Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Note : This document has been translated from a part of the Japanese originalfor reference purposes only. In the event of any discrepancy between thistranslated document and the Japanese original, the original shall prevail.

Nippon Sanso Holdings Corporation – Water
Security 2023

W0. Introduction
W0.1(W0.1) Give a general description of and introduction to your organization.
The Nippon Sanso Holdings Corporation (hereinto referred to as NSHD) was founded in 1910
as Nippon Sanso Ltd. In 1918, NSHD formally changed its name to Nippon Sanso and in 2004,
merged with Taiyo Toyo Sanso Co., Ltd to become Taiyo Nippon Sanso Corporation (hereinto
referred to as TNSC). From there, in 2014, TNSC became a consolidated subsidiary of
Mitsubishi Chemical Holdings. On the other side, in 2018, through Nippon Gases EuroHoldings S.L.U, NSHD acquired a stake in a corporation that operates part of Praxair, Inc's
European operations. In 2019, NSHD acquired a portion of the HyCO business and related
assets of Linde Gas North America LLC through Matheson Tri-Gas, Inc. and transitioned NSHD
to a holding company structure effective October 1, 2020. Classified in the chemical industry,
NSHD's primary business is the production and sale of oxygen, nitrogen, and argon, which are
typical industrial gases, and other industrial gases such as carbon dioxide, hydrogen, helium,
LP gas, and specialty gases for semiconductor applications. NSHD is comprised of 206
consolidated companies employing a total of 19,579 people worldwide (as of March 31, 2023).
Under the previous Medium-term Management Plan, "Ortus Stage 2," during the period fromthe fiscal year ending March 31, 2018, to the fiscal year ending March 31, 2021, the Company
achieved the following results: "Globalization and expansion ofpresence through the acquisition of European businesses and HyCO business in the UnitedStates," "Expansion of specialty gas business for electronics in East Asia," "Production capacity
expansion in the United States and Asia”. Moreover, in October 2020, we transitioned to a pureholding company structure, and have formulated "NS Vision 2026 - Enabling the Future," which
will conclude in the fiscal year ending March 31, 2026. “NS Vision 2026" is based on thebusiness management structure of "four geographic hubs and the Thermos business," and in
addition to financial KPI targets, non-financial KPI targets have also been newly established,1

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

along with five key strategies (sustainability management, exploring new business toward
carbon neutrality, total electronics, operational excellence, and DX initiatives) as we aim tostrengthen the Group's overall capabilities and achieve growth.

W-CH0.1a(W-CH0.1a) Which activities in the chemical sector does your organization engage in?
Bulk inorganic chemicals

W0.2(W0.2) State the start and end date of the year for which you are reporting data.
Reporting year

Start dateEnd date

April 1 2022

March 31 2023

W0.3
(W0.3) Select the countries/areas in which you operate.
Australia
Belgium
CanadaChina
Denmark
FranceGermany
India
Indonesia
IrelandItaly
Japan
Malaysia
Myanmar
Netherlands
NorwayPhilippines
PolandPortugal
Republic of Korea
Saudi Arabia
Singapore
Spain
SwedenTaiwanChina
Thailand
United Kingdom of Great Britain and Northern Ireland
2

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

United States of America
Vietnam

W0.4(W0.4) Select the currency used for all financial information disclosed throughout
your response
JPY

W0.5
(W0.5) Select the option that best describes the reporting boundary for companies,
entities, or groups for which water impacts on your business are being reported.
Companies, entities or groups over which financial control is exercised

W0.6(W0.6) Within this boundary, are there any geographies, facilities, water aspects, orother exclusions from your disclosure?
No

W0.7(W0.7) Does your organization have an ISIN code or another unique identifier (e.g.,
Ticker, CUSIP, etc.)?
Indicate whether you are able to provide a unique identifier foryour organization.

Provide your unique
identifier

Yes, a Ticker symbol

4091

W1. Current state
W1.1(W1.1) Rate the importance (current and future) of water quality and water quantity to
the success of your businessDirect use Indirect use Please explain
importance importance
ratingrating
Sufficient
Importantamounts of goodquality
freshwater
available for use

Notimportant at
all◆Primary Use in Direct Operations◆
In the industrial gas production process, fresh water isused as a coolant for heat exchangers (a component
in various manufacturing plants) built into rotatingmachines and other equipment.

3

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25◆Why is the use of fresh water not important inindirect operations?◆
In our industry, the main use of water in our supply
chain is limited to the manufacturing stage, which weare responsible for, and is not used upstream,
downstream or in the product use stage. Therefore,
the quality and quantity of fresh water during indirect
usage is rated as not important at all, and since air,
the raw material of industrial gas, is obtained from theatmosphere in upstream operations, there are no
suppliers. In downstream operations, products aresupplied in three ways: by lorries (liquids), bycylinders or other containers (gases), and by pipelines(gases). Water is rarely used when the supplied
products (both liquids and gases) are consumed.
Moreover, the total amount of water withdrawn during
the industrial gas production stage is 90% of NSHD’s
total water withdrawals.
◆Why is the use of fresh water important in direct
operations?◆
We believe that the availability of sufficient fresh water
is important in preventing a decline in production
output levels. If the heat exchanger cannot be
sufficiently cooled, the temperature of the industrial
gas leaving the exchanger will be higher and theindustrial (gas) density will be lower, thereby creating
a lower product output. As global warming and rising
average temperatures are expected to cause anincrease in the temperature of cooling water, we
believe production output levels will become anincreasingly important factor of production in the
future. We also believe that our water dependence will
not change in the future for both direct and indirect
operations.
SufficientNot
Notamounts ofimportant at important at
recycled,all
allbrackish and/or
produced water
available for use◆Why is the use of recycled water not important in
direct operations?◆
NSHD's manufacturing plants are located in bothcoastal and inland areas, but neither location uses
seawater. Rotating machines that are present in the
manufacturing process compress gases and, duringthat process, heat exchangers are essential in cooling
the gases as they rise in temperature. The heatexchangers are made of steel, which means if
seawater is used as a refrigerant for the heat4

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

exchanger, rusting or other problems may occur,
leading to damage. To prevent rusting, the heatexchanger would have to be made of a sturdy
material like stainless steel; however due to the highcost when compared with conventional products, it isdifficult to choose stainless steel heat exchangers. For
this reason, NSHD's manufacturing plants do not use
seawater, but instead use fresh water to supply theheat exchangers. Furthermore, our use of fresh water
is cyclical in its cooling usage reducing the necessity
for recycled water from outside sources. NSHD hopes
to promote freshwater recycling by increasing thefrequency of our own fresh water circulation in thecooling towers present at our plants. The use of waterother than fresh water, including recycled fresh water,
is not expected to become more important in the
future.
◆Why is the use of recycled water not important inindirect operations?◆
Regarding indirect use, as there are no upstream
suppliers, we do not need to consider how our
suppliers use seawater or recycled water. Similarly,
we do not need to consider how our customers use
seawater or recycled water downstream, because
there are no heating or cooling processes involved in
the use of the industrial gases we supply. For thisreason, we have rated its importance as "not very
important". This trend is expected to change little in
the future.

W1.2(W1.2) Across all your operations, what proportion of the following water aspects are
regularly measured and monitored?
% ofsites/fa
cilities/
operati
ons
Water
100%
withdrawals – totalvolumesFreque Method ofPlease explain
ncy of measurement
measurement
Continu Water
ously
withdrawals
are regularly
measured

Given the importance of water in the manufacturing
process (cooling), it is recorded at 100% of ourmanufacturing facilities, for example, throughautomated measuring devices. Monthly totals arereported to site management and used to evaluatevarious performance characteristics of the5Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

using flow
meters.

manufacturing industry. Once a month, the datafrom the automated measuring devices is reviewed
and monitored.

Water
100%
withdrawals–volumes bysourceContinu Water
ously
withdrawals
are regularly
measuredusing flow
meters.

Water supplied from municipal sources is constantly
monitored using automated equipment to verify
license requirements and water usage. We continue
our monitoring efforts to assess water use efficiency
at facilities where large volumes of groundwater andsurface water are used. Monthly totals are reported
to site managers and used to assess various
performance characteristics of the manufacturingindustry.

Water
100%
withdrawal
s quality

Continu Water quality We monitor the water quality at each production site
ouslyparameters
once a month to confirm that there are no abnormalsuch asvalues. For water supplied by third parties, we doturbidity,
not measure the water quality ourselves because
hardness, and the quality is usually stable. However, we do use
pH aredata obtained from our supplier and monitor it
important for
regularly, usually once a month. Our suppliers alsostableconsistently and automatically measure the quality
operation and of supplied water. If we detect any anomalies in the
productwater quality from the measurement results, wequality, so
contact our supplier immediately. Thus, including
they arethis indirect monitoring, we virtually always monitor
constantly and the quality of all water we take and use in ourcontinuously
operations.
monitored
through the
installation of
automaticequipment
andsampling at all
facilities thatuse surface orground water.

Water
100%
discharges– totalvolumesMonthly Because
NSHD measures 83% of total water discharge
wastewater is volumes. One of the characteristics of the sites thatnot continuous are not being measured is that the wastewater is
at our sites, it routed through pits (ditches) rather than piping. Afteris difficult to
consulting with an outside organization, NSHD
measure theadopted this formula for [facilities that do notvolume ofmeasure wastewater discharge] to calculate water
wastewater
discharge volumes. These calculations areusing
performed once/month. Additionally, 78% of all
6

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

instruments
establishments in FYE2022 discharged into existingsuch as flow
sewage systems, while only 10% discharged directly
meters.
into rivers, lakes, etc., and 1% directly into
Through test groundwater and the ocean, respectively. On themeasurement other hand, for Europe, HyCO, and others, thes of the trends actual volume of wastewater discharged isin our water
automatically measured. In Europe or HyCO, thewithdrawals
drainage route is piping and although the drainage isandnot continuous, it is constantly monitored because it
discharges in is easy to measure with a flow meter. That data isa typical
compiled at a frequency of about once/month,production
together with the data from the above offices that doplant, we have not actually measure the volume of wastewater
confirmed the discharged.
following
formula:[waterdischarge =(1/3) x water
withdrawal(measuredcontinuously)]
Water
100%
discharges– volumesbydestination

Monthly Because
NSHD measures 83% of total water discharge
wastewater is volumes. One of the characteristics of the sites thatnot continuous are not being measured is that the wastewater is
at our sites, it routed through pits (ditches) rather than piping. Afteris difficult to
consulting with an outside organization, NSHD
measure theadopted this formula for [facilities that do notvolume ofmeasure wastewater discharge] to calculate water
wastewater
discharge volumes. These calculations areusing
performed once/month. Additionally, 78% of all
instruments
establishments in FYE2022 discharged into existingsuch as flow
sewage systems, while only 10% discharged directly
meters.
into rivers, lakes, etc., and 1% directly into
Through test groundwater and the ocean, respectively. On themeasurement other hand, for Europe, HyCO, and others, thes of the trends actual volume of wastewater discharged isin our water
automatically measured. In Europe or HyCO, thewithdrawals
drainage route is piping and although the drainage isandnot continuous, it is constantly monitored because it
discharges in is easy to measure with a flow meter. That data isa typical
compiled at a frequency of about once/month,production
together with the data from the above offices that doplant, we have not actually measure the volume of wastewater
confirmed the discharged.

7

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

following
formula:[waterdischarge =(1/3) x water
withdrawal(measuredcontinuously)]
Water
Not
discharges relevant– volumesbytreatment
methodWater
100%discharge
quality – bystandard
effluent
parameters

Water treatments are not relevant to NSHD as there
are no processes that could lead to contamination of
fresh water, and therefore there is no need to havetreatment methods such as an activated sludge
process or other treatment facilities. Specifically, allfresh water taken in by NSHD is supplied to thecooling tower and then to the heat exchanger, acomponent of the rotating machine, as a refrigerantby means of a water pump. After heat exchange inthe heat exchanger, the warmed fresh water isreturned to the cooling tower and simultaneously
cooled to a temperature equivalent to that of theatmosphere. The fresh water cooled in the cooling
tower is again supplied to the heat exchanger by awater pump and returns to the cooling tower by thesame route described above. Therefore, the use of
fresh water in the NSHD is circulating, and there arealmost no factors that would deteriorate water
quality. In the cooling tower, because of the hightemperature of the fresh water returned from theheat exchangers, some of the fresh water
evaporates into the atmosphere and is also released
into the atmosphere as droplets under the influenceof the large air propellers installed in the cooling
tower. Moreover, fresh water gradually decreases
with each circulation around the cooling tower, andat the same time, it also concentrates due toevaporation. Thus, we do not expect any majorchanges in our business operations in the future,
and we do not expect any changes in our current
situation.
Monthly Whendischarging
into the publicsewagesystem, fresh
water inside

We measure freshwater composition in the watertank inside the cooling tower, rather than throughwater discharges. Our freshwater circulation system
is centred around cooling towers, so the fresh water
discharged from the cooling tower is intermittent andnot always discharged. On the other hand, the fresh
8

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

the cooling
tower issampled andanalysed by athird-party
organization
at least
once/month
as well.

water discharged from the cooling tower isdischarged directly from the water tank inside thecooling tower. For that reason, water quality control
inside the water tank is more effective thanwastewater quality control. At least once a month,through a third-party laboratory analysis, the fresh
water inside the cooling tower is sampled andmonitored for COD, total nitrogen, and otherregulatory parameters for the monitored areas ofwhere wastewater is discharged to public waters.
More than 78% of NSHD sites discharge wastewater
into public sewers. When discharging to publicsewers, fresh water inside the cooling towers is
sampled and analysed by a third-party organization
at least once a month.

Water
100%
discharge
quality –emissionsto water(nitrates,
phosphates,pesticides,
and/orother
priority
substances)

Monthly Priority
substance
discharges
are measured
with a flow
meter. Toxic
substancessuch asnitrates andphosphates
are sampled
by watersampling andthe quality ofthewastewater ismonitored bya measuring
company.

We measure freshwater composition in the watertank inside the cooling tower, rather than throughwater discharges. Our freshwater circulation system
is centred around cooling towers, so the fresh water
discharged from the cooling tower is intermittent andnot always discharged. On the other hand, the fresh
water discharged from the cooling tower isdischarged directly from the water tank inside thecooling tower. For that reason, water quality control
inside the water tank is more effective thanwastewater quality control. At least once a month,through a third-party laboratory analysis, the fresh
water inside the cooling tower is sampled andmonitored for COD, total nitrogen, and otherregulatory parameters for the monitored areas ofwhere wastewater is discharged to public waters.
More than 80% of NSHD sites discharge wastewater
into public sewers.

Water
100%
discharge
quality –temperatureContinu Temperatureously
is constantly
monitored
using anautomatic
measuring
deviceinstalled
inside thewater tanks.

We measure the temperature of the fresh water inthe water tank inside the cooling tower, not thewastewater. At NSHD, the freshwater circulation
system is centred on the cooling tower, so the fresh
water discharged from the cooling tower isintermittent and is not always discharged. On theother hand, the fresh water discharged from thecooling tower is discharged directly from the watertank inside the cooling tower. This is the reason whywater temperature control inside the tank is effective
in controlling wastewater quality. In the case of9

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

NSHD, on the other hand, there are almost no
establishments that discharge directly into public
waters, and more than 78% discharge into existing
sewers, etc. The temperature is constantly
monitored by automatic measuring devices installedinside the water tank.
Water
consumpti
on – total
volume100%Monthly Because
After consulting with an outside organization, NSHD
wastewater is adopted this formula for [facilities that do not
not continuous measure wastewater discharge] to calculate waterat our sites, it discharge volumes. These calculations areis difficult toperformed once/month. Additionally, 78% of all
measure theestablishments in FYE2022 discharged into existing
volume ofsewage systems, while only 10%
wastewater
discharged directly into rivers, lakes, etc., and 1%
using
directly into groundwater and the ocean,
instruments
respectively. On the other hand, for Europe, HyCO,
such as flow
and others, the actual volume of wastewater
meters.
discharged is automatically measured. In Europe or
Through test HyCO, the drainage route is piping and although themeasurement drainage is not continuous, it is constantly monitored
s of the trends because it is easy to measure with a flow meter. The
in our water
data is compiled at a frequency of about
withdrawals
once/month, together with the data from the above
andoffices that do not actually measure the volume ofdischarges in wastewater discharged. Usage is tabulated monthly
a typical
to identify any anomalies. In cases where waterproduction
discharge volumes are low and not constantly
plant, we have measured (e.g., offices), water withdrawals andconfirmed the water discharges are assumed to be the same andfollowingwater consumption is set to zero.
formula:[waterdischarge =(1/3) x water
withdrawal(measuredcontinuously)]

Water
100%
recycled/reusedMonthly As analternative tostandard
measurement
method, weprioritize two
factors. The
first is to

Since the only use of fresh water at NSHD iscirculatory in coolant systems, centred in the cooling
towers, all of the facilities that use a circulation
system fall under the category of freshwater
recycling facilities. In order to improve water, use
efficiency, future efforts will be made to increasewater recovery and recycling. However, it isextremely difficult to accurately determine the10Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

The
100%
provisionof fullyfunctioning, safely
managed
WASH
services toall workers

Yearlycompare thebehaviour of
past
withdrawals
with actual
withdrawals.
The second isto observe theproperties ofconcentration.
Based onthese two
factors, we
determinewhether therecycled
volumes are
being
maintained
within an
appropriate
range andmonitorappropriately.
It is therefore
very importantto accumulate
data on water
withdrawal
andconcentration
patterns.

volumes of water recycled. The reason for this isthat it is extremely difficult to quantitatively
determine the amount of evaporation and droplet
volume, which fluctuates with temperature. Data iscompiled at a frequency of about once/month. In the
future, we believe it is important to optimize the typeand frequency of injected chemicals in order to slow
the degree by which concentration increases, which
would result in the further promotion of water
withdrawal reduction activities.

Safe waterand sanitation
facilities arepresent at all
business
locations at all
times. The
condition ofsafe waterand sanitation
facilities ismonitored andreported

Safe water is supplied by a third party, whoconstantly monitors safety levels. If there is aproblem with the monitored data, the third party isrequired to immediately stop supplying said waterand report to us.

11Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

annually
through
employeehealth care
performancemonitoring.

W1.2b(W1.2b) What are the total volumes of water withdrawn, discharged, and consumed
across all your operations, how do they compare to the previous reporting year, andhow are they forecasted to change?
Volu
me
(meg
aliters/yea
r)Comparison with
previous
reporting yearPrimary
Five- Primar Please explain
reason for yearycompariso foreca reason
n withstforprevious
forecasreporting
t
year

Total
44,95 About the Increase/d Lower Increas [Comparison with Previous Year］
withdra 2
same
ecrease ine/decre NSHD uses the following criteria towals
business
ase inevaluate changes in water quantity.
activity
efficienc
Deviation of: ±5% = about the same, ±5y
10% = higher/lower, and ±10% or more =significantly higher/lower.
In FYE2022, water withdrawals were
45,911 ML; in the reporting year, they
were 44,952 ML. Since this is a decreaseof approximately 2%, we rate it as "about
the same" as the previous year. We
believe that the main reasons for thechange are the stabilization of industrial
gas production since FYEE2022 and theresult of our water withdrawal reduction
activities.
Going forward, we expect water
withdrawals to decrease due to NSHD'swater conservation activities.
Total
28,51 About the Increase/d About Increas [Comparison with Previous Year］
dischar 8
same
ecrease in thee/decre NSHD uses the following criteria togesbusinesssame ase inevaluate changes in water quantity.
activity
12

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

efficienc Deviation of: ±5% = about the same, ±5y
10% = higher/lower, and ±10% or more =significantly higher/lower.
In FYE2022, the volume of water
discharged was 29,885 ML; in FYE2023,
the volume was 28,518 ML. Since this is adecrease of approximately 5%, we rate
this as "about the same" as the previous
year. The main reason for this can be
attributed to the increased evaporation ofwater to the atmosphere, which reduced
the amount of water going to wastewater,
resulting in a decrease in total wastewater
discharge.
Since our use of water will not change
significantly in the future, it is likely that thevolume of wastewater will remain about
the same.
Total
consu
mption16,43 About the Increase/d About Increas [Comparison with Previous Year］
4
same
ecrease in thee/decre NSHD uses the following criteria tobusinesssame ase inevaluate changes in water quantity.
activity
efficienc
Deviation of: ±5% = about the same, ±5y
10% = higher/lower, and ±10% or more =significantly higher/lower.
In FYE2022, total consumption was
16,026 ML; in FYE2023, total consumption
was 16,434 ML. Since this is an increaseof approximately 3%, we rate it as "about
the same" as the previous year. The main
reason for this is a characteristic of ourbusiness activities: water consumption in
production plants is mainly due to water
evaporation in cooling towers.
Since our use of water will not change
significantly in the future, consumption is
expected to remain at about the sameamount.

13

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

W1.2d(W1.2d) Indicate whether water is withdrawn from areas with water stress, provide theproportion, how it compares with the previous reporting year, and how it is forecasted
to change.
Withd %
Compa Prima Five
rawal with risonrys are dra withreaso year
from wn previou n for fore
areas from scomp castwitharea reporti arison
water sng year withstress withpreviowate
usrreport
stre
ing
ss
year
R Yes
o
w
1

1～
10

About
the
same

Increa Low
se/dec er
reaseinbusiness
activityPrimar Identif Please explainyicatioreason n toolfor
forecast

Increas WRIFYE2023 used WRI Aqueduct's
e/decre Aqued [Aqueduct Water Risk Atlas] to screen
ase inuct
water stress at sites representing 99% of
efficienc
NSHD's total water withdrawals. One ofythe primary reasons we chose the WRI
Aqueduct is its simple usage as the
person in charge of each site is
responsible for performing that sites waterrisk assessment. In the WRI Aqueduct,
the risk levels are divided into 5 levels,with 0 being low risk and 5 being
extremely high. We assessed 130 sites,
and at water intake sites with high water
risk, are conducting interviews as well.
While we could not identify any sites inJapan with "extremely high" water risk,
we surveyed overseas sites and foundthat overall, 16 sites had "high" water risk.
Through the above process, 16 sites wereidentified as potentially exposed to water
risk.
These 16 sites were categorized byregion as follows.
5 sites in the United States;
Albuquerque, Irving, Masa, Odessa, andVernon14

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

7 sites in Europe;
Pint, Lommel, Ravenna, Pontinia, San
Salvo, Castelnuovo, and Rapolano
3 sites in Asia and Oceania;
Chakan, Lamphun 5, Lamphun 6
These 16 sites account for 4% of the total
water withdrawal.
Based on a comprehensive evaluation of
the scale of water withdrawal, our own
assessment of Physical Risks Quantity,
and the results of interviews with local
residents, we did not find any areas thatwere assessed to be at risk of water
stress.

W1.2h(W1.2h) Provide total water withdrawal data by source.
SourceRelev Volume
Compa Primary Please explain
ance (megaliter rison
reasons/year)withforpreviou comparisson withreporti previous
ng year reporting
year

Fresh
Relev
surfaceantwater,
including
rainwater,water fromwetlands,
rivers, andlakes

24,440

About
the
same

Increase/decrease [Comparison with Previous Year］
in
NSHD uses the following criteria to evaluate
efficiency changes in water quantity.
Deviation of: ±5% = about the same, ±5-10%= higher/lower, and ±10% or more =significantly higher/lower.
Surface water use for FYE2023 was 24,440
ML and FYE2022 was 25,582 ML, a decreaseof 4.5%.

15

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Brackishsurfacewater/Sea
water

Not
relevant

Groundwat Relev
er –ant
renewable

NSHD has been completely free of seawaterand brackish water at all of its facilities
worldwide since FYE 2020. We expect thistrend to continue because we will never use
seawater or brackish water. The trend of notusing seawater or brackish water at all is
expected to continue, because we will neveruse seawater or brackish water.
2,366

Much
lower

Increase/ [Comparison with Previous Year］
decrease NSHD uses the following criteria to evaluateinchanges in water quantity.
efficiency
Deviation of: ±5% = about the same, ±5-10%= higher/lower, and ±10% or more =significantly higher/lower.
Groundwater use in FYE2023 was 2,366 ML
and in FYE2022 was 2,710 ML, a decrease of
12.7%.

Groundwat Not
er – nonreleva
renewable nt

While our plants are not designed to use
water on a large-scale, for sustainability
purposes, we do not rely on acyclic water
resources. Although the survey was notconducted separately from renewablegroundwater, we do not believe it is currently
being used and should not be used in the
future.

Produced/
Entrainedwater

The use of stable quality fresh water isessential for our plants as it correlates tostable operations. Furthermore, produced
water is not common today and we believe
should not be used in the future. However,even at present, we cannot rule out thepossibility that facilities located in water
stressed areas might have to provisionallyaccept fresh water in the event of a drought.
That possibility further indicates the need touse this water source effectively, as fresh
water may be steadily depleted in the future.

Not
relevant

Third party Relev
sourcesant

18,146

About
the
same

Increase/ [Comparison with Previous Year］
decrease NSHD uses the following criteria to evaluateinchanges in water quantity.
efficiency

16

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Deviation of: ±5% = about the same, ±5-10%= higher/lower, and ±10% or more =significantly higher/lower.
Third-party water usage in FYE2023 was
18,146 ML, compared to 17,619 ML in
FYE2022, an increase of 3.0%. 754 ML
increased due to the addition of Continental
Carbonic Products, Inc. and WesternInternational Gas & Cylinders, Inc. from the
U.S. beginning in FYE2023. Cylinders, Inc.
were added to the scope of consolidation fromFYE2023, resulting in an increase of 754 ML.

W1.2i(W1.2i) Provide total water discharge data by destination.
Source Relev Volume Comparisance (megali on withters/ye previousar)reportingyear

Primaryreason forcomparison
with previous
reporting year

Fresh
Relev
surface ant
water

Increase/decrea [Comparison with Previous Year］
se in efficiency NSHD uses the following criteria to

21,815

Lower

Please explain

evaluate changes in water quantity.
Deviation of: ±5% = about the same, ±510% = higher/lower, and ±10% or more =significantly higher/lower.
fresh water discharged to surface water in
FYE2023 was 21,815 ML and in FYE2022
was 23,685 ML, a decrease of 7.9%.

Brackis Relevhant
surfacewater/seawater64

About thesame

Increase/decrea [Comparison with Previous Year］
se in efficiency NSHD uses the following criteria toevaluate changes in water quantity.
Deviation of: ±5% = about the same, ±510% = higher/lower, and ±10% or more =significantly higher/lower.
Brackish water discharged to surface
water/sea water in FYE2023 was 64 ML
and in FYE2022 was 62 ML, an increaseof 2.2%.

17

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Ground Relev
water
ant

134

Much lower Increase/decrea [Comparison with Previous Year］
se in efficiency NSHD uses the following criteria toevaluate changes in water quantity.
Deviation of: ±5% = about the same, ±510% = higher/lower, and ±10% or more =significantly higher/lower.
FYE2023 discharged 134 ML togroundwater, while FYE2022 discharged
154 ML, a 12.9% decrease.

ThirdRelev
party
ant
destinat
ions

6,504

HigherIncrease/decrea [Comparison with Previous Year］
se in efficiency NSHD uses the following criteria toevaluate changes in water quantity.
Deviation of: ±5% = about the same, ±510% = higher/lower, and ±10% or more =significantly higher/lower.
The volume of wastewater discharged tothird-party dischargers in FYE2023 was
6,504 ML and in FYE2022 was 5,983 ML,
an increase of 8.7%. 471 ML increased
due to the addition of Continental Carbonic
Products, Inc. of the U.S. and WesternInternational Gas & Cylinders, Inc. wereadded to the scope of consolidation
starting in FYE2023, resulting in an
increase of 471 ML.

W1.2k(W1.2k) Provide details of your organization’s emissions of nitrates, phosphates,
pesticides, and other priority substances to water in the reporting year.
Emissions to
Category(ies) of Please explain
water in thesubstances
reporting year included(metric tonnes)
Row1 3

Nitrates
Phosphates

Since NSHD uses water mainly for indirect cooling, we
do not consider this to be a significant burden on water
quality. Among certain Japanese subsidiaries and Taiyo
Nippon, there are five operations that are subject toregulations on the concentration of hazardous
substances (phosphate, nitrate, etc.) in wastewater. The
total emissions of hazardous substances for those five18

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

operations as a whole are less than one ton each.
Nitrate nitrogen is decomposed into nitrogen andoxygen by anaerobic microorganisms in the degassing
layer, adjusted to a pH of 5.8-8.6, and discharged into
seawater.

W1.3(W1.3) Provide a figure for your organization’s total water withdrawal efficiency.
Revenue

Total water
withdrawal
volume(megaliters)

Row1 1,187,000,000 44,952

Total water
withdrawal
efficiency

Anticipated forward trend

26,405.9441181705

In the industrial gas production process(direct use), fresh water used as
coolant for heat exchangers(components of equipment in various
manufacturing plants) built into rotatingmachines and other equipment. As aresult, there is a perfect proportional
relationship between industrial gas
production and total water withdrawals.
Therefore,
as sales increase, the total withdrawals
will also increase proportionally, andthus our total water withdrawal
efficiency is expected to remain
consistent.

W-CH1.3(W-CH1.3) Do you calculate water intensity for your activities in the chemical sector?
Yes

W-CH1.3a(W-CH1.3a) For your top five products by production weight/volume, provide thefollowing water intensity information associated with your activities in the chemical
sector.

Product type
Bulk inorganic chemicals

Product name19

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

oxygenWater intensity value (m3/denominator)
0.93

Numerator: water aspect
Freshwater withdrawals

Denominator
Other, please specify (KNm3)
KNm3

Comparison with previous reporting year
About the same

Please explain
The water used per unit of oxygen in FYE2023 was 0.9, while the water used per unit ofoxygen in FYE2022 was 0.9. Water intensity is calculated as [water withdrawals
required to produce oxygen (m3) ÷ oxygen production (kNm3)]. This means that theamount of fresh water required to produce 1.0 kNm3 of oxygen is 0.9 m3. Generally, it
can be assumed water consumption is essentially proportional to product flow rate. As
the unit value is nearly the same as the previous year, this indicates that there has beenno significant change in production efficiency, with respect to water, and production
activities have been carried out smoothly.
Water intensity can be used as a strategic indicator for reducing water withdrawal.
Accordingly, it is desirable to monitor water intensity as a KPI (Key Performance
Indicator) at production sites and use it as a reference point for activities such as
reducing water withdrawals.

Product type
Bulk inorganic chemicals

Product name
Nitrogen

Water intensity value (m3/denominator)
2.3

Numerator: water aspect
Freshwater withdrawals

Denominator
Other, please specify (KNm3)
KNm3

Comparison with previous reporting year
About the same

Please explain
20

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

The water used per unit of nitrogen in FYE2023 was 2.3, while the water used per unitof oxygen in FYE2022 was 2.5. Water intensity is calculated as [water withdrawals
required to produce nitrogen (m3) ÷ nitrogen production (kNm3)]. This means that theamount of fresh water required to produce 1.0 kNm3 of nitrogen is 2.3 m3. Generally, it
can be assumed water consumption is essentially proportional to product flow rate. As
the unit value is nearly the same as the previous year, this indicates that there has beenno significant change in production efficiency, with respect to water, and production
activities have been carried out smoothly.
Water intensity can be used as a strategic indicator for reducing water withdrawal.
Accordingly, it is desirable to monitor water intensity as a KPI (Key Performance
Indicator) at production sites and use it as a reference point for activities such as
reducing water withdrawals.

Product type
Bulk inorganic chemicals

Product name
Argon

Water intensity value (m3/denominator)
1.2

Numerator: water aspect
Freshwater withdrawals

Denominator
Other, please specify (KNm3)

Comparison with previous reporting year
About the same

Please explain
The water used per unit of argon in FYE2023 was 1.2, while the water used per unit ofargon in FYE2022 was 1.2. Water intensity is calculated as [water withdrawals required
to produce argon (m3) ÷ argon production (kNm3)]. This means that the amount of fresh
water required to produce 1.0 kNm3 of argon is 1.2 m3. Generally, it can be assumed
water consumption is essentially proportional to product flow rate. As the unit value isnearly the same as the previous year, this indicates that there has been no significant
change in production efficiency, with respect to water, and production activities havebeen carried out smoothly.
Water intensity can be used as a strategic indicator for reducing water withdrawal.
Accordingly, it is desirable to monitor water intensity as a KPI (Key Performance
Indicator) at production sites and use it as a reference point for activities such as
reducing water withdrawals.

Product type
Bulk inorganic chemicals
21

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Product name
Hydrogen

Water intensity value (m3/denominator)
2.3

Numerator: water aspect
Freshwater withdrawals

Denominator
Other, please specify (KNm3)

Comparison with previous reporting year
About the same

Please explain
The water used per unit of hydrogen in FYE2023 was 2.3, while the water used per unitof hydrogen in FYE2022 was 2.1. Water intensity is calculated as [water withdrawals
required to produce hydrogen (m3) ÷ hydrogen production (kNm3)]. This means that theamount of fresh water required to produce 1.0 kNm3 of hydrogen is 2.3 m3. Generally, it
can be assumed water consumption is essentially proportional to product flow rate. As
the unit value is nearly the same as the previous year, this indicates that there has beenno significant change in production efficiency, with respect to water, and production
activities have been carried out smoothly.
Water intensity can be used as a strategic indicator for reducing water withdrawal.
Accordingly, it is desirable to monitor water intensity as a KPI (Key Performance
Indicator) at production sites and use it as a reference point for activities such as
reducing water withdrawals.

Product type
Bulk inorganic chemicals

Product name
Carbon monoxide

Water intensity value (m3/denominator)
7.7

Numerator: water aspect
Freshwater withdrawals

Denominator
Other, please specify (KNm3)

Comparison with previous reporting year
About the same

Please explain

22

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

The water used per unit of carbon monoxide in FYE2023 was 7.7, while the water used perunit of hydrogen in FYE2022 was 7.3. Water intensity is calculated as [water withdrawals
required to produce carbon monoxide (m3) ÷ carbon monoxide production (kNm3)]. Thismeans that the amount of fresh water required to produce 1.0 kNm3 of carbon monoxide is
7.7 m3. Generally, it can be assumed water consumption is essentially proportional toproduct flow rate. As the unit value is nearly the same as the previous year, this indicatesthat there has been no significant change in production efficiency, with respect to water, andproduction activities have been carried out smoothly.
Water intensity can be used as a strategic indicator for reducing water withdrawal.
Accordingly, it is desirable to monitor water intensity as a KPI (Key Performance Indicator) at
production sites and use it as a reference point for activities such as reducing water
withdrawals.

W1.4(W1.4) Do any of your products contain substances classified as hazardous by aregulatory authority?
Products contain hazardous substances
Row 1

Comment

No

W1.5(W1.5) Do you engage with your value chain on water-related issues?
Value chain
stakeholder

Engagement Primary reason
for noengagement

Please explain

SuppliersNo

Although water security is included the NSHD
environmental policy, for example water resource
efficiency activities, water-related supplierengagement activities have yet to yield
substantial results. The reason for this is that
NSHD closely checks the parameters of thecooling water circuit at its plants and adjusts
water treatment accordingly to minimize waterdisposal to the sewage system and optimize
water usage. Currently, we do not conduct waterrelated engagement with suppliers andcustomers, as our own efforts alone are sufficientto handle the situation. However, as part of ourenvironmental activities, there is a requirement inour procurement policy that we strive to reduce
our environmental burden. Therefore, we plan toincorporate water-related surveys, including
topics such as water intake and water risk, into

We are planningto do so within
the next two
years

23

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

our supplier engagement in the future, and use
the information gained from the dialogue to help
suppliers better manage water issues. The
content of the survey is still under consideration
but will be conducted within the next two years.
The inclusion of the following items is being
discussed:(1) Drought risk
(2) Water quality(3) Administrative regulations(4) River flood risk
Other value
chain partners(e.g.,
customers)

No

We are planningto do so within
the next two
years

Although NSHD's environmental policy includes
water security, such as water resource efficiency
activities, water-related customer engagement
activities have yet to yield substantial results. The
reason for this is that NSHD closely checks theparameters of the cooling water circuit at its
plants and adjusts water treatment accordingly tominimize water disposal to the sewage systemand optimize water usage. Currently, we do not
conduct water-related engagement with suppliersand customers, as our own efforts alone aresufficient to handle the situation. However, as partof our environmental activities, we have arequirement in our procurement policy to strive to
reduce the environmental burden and willconsider water-related engagement activities withour customers in the future.

W2. Business impacts
W2.1(W2.1) Has your organization experienced any detrimental water-related impacts?
No

W2.2(W2.2) In the reporting year, was your organization subject to any fines, enforcement
orders, and/or other penalties for water-related regulatory violations?
Water-related regulatory violations Fines, enforcement orders, and/or other penalties
Row 1 No

<not applicable>

24

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

W3. Procedures
W3.1(W3.1) Does your organization identify and classify potential water pollutants
associated with its activities that could have a detrimental impact on water
ecosystems or human health?
Identification andclassification ofpotential waterpollutants
Row Yes, we identify and1classify our potential
water pollutants

How potential water pollutants are identified and classified

NSHD identifies and classifies water pollutants whose chemical
manufacturing activities may adversely affect water ecosystems andhuman health in accordance with the following policies and rationale.
[Group Policy/Rationale]
In accordance with the NSHD Group Environmental Policy, NSHD
complies with the relevant laws and regulations of each country andregion (such as water pollution control laws), respects international
norms, and conducts its business in full consideration of theenvironment. NSHD does not violate any regulations in the products it
manufactures, the manufacturing process of those products, or the
consumption or disposal of those products. In addition, only after
measuring pH, phosphorus, COD, nitrates etc., is our water
discharged. Currently, NSHD has determined that there is no
significant risk of hazardous substances leaking to customers or thenatural environment. Currently, NSHD has determined that there is no
significant risk of hazardous substances leaking to customers or thenatural environment.
Additionally, as a mechanism to prevent leakage of hazardous
substances, NSHD's use of fresh water is designed to be recyclingoriented. As for the specific mechanism, all fresh water withdrawn by
NSHD is supplied to cooling towers, and then to the heat exchanger,
which is a component of the rotating machine, as a refrigerant bymeans of a water pump. After heat exchange in the heat exchanger,
the warmed fresh water returns to the cooling tower and is cooled to atemperature equivalent to that of the atmosphere. The fresh watercooled in the cooling tower is again supplied to the heat exchanger by
a water pump and returns to the cooling tower by the same route as
described above. Thus, the fresh water is used in a cyclical manner,
and we believe that there is almost no factor that would deteriorate thewater quality.

25

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

W3.1a(W3.1a) Describe how your organization minimizes the adverse impacts of potential
water pollutants on water ecosystems or human health associated with youractivities.

Water pollutant category
Inorganic pollutants

Description of water pollutant and potential impacts
NSHD identifies the following substances as water pollutants and recognizes theirpotential impacts as follows:-Nitric acid and nitrate compounds: High levels of nitrate and nitrite nitrogen in drinking
water and other sources can cause methemoglobinemia, which interferes with theoxygen-carrying capacity of the blood and may be harmful to human health.
-Fluorine and fluorine compounds: May accumulate in the environment and be
carcinogenic.
-Hexavalent chromium: Highly toxic heavy metal and carcinogenic.
-Boron and boron compounds: Serious eye damage or eye irritation, etc.
-Ammonium compounds: High levels of nitrate and nitrite nitrogen in drinking water cancause methemoglobinemia, which interferes with the oxygen-carrying capacity of theblood and may be harmful to human health.

Value chain stage
Direct operations

Actions and procedures to minimize adverse impacts
Assessment of critical infrastructure and storage condition (leakages, spillages, pipe
erosion etc.) and their resilience

Please explain

26

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

For risk management, NSHD manages wastewater quality to ensure that wastewater
quality standards are not violated and that these substances are not spilled, extracted, or
leaked. Wastewater is stored in a liquid waste tank and taken away as industrial waste bya specialized company, preventing external leaks. Compliance with the regulations
preventing liquid waste discharge, and ensuring it is treated by a third party, is carefully
controlled and verified at each site. Contaminants are also monitored by observing thequality of the wastewater. Moreover, as a measure to prevent contaminant spills, wemonitor the presence of spills visually with equipment and sensors, and regularly monitor
the wastewater to ensure that it does not contain contaminants more than the standards
set by local authorities.
We use the fact that contaminants in wastewater are contained within the standard values
as a criterion for evaluating success and are consistently working to prevent leakage
accidents and outflows of chemical substances. As an example, the effluent standard
under the Water Pollution Prevention Act is "within the range of pH 5.0 or higher to 9.0 or
lower," and the control values within NSHD are set at "pH 6.3 or lower and pH 8.1 orhigher". A system has been established in facilities that comply with this standard where
the janitor of the facility records the pH of the integrated septic tank daily, and in theunlikely event that it shows a pH of 6.3 or below or pH 8.1 or above, notifies the
Operations Section of the facility to an emergency situation. From there, the Operations
Section cuts off the drinking water supply and applies a pH adjuster to adjust the water's
pH. This is evaluated on an annual basis at Technological Risk Management Committee.

W3.3(W3.3) Does your organization undertake a water-related risk assessment?
Yes, water-related risks are assessed

W3.3a(W3.3a) Select the options that best describe your procedures for identifying andassessing water-related risks.

Value chain stage
Direct operations
Supply chain

Coverage
Full

Risk assessment procedure
Water risks are assessed as part of an established enterprise risk management
framework

Frequency of assessment
Annually27

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

How far into the future are risks considered?
3 to 6 years

Type of tools and methods usedTools on the market
Databases

Tools and methods used
WRI Aqueduct

Contextual issues considered
Water availability at a basin/catchment level
Water quality at a basin/catchment level
Impact on human health
Water regulatory frameworks Status of ecosystems and habitats
Access to fully-functioning, safely managed WASH services for all employees

Stakeholders considered
Customers
Employees
Investors
Local communities
Suppliers
Water utilities at a local level
Other water users at the basin/catchment level

Comment
Value Chain Stage - "Supply Chain";This covers air separation units that produce our core products nitrogen, oxygen, andargon.

W3.3b(W3.3b) Describe your organization’s process for identifying, assessing, andresponding to water-related risks within your direct operations and other stages ofyour value chain
Rationale forapproach to risk
assessment

Explanation ofcontextual issues
considered

Explanation of
stakeholders
considered

Row NSHD uses the WRI [Amount of Water[Customer]
1
Aqueduct tool to
Resources Available for Many of NSHD's
assess water stress Withdrawal in Rivercustomers arefor all production
Basins/Catchment Areas] manufacturers, andsites. In the WRINSHD uses fresh water like us, their use of
Aqueduct it isin the cooling water
water is essential topossible to search
circulation system,
business. What

Decision-making
process for risk
response[Process Details]
The selection andevaluation of significant
company-wide risks at
NSHD and thedeliberation of
measures to address28

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

for water risk, water mainly in the cooling
NSHD can do forthem are centralized instress, drought risk, towers in thecustomers is to
the Global Risk
etc., making it easy manufacturing process at provide them withManagement
to conduct water
the plant. Althoughproducts produced
Committee, whichrisk assessments for freshwater use is limited, with efficient use ofmeets once a year.
each of ourit is essential to thewater, in the
Climate change risks
production sites
operation of thequantities they need, are also among thearound the world.
business, so the WRI
when they needrisks considered in the
Recognizing the
Aqueduct was used tothem. Therefore, it is meeting. Risks thatimportance ofsurvey sites representing important that we do may have an impact,
understanding local 99% of total water
the following on awhether short-,
characteristics, each withdrawals. As a result, daily basis to ensure medium-, or long-term,
NSHD production
16 sites, representing 4% efficient water use.
are discussed, and thesite conducts itsof total water
discussion results are-The number ofown water risk
withdrawals, werereported to the Board
rotary machines inassessment. In the identified as being
operation should be of Directors.
WRI Aqueduct, the exposed to water risk.
optimized to meet
The identified risks arerisk level itself isBased on the results ofthe ever-changing
then reflected individed into fivethe survey and based on demand for products. business strategies
levels, with "0"an overall assessment of -Thoroughly circulate through the Global
being low risk andthe scale of water
water in the cooling Strategy Review"5" being extremely withdrawals, our own
Meeting. The Global
tower system.
high. We surveyed Physical Risks Quantity
Strategy Review-Enhance
the stress at 119
assessment, and theMeeting is held once amaintenancesites and conducted results of interviews withyear to review theactivities to reduce
interviews at
the sites, we did not findstrategies of eachbreakdowns of
production sites with any particular areas that
operating company inrotating machines.
high water risk towere assessed as being
preparation for the
To this end, we
ascertain theat risk of water stress.
following year's budget.
hold meetings withamount of water[Water Quality in River
During this meeting,customers about
withdrawn from the Basins/Catchments]
each operating
once a month tosite. We could notcompany reports their
While high quality freshobtain information on
identify any sites in water is not required,sustainability strategies
the expected
Japan with "high" or there is a risk that abased on theirdemand for NSHD's"extremely high"identified risks, among
significant drop in
products. The
water risk, but wewhich includes climate
freshwater quality could production andsurveyed overseas lead to adverse effects
change issues. The
supply system aresites and found 19
results of the above
on production efficiency then examinedsites with overall
meeting are thenand damage tobased on the"high" or "extremely equipment. In particular,reported to the Board
expected demandhigh" water risk.
of Directors in the form
NSHD recognizes that a volume, and theof a budget proposal.
temporary shutdown of
number of equipment
production facilities due to be operated
As for risk response,to equipment damage
the Technical Risk
determined.
could result in a loss of
Liaison Committee is in[Employees]

29

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

revenue for NSHD. To
avoid risk, NSHD
conducts water quality
checks on the quality offresh water in the coolant
circulation systems
once/month.

Proper management charge. Based on theof water intake andresults of the Global
wastewater
Strategy Review
discharge is
Meeting, NSHD and
extremely important each operating
for the stablecompany discuss risks,
operation of NSHD's including climate
plants. Therefore, as change issues,[Conflicts Amongpart of ourindividually to resolve
Stakeholders related toenvironmental
the risks. The
Water Resources in
education,
weTechnical Risk Liaison
River Basins/Catchments
provide training on
Meeting is held at least
Areas]
twice a year for eachIn the event of a natural the need for water
conservation,
operating company,
disaster such as drought
reduction ofand riskor typhoon, the water
environmentallycountermeasures,
supply needed for NSHD
hazardous
including climate
to continue operations
substances in water change issues, aremay be reduced or
bodies, anddeployed throughout
stopped. For thesereasons, NSHD seeks to regulations related to the company.
water quality
reduce risk bycommunicating with local standards, including
residents and asking for laws and regulations.
The target audience
their direct input.
for this education isSpecifically, NSHD
our employees. The
participates infoundation of properorganizations such as
water management
drought and typhoonis the daily
response councils
management byorganized by local
employees, whichgovernments in theaccumulates day bywatershed area if suchday. We cannot denyorganizations exist.
the possibility that
[Water-related
problems such as
Regulatory Framework]
wastewater
We believe that changes
contamination may
in the regulation of water
occur if an employee
quality in wastewater ismakes a wrong
one of the major water
decision. Therefore,risks. In response to
we believe it iswater pollution, we follow
essential to assess
the regulations of eachwater risks that could
region and measurestem from bynecessary control items
employees.
such as COD and total
Assessment of water30

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

nitrogen to comply withrisks is especiallythe laws and regulations. important at
If laws and regulations
production sites.
become even stricter in
In accordance withthe future, we believe it
the High-Pressure
will be necessary to
Gas Safety Act, each
respond in terms of both plant conducts
water facilities andperiodic "safety
management, and we will training" sessions.
continue to optimally
We use thesebalance water quality
training sessions toimprovement and cost.
educate employees
Overseas, regulations
on the importance ofregarding water pollution efficient water use.
issues are already being The main points oftightened, especially inthe educational
developing countries,
activities are theand it is important tonecessity of water
address these risks
conservation,
appropriately.
reduction of[Ecosystem and Animal
and Plant Habitat
Conditions]discharge ofenvironmentallyhazardous
Air is the raw material for substances into
water bodies, laws,
NSHD's flagship air
and regulations
separation units, which
regarding waterproduce nitrogen,oxygen, and argon, and quality standards.
the units themselves[Investors]
handle few substances
Because NSHD
that have a significant
provides solutions to
impact on biodiversity.
water issues,
However, we believe that inadequate
activities to reduce any
disclosure of waterpossible impact on
related initiatives
biodiversity are very
could lead toimportant, and we will
reputational risk.
promote businessThis investor-driven
actions that contribute to reputational riskbiodiversity conservation, alone is sufficientin accordance with theenough to trigger
Nippon Sanso Holdings additional customerGroup Environmental
related reputation
Policy, and strive torisks, and we
avoid negative impacts. therefore believe it is31

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

We believe that any
essential to assess
damage to biodiversity
investor-induced
poses a reputational risk water risk. Our
to NSHD and to theinvestor's report
operation of our sites. As provides information
an overall philosophy, we on the expansion ofbelieve that negative
the water-related
impacts on biodiversity
area of eachcan be avoided to asegment's business.
certain degree through[Local community]
environmentally
Certain plants issue
conscious operations
periodic reports.
such as through the
These reports
protection of forests and always include athe habitats of plants and description of issues
animals or working withrelated to matters of
local environmental
interest to thesocieties on a projectcommunity. We also
basis. For that reason,
have the opportunity
we will continue toto obtain feedback
promote biodiversity
on the activities ofactivities.
our business sites[All Employees have
Access to Fully Managed
Water, Sanitation, andHygiene (WASH)
Services]
The health and safety of
our employees is very
important to us. In theevent issues related tohealth and safety were toarise, we cannot rule out
the possibility of a direct
impact on our
employee’s trust, which
could in turn lead to ahigher employee
turnover rate. With this inmind, we have enhanced
WASH services at all of
our sites around theworld to improve theworkplace environment,
which is the cornerstone

through discussions
with local residents
and communicate
about any concerns
they may have aboutwater. Deteriorationin the quality of
wastewater canundeniably lead torisks such as
lawsuits by local
communities,
especially those
involved in thefishing industry. Ifsuch litigation wereto occur, theresulting reputationalrisk to NSHD would
be substantially
increased. For thisreason, it isimportant to assess

32

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

of occupational healthand safety. NSHD’splants are located wherewater is convenient, andwe have had no
problems with water,
sanitation, or hygiene(WASH).

the water risk to the
local community. As
part of ourenvironmental
preservation
activities, we arealso actively working
to protect the water
bodies around ourplants by cleaning up
the rivers andbeaches around ourplants together with
our neighbours. We
believe these
activities contributeto establishing andmaintaining a
relationship of trustwith community
members.

W4. Risks and opportunities
W4.1(W4.1) Have you identified any inherent water-related risks with the potential to have asubstantive financial or strategic impact on your business?
No

W4.1a
(W4.1a) How does your organization define substantive financial or strategic impact
on your business?

33

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

NSHD defines the impact of water risk in five levels. Level 1 is when the amount of damage
from water risk is less than 100 million and does not affect business operations; Level 2 iswhen the amount of damage is between ¥100 million and ¥2 billion and has a minor impact
on business operations; Level 3 is when the amount of damage from water security is
between ¥2 billion and ¥5 billion and affects business operations; and Level 4 is when theamount of loss is between ¥5 billion and ¥10 billion and in addition has a significant impact on
business operations. Level 4 is a loss of 5 to 10 billion yen and a significant impact on
business operations. Level 5, the most serious level, is defined as a loss of 10 billion yen or
more and a significant impact on business operations.

W4.2b

.

(W4.2b) Why does your organization not consider itself exposed to water risks in its
direct operations with the potential to have a substantive financial or strategic
impact?
Primary reason

Please explain

Row Risks exist, but
For our water risk assessment, we use the WRI Aqueduct to evaluate
1
no substantive
flooding, water risk, and water stress to analyse water-related risks inimpact anticipated NSHD's direct operations. Each risk is evaluated in terms of probability ofoccurrence, financial impact, and impact on business strategy, and if thefinancial impact is 10 billion yen or more, the risk is considered to have asignificant impact on the company.
Specifically, in FYE 2022 used WRI Aqueduct's [Aqueduct Water Risk
Atlas] to screen water stress at sites representing 99% of NSHD's total
water withdrawals. The sites we identified as being at risk were Vernon in
the U.S. and Ravenna in Italy. Ravenna tends to be drier from June
through August.
WRI's Aqueduct physical risk ratings of 4.3 for Vernon and 4.0 for Ravenna
indicate that water risk is in the low end of the "high" range. These facilities
use fresh water primarily as coolant in circulation systems, primarily
cooling towers, and while their water withdrawals are relatively highcompared to our group, they do not account for a large portion — only
1.5% of the total water withdrawals for the NSHD group as a whole.
Since we have never faced water risks in Vernon and Ravenna before, wehave decided not to consider them as water risks for the NSHD Group
based on our overall assessment of the results of interviews with the local
communities and other factors.

W4.2c(W4.2c) Why does your organization not consider itself exposed to water risks in its
value chain (beyond direct operations) with the potential to have a substantive
financial or strategic impact?
Primary reason

Please explain

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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Row Risks exist, but
Our water risk assessment uses WRI Aqueduct to evaluate flooding, water1
no substantive
risk, and water stress to analyse water-related risks in NSHD's value chain.
impact anticipated Each risk is evaluated in terms of probability of occurrence, financial
impact, and impact on business strategy. If the financial impact is 10 billion
yen or more, the risk is considered to have a significant impact on NSHD'soperations. There are also criteria that divide the "degree of impact" into
five levels, and risks that are Level 5 under these criteria are defined ashaving a significant impact. Based on a survey of NSHD's value chain
using the above Levels, we have determined that there are no significant
water risks at this time. In addition, the raw material for industrial gas is air,and NSHD does not face any water risk in the procurement of raw
materials. We also do not use large amounts of water in many of our
products, such as the water used to make 180 PET bottles, or the waterused in fish farming. Therefore, the water risk in our value chain, while
present, is considered to be small.

W4.3(W4.3) Have you identified any water-related opportunities with the potential to have asubstantive financial or strategic impact on your business?
Yes, we have identified opportunities, and some/all are being realized

W4.3a(W4.3a) Provide details of opportunities currently being realized that could have asubstantive financial or strategic impact on your business.

Type of opportunity
Products and services

Primary water-related opportunity
Sales of new products/services

Company-specific description & strategy to realize opportunity[Description of Strategic Opportunity]
Global demand for seafood is increasing. On the other hand, due to the effects ofclimate change in recent years, fish catches have been decreasing worldwide, making
food supply a major issue. NGE, our European gas business, supplies high-purity
oxygen for salmon farming. In Norway, we have installed two air separation units tomeet that demand for oxygen. As global demand for seafood increases, Norwegian
farmed salmon production is expected to expand at an average growth rate of 6%.
Meanwhile, Taiyo Nippon Sanso has a lineup of high-efficiency oxygen dissolution
equipment that can solve problems in aquaculture ponds. They enable high-density

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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

aquaculture of eel, trout, flatfish, shrimp, and other farmed fish, as well as the preventionof farmed fish diseases, thereby increasing fish catches at low cost. Taiyo Nippon
Sanso's high-efficiency oxygen dissolvers for aquaculture can help solve the global
problem of declining fish catches.
Control of the amount of dissolved oxygen (DO value) in rearing water is important for
the healthy growth of the fish. The upper limit of the amount of oxygen that can dissolve
into the water varies greatly depending on the water temperature and salinity as well as
the strength of the aeration. The highly efficient oxygen dissolution system foraquaculture efficiently dissolves oxygen in water to achieve the ideal amount ofdissolved oxygen (DO value) for fish rearing, thereby making it possible to improve
productivity. By introducing this equipment and enriching the rearing water with oxygen,high-density aquaculture, accelerated growth, and reduction of wastewater volume will
be realized.
Taiyo Nippon Sanso has a proven track record in the cultivation of a wide range of fish
species, including eels, trout, and flatfish, while NGE is engaged in salmon farming.
Based on this know-how, we will propose the optimal oxygen supply method after
actually visiting the customer's site.
[Strategy to Realize Opportunity]
The NSHD Group's strategy is to sell high-efficiency oxygen dissolution equipment foraquaculture and to introduce air separation equipment, portable liquefied oxygen
containers (LGCs), and liquefied oxygen storage tanks (CEs) to customers, and toreceive exclusive orders for oxygen gas and supply systems.
[Countermeasures]
After FYE2022, Taiyo Nippon Sanso will continue to accumulate the necessary knowhow as a manufacturer of highly efficient oxygen dissolution systems for aquaculture,
while contributing to the high operational efficiency of the highly efficient oxygen
dissolution systems for aquaculture and is considering expanding its businessworldwide. As a result of FYE2017-2020, Taiyo Nippon Sanso has increased 1.3 times
from 29 companies to 38 companies. Considering the recent food problems, we believethat sales of oxygen from aquaculture will increase in the future, and we plan to acquire
up to 57 customers by FYE2026.

Estimated timeframe for realization
1 to 3 years

Magnitude of potential financial impact
Medium-high

Are you able to provide a potential financial impact figure?
Yes, a single figure estimate

Potential financial impact figure (currency)
450,000,000

36Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Potential financial impact figure – minimum (currency)
Potential financial impact figure – maximum (currency)

Explanation of financial impact
TNSC has increased 1.3 times from 29 companies to 38 companies as of FYE2017-2020.
Considering recent food issues, we believe that oxygen sales from aquaculture will
increase in the future, and we plan to acquire up to 57 customers by FYE2026.
We believe that by continuing to grow the demand for oxygen gas for aquaculture, sales ofthe division that manages these products could reach approximately 450 million yen in asingle year by FYE2026

W6. Governance.

W6.1(W6.1) Does your organization have a water policy?
Yes, we have a documented water policy that is publicly available

W6.1a(W6.1a) Select the options that best describe the scope and content of your water
policy.
ScopeContent

Please explain

Row Companywide Description of business In addition to providing products and services with1
dependency on water
minimal environmental impact, NSHD is committed to
Description of business the conservation of water resources in accordance
impact on waterwith the NSHD Group Environmental Policy. We are
Commitment to alignmaking company-wide efforts to prevent the pollution
with internationalof water resources by monitoring water withdrawals
frameworks, standards, and improving the efficiency of water use. Because
and widely-recognized NSHD does not use seawater at all, and the only
water initiatives
fresh water we use is as coolant in our circulation
Commitment tosystem, primarily in cooling towers, the possibility of
prevent, minimize, and polluting the fresh water we use is negligible.
control pollution
However, NSHD considers the conservation of waterCommitment to reduce resources to be one of our most importantor phaseout hazardous environmental preservation activities and we makesubstances
efforts to confirm that there are no discharges ofCommitment to reduce hazardous substances. We also monitor COD levels
water withdrawal
every year to ensure that there is no impact on the37

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

and/or consumption
environment in addition to compliance withvolumes in direct
regulations.
operations
Furthermore, NSHD has signed the United Nations
Commitment to reduce Global Compact proposed by the United Nations andwater withdrawal
is registered as a signatory member as of 2022. The
and/or consumption
United Nations Global Compact is a voluntaryvolumes in supply
initiative for companies and organizations to achieve
chain Commitment tosustainable growth through responsible and creative
safely managed Water, leadership. Signatories are required to adhere to andSanitation and Hygiene practice 10 principles in the four areas of human(WASH) in therights, labour, environment, and anti-corruption, andworkplaceto develop their business activities toward theCommitments beyond realization of a healthy global society. The principles
regulatory compliance of "support a precautionary approach toReference to company environmental issues", "assume greater responsibility
water related targets
for the environment", and "promote the development
Recognition ofand diffusion of environmentally friendly technologies"
environmental linkages, are specified in the principles. By signing the UN
for example, due to
Global Compact, the NSHD Group is clearlyclimate change
expressing our corporate stance and further
promoting efforts to further contribute to a sustainable
society.

W6.2(W6.2) Is there board level oversight of water-related issues within your organization?
Yes

W6.2a
(W6.2a) Identify the position(s) (do not include any names) of the individual(s) on theboard with responsibility for water-related issues.
Position ofindividual orcommittee

Responsibilities for water-related issues

Chief Executive NSHD has established the NSHD Group Environmental Policy by resolution of the
Officer (CEO)Board of Directors, which states, "Under the direction of top management, we will
strive to harmonize our business activities with the environment and reduce ourenvironmental impact, thereby contributing to the development of a sustainable
society through technology and a recycling-oriented society." As stated in thispolicy, the President (CEO) of NSHD is responsible for addressing climate changerelated issues, including water withdrawal and water resources, as delegated by
the Board of Directors. The CEO chairs the Global Strategy Review Committee
and the Global Risk Management Committee in accordance with the rules andregulations established by the Board of Directors, and is responsible for38

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

determining the Group's overall business strategy and ensuring the effectivenessof the NSHD Group's risk management in the former. Through these meetings, thePresident (CEO) considers NSHD's specific responses to climate change-related
issues.
As an example of the CEO's resolution, commissioned by the Board of Directors in
FYE 2022, the CEO announced the Sustainable Water Program (SWP) under thepromotion of sustainability management in the mid-term management plan
released on May 11, 2022. Effective use of water resources is a must, and throughefficient use of water, we aim to conserve water resources in our corporate
activities, identify water risks, and implement measures for high-risk business sites.
Specifically, we conduct a water stress survey using Aqueduct, a water risk
assessment tool developed by the World Resources Institute (WRI), to identify
production plants (ASU and HyCO plants) in high-risk areas. In addition,
production plants in high-risk areas will work to reduce water withdrawal andconsumption by increasing cyclical water usage among other measures. The SWP
is promoted by the CEO, who is responsible for responses to issues stemmingfrom climate change.

W6.2b(W6.2b) Provide further details on the board’s oversight of water-related issues.
Frequency thatwater-related
issues are ascheduled
agenda item
Row Scheduled 1
some meetings

Governance
Please explain
mechanisms into
which water-related
issues are integrated
Monitoring
implementation andperformance
Monitoring progress
towards corporate
targets
Overseeing andguiding scenario
analysis

The Global Strategy Review Committee is held
once a year to review the strategies of each
operating company in the formulation of the budget
for the next fiscal year. At the meeting, theoperating companies report on their strategies forsustainability, including their impact on otherenvironmental impacts, including water resources
and climate change issues. The results of themeeting are reported to the Board of Directors in
the form of a budget proposal.

Overseeing the setting
The Global Risk Management Committee is a bodyof corporate targets
that deliberates on the selection of the NSHD
Reviewing and guiding
Group's key risks and measures to address themannual budgets
and meets once a year. Other risks that may affect
Reviewing and guiding
environmental impact, including water resources
risk management
and climate change issues, are also included in thepolicies
risks to be considered by the meeting, and the
Reviewing and guiding
results of the meeting are reported to the Board ofstrategy
Directors.
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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

The Executive Committee deliberates on theformulation and monitoring of mid-term
management plans and investment projects. While
formulating the medium-term management plan,
the NSHD Group's efforts to address climatechange issues during the period of the mediumterm management plan and the setting of targets is
discussed. In addition, the impact of each
investment on other environmental burdens,
including climate change issues, is discussed
during the deliberation of individual investment
projects.
Medium-term management plans and investment
projects are proposed to the Board of Directors
after deliberation by the Executive Committee.
Once a year, MOS Indices reports to the Board of
Directors the targets for reducing GHG emissions
and other environmental impacts, as well as thetargets for the next fiscal year and the results ofthe previous year with respect to quality, safety,
and security, and the Board of Directors discusses
the contents of these reports.

W6.2d(W6.2d) Does your organization have at least one board member with competence onwater-related issues?
Board member(s)have competence
on water-related
issuesRow Yes1

Criteria used to assess competence of board member(s) on waterrelated issues

The company comprehensively evaluates the applicant's qualifications,such as having served as a manager responsible for environmentrelated management for at least two years. The Group has a Global
Strategy Review Committee to determine the Group's overall businessstrategy and a Global Risk Management Committee to determine theGroup's overall risk management policy. Specifically, in the former
committee, the Chief Sustainability Officer (CSO), who is responsible
for the Group's sustainability activities, reports on the results of theGroup's sustainability activities during the year, including GHG
emissions reductions, and targets for the following year are set. In thelatter Global Risk Management Committee, business risks the Groups
faces are evaluated through the formula of financial impact on strategy
or finances x frequency, after which countermeasures are discusses
based on the results. As the decisions made in these two committees
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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

are reported to the Board of Directors, who then determine the Group's
strategy on climate change issues, weconsider a director who has been in charge of environmental
management, including these committee, for more than two years to bea director with expertise in environmental issues, including waterrelated ones.

W6.3(W6.3) Provide the highest management-level position(s) or committee(s) withresponsibility for water-related issues (do not include the names of individuals).

Name of the position(s) and/or committee(s)Chief Executive Officer (CEO)Water-related responsibilities of this position
Assessing future trends in water demand
Assessing water-related risks and opportunities
Managing water-related risks and opportunities
Conducting water-related scenario analysis
Setting water-related corporate targets Integrating water-related issues into businessstrategyManaging annual budgets relating to water security

Frequency of reporting to the board on water-related issues
Quarterly

Please explain
The CEO is the top level of management for the Nippon Sanso Holdings Group. This isfurther exemplified in the "Nippon Sanso Holdings Group Environmental Policy", where
it is stipulated that the CEO is the person with the highest responsibility forenvironmental issues. The CEO chairs the Global Risk Management Committee, theGlobal Strategy Review Committee, and the Executive Committee.
<Responsibility Details>
The CEO is responsible for all aspects of the Group's management. The Nippon Sanso
Holdings Group Environmental Policy stipulates that by striving to harmonize ourbusiness activities with the environment, the CEO should lead the Group’s contribution
to the development of a sustainable society through technology that adds to resourcerecycling and reduces our environmental impact. Matters related to water risks that areconsidered by the Global Strategy Review Committee are reported to the Board of
Directors, who then review the contents and instruct the CEO on any necessary
measures to be taken. The Sustainable Water Program (SWP) was reviewed during
FYE2022 and announced in May 2022. Effective use of water resources is essential,
and through efficient use of water, we aim to conserve water resources in our corporate
activities, identify water risks, and implement measures for high-risk business sites.

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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Specifically, we conduct a water stress survey using the “WRI Aqueduct”, a water risk
assessment tool developed by the World Resources Institute (WRI), to identify
production plants (ASU and HyCO plants) in high-risk areas. At such sites, measures toreduce water withdrawals and consumption, such as increasing circulated freshwater
coolant volumes, are introduced. The SWP is generally promoted by the CEO, who is
responsible for climate change response issues.
<Monitoring Method>
In the Global Strategy Review Committee, the CSO reports on environmental impacts
and progress, such as reductions in GHG emissions or water usage.

W6.4(W6.4) Do you provide incentives to C-suite employees or board members for the
management of water-related issues?
Provide incentives for management of water-related issues
Row 1

Comment

No, not currently but we plan to introduce them in the next two years

W6.5(W6.5) Do you engage in activities that could either directly or indirectly influence
public policy on water through any of the following?
Yes, direct engagement with policy makers
Yes, trade associations

W6.5a(W6.5a) What processes do you have in place to ensure that all of your direct andindirect activities seeking to influence policy are consistent with your water
policy/water commitments?
The Chief Sustainability Officer (CSO) is responsible for all water-related activities, including
planning and overseeing their implementation. The Technological Risks Liaison Committee
also ensures alignment with strategies and activities that may affect water public policy. If an
inconsistency is identified, it is promptly noted in the minutes of the meeting to verify whether
the source of the inconsistency is strategy-derived, activity-derived, or related to some otherfactor. Countermeasures based on the results of the subsequent verification will then be
developed and discussed with the CSO. These activities are repeated to ensure that there isalways consistency between strategies and activities.

W6.6(W6.6) Did your organization include information about its response to water-relatedrisks in its most recent mainstream financial report?
Yes (you may attach the report - this is optional)

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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

W7. Business strategy
W7.1(W7.1) Are water-related issues integrated into any aspects of your long-term
strategic business plan, and if so how?
Are waterLongPlease explain
related issues term time
integrated?
horizon(years)Long-termbusiness
objectives

Yes, waterrelated issues
are integrated

5-10

The NSHD Group believes that the issue of global water
stress will become increasingly important in the future.
We analysed "physical climate scenarios" utilizing the
global warming scenario (RCP8.5) from the UN's
Intergovernmental Panel on Climate Change (IPCC)
Fifth Assessment Report (released in 2014), with theperiod between 2030-2050 as the long-term. Several
theories suggest that climate change will increase thefrequency of natural disasters, which will increase risk
exposure. Global warming increases the risk of localized
heavy rains and flooding from typhoons and storm
surges due to rising sea levels, and consequently
natural disasters increase the risk of plant closures fordays or weeks. To reduce damages from these risks, wewill promote disaster countermeasures and the use of
insurance as part of our long-term efforts. In addition,
NSHD's medium-term management plan, which started
in FYE2022, launched the Sustainable Water Program(SWP), and water stress surveys using Aqueduct, awater risk assessment tool developed by the World
Resources Institute (WRI), will be used to assess
production in high-risk areas. We will identify andcontinuously monitor production plants (ASU and HyCO
plants) located in high-risk areas using the Aqueduct, awater risk assessment tool developed by the World
Resources Institute (WRI), and work to reduce water
withdrawals and consumption by increasing water
circulation at production plants in high-risk areas.
Effective use of water resources is a must, and we aim
to conserve water resources in our corporate activities
through great resource efficiency.

Strategy forachievingYes, waterrelated issues
are integrated

5-10

The NSHD Group believes that the issue of global water
stress will become increasingly important in the future.

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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

long-term
objectives

We analysed "physical climate scenarios" utilizing the
global warming scenario (RCP8.5) from the UN's
Intergovernmental Panel on Climate Change (IPCC)
Fifth Assessment Report (released in 2014), with theperiod between 2030-2050 as the long-term.
Several theories suggest that climate change will
increase the frequency of natural disasters, which will
increase risk exposure.
Global warming increases the risk of localized heavy
rains and flooding from typhoons and storm surges due
to rising sea levels, and consequently natural disasters
increase the risk of plant closures for days or weeks. To
reduce damages from these risks, we will promotedisaster countermeasures and the use of insurance aspart of our long-term efforts. Additionally, NSHD's
medium-term management plan, which started in
FYE2022, launched the Sustainable Water Program(SWP), and water stress surveys using Aqueduct, awater risk assessment tool developed by the World
Resources Institute (WRI), will be used to assess
production in high-risk areas. We will identify andcontinuously monitor production plants (ASU and HyCO
plants) located in high-risk areas using the Aqueduct, awater risk assessment tool developed by the World
Resources Institute (WRI), and work to reduce water
withdrawals and consumption by increasing water
circulation at production plants in high-risk areas.
Effective use of water resources is a must, and we aim
to conserve water resources in our corporate activities
through great resource efficiency.

Financialplanning

Yes, waterrelated issues
are integrated

5-10

The NSHD Group believes that the issue of global water
stress will become increasingly important in the future.
We analysed "physical climate scenarios" utilizing the
global warming scenario (RCP8.5) from the UN's
Intergovernmental Panel on Climate Change (IPCC)
Fifth Assessment Report (released in 2014), with theperiod between 2030-2050 as the long-term.
Several theories suggest that climate change will
increase the frequency of natural disasters, which will
increase risk exposure. Global warming increases therisk of localized heavy rains and flooding from typhoons
and storm surges due to rising sea levels, andconsequently natural disasters increase the risk of plantclosures for days or weeks. To reduce damages fromthese risks, we will promote disaster countermeasures
44

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

and the use of insurance as part of our long-term efforts.
Additionally, NSHD's medium-term management plan,
which started in FYE2022, launched the Sustainable
Water Program (SWP), and water stress surveys using
Aqueduct, a water risk assessment tool developed by
the World Resources Institute (WRI), will be used toassess production in high-risk areas. We will identify andcontinuously monitor production plants (ASU and HyCO
plants) located in high-risk areas using the Aqueduct, awater risk assessment tool developed by the World
Resources Institute (WRI), and work to reduce water
withdrawal and consumption by increasing water
circulation at production plants in high-risk areas.
Effective use of water resources is a must, and we aim
to conserve water resources in our corporate activities
through great resource efficiency.

W7.2(W7.2) What is the trend in your organization’s water-related capital expenditure(CAPEX) and operating expenditure (OPEX) for the reporting year, and the anticipatedtrend for the next reporting year?
Row1
Water-related CAPEX (+/- % change)-50

Anticipated forward trend for CAPEX (+/- % change)
2,171

Water-related OPEX (+/- % change)
35

Anticipated forward trend for OPEX (+/- % change)
11

Please explain
In FYE2021, Taiyo Nippon Sanso renewed a large air separation unit that uses coolingwater, added three air separation units for gas and liquid production, and idled the old
facility,
The large capital investments that began in FYE2019 were mostly completed by
FYE2021, and there were no capital investments of note for FYE2023.
However, in FYE2024, we are planning to invest in two new air separation units toaccommodate the relocation and aging of our manufacturing facilities, and construction
has begun on site since FYE2023. As for the capital expenditure forecast for the nextreporting year, we plan to replace the air separation equipment at JFE Oxygen Centre
Fukuyama.
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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

As for operation expenses, in the medium-term management plan, a subcommittee for"production plants" was established, and the Remote Operation Centre (ROC) wasestablished in April 2023 to realize "automatic operation of production plants" by
FYE2031, mainly through the use and promotion of DX. The ROC was established in
April 2023 and started remote operation of production plants.
Although the cost of electricity for operations has been increasing due to soaring fuelcosts caused by the recent social situation, we will continue to promote theaforementioned initiatives with the goal of improving productivity.
We believe that higher productivity will lead to more efficient operations, which in turnwill lead to lower operating costs.

W7.3(W7.3) Does your organization use scenario analysis to inform its business strategy?
Use ofscenario
analysisRow Yes1

Comment

With the implementation of the Paris Agreement, there is an urgent need toreduce global emissions of greenhouse gases to mitigate climate change.
Industrial gases such as oxygen, nitrogen, and argon consume large amounts ofelectricity during production, which means that they emit corresponding levels of
GHGs.
Therefore, we need to take proactive steps to reduce GHG emissions andestablish a mechanism to continue our business.NSHD has formulated a
Medium-term Management Plan starting in FYE2023 and will work to reduce
GHG emissions by 18% in FYE2026 and 32% in FYE2031 compared to
FYE2019 levels, with the goal of achieving carbon neutrality in FYE2051.

W7.3a(W7.3a) Provide details of the scenario analysis, what water-related outcomes wereidentified, and how they have influenced your organization’s business strategy.
Type of Parameters,
Description of possible Description of possible
scenario assumptions, analytical water-related outcomes water-related outcomesanalysis choices
used
Row Water1
relatedClimaterelated

The industrial gas
production processes(direct use), NSHDGroup's core business,water is used as coolingwater in cooling water
circulation systems,

Water availability is an
In order to reduce theimportant consideration
damage caused by the risk
in determining a location of severe and frequent
for a plant. Most of our
natural disasters, NSHD
plant are located in areas launched the Sustainablewith easy access to
Water Program (SWP) in ourwater.
medium-term management46

Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

primarily in cooling
towers. As a result, water
availability is an importantconsideration in plant
siting decisions, andplants are located inareas with easy access towater.

The RCP 8.5 scenario
plan that started insuggests that climate
FYE2022. The SWP willchange will increase the identify and continuously
frequency of naturalmonitor production plants in
disasters, which will
high-risk areas throughincrease risk exposure.
water stress surveys using
The analysis suggests
Aqueduct, a water riskthat the risk of localized assessment tool developedby the World Resources
Some scenarios suggest heavy rains due to a
global rise in temperature Institute (WRI), and atthat climate change willproduction plants in high-riskincrease the frequency of and flooding due totyphoons and storm
areas, we will work to reduce
natural disasters, which
surges due to sea level
water intake andwill increase risk
rise
will
increase,andasconsumption by increasing
exposure.
Global warming increases a result, natural disasters water circulation andreplacing with high-efficiency
the risk of localized heavy will increase the risk ofplant closures forplants. As a concrete plan,rains and flooding from
NSHD's coastal
we will complete thetyphoons and storm
installations
for
days
to
identification of production
surges due to rising sea
plants in high-risk areas bylevels, and consequently weeks. Among them,NipponSanso
Ingasco,2025 and begin
natural disasters increase
implementing specificthe risk of factory closures Clark in the Philippines
and Nippon Sanso
measures.
for days or weeks.
Vietnam Joint Stock
In addition, as a long-term
In addition, as
Company Hung Yen are initiative, we will promote
temperatures rise due toassessed to be at higher disaster countermeasures
global warming, therisk of flooding than atand the use of insurance bytemperature of coolingpresent. In addition,
2050. Effective use of water
water supplied to coolingwater use may increase resources is a must, andtowers will also rise. In
due to rising global
through efficient use ofthis case, the temperature
warming temperatures.
water, we aim to conserveof the industrial gas
Werecognize
that
these
water resources in our
coming out of the coolingare matters that increase corporate activities.
tower will also increase,water-related risks.
resulting in a smaller
density of the industrial
gas (gases) andworsening the intensity.
To prevent this, it isnecessary to increase theflow rate of fresh water forcooling, which will
increase water
consumption.

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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

We recognize that theseare matters that increasewater-related risks.

W7.4(W7.4) Does your company use an internal price on water?
Row1
Does your company use an internal price on water?
No, but we are currently exploring water valuation practices

Please explain
Plant operating areas are scattered around the world and the sources and uses of water
are so diverse that implementing uniform pricing is very difficult. For example, the valueof 1 t of water in Japan, was determined not to be equal to the value of 1 t of water inIndonesia. First and foremost, a method for monitoring how large of a risk exists basedon the source and water usage needs to be established.

W7.5(W7.5) Do you classify any of your current products and/or services as low water
impact?
Products and/or Definition used to classify
services
low water impact
classified as low
water impact
Row Yes1

Products and services thathave no negative impact onwater quality or use lesswater than usual are defined
as a low impact on water.

Please explain

NSHD sells air separation equipment, which
improves the efficiency of gas-liquid contact.
By installing energy-efficient air separationequipment, water usage for cooling is
reduced and at the same time water intake
is also reduced.

W8. Targets
W8.1(W8.1) Do you have any water-related targets?
Yes

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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

W8.1a(W8.1a) Indicate whether you have targets relating to water pollution, water
withdrawals, WASH, or other water-related categories.
Target set in this category Please explain
this category
Water pollution

Yes

Water
withdrawals

Yes

Water,
No, but weSanitation, andplan to within
Hygiene (WASH) the next two
service
years

Other

Management of water resources is a key issue in the NSHDGroup's environmental policy. Our current environment-related
activities include a sustainable water program, and we areworking to conserve water resources. However, we have not set
specific targets for WASH services in Japan because of theinherent responsibility for clean and accessible WASH services.
However, we believe that some of our global factories may not beproviding 100% WASH service, so we will investigate the WASH
service status of our overseas factories and consider setting atarget for them.

Please selectW8.1b(W8.1b) Provide details of your water-related targets and the progress made.

Target reference number
Target 1

Category of target
Water pollution

Target coverage
Company-wide (direct operations only)

Quantitative metric
Reduction in water discharges per revenue

Year target was set
2022

Base Year
2019

Base year figure
1049Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Target year
2026

Target year figure
10Reporting year figure30% of target achieved relative to base year

Target status in reporting year
Underway

Please explain
The global shortage of available fresh water is increasing, and our business is expected
to contribute to alleviating water shortages. The targets are monitored once a year, andif the water consumption rate is below the water consumption rate target set by each
operating company by FYE2026, the target is considered to have been achieved. The
relevant target was set in FYE2022 and began in FYE2023.Under the Sustainable
Water Program, we have set a target of 10% reduction in water use intensity at our
European operating companies. The reduction in water use will also reduce emissionsof water pollutants.
In addition, NSHD identifies and classifies water pollutants whose chemical
manufacturing activities could adversely affect water ecosystems and human health inaccordance with the following policies and rationale. NSHD complies with all applicablelaws and regulations of each country and region, respects international norms, andconducts its business with due consideration for theenvironment in accordance with the Nippon Sanso Holdings Group Environmental
Policy. All fresh water withdrawn by NSHD is supplied to cooling towers and then to heatexchangers, a component of rotating machines, as a refrigerant. After heat exchange inthe heat exchanger, the warmed fresh water is returned to the cooling tower and cooled
to a temperature equivalent to that of the atmosphere. The fresh water cooled in thecooling tower is again supplied to the heat exchanger by a water pump and returns tothe cooling tower by the same route as described above. Therefore, NSHD's freshwater
applications are circulatory, and there are few factors that would degrade water quality.
NSHD does not violate any regulations in the products it manufactures, themanufacturing process of those products, or the consumption and disposal stages of
those products. In addition, only after measuring pH, phosphorus, COD, nitrates etc., isour water discharged. Currently, NSHD has determined that there is no significant risk ofhazardous substances leaking to customers or the natural environment.
Water-related targets are discussed at the Global Strategy Review Committee, followed
by deliberation by the Board of Directors before a decision is made. In terms of MOS
Indices, NSHD has set a KPI for the number of environmental accidents based on the
Water Pollution Prevention Act and the Air Pollution Control Law. The relevant target
was set in FYE2022 and began in FYE2023.
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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Target reference number
Target 2

Category of target
Water withdrawals

Target coverage
Company-wide (direct operations only)

Quantitative metric
Reduction in withdrawals per revenue

Year target was set
2022

Base year
2019

Base year figure
10

Target year
2026

Target year figure
10Reporting year figure30% of target achieved relative to base year

Target status in reporting year
Underway

Please explain
A global shortage of available fresh water is increasing, but our business is expected tocontribute to alleviating water shortages. The targets are monitored once a year, and if
the water consumption rate is below the water consumption rate target set by each
operating company by FYE2026, the target is considered to have been achieved. The
relevant target was set in FYE2022 and began in FYE2023.
Under the Sustainable Water Program, our European operating companies have set atarget of 10% reduction in water consumption rate.

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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

W9. Verification
W9.1(W9.1) Do you verify any other water information reported in your CDP disclosure (notalready covered by W5.1a)?
Yes

W9.1a
(W9.1a) Which data points within your CDP disclosure have been verified, and which
standards were used?
Disclosure
moduleData verified

Verification
standard

W1 Current
state

Total freshwater
ISAE 3000
withdrawals and total
wastewater discharges

Please explain
NSHD’s performance data for FYE2020 has
been verified by a third party, and we are
currently in the process of verifying the data
for FYE2023.

W10. Plastics
W10.1(W10.1) Have you mapped where in your value chain plastics are used and/or
produced?
Plastics mapping
Row 1

Please explain

Not mapped – and we do not plan to within the next two years

W10.2(W10.2) Across your value chain, have you assessed the potential environmental andhuman health impacts of your use and/or production of plastics?
Risk exposure
Row 1

Please explain

Not assessed – but we plan to within the next two years

W10.3(W10.3) Across your value chain, are you exposed to plastics-related risks with thepotential to have a substantive financial or strategic impact on your business? If so,
provide details.
Risk exposure

Please explain

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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

Row 1

Not assessed – but we plan to within the next two years

W10.4(W10.4) Do you have plastics-related targets, and if so what type?
Target in place
Row 1

Please explain

No – but we plan to within the next two years

W10.5(W10.5) Indicate whether your organization engages in the following activities.
Activity

Activity
applies

Production of plastic polymers

No

Production of durable plastic components

No

Production / commercialization of durable plastic goods (including mixedmaterials)

No

Production / commercialization of plastic packaging

No

Production of goods packaged in plastics

No

Provision / commercialization of services or goods that use plastic
packaging (e.g., retail and food services)

Yes

Comment

W10.8(W10.8) Provide the total weight of plastic packaging sold and/or used, and indicate
the raw material content.

Plastic
packagingusedTotal weight of plastic
packaging sold / usedduring the reporting
year (Metric tonnes)

Raw material
content
percentages
available to report% virginfossilbased
content

1.03% virgin fossil-based 100
content

Please explain

Use of plastic materials
as packaging material for
pharmaceutical products

W10.8a(W10.8a) Indicate the circularity potential of the plastic packaging you sold and/or
used.
Percentages available to report for Please explain
circularity potential
Plastic
packaging used

None

Used plastics are effectively utilized as raw
materials for thermal recycling.
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Nippon Sanso Holdings Corporation CDP Water Security 2023 Questionnaire2023.07.25

W11. Sign off
W-FI(W-FI) Use this field to provide any additional information or context that you feel isrelevant to your organization's response. Please note that this field is optional and is
not scored.

W11.1(W11.1) Provide details for the person that has signed off (approved) your CDP water
response.
Row 1

Job title

Corresponding job category

President

Chief Executive Officer (CEO)54