Sustainability Report2022

Management Philosophy

1.	Bring about progress and enriched quality of life to society by providing
superior products.
1.	With independence as our basis, utilize creation and efficiency together toendlessly pursue growth and improvement.
1.	Increase well-being of the ones while progressing with us, and provide society
with an even larger place to do rewarding work.
Editorial Policy

Table of Contents
Outline of Nippon Yakin Kogyo

01

01 Management Philosophy, Table of Contents, Editorial Policy /02 Global Network, Corporate Profile / 03 Introduction of the
production bases / 05 History of Nippon Yakin Kogyo

Nippon Yakin Kogyo’s Value Creation Process

07

07 Nippon Yakin Kogyo’s Value Creation Process /09 Message from the President /11 Progress with the Medium-Term Management Plan 2021

Sustainability

13

13 Nippon Yakin Kogyo’s Sustainability / 15 Nippon Yakin
Kogyo’s Materiality: Results of Activities Conducted in FY2022

Issue of Materiality 1:
Provision of useful products for society

17

Issue of Materiality 2: Reduction of global
environmental impact through business activities

19

19 Taking on the Challenge of Carbonless Nickel Smelting /20 Environmental Management/Climate ChangeCountermeasures / 23 Reduction of Environmental Impact /25 Building a Recycling-Oriented Society / 26 Material Flow

Issue of Materiality 3:
Achievement of safe and stable manufacturing

27

Issue of Materiality 4: Creation of workplaces where all30
people can work with equality and satisfaction
30 Human Rights/Diversity / 32 Human Resource Development /33 Measures for Work-Life Balance

34

34 Stakeholder Engagement / 35 Procurement

Issