Positions / Career highlights

1

Toshihiko Hamada

President CEO

2

Kenji Nagata

3

Scott Kallman

4

Eduardo Gil Elejoste

5

Miri Hara

Member of the Board
Representative Director and President, Taiyo Nippon Sanso Corporation

Member of the Board
Chairman and CEO, Matheson Tri-Gas, Inc.

Member of the Board
Chairman and President, Nippon Gases Euro-Holding S.L.U.

No. of years
in position

Corporate
management

3

Development andtechnology

●

●

●

5

●

●

●

4

●

●

●

●

4

●

●

●

●

Member of the Board (Outside Director)
Katsumi Nagasawa

Former vice president and executive officer, Hitachi, Ltd.

1

Outside director, Sugino Machine LimitedExperience working overseas

Independence

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

Member of the Board (Outside Director)
7

Masako Miyatake

8

Hideo Nakajima

Professor, Keio University Law School / Special Counsel, Blakemore & Mitsuki
Deputy Secretary-General, Japan / International Dispute Resolution Center
Outside director, SUMIDA CORPORATION

1Member of the Board (Outside Director)
Former Secretary General, Japan Fair Trade Commission●

0

Special Advisor, White & Case LLP / White & Case Law Offices

9
Audit & Supervisory Board
Members

Production andprocurement●2

Outside director, SECOM Co., Ltd.

6

Legal and risk
management

Experience working in othercompanies

Sales andmarketingMember of the Board (Outside Director)
Founder and partner, Tax Corporation Yokohama Benten Accounting, Inc.

Finance andaccounting

Katsuhito Yamaji

1

Satoshi Wataru

2

Akihiro Hashimoto

3

Masahiro Osada

4

Kazuya Kobayashi

Member of the Board (Outside Director)
Former managing executive officer and director, Yamaha Motor Co., Ltd.

0

●

0

●

●

6

●

●

●

3

●

●

●

3

●

●

●

Audit & Supervisory Board Member
Former senior executive officer of Group Human Resources & Corporate Secretariat Office,­General manager of Human Resources Department, Nippon Sanso Holdings Corporation

Audit & Supervisory Board Member (Outside Auditor)
Former senior general manager, Mizuho Bank, Ltd.

Audit & Supervisory Board Member (Outside Auditor)
Former managing executive officer (in charge of Corporate Management Department and Finance& Accounting Department), Mitsubishi Chemical Corporation

Audit & Supervisory Board Member (Outside Auditor)
Senior general manager, Mizuho Financial Group, Inc.

Notes: 1. Details on the definition of table headings
Corporate management: Experience serving as CEO, executive, or executive officer of a listed company or CEO of a local subsidiary of a global company
Experience working in other companies: Experience working outside of the NSHD Group’s companies or the parent company Group’s companies
Notes: 2. The chart does not present all of the officers’ knowledge and experience.

●●Introduction

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Appendix76

Corporate Governance
Our Approach to Governance
NSHD’s Board of Directors has formulated the Principles of Corporate
Governance as a guide to its basic approach to corporate governance. The purpose of corporate governance is to sustain growthand improve corporate value for the Company over the long term.
NSHD is a company that has an Audit & Supervisory Board andInternal Accounting Auditors. In accordance with the Companies
Act, NSHD has a General Meetings of Shareholders, a Board of
Directors, an Audit & Supervisory Board, and independent public
accountants.
In holding the General Meeting of Shareholders, we adhere to
the principle of respecting the rights of shareholders and ensuring
equality. On this basis, we strive to provide appropriate material forthe shareholders’ meeting at an early stage, utilize electronic voting
platforms, and offer meeting material’s in both Japanese and English.
Our Principles of Corporate Governance specify the following fourroles for the Board of Directors.
(1) Total management oversight(2) Maintenance of an internal control system (a structure to ensure theappropriateness of operations)(3) Selection, appointment, dismissal, evaluation, and determination of
remuneration for the CEO and other members of management(4) Formulation of management strategy and make decisions on significant business execution

The Board of Directors consists of four internal directors and fiveoutside directors. All five outside directors are independent. Having
a majority of independent outside directors increases the objectivityof business execution oversight by the Board of Directors. Although
NSHD’s parent company is Mitsubishi Chemical Group Corporation,
having a majority of independent outside directors ensures thatminority interests will be protected and NSHD will remain independent from its parent.
We pay attention to diversity in the composition of the Board of
Directors. Currently, two directors are of foreign nationality (heads of
U.S. and European businesses), and two are women. We have created a skills matrix that maps out the experience, knowledge, andabilities that our directors should possess, and appoint directors
who balance out this skills matrix. Internal directors who are wellacquainted with our business and outside directors with diverse skills
and experience discuss management strategies, capital investments,
M&A proposals, and other important matters at meetings of theBoard of Directors.
For internal control systems, the Board of Directors determines
structures for compliance, risk management, sustainability, etc., andthe outcomes of various initiatives are reported regularly to the Boardof Directors.
For the appointment, dismissal, and remuneration of directors,
auditors, and managers (including the CEO and executive officers),
NSHD has established the Advisory Committee on Appointments
and Remuneration as an advisory body to the Board of Directors.
Comprising the CEO and five independent outside directors, thecommittee deliberates on matters referred to it by the Board of
Directors, and the chair of the committee is an independent outside
director selected by the members. With independent outside directors
constituting the majority of members on the committee, we can ensuretransparency and impartiality in decisions related to officer appointments and remuneration, and independence from the parent company.
Director remuneration includes fixed compensation as well as aperformance-linked bonus and a non-financial KPI-linked bonus.
Every year, the Board of Directors conducts an effectiveness evaluation in order to improve the effectiveness of its activities. The effectiveness evaluation is done through a questionnaire, where directors
answer questions about the aforementioned roles of the Board of
Directors and whether it was able or unable to effectively address
issues identified in the previous fiscal year, in addition to other points
that should be discussed by the Board of Directors. Based on the
results of the questionnaire, the Board of Directors holds a discussion
and decides which topics should be deliberated in the next fiscal
year. Our aim is to increase the effectiveness of the Board of
Directors’ activities by creating measures to improve upon issues
or topics that had not been effectively carried out in the past.
We also prioritize dialogue with shareholders. NSHD discloses
corporate information in a timely and appropriate manner based on

its IR Policy approved by the Board of Directors. NSHD holds quarterly financial briefings and meets with investors on over 300 occasions throughout the year. The content of these discussions withshareholders is reported to the Board of Directors twice per year.
The Audit & Supervisory Board consists of four full-time members,
including three outside members (two of whom are independent
outside members). Auditors attend key internal meetings, such as
meetings of the Board of Directors and the Management Committee,
and conduct audits in Japan and overseas Group companies, interviewing top management (directors and executive officers) andreviewing important documents, in accordance with the auditing
policies and plans decided by the Audit & Supervisory Board. The
Audit & Supervisory Board also works closely with the internal audit
division and independent public accountants, and exchanges information and opinions regularly with outside directors and auditors toenhance the effectiveness of audits.
History of Changes in NSHD’s Corporate Governance
June 2015	Appointed two independent outside directors (twoof 11 directors)
October 2015	Formulated Principles of Corporate Governance andDisclosure Policy (now IR Policy)
June 2016	Established Advisory Committee on Appointments
and Remuneration
Introduced performance-linked remuneration for
directors
June 2019	Appointed two directors of foreign nationality (headsof U.S. and European businesses)
October 2020	Transitioned to holding company structure
June 2021	Increased independent outside directors to three(three of nine directors; one female outside director)
June 2022	Increased independent outside directors to five
(five of nine directors; two female outside directors)
Introduced non-financial KPIs linked to remunerationof directors
Please refer to our website for details on corporate governance.
Corporate governance

Please see here.

Securities report (Japanese only)

Please see here.

Introduction

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Corporate Governance

Remuneration for Officers

Relationship with the Parent Company

Succession Plan

Remuneration for directors and Audit & Supervisory Board members
is determined by resolution at the annual General Meeting of
Shareholders in line with the total compensation limits for directors andAudit & Supervisory Board members. The amount of remuneration foreach director is determined in accordance with the remuneration standard resolved at the Board of Directors by the President CEO, who isdelegated by the Board of Directors, while remuneration for each Audit& Supervisory Board member is determined through internal discussions
within the Audit & Supervisory Board and by the approval of the Boardof Directors and the Advisory Committee on Appointments andRemuneration. The Advisory Committee on Appointments andRemuneration deliberates the appropriateness of remuneration proposed
after being consulted by the Board of Directors and the Audit &Supervisory Board and reports the results of its deliberations to the Boardof Directors and the Audit & Supervisory Board. The committee alsodeliberates remuneration systems that lead to improvements in NSHD’s
corporate value while referring to external remuneration surveys.
Directors’ remuneration consists of basic monthly remuneration,
performance-linked bonuses, and non-financial KPI-linked bonuses,
and is reflected in the amount paid to each person. In addition,
directors and outside directors whose main duties are as officers ofsubsidiaries are paid only the fixed basic monthly remuneration.
Remuneration for Audit & Supervisory Board members, including
outside members, consists of base salary.

We concluded a basic agreement with our parent company,
Mitsubishi Chemical Group Corporation (MCG), on May 13, 2014.
Under this agreement, MCG committed to respecting our autonomy,
supporting and cooperating with us under the MCG GroupManagement Regulations. In turn, we conduct all business functions
independently, including management, finance, sales, and R&D.
In situations where the interests of the parent company conflictwith shareholders other than shareholders of the parent company,
the directors of Nippon Sanso Holdings act to avoid harm to theinterests of the shareholders other than the shareholders of theparent company. We have appointed five independent outside directors and two full-time independent outside Audit & Supervisory
Board members These individuals oversee the Company to ensure
there are no conflicts of interest between the parent company
and shareholders other than shareholders of the parent company.
Furthermore, we have voluntarily established the Advisory
Committee on Appointments and Remuneration, which ensures
independence from the parent company in the selection of a management team. While parent company MCG is a holding company,
the Nippon Sanso Holdings Group and Mitsubishi Chemical
Corporation, the main operating company of the MCG Group,
engage in transactions, totaling ¥7,058 million in FYE2023.

In the NSHD Group’s governance structure, we recognize the importance of grooming next-generation leaders. The Advisory Committee
on Appointments and Remuneration has deliberated on the required
qualifications of next-generation managers, the selection process,training policies, and selection of candidates. The NSHD Group has abusiness presence in 32 countries and regions around the world, andwill continue to train human resources who are able to insightfully
manage operations from a global perspective.

Breakdown of Remuneration for Officers
Basic monthly remuneration50%

Non-financial KPI-linked bonuses

Performance-linked bonuses

40%

10%
(Percentages are approximate values.)

Fixed

Variable

Basic monthly remuneration

Fixed remuneration by rank

Performance-linked
bonusesRank-based standard amounts are linked to the achievement of budgets in each fiscal year of the medium-term management plan (20.5% of consolidated revenue and 20.5% of consolidated core operating profit margin), as well as therate of year-on-year growth in earnings (19.6%), consolidated core operating profit (19.6%), and net income attributable to owners of the parent (19.6%). Percentages in parentheses indicate the weighting in the evaluation.

Non-financial
KPI-linked bonuses

Linked to the achievement of non-financial KPIs (specific KPIs: (1) lost time injury rate, (2) rate of receiving compliancetraining) set in the non-financial medium-term management plan.

Senior Management Training
In order to accelerate global business development, NSHD operates
a training system aimed at developing the abilities of top management, in order to refine the decision-making capabilities of management from the diverse perspectives and knowledge expected of its
leaders. The training that we implemented over the past three years
is listed below.
• March 2021

Human rights• November 2021	Internal control systems that officers
should understand• August 2022	Latest trends in information security andeconomic security• April 2023

Prevent corruption globallyThose eligible for training include directors, auditors, and executive
officers of NSHD and directors of Taiyo Nippon Sanso. In April 2023,
in light of trending topics in training, we expanded the scope of
eligible participants to senior management in the United States,
Europe, Australia, and Asia. We will implement training in a timely
matter that improves the caliber of the Company’s man­agement team.

Introduction

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Information

Appendix

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2023

78

For more on our compliance promotion structure, please refer to here.
Compliance:

Please see here.

The NSHD Group has decided on a basic compliance policy and updates its organizations and rules in order to ensure it is effectively implemented.
The Group Chief Compliance Officer (GCCO) is in charge of all aspects of compliance, and Regional Chief Compliance Officers (RCCOs) are assigned to each region ina coordinated effort to carry out compliance activities on a global scale. In the FYE2023 report, messages from the RCCOs of Europe and East Asia are introduced following
those of North America and Southeast Asia that featured last year.

GCCO Message
Excitement for New Appointment
The Nippon Sanso Holdings Group operates in four geographic hubs
(Japan, the United States, Europe, and Asia and Oceania) and
Thermos. To promote the Group’s sustainable growth and long-term
increase in corporate value, compliance is a foundational aspect of
all of our business activities, in the same way as safety and quality.
My role as GCCO is to direct and manage compliance promotion
activities, create training and systems to firmly embed compliancepromotion in our culture, and advance the building of these systems.
In the current business environment of economic uncertainty, geopolitical instability, and increasing diversification of values and lifestyles,
the need for rigorous compliance and appropriate risk management
is even more pressing, and I want to ensure that this awareness isshared throughout the Group.

Kazuhiko Nishikawa
Executive Officer, Taiyo Nippon Sanso Corporation GCCO,
with responsibility for Groupwide internal control
Appointed in June 2023

In FYE2022, we conducted a compliance awareness survey for
employees all over the world, which revealed differences in awareness in different regions and individual companies. To address this,we have established periods for strengthening compliance promotion in each region, during which we will issue messages from senior
management and conduct a range of information dissemination
activities.
In Japan, we conduct annual compliance training for all employees, including those of Group companies. At the beginning of eachtraining, we issue messages from the CCO and the heads of eachorganization and company. Participants in the training have reported
that they are satisfied with the training content overall, and this has
led to increased awareness.

Ideal Compliance Management for the NSHD Group
Current Status of the NSHD Group’s Compliance
Under the holding company structure, the NSHD Group has
established RCCOs in North America, Europe, East Asia, Southeast
Asia & India, Australia, Taiwan, and Japan. We work to create andpromote corporate cultures that do not commit compliance violations, systems to prevent violations from happening, and systems forreporting them if they do occur. We also implement various forms ofcompliance training. These initiatives are tailored to the characteristics of each region and business, and I feel this makes them more
relatable for employees and therefore highly effective.

As I mentioned above, in today’s world of economic uncertainty,
geopolitical instability, and increasing diversification of values andlifestyles, the need for rigorous compliance and appropriate risk
management is even more acute.
The Group holds a Global Compliance Committee meeting of the
GCCO and RCCOs each year to share the details of their compliancepromotion activities and issues in each region. Looking ahead, we willfurther enhance our internal control functions for the entire Group,
while respecting regional autonomy and characteristics.

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

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2023

79

Compliance

East Asia CCO Message
Jack Yuan
Compliance Director
Chief Compliance Officer East Asia
Taiyo Nippon Sanso (China) Investment
Co., Ltd.

Approach to Compliance in East Asia and Its Distinctive
Characteristics
In East Asia, we have a business presence in both China and South
Korea with various types of legal entities, from gas manufacturers,
gas trading companies, and gas service companies to gas warehousecompanies, which requires us to design and implement different
compliance training programs customized to the staff of eachunique business operation.
In today’s operating environment, staff working at gas trading
companies need a deep understating of competition law and regulations, while staff working at gas manufacturers should be educatedmore on trade secret and anti-bribery laws. Relevant case studies
and simulations of how staff might be approached to pay a bribe areuseful and interactive training approaches. Compliance training isa continuous strategy conducted via face-to-face communication
throughout the year and based on new examples of possible fraudsituations. Face-to-face training in person enables us to focus on thereal awareness of each staff regarding compliance, specifically, how
they view reporting potential wrongdoing and the consequences for
failure to abide by our Code of Conduct.
Current Compliance-Related Measures
NSHD has established the improvement of compliance as one of theobjectives in its medium-term management plan NS Vision 2026. We
realize that to achieve this objective we must rely on compliance

Europe CCO Message
training and communication, compliance review and monitoringembedded in day-to-day business management and decision-making
process is a key institutional measure for our Company to effectively
reinforce its penetration. Currently, we are endeavoring to develop acompliance review system as a prerequisite for social entertainmentand gift conduct in business activities for the purpose of early prevention of bribery risk rather than correction measures after wrongdoing has occurred.
Approach to the Compliance Promotion System of
Nippon Sanso Holdings Group as a Whole
Although we conduct business in different jurisdictions, where thelaws and regulations may differ, we share the same corporate values
and commitments and uphold a high standard of legal complianceand business ethics. In addition, for some groupwide issues, suchas semiconductor export restrictions as a result of tension between
China and the United States, or the intra-group transfer of personaldata, we coordinate our compliance efforts with NSHD and other
RCCOs.
Mission and Role as an RCCO
Fundamental to the role of RCCO is designing programs that help
to ensure compliance with laws, regulations, and Company policies.
This requires spending considerable time on the nuts and bolts andmaking sure the right resources, systems, and controls are in place.
Meanwhile, an RCCO might face some challenges, even frustration,
in designing and implementing an effective ethics and complianceprogram, but we should never give up. If a team member cannot
understand, we should redouble our efforts to convince him or her
to embrace compliance.

Laura Zanotti
Legal Director Europe
Chief Compliance Officer Europe
Nippon Gases Euro-Holding S.L.U.

Approach to Compliance in Europe and Its Distinctive
Characteristics
At Nippon Gases, we’ve become recognized as a trusted supplier ofindustrial, medical, and specialty gases, and corresponding applications. Our main objective is to maintain the confidence of all our
stakeholders, including customers, suppliers, our workforce, andbroader society. Not meeting their expectations can expose us torisks that may jeopardize our operations and business. Thus, we
endeavor to be viewed as a dependable and trustworthy partner forall. Moreover, our adherence to ethical standards and compliance isdeeply embedded in our overall ESG approach.
We have designed and instituted stringent policies, protocols, andbest practices at Nippon Gases, to guarantee that we operate within
legal boundaries and uphold the highest ethical standards. Every
employee, supervisor, manager, and executive at Nippon Gases
individually and collectively commits to uphold ethical principles in all
business activities, guided by our Code of Conduct. The Code, available in multiple European languages both in print and digital forms,
provides guidance on ethical behaviors and also outlines the channels for reporting any potential non-compliance.
At Nippon Gases, we promote an environment where employees
feel safe to voice their concerns. They have the option to reportinfractions via several channels, both within the Company and externally, via a dedicated hotline or through the email address compliance@nippongases.com. Employees reporting any complianceIntroduction

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Story

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Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

80

Compliance
Europe CCO Message

violations have the option to do so anonymously and are safeguarded against any form of retaliation. Our strong culture of compliance, evidenced by our compliance performance, permeates alllevels of our organization and is bolstered by effective interdepartmental communication and stringent tracking of our initiatives.
Current Compliance-Related Measures
A robust compliance program indicates that an organization has
implemented suitable measures to ensure compliance with laws,
regulations, and rules, and fosters an environment of ethical conduct
among employees. The compliance program at Nippon Gases incorporates compulsory steps and additional measures, such as regular
updates on compliance and frequent training, to enhanceawareness.
Every year, our employees are mandated to participate in a training program on our Code of Conduct, which declares our commitment to compliance, that sets out our principles and values andprovides guidelines on ethical decision-making, handling conflicts ofinterest, dealing with bribery and corruption, maintaining confidentiality, and upholding human rights. Our compliance program includes
mandatory biennial training on the following modules and topics:
Fair competition, Conflict of interest and anti-bribery, Email and document management, Data protection, and Respect for human rights.
In years without compliance training, we conduct a “ComplianceWeek.” During this week, each employee is required to devote atleast 10 minutes to discuss compliance issues in every internal orexternal meeting held. Suggestions gathered from these sessions areforwarded to our compliance team for potential program improvements. The focal point for our Compliance Week in FYE2022 was
Cybersecurity, and this year we will be concentrating on our interactions with customers and suppliers.
Compliance matters are prioritized in all management agendas.
Quarterly Compliance Review Board meetings are held at both local
and European levels. During these meetings, all compliance issues

are reviewed in depth by local management teams and the European
Management Team.
In the course of our compliance program in FYE2023, we accomplished the recertification of our Code of Conduct, with 100% of
our employees participating, as well as mandatory Compliancemodule training, completed by 2,272 employees. A larger group
participated in Human Rights training: 3,831. In addition to thecompulsory trainings, an expanded training on Social Media usage
was conducted and completed by 2,714 employees.** An employee may participate in multiple training sessions.

Approach to the Compliance Promotion System of
Nippon Sanso Holdings Group as a Whole
Our compliance program aligns seamlessly with NSHD’s global compliance program, which provides a distinct framework for legal,
ethical, and responsible business conduct. We leverage this framework and tailor it to meet local requirements. Being part of NSHD,
we operate with integrity and fairness, reinforcing our commitment
to upholding the highest ethical, legal, and professional standards tomaintain and enhance the Group’s reputation. Honesty and respect
are integral to all our actions.
Mission and Role as an RCCOThe role of the compliance officer is to guarantee that theCompany’s operations are fully compliant with legal requirements.
The compliance officer supports the organization, to make sure:a) policies to avert unlawful, unethical, or inappropriate behavior are
maintained and improved,b) risks that may potentially cause legal, financial, operational, or
reputational harm are assessed, andc) measures to alleviate these risks are identified.
At Nippon Gases, the compliance role is not only a major role

within the senior management team of every organization but isalso interwoven into the business processes, enabling us to promote
ethical behavior from the ground up. This integration is key toachieving the best outcomes, and our track record affirms this effort.
As a result, in the last fiscal year, we encountered only minor compliance issues, which were promptly addressed.

Introduction

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Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Risk Management

Integrated Report2023

Appendix81

For more on our risk management structure, please refer to here.
Global Risk Management Structure:
Risk Management:

Please see here.

Please see here.

On February 22, 2023, NSHD held the Global Risk Management Committee, chaired by President CEO Toshihiko Hamada.
Amid significant changes in the external environment, such as the invasion of Ukraine by Russia, discussions were held concerning the key risk themes for each operatingcompany and the NSHD Group, sharing their risk recognitions and responses, centered on the topic of geopolitical tensions and trends in the semiconductor industry.
Summary of the Global Risk Management Committee
Topic 1

Topic 2

Topic 3

Key Risk Themes for the NSHD Group

Geopolitical Tensions and Trends in the Semiconductor Industry

Speech by Chair Hamada (President CEO)

Changes in the Business Environment

Via the Committee

Strengths of the NSHD Group(1) T he Global Risk Management Committee is(1) A gainst a backdrop of geopolitical tensions,(1) Amid significant changes in the external environment, we had a vigorous debate about

trends have significantly changed in the semi-

similarly important as business operations.

the key risk themes of the NSHD Group.

conductor industry, such as the onshoring of

Each operating company should strive to(2) The NSHD Group has a global business pres-advanced semiconductor production, techno-

reduce risks in their own organizations with anence. While risk recognitions differ depend-

logical exclusivity, and reviews of supply chains.

understanding of the differences and variations in the risk recognitions.

(2) T he strength of the NSHD Group lies in its

ing on the business environment, risk
management activities can be improved withability to respond quickly to trends in the(2) D aily efforts to get customers and society toa better understanding of background factors

semiconductor industry and produce semi-recognize the value of industrial gases andand differences, while viewing risks fromconductor materials gases in Japan, thethe value of reliable supply are of utmost

multiple angles.

United States, China, and South Korea.

importance.

Sharing of Risk Recognition and Risk Response

Content of Key Discussions

Significance of the Global Risk Management Committee

The external environment has significantly changed over the past year, as geopoliti-

Companies in JapanThe Global Risk Management Committee, in conjunction with the Global Strategy

cal tensions increased due to Russia’s invasion of Ukraine and other events, and elec-

In Japan, we have launched projects related to the semiconductor industry. Although

Review Committee, are of equal importance to business operations. In businesstric power and energy prices fluctuated. At the Global Risk Management Committee,

there are issues with production costs, the anticipated return of advanced semicon-

management, there are external risks that a single company cannot handle alone,

we had a lively discussion about the key risk themes for the NSHD Group, and talked

ductor production in Japan, the United States, and Europe is a business opportunity.

such as the Russia–Ukraine conflict. Various risks were raised at the committee, andabout the risks that each operating company faces.

On the other hand, products exported from Japan to China are being replaced byinsightful data was presented about differences in countries, businesses, and work-

locally produced products, which may reduce future business opportunities.

ers, where such minor differences can lead to differences in the risk recognitions.

1. Changes in external and internal environment
Geopolitical risk, supply chains, energy and electricity, carbon neutrality
2. Maintain and reinforce core business
Aging facilities, governance, compliance and corruption prevention
3. Secure and train human resources who will support the aforementioned
endeavors
Personnel shortages, diversity, succession planning

Companies in the United States
Geopolitical tensions are a major concern, especially for the United States, where theoutflow of intellectual property and technological know-how to other countries isa concern. In light of the global situation, decentralizing semiconductor production
bases across the United States, Japan, and Europe will likely become a risk avoidance
strategy.
Companies in Asia and Oceania

I would like everyone to listen carefully to how other organizations, as well as yourown organization, prioritize their risks, and to utilize this information to identify andreduce risks in each organization.
Value of Industrial Gases and Value of Reliable Supply
In times of emergency, there may be situations where industrial gases cannot be­reliably delivered.
We believe there is meaning in daily efforts to get customers and society to recog-

Understanding Risks from Multiple Perspectives

The NSHD Group produces electronic material gases in Japan, the United States,

nize the value of industrial gases and the value of reliable supply. Such efforts will

The NSHD Group has a global business presence. While perceptions of risk differ

China, and South Korea. Being able to respond quickly to trends in the semiconductor

lead to a better understanding of the NSHD Group’s significance, including in times

depending on the business environment, risk management activities can beindustry is a significant advantage for the Company. Although some aspects of semi-of emergency.

improved with a better understanding of background factors and differences, while

conductor industry trends might be disadvantageous for the NSHD Group, we believe

viewing risks from multiple angles.

we can maintain a favorable position by offsetting these disadvantages.

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessInformation Security

Jan Van den Bulck

Global Information Security
Council Chairman

Global Information Security Director

Development of Technologies and Securing of
Personnel to Ensure Information Security

Importance of In-House Training as a Part ofDaily Operations

NSHD recognizes how cybersecurity incidents may affect theCompany and therefore treats information security risk as apriority, putting focus on the Company’s ability to timely identify
risks and to react accordingly.
To be able to execute the global information security programand for it to be effective, NSHD is further developing both theglobal and regional information security functions, throughinvestments in technology and by attracting specialized staff.

At the NSHD Group, various departments and teams around theworld are cooperating to facilitate the close scrutinization ofcompliance with Group company rules, as well as laws andregulations.
Emphasis is placed on employee training and awareness inorder to improve their ability to identify potential information
security threats. As a part of our daily operations, we believethat training employees to acquire skills for dealing with risks
is a critical element of our information security program.

Please see here.

Please see here.

For more details on the structure and specifics of the Global Information Security Council, please visit our website.

Global Information Security Council (GISC):

Please see here.

Group
Information

Appendix

Integrated Report
2023

82

Appropriate Taxation

NSHD has established the Global Information Security Council (GISC) as a countermeasure against cyberattacks. GISC sets and manages security standards, controls, and overall governance including identificationand tracking of existing threats and incidents. GISC also discovers and fixes vulnerabilities, and reinforces
technical solutions.

Cesar Callejo

GovernanceIn all countries and regions where we operate, we
comply with laws and regulations to fulfill our tax
obligations.

NSHD and its subsidiaries act with integrity in every country andregion where we have a business presence. Every policy that governs
our business activities, including our taxation policy, is aimed atstrictly complying with all applicable laws and regulations.
In each country and region where NSHD has a business presence,
the NSHD Group is committed to addressing the interests of various
stakeholders by ensuring timely filing of tax returns and payment ofappropriate tax amounts, as well as by implementing effective tax
governance programs that ensure we take a transparent approachto adhering to laws and regulations about tax management.
Through this approach, the NSHD Group is able to pay all relevant
taxes in accordance with applicable laws and regulations while
maintaining a transparent, constructive, and cooperative relationship with various tax authorities around the world.
Please see here.

Introduction

Value Creation
Story

Special FeatureIntellectual Property

NSHD positions intellectual property as a vital asset. In order tocontribute to both our business and society through intellectual
property activities and to realize global sustainable growth for the
NSHD Group, we engage in the strategic acquisition, protection, andutilization of intellectual property, which includes patents, utility
models, designs, trademarks, and know-how.
As stated in our intellectual property policy, we respect the intellectual property rights of other companies and make every effort toensure that we do not infringe upon them.
Moving forward, we will strengthen our strategic proposal capabilities by utilizing intellectual property landscape tools (analysis ofintellectual property information) to improve our management ofintellectual property.

NSHD Patents
Patents

1,500
1,200

1,147

900

373

1,255

0

Japan

1,591

653

650

925

941

2021

2022

GovernanceGroup
Information

Appendix

Integrated Report
2023

83

1,682

At NSHD, in line with our IR Policy and Code of Conduct, we engage in dialogues with investors,
shareholders, and other stakeholders.

Investors and Shareholders
Based on our IR Policy, we engage in constructive dialogue with market participants (including shareholders, investors, potential investors, andsecurities analysts) based on the concept of fair disclosure with the aim of realizing sustainable growth and medium- to long-term improvement
in corporate value. In addition, we endeavor to enhance our investor relations (IR) activities by providing fair, timely, and appropriate explanationand disclosure of accurate information, including the status of management and business operation, and to enhance corporate value by communicating the requests and assessment by the market participants to management to reflect them in business management.
Item

Unit

FYE2021

FYE2022

FYE2023

IR briefings

Times

6

6

6

Total number of discussions with domestic and overseas institutional
investors and securities analysts (number of ESG-related discussions)

Events

268

365

324

(17)

(14)

(23)

IR briefings for individual investors (cumulative number of live andon-demand video views)

Times

Number of people attending the General Meeting of Shareholders

People232(1,249)(3,485)(3,858)

25*

35*

55

* The number of people who attended the General Meeting of Shareholders has been low in the interest of preventing the spread of COVID-19.

Please see here.

644

32%

Other Stakeholders

774

802

2019

2020

1,038

2023

Overseas(Yearsended
March 31)

* Figures through FYE2019 represent the number of patents as of December 31 of the previous fiscal
year. The figures for FYE2020 onward represent the number of patents at fiscal year-end. Figures
through FYE2020 represent Taiyo Nippon Sanso Corporation patents only. The figures for FYE2021
onward represent the total for all NSHD, including those of its operating companies.

Please see here.

Value Creation in
Each Business

453

600
300

1,578

Sustainability

Dialogues with Stakeholders

We will enhance our strategic proposal capabilities
for intellectual property, while properly using ourintellectual property.

1,800

Performance
Highlights

Regarding our social responsibility and relationships with stakeholders, a section of the NSHD Code of Conduct establishes “2. Accountability &Respect for Stakeholders.” The President CEO has made concerted efforts to spread and entrench an awareness of this among Group employees.
Please see here.

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGroup
Information

GovernanceAppendix

Integrated Report2023

Corporate Data
Company Overview (As of March 31, 2023)

Group Organization (As of March 31, 2023)

Company name: Nippon Sanso Holdings Corporation

Stock exchange listing: Tokyo Stock Exchange Prime Market

Date founded: October 30, 1910

Transfer agent: Mizuho Trust & Banking Co., Ltd.

Paid-in capital: ¥37,344 million

2-8-4 Izumi, Suginami-ku, Tokyo 168-8507, Japan

Head office: 1-3-26 Koyama, Shinagawa-ku, Tokyo

Tel (toll free in Japan): 0120-288-324

142-0062, Japan

Contact: Investor Relations, Group Finance andNumber of employees: 19,579

Accounting Office, Nippon Sanso Holdings Corporation

Independent public accountants: Ernst & Young

Tel: +81-3-5788-8512

Japan: Taiyo Nippon Sanso Corporation Group
United States: Matheson Tri-Gas, Inc. Group

Nippon Sanso Holdings
Corporation

ShinNihon LLC

Asia and Oceania: Operating company groups in Asia and Oceania

Share and Shareholder Information (As of March 31, 2023)

Thermos: Thermos K.K. Group

Status of Shares

Major Shareholders

Number of shares authorized: 1,600,000,000(10 Largest Shareholders, Shares Held Rounded Down to the Nearest
Thousand)Thousands of Percentage ofshares owned
total (%)

Number of shares issued: 433,092,837
Number of shareholders: 18,315
Individuals andother investors
9.7%
Overseas
investors

Distribution of
Shares by
Shareholder Type

17.2%

Other
Japanesecompanies
55.8%

Financial
institutions
and securities
companies
17.1%

Mitsubishi Chemical Group Corporation

218,996

50.59

The Master Trust Bank of Japan, Ltd. (trust account)

33,058

7.64

Client shareholding association of Taiyo Nippon
Sanso Corporation

17,176

3.97

Custody Bank of Japan, Ltd. (trust account)

12,674

2.93

Meiji Yasuda Life Insurance Company

9,006

2.08

Mizuho Bank, Ltd.

4,332

1.00

JP MORGAN CHASE BANK

4,041

0.93

THE BANK OF NEW YORK MELLON(INTERNATIONAL) LIMITED

3,795

0.88

The Norinchukin Bank

3,500

0.81

Shareholding association of Nippon Sanso Holdings
Corporation

3,099

0.72

* Our Company holds 185,000 treasury shares.
The shareholding ratio is calculated based on the total number of issued
shares, excluding treasury shares.

Common Stock Price Range and Trading Volume

Stock price (Left scale)

Trading volume (Right scale)(Yen) (Thousands of shares)

3,000

30,0002,000

20,0001,000

10,0000Europe: Nippon Gases Euro-Holding S.L.U. Group

2017

2018

2019

2020

2021

2022

2023

0

Main Affiliated Companies (As of March 31, 2023)
Taiyo Nippon Sanso Corporation
1-3-26 Koyama, Shinagawa-ku,
Tokyo 142-8558, Japan
Tel: +81-3-5788-8000
Matheson Tri-Gas, Inc.
909 Lake Carolyn Parkway, Suite 1300,
Irving, TX 75039, U.S.A.
Tel: +1-972-560-5700
Nippon Gases Euro-Holding S.L.U.
Calle Orense, 11-9o E-28020
Madrid Spain
Tel: +34-91-453-72-00
Matheson Gas Products Korea, Co., Ltd.
94, Eumbongmyeon-ro, Eumbong-myeon,
Asan-si, Chungcheongnam-do,
South Korea 31443
Tel: +82-41-539-7400
Shanghai Taiyo Nippon Sanso Gas Co., Ltd.
No.1959, Zhuanxing Road, Xinzhuang
Industry District, Shanghai, P.R. China
Tel: +86-21-6442-2966

Taiyo Nippon Sanso Trading(Shanghai) Co., Ltd.
1601, New Bund International Square,No.90 Qirong Road, Pudong New Area,
Shanghai China
Tel: +86-21-5835-8700
Nippon Sanso Taiwan, Inc.
5F-1 No. 1 Sec. 3 Gongdao 5th Road,
East Dist., Hsinchu City 30069, Taiwan,
R.O.C. (TFC ONE Building)Tel: +886-3-572-6588
Nippon Sanso Ingasco, Inc.
One Corporate Center, 23rd Floor,
Dona Julia Vargas Avenue, Corner Meralco
Avenue, Ortigas Center, Pasig City 1605,
Philippines
Tel: +63-2-8626-1504
Nippon Sanso Vietnam Joint Stock
Company
No. 33, Road 3A, Bien Hoa Industrial Zone II,
Bien Hoa City, Dong Nai Province, Vietnam
Tel: +84-251-3836706~09

Nippon Sanso (Thailand) Co., Ltd.
282 Bangbon 3 Road, Kwaeng
Nongkhaem, Khet Nongkhaem, Bangkok
10160, Thailand
Tel: +66-2-445-5010
Leeden National Oxygen Ltd.
1 Shipyard Road, Singapore 628128
Tel: +65-6266-4868
Taiyo Nippon Sanso India Pvt. Ltd.
A-201, ICC Trade Towers, Senapati
Bapat Road, Pune, India 411016
Tel: 91-20-30237000
Supagas Pty Ltd
5 Benson Road, Ingleburn, NSW 2565,
Australia
Tel: +61-2-8788-4444
Thermos K.K.
21F Mita NN Bldg., 4-1-23 Shiba,
Minato-ku, Tokyo 108-8450, Japan
Tel: +81-3-5730-0130

84Introduction

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Highlights

Sustainability

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Information

Appendix

Integrated Report
2023

85

AwardsJapan

Designated as “Health & Productivity Management
Outstanding Organization 2023 (White 500)“ and“Sports Yell Company 2023”
Nippon Sanso Holdings and Taiyo Nippon Sanso have been designated by Nippon Kenko Kaigi as “Health & Productivity Management
Outstanding Organization 2023 (White 500)” and Taiyo Nippon Sanso
has been designated by the Sports Agency as “Sports Yell Company
2023.”

EuropeNGE Received Four EIGA (European Industrial Gas Association)
2022 Awards
Nippon Gases Euro-Holding (NGE) received four top
awards from EIGA for its safety and environmental
initiatives.

Operating Company Groups in Asia and Oceania

Nippon Sanso Ingasco Received a Letter of Appreciation fromthe Philippines Government
Nippon Sanso Ingasco received a letter of appreciation from thePhilippines government for its continued prompt and reliable supply
of medical oxygen despite the spread of COVID-19.

Nippon Sanso Thailand Received Awards from theThailand Institute of Occupational Safety and Health
Nippon Sanso Thailand received
awards from the Thailand Instituteof Occupational Safety and Health,which is conducting Zero Accident
Campaign 2022, for six factories
that have maintained zero lost time
injury accidents.
Nippon Sanso Thailand Received a Letter of Appreciation fromthe Northern Industrial Estate
Nippon Sanso Thailand received
a letter of appreciation from theNorthern Industrial Estate for its
work in developing a forest fire
prevention line in the Ton Nam
Forest in Thailand.

United States

Shanghai Taiyo Nippon Sanso Received a Letter ofAppreciation from Shanghai Minhang District
Shanghai Taiyo Nippon Sanso received a letter of appreciation from
Shanghai Minhang District for its continued prompt and reliablesupply of medical oxygen despite the spread of COVID-19.

Matheson Tri-Gas Received Champions of Sustainability Award
from Salt River Project
Matheson Tri-Gas received Champions of Sustainability Award fromthe Salt River Project, a publicly owned electric utility in the UnitedStates, for its efforts to save electricity at its production plants during
the summer power demand period.
Nippon Sanso Vietnam Received the Typical Enterprise Award
Nippon Sanso Vietnam received the
Typical Enterprise Award from Ba
Ria–Vung Tau Province for its contribution to the local community
through the prompt and reliablesupply of medical oxygen despite
the spread of COVID-19.

Supagas Selected as the “Most Satisfied Customers” Brand in
LP Gas Category for the Third Consecutive Year by Canstar BlueSupagas has been selected as the “Most Satisfied Customers” brandin the Australian LP gas category for the third consecutive year by
Canstar Blue, a consumer review and product comparison website
for the Oceania region.

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGroup
Information

Governance

Editorial Policy

Editorial Note

We strive to guarantee management transparency and believe in the importance ofbuilding relationships of trust with stakeholders through dialogue. Accordingly, inthis report we place a priority on ensuring that stakeholders understand our overallvalue creation process.
Since FYE2017, we have published an annual integrated report. The purpose ofthis report is to provide financial information, including that related to corporate
strategies and operating conditions, and non-financial information, such as that related to environmental
protection and social contribution initiatives and to corporate governance. Information has been selectedwith consideration to relevance to give shareholders, investors, and other stakeholders an accurate overall
understanding of the Nippon Sanso Holdings Group, its operating activities, and its approach to value
creation. In editing the report, we have referred to the IFRS Foundation's Integrated Reporting Framework,and the Guidance for Integrated Corporate Disclosure and Company–Investor Dialogue for Collaborative
Value Creation, published by the Ministry of Economy, Trade and Industry (METI).

Publication Process of This Report

Reporting Boundary
In the 2023 report, we have focused on communicating
the business activities and initiatives in each specificregion of operations. To describe the activities of theindividual companies or groups, we have applied thefollowing expression standard. Furthermore, the terms• Generic expressions (e.g., the Company, the Group):
Capitalized to describe Nippon Sanso Holdings or the
Nippon Sanso Holdings Group, and used with lower
case (e.g., the company, the group) when describing
segment operating companies

Nippon Sanso Holdings Corporation
Integrated Report Production Committee
Head:
Alan David Draper
Sub-head: 	Takeshi Miki, Yutaka Okuda,
Satoshi Suzuki, Koichiro Kubo
Arranger:	Kenji Koyama, Yu Yasumi, Mitsuhiro Toda,
Hiroaki Hijino, Yasukazu Takada, Shingo Noguchi,
Toshifumi Abe, Yuji Sakuramoto, Mamoru Kai,
Ryuichi Ishikawa, Tomoki Nakamura, Yusuke Tanaami,
Yoshiyuki Hagihara, Katsumasa Suzuki, Toru Nomura,
Kayo Ushio, Akiko Kamata, Takashi Yoshida,
Takeyoshi Sakuma, Hayato Sato, Yuji Nozaki
Secretariat:	Keita Kajiyama, Takayoshi Umehara,
Soichiro Momiyama

People Who Helped to Produce This Report(in no particular order)
Nippon Sanso Holdings Corporation
Momo Katayama, Hisanori Goto, Yoko Sugiyama, Katsumi Nagasawa,
Kazuhiko Nishikawa, Tsutomu Moroishi, Cesar Callejo,
DuyCuong Nguyen, Jan Van den Bulck, Todd Givens

Period Covered

used for convenience to refer to Nippon Sanso Holdings

Data in this report is for FYE2023, ended March 31,

and its Group companies. These terms may also be used

2023, although some FYE2024 activities and future

in cases where there is no beneficial purpose in identify-

issues and targets are also featured.

Taiyo Nippon Sanso Corporation
Masato Arai, Tatsushi Urakami, Eita Echigo, Yasushi Endou,
Takashi Oshige, Mio Katagiri, Asami Takai, Masahiro Takeuchi,
Toshie Furuumi, Yusuke Miki

Disclosure System

Matheson Tri-Gas, Inc.
Ashis Kar, Hermann Miskelly, Marie Robertson

Expression Standard

This report contains important basic information that

Continental Carbonic Products, Inc.

Leah Hull

Nippon Sanso Holdings Corporation particularly wishes

Nippon Gases Euro-Holding S.L.U.
Gabriel Kiewek, José Ramón Calvo, Laura Zanotti

Corporation): Used primarily in the formal titles of

to communicate to stakeholders. In the 2023 edition, we

Nippon Gases Belgium NV

Kathleen Sels

corporate officers, executive officers, and employees

have utilized links to our corporate website and guid-

Nippon Gases España, S.L.U.

Álvar Pescador Calleja, Ruben Pastor

ance to relevant pages in an effort to increase the

Nippon Sanso Holdings Singapore Pte. Ltd.
Tan Wei Sheng Wilson• Formal names (e.g., Nippon Sanso Holdings• Truncated formal names (e.g., Nippon Sanso Holdings):
In principle, used as the basic way of expressing
company names• Acronyms (e.g., NSHD): Used as a simple expression tousability of the report.

Integrated Report2023

In publishing Integrated Report 2023, the Group worked as one under the Production Committee led by
CFO Alan David Draper, gathering and collating information on initiatives in each business and region for
the entire Group while keeping in mind our daily conversations with shareholders and investors, theresults of investor survey questionnaires, and feedback and requests received from a wide range ofstakeholders.

“Nippon Sanso Holdings Group” or “the Group” may be

ing a specific company.

Appendix

Nippon Sanso Vietnam Joint Stock Company
Nobuyuki Kojima, Cao Van Trang, Nguyen Huong Thao,
Pham Quang Tu, Vo Xuan Thien

allow the reader to identify a particular company in the

Nippon Sanso Taiwan Inc.

context (e.g., in dialogue)

Taiyo Nippon Sanso (China) Investment Co., Ltd.
TNSCI Wuxi Co., Ltd.
Thermos K.K.

Tracy Chou

Lander Zhu

Tomoko Hayakawa

Jack Yuan

Editorial Note
Thank you for taking the time to read Integrated Report
2023 to the end. Each year, in producing the integrated
report, we listen to the valuable opinions and impressionsof our stakeholders who have read it, and we hope todevelop the contents into something that they will findinteresting and readable. This year, we aimed to make thevolume more concise and readable, while at the same time
improving quality and quantity of information. We havealso taken advantage of the fact that the report is published on the web, rather than on paper, by providing links
throughout the report so that those who wish to readmore in detail can easily access detailed information. In
addition, we have continued to include multiple roundtable discussions and member introductions in the hopethat by introducing not only management but also as
many of our nearly 20,000 employees as possible, you can
get a sense of the atmosphere and enthusiasm of ourCompany.
We hope that this integrated report will help you better
understand and become more interested in our Group. We
will continue to enhance this report through various formsof communication with stakeholders. We would therefore
appreciate your continued frank opinions and support.
Finally, I would like to thank the many colleagues
within the Nippon Sanso Holdings Group for their direct
and indirect cooperation in the production of this report.
We would like to express our deepest gratitude to all of
you for your cooperation.
Keita Kajiyama
General Manager, Investor Relations, Group Finance andAccounting Office, Nippon Sanso Holdings Corporation

86

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each Business

Appendix
Sustainability Data

GovernanceGroup
Information

Appendix

Integrated Report2023

88	Environment
90	Society
92	Governance93	Intellectual Property andResearch and Development
94	Independent Assurance Report87Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report
2023

88

Sustainability Data
Environment
Unit

FYE2021

FYE2022

FYE2023

Greenhouse Gas (GHG) Emissions
GHG Emissions Scope 1

Thousands of tonnes CO2e

987

1,087

1,103

GHG Emissions Scope 2

Thousands of tonnes CO2e

4,664

4,834

4,765

GHG Emissions Scope 3—Total for the Following Categories

Thousands of tonnes CO2e

4,341

3,408

3,341

Category 1 Purchased goods and services

Thousands of tonnes CO2e

883

897

911

Category 2 Capital goods

Thousands of tonnes CO2e

44

42

67

Category 3 Fuel- and energy-related activities not included in Scope 1 and Scope 2

Thousands of tonnes CO2e

248

276

261

Category 4 U pstream transportation and distribution (Including transportation
services whose cost is borne by the Company)

Thousands of tonnes CO2e

37

39

36

Category 5 Waste generated in operations

Thousands of tonnes CO2e

2

1

1

Category 6 Business travel

Thousands of tonnes CO2e

1

1

1

Category 7 Employee commuting

Thousands of tonnes CO2e

3

3

3

Category 8 Upstream leased assets

Thousands of tonnes CO2e

N/A

N/A

N/A

Category 9 Downstream transportation and distribution

Thousands of tonnes CO2e

N/A

N/A

N/A

Category 10 Processing of sold products

Thousands of tonnes CO2e

N/A

N/A

N/A

Category 11 Use of sold products

Thousands of tonnes CO2e

2,436

1,466

1,382

Category 12 End-of-life treatment of sold products

Thousands of tonnes CO2e

N/A

N/A

N/A

Category 13 Downstream leased assets

Thousands of tonnes CO2e

N/A

N/A

N/A

Category 14 Franchises

Thousands of tonnes CO2e

N/A

N/A

N/A

Category 15 Investments

Thousands of tonnes CO2e

687

683

679

Unit

FYE2021

FYE2022

FYE2023

Contributions to Environmental Protection through Products

GHG Emission Reduction
Contribution

Products and Services

Thousands of tonnes CO2e

2,892

3,176

3,556

Industrial Gases

Thousands of tonnes CO2e

2,174

3,689

3,752

For information on the reporting boundary and the method of calculation, please refer to here.

Reporting boundary: Scope 1 emissions and Scope 2 emissions represent Nippon Sanso Holdings and its
main consolidated subsidiaries. For information on Scope 3 emissions aggregation, please refer to here.
Scope 1 emissions: Direct emissions occurring from sources owned or controlled by the company
Scope 2 emissions: Indirect emissions from the use of electricity, steam, and heat
Scope 3 emissions: Indirect emissions other than Scope 2 emissions
Calculation methods: GHG emissions in Japan are calculated using emission factors provided in Japan’s Act on
Promotion of Global Warming Countermeasures (for electricity, up until FYE2021 the basic emission factors foreach electricity provider and from FYE2022 the adjusted emission factors for each provider). For GHG emissions
overseas, Scope 1 emissions are calculated using emission factors set forth in Japan’s Act on Promotion of
Global Warming Countermeasures. Scope 2 emissions are calculated using country-specific emission factors
published by the IEA. However, for electricity in Europe, beginning FYE2021 a separate emission factor for eachelectricity provider is used, and emissions are calculated making reference to the Guarantee of Origin.
Furthermore, from FYE2022, emissions from electricity use at Taiyo Gases Co., Ltd. and Top Thermo
Manufacturing (Malaysia) Sdn. Bhd are calculated using emissions coefficients for each electricity provider, whileemissions from electricity use in the United States, China, Taiwan, and Singapore are calculated using publishedgrid coefficients for each country. Please refer to here for calculation method for Scope 3 emissions.
Indicators withmark have been assured by KPMG AZSA Sustainability Co., Ltd. for FYE2023.

Introduction

Value Creation
Story

Special Feature

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

89

Integrated Report2023

Appendix

Sustainability Data
Environment
Unit
Energy Usage*1, *2
Energy Consumption
Electric power
Fuels
Heat

FYE2021

FYE2022

FYE2023

GWh
GWh
GWh
GWh

12,570
9,592
2,779
199

14,273
10,776
3,293
204

13,945
10,4753,269
201

Reporting boundary: Nippon Sanso Holdings and its main consolidated subsidiaries
The energy of the consumed fuels are calculated based on the gross calorific values specified in Japan’s Act on the Rational Use of Energy.
*1 Until to FYE2022, purchased electricity and purchased steam were converted into a primary energy amount. However, from FYE2023, we have changed to a methodof not performing the conversion. Figures presented in previous fiscal years have been retroactively amended due to this revision.
*2 From FYE2023, the unit of energy usage was changed from TJ to GWh.

Tonnes

1.8
1.0
0.1
5

2.0
1.1
0.1
8

2.6
1.1
0.1
5

Tonnes8108

TonnesTonnesTonnesFYE2021

FYE2022

FYE2023

Japan

Thousands of tonnes CO2e

5,651

5,921

5,868

Thousands of tonnes CO2e

2,014

2,253

2,054
2,251

the United States

Thousands of tonnes CO2e

2,066

2,130

EuropeThousands of tonnes CO2e

1,049

885

916

Asia and Oceania

Thousands of tonnes CO2e

511

638

632

Thermos

Thousands of tonnes CO2e

11

15

15

Energy Consumption*1, *2
GWh

12,57014,273

13,945

Japan

GWh

3,580

3,978

3,757

the United States

GWh

5,215

5,917

6,106

Europe

GWh

2,753

3,180

2,889

Asia and Oceania

GWh

1,002

1,171

1,167

Thermos

GWh

20

27

26

Electricity Consumption*3

Reporting boundary: Consolidated subsidiaries in Japan, including Taiyo Nippon Sanso Corporation

Breakdown ofsources of fresh
water withdrawn

GHG Scope 1 + Scope 2

Total

Environmental Impact
Nitrogen oxide (NOx) emissions
Sulfur oxide (SOx) emissions
Particulate emissions
Volatile organic compound (VOC) emissions
Releases of substances designated under the Pollutant
Release and Transfer Register (PRTR)

Water Usage
Water Withdrawal
Water supply from local government
Municipal waterIndustrial water
Groundwater
Surface water
Other

Unit
GHG Emissions

GWh

9,592

10,776

10,475

Japan

GWh

3,402

3,783

3,552

the United States

GWh

2,824

3,114

3,249

Europe

GWh

2,442

2,762

2,585

Asia and Oceania

GWh

908

1,094

1,066

Thermos

GWh

16

23

23

Total
Thousands of m3
Thousands of m3
Thousands of m3
Thousands of m3
Thousands of m3
Thousands of m3
Thousands of m3

43,345
14,723
4,901
9,823
2,578
26,01628

45,911
17,5895,757
11,832
2,710
25,58230

44,98818,161
6,332
11,8292,366
24,44021

Reporting boundary: Gas production plants operated by consolidated subsidiaries of Nippon Sanso Holdings in Japan, business locations with facilities specified under the
Water Pollution Prevention Act, and main overseas consolidated subsidiaries

Waste
Waste generated*1
Waste disposed of as landfill*2
Hazardous waste generated*3
Waste recycled*4

TonnesTonnesTonnesTonnes

14,715
7,152
1,799
4,885

14,352
3,875
2,015
7,623

15,392*5
5,052*52,000*5
7,975*5

Reporting boundary: Nippon Sanso Holdings and its main consolidated subsidiaries
Waste generated by consolidated subsidiaries in Japan is the volume for which the Company issued a manifest.
*1 Includes valuable materials *2 Includes residue after intermediate treatment outside the Group company *3 Includes specially controlled industrial waste*4 We consider waste collected to be the amount of resources recycled. *5 Due to restrictions on availability of information, of the consolidated subsidiaries presented
on P.91, Continental Carbonic Products, Inc. is not included among the aggregated total.

OthersNumber of environmental violations*
Amount of fines paid for environmental violations*

Incidents
Millions of yen

0
0

0
0

0
0

* From FYE2023, values presented in past fiscal years have been retroactively amended.
The figures for chemical oxygen demand (COD) emissions, nitrogen emissions in wastewater, and phosphorus emissions have been omitted from disclosure since theamounts of these emissions have been immaterial. The Nippon Sanso Holdings Group uses water primarily for indirect cooling, and its impacts on water quality are therefore not large. Taiyo Nippon Sanso and its Japanese subsidiaries have five business sites that are subject to restrictions on the concentration of COD, nitrogen, and phosphorous emissions in wastewater. The total amounts of COD, nitrogen, and phosphorous emissions for all five sites amount to less than one tonne each.

Water Withdrawal

Total

Thousands of m3

43,34545,911

44,988Japan

Thousands of m3

6,760

7,464

7,445

the United States

Thousands of m3

7,074

7,293

8,464

EuropeThousands of m3

27,292

27,02925,136

Asia and Oceania

Thousands of m3

2,049

3,929

3,744

Thermos

Thousands of m3

170

196

199
15,392*5

Waste Generated (Including Valuable Materials)*4
Total

Tonnes

14,715

14,352Japan

Tonnes

5,505

4,187

3,909

the United States

Tonnes

5,691

3,486

5,415*5

EuropeTonnes

758

2,909

3,068

Asia and Oceania

Tonnes

395

1,399

602

Thermos

Tonnes

2,366

2,371

2,398

*1 Until to FYE2022, purchased electricity and purchased steam were converted into a primary energy amount. However, from FYE2023, we have changed to a methodof not performing the conversion. Figures presented in previous fiscal years have been retroactively amended due to this revision. *2 From FYE2023, the unit ofenergy usage was changed from thousand GJ to GWh. *3 From FYE2023, the unit of electricity usage was changed from Millions of kWh to GWh. *4 Waste generated by the consolidated subsidiaries of Nippon Sanso Holdings in Japan is the volume for which the Company issued a manifest. *5 As with the reporting boundary
for “Waste” on the left, of the consolidated subsidiaries presented on P.91, Continental Carbonic Products, Inc. is not included among the aggregated total.
The names of reportable segments were previously “Gas Business in Japan,” ”Gas Business in the United States,” “Gas Business in Europe,” “Gas Business in Asia andOceania,” and “Thermos Business.” Effective from FYE2023, these names were changed to “Japan,” “United States,” “Europe,” “Asia and Oceania,” and “Thermos,”respectively.

Introduction

Value Creation
Story

Special Feature

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

90

Integrated Report2023

Appendix

Sustainability Data
Society
Unit

FYE2021

FYE2022

FYE2023

Employees and Diversity (Consolidated)

Unit

FYE2021

FYE2022

FYE2023

Employees, Diversity, and Work–Life Balance (Registered employees of Taiyo Nippon Sanso Corporation)

Employees*

Number of individuals

19,155

19,172

19,541

Employees

Japan

Number of individuals

6,295

6,465

6,391

Employees by gender

the United States

Number of individuals

4,534

4,406

4,532

EuropeNumber of individuals

2,884

2,912

3,013

Asia and Oceania

Number of individuals

4,114

4,102

4,267

Thermos

Number of individuals

1,328

1,287

1,338

Employees by gender

Number of individuals

2,065

2,075

2,086

Male

Number of individuals

1,789

1,784

1,780

FemaleNumber of individuals

276

291

306

Employees by age group (Composition ratio)
20s and below

%

19.5

19.8

20.2

30s

%

20.1

20.3

20.5

Male

Number of individuals

15,307

15,233

15,651

40s

%

27.6

25.7

24.2

FemaleNumber of individuals

3,848

3,939

3,890

50s and above

%

32.9

34.2

35.1

Employees by age group (Composition ratio)

Years of consecutive service

20s and below

%

16.6

16.4

15.7

Overall average

Years

17.8

17.8

18.7

30s

%

24.6

25.0

25.0

Men

Years

18.5

18.6

19.4

40s

%

28.6

30.1

27.0

Women

Years

12.9

13.3

14.0

50s and above

%

30.2

28.5

32.4

Average age

Years

42.3

42.4

42.7

Number of individuals

102

85

88

%

2.8

3.3

3.7

Years of consecutive service

New hires

Overall average

Years

11.3

11.4

11.6

Employee turnover rate*1

Men

Years

11.7

11.5

11.8

Companywide employee training hours*2

Women

Years

9.5

11.1

11.4

New employee training hours

Hours

32,16016,32027,360

Average age

Years

42.3

44.2

44.1

Employee training hours

Hours

17,716

21,50424,052

Number of individuals

1,893

2,917

3,161

Number of individuals

1,195

1,214

1,232

%

57.8

58.5

59.1

New hires
Employee turnover rate

%

5.7

7.1

6.9

Female employees as a percentage of the total numberof employees

%

20.1

20.5

19.9

Female managers as a percentage of total managerial
positions

%

14.6

14.8

14.5

Union members
Union members as a percentage of the total numberof employees

0

0

0

Female employees as a percentage of total numberof employees

%

13.4

14.0

14.7

* Aggregated from actual figures of the Nippon Sanso Holdings Group companies as of the end of each fiscal year. Due to differences in the reporting periods, part of thedata includes figures as of the end of December.

Female managers as a percentage of total managerial
positions

%

1.5

1.5

1.8

Employees and Diversity (Non-Consolidated)

Employment ratio of persons with disabilities (as of June
1 of each fiscal year)

%

2.3

2.5

2.5

Number of employees reemployed after retirement

Number of individuals

74

82

86

Employees using childcare leave systems

Number of individuals

16

19

39

Employees

Number of individuals

81*

86*

88*

Employees by gender

Layoffs*3

Number of individuals

Male

Number of individuals

66

71

72

Men

Number of individuals

6

6

21

FemaleNumber of individuals

15

15

16

Women

Number of individuals

10

13

18

%

18.5

17.4

18.2

Employees using nursing care leave or long-term nursing
care leave

Number of individuals

0

0

0

%

4.1

3.6

3.6

Usage rate for annual paid leave*

60.2

61.5

67.0

0

0

0

Female employees as a percentage of the total numberof employees
Female managers as a percentage of total managerial
positions* Includes employees working concurrently for Taiyo Nippon Sanso Corporation (47 employees in FYE2021, 49 employees in FYE2022, 47 employees in FYE2023)

4

Employees using volunteer leave system%
Number of individuals*1 Employee turnover rate is the number of employees leaving the Company during the fiscal year (including mandatory-age retirees and excluding personnel transferring
to other Group companies) divided by the number of employees at the end of the fiscal year *2 Reporting boundary: Training hours of Taiyo Nippon Sanso Corporation
employees and Taiyo Nippon Sanso Group employees who took training held by Taiyo Nippon Sanso Corporation *3 Employees leaving the Company for reasons attributable to the Company (dismissals) *4 The number of new days granted in the reporting year is the denominator. The number of days used in the reporting year is thenumerator. The denominator does not include the number of days carried over from the previous fiscal year.

Introduction

Value Creation
Story

Special Feature

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernance

Sustainability Data
Society
Unit

FYE2021

FYE2022

FYE2023

109.7

84.5

78.3

Others (Consolidated)
Expenditures on social contribution initiatives

Millions of yen

Occupational Health and Safety
Frequency rate of occupational accidents resulting in lost workdays(Number of injuries / fatalities due to occupational accidents per million work hours)
Nippon Sanso Holdings Group (Including Taiyo Nippon
Sanso Group)

—

2.51

2.14*1

1.56

Taiyo Nippon Sanso Group

—

0.64

0.52

0.81

1

1

0

Number of fatalities (Consolidated)*2
Employees

Number of individuals

1

0

0

Contractors

Number of individuals

0

1

0

Reporting boundary: Consolidated subsidiaries with production divisions in Japan and overseas*1 To improve the accuracy of data aggregation, values presented in past fiscal year have been retroactively amended.
*2 From FYE2023, values presented in past fiscal years have been retroactively amended.

Reporting Boundary
Main consolidated subsidiaries
Consolidated subsidiaries in Japan including Taiyo Nippon Sanso Corporation; Matheson Tri-Gas, Inc.; Continental Carbonic Products, Inc.; Western International Gas &Cylinders, Inc.; Nippon Gases Euro-Holding S.L.U. and its consolidated subsidiaries; Leeden National Oxygen Ltd.; Leeden Gases Sdn. Bhd.; Nippon Sanso Ingasco, Inc.;
Nippon Sanso Ingasco Philippines, Inc.; Nippon Sanso Ingasco Clark, Inc.; Nippon Sanso (Thailand) Co., Ltd.; Ayutthaya Industrial Gases Co., Ltd.; Taiyo Gases Co., Ltd.;
Nippon Sanso Vietnam Joint Stock Company; Taiyo Nippon Sanso India Pvt. Ltd.; Shanghai Taiyo Nippon Sanso Gas Co., Ltd.; Suzhou Taiyo Nippon Sanso Gas Co.,
Ltd.; Dalian Changxing Island Taiyo Nippon Sanso Gas Co., Ltd.; Dalian Taiyo Nippon Sanso Gas Co., Ltd.; Yangzhou Taiyo Nippon Sanso Semiconductor Gases Co.,
Ltd.; Matheson Gas Products Korea Co., Ltd.; Nippon Sanso Taiwan, Inc.; Taiyo Nippon Sanso Engineering Taiwan, Inc.; Fu Yang Gas Co., Ltd.; Supagas Pty Ltd; Nippon
Sanso Myanmar Co., Ltd.; Top Thermo Manufacturing (Malaysia) Sdn. Bhd.; Vacuumtech Philippines Inc.

Beginning FYE2022, environmental data includes International Carbon Dioxide Co., Ltd., Nippon Gases Euro-Holding S.L.U. and its subsidiary filling sites, Leeden Gases
Sdn. Bhd., and Matheson Gas Products Korea Co., Ltd. From FYE2023, data from eight consolidated subsidiaries in Japan, Continental Carbonic Products, Inc. andWestern International Gas & Cylinders, Inc. were also included.

Group
Information

Appendix

Integrated Report
2023

91

Introduction

Value Creation
Story

Special Feature

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

92

Integrated Report2023

Appendix

Sustainability Data
GovernanceUnit

FYE2021

FYE2022

FYE2023

Number of individuals

9

9

9

Number of individuals

7

6

4

Activities of Committees
Management Configuration
Internal directors

Unit

FYE2021

FYE2022

FYE2023

Number of individuals

3

5

6

Activities of Committees
Advisory Committee on Appointments and Remuneration
Members

Number of individuals

2

3

5

Internal directors

Number of individuals

1

2

1

 Directors serving concurrently as executive officers

Number of individuals

3

1

1

Independent outside directors

Number of individuals

2

3

5

Percentage of directors serving concurrently as executive officers

%

33.3

11.1

11.1

Independent outside directors

Frequency of meetings%

Independent outside directors as a percentage of total
Board of Directors’ members

%

22.2

33.3

55.6

Female directors as a percentage of total Board of
Directors’ members

%

0.0

11.1

22.2

Term of appointment

Years

1

1

1

Frequency of meetings

Frequency of Board of Directors’ meetings

Times

11

14

11

Attendance*1

Attendance at Board of Directors’ meetings

%

98.0

98.4

100.0

Attendance of independent outside directors at Board of
Directors’ meetings

%

100.0

100.0

100.0

Number of directors attending less than 75% of Board of
Directors’ meetings

Number of individuals

Audit & Supervisory Board members

0

0

0

Number of individuals

4

4

4

Internal Audit & Supervisory Board members

Number of individuals

1

1

1

Independent outside Audit & Supervisory Board
members

Number of individuals

2

2

2

50.0

50.0

50.0

0.0

0.0

0.0

Independent outside Audit & Supervisory Board members as a percentage of total Audit & Supervisory Board
members%

Female Audit & Supervisory Board members as apercentage of total Audit & Supervisory Board
members

%

17

14

%

100.0

100.0

100.0

%

100.0

100.0

100.0

Times

Attendance at Audit & Supervisory Board meetings
Attendance of independent outside Audit & Supervisory
Board members at Audit & Supervisory Board meetings

Number of Audit & Supervisory Board members attending Number of individuals
less than 75% of Audit & Supervisory Board meetings

Number of executive officers
Female executive officers as a percentage of total executive officers

0

0

0

Members

64.8

65.8

66.1

7

6

7

%

0.0

0.0

0.0

10

12

100.0

100.0

Number of individuals

13

13

12

Times

6

11

12

100.0

100.0

100.0

Number of individuals

15

15

15

Times

1

3

2

%

93.3

93.3

93.3

Number of individuals

17

17

17

Times

1

1

1

100.0

100.0

100.0

17

18

18

%

Investment Committee
Members*2
Frequency of meetings
Attendance*

1

Global Strategy Review Committee
Members
Frequency of meetings
Attendance%

Global Risk Management Committee
Members

Number of individuals
Times

Attendance

%

1

1

1

100.0

100.0

100.0

20

8

8

Global Compliance Committee
Members*3
Frequency of meetings*
Attendance

Number of individuals

Years

6
100.0

Management Committee

Frequency of meetings
16

Frequency of Audit & Supervisory Board meetings

Average age of directors and Audit & Supervisory Board
members

Times

Attendance

Number of individuals
4

Times

0

1

1

%

—

87.5

100.0

*1 Average attendance rate *2 Excluding additional attendees and Secretariat*3 Excluding attendees and Secretariat from FYE2022 *4 Not held during FYE2021 due to COVID-19

Introduction

Value Creation
Story

Special Feature

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

93

Integrated Report2023

Appendix

Sustainability Data
GovernanceIntellectual Property and Research and Development
Unit

FYE2021

FYE2022

FYE2023Unit

FYE2021

FYE2022

FYE2023

Patents

1,578

1,591

1,682

Intellectual Property

Remuneration for Officers

Registered patents

Remuneration for directors (excluding outside directors)
Millions of
yen

263

200

152

Basic remuneration

Millions of
yen

169

141

102

Japan

Patents

925

941

1,038

Corporate political contributions

Millions of
yen

94

59

47

Overseas

Patents

653

650

644

Non-financial KPI-linked bonuses

Millions of
yen

—

—

3

Millions of
yen

27

28

28

Millions of
yen

27

28

28

Total

Remuneration for Audit & Supervisory Board members(excluding independent outside members)
Total
Basic remuneration
Remuneration for independent outside directors
Total
Basic remuneration

Millions of
yen

100

108

129

Millions of
yen

100

108

129

Millions of
yen

210

222

206

Millions of
yen

209

218

205

Millions of
yen

1

4

1

Remuneration for independent auditors
Total
Remuneration for audit services Other remuneration for independent auditors
OthersAnti-takeover measures—

Not adopted

Not adopted

Not adopted

Code of ethics—

AdoptedAdoptedAdoptedAdoptedAdoptedAdopted

Policy on transparency of tax affairs—(Currently
disclosed on
the Company
website)(Currently
disclosed on
the Company
website)(Currently
disclosed on the
Company
website)Corporate political contributions*

Millions of
yen

0.0

0.2

0.0

Violations of rules for the prevention of corruption

Number ofviolations

0

0

0

Monetary penalties incurred as a result of violations ofguidelines for the prevention of corruption

Millions of
yen

0

0

0

%

—

—

99.7

Rate of receiving compliance training* Reporting boundary is consolidated from FYE2022.

Total* Sum of patents at all operating companies. From FYE2023, the figure includes the consolidated subsidiaries of each operating company.

Research and Development
Research and Development
Millions of
yen

3,315

3,569

3,515

Japan

Millions of
yen

2,694

2,872

3,054

the United States

Millions of
yen

589

659

429

Thermos

Millions of
yen

32

37

31

Total

Introduction

Special Feature

Value Creation
Story

Performance
Highlights

Sustainability

Value Creation in
Each BusinessGovernanceGroup
Information

Appendix

Integrated Report2023

Sustainability Data
Independent Assurance Report

Independent Assurance Report
To the Representative Director, President CEO of Nippon Sanso Holdings Corporation•V isiting the Kurashiki Plant of JFE Sanso Center Co., Ltd. and the Lemont2 Plant ofMatheson Tri-Gas, Inc. selected on the basis of a risk analysis.
• E valuating the overall presentation of the Indicators.

We were engaged by Nippon Sanso Holdings Corporation (the “Company”) to undertake alimited assurance engagement of the environmental and social performance indicators marked
with (the “Indicators”) for the period from April 1, 2022 to March 31, 2023 included in its
Integrated Report 2023 (English version) (the “Report”) for the fiscal year ended March 31, 2023.

Conclusion
Based on the procedures performed, as described above, nothing has come to our attention
that causes us to believe that the Indicators in the Report are not prepared, in all material
respects, in accordance with the Company’s reporting criteria as described in the Report.

The Company’s Responsibility
The Company is responsible for the preparation of the Indicators in accordance with its own
reporting criteria (the “Company’s reporting criteria”), as described in the Report.

Our Independence and Quality Management
We have complied with the Code of Ethics for Professional Accountants issued by theInternational Ethics Standards Board for Accountants, which includes independence and otherrequirements founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior. In accordance with International
Standard on Quality Management 1, we design, implement and operate a system of quality
management including policies or procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements.

Our Responsibility
Our responsibility is to express a limited assurance conclusion on the Indicators based on theprocedures we have performed. We conducted our engagement in accordance with the‘International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements
other than Audits or Reviews of Historical Financial Information’ and the ‘ISAE 3410,
Assurance Engagements on Greenhouse Gas Statements’ issued by the International Auditing
and Assurance Standards Board. The limited assurance engagement consisted of making
inquiries, primarily of persons responsible for the preparation of information presented in theReport, and applying analytical and other procedures, and the procedures performed vary innature from, and are less in extent than for, a reasonable assurance engagement. The level ofassurance provided is thus not as high as that provided by a reasonable assurance engagement. Our assurance procedures included:• Interviewing the Company’s responsible personnel to obtain an understanding of its policy
for preparing the Report and reviewing the Company’s reporting criteria.
• Inquiring about the design of the systems and methods used to collect and process the
Indicators.
• P erforming analytical procedures on the Indicators.
• E xamining, on a test basis, evidence supporting the generation, aggregation and reportingof the Indicators in conformity with the Company’s reporting criteria, and recalculating the
Indicators.

/s/ Kazuhiko Saito
Kazuhiko Saito, Partner, Representative Director
KPMG AZSA Sustainability Co., Ltd.
Tokyo, Japan
September 14, 2023

Notes to the Reader of Independent Assurance Report:
This is a copy of the Independent Assurance Report and the original copies are kept separately by the Company and KPMG AZSA Sustainability Co., Ltd.

94

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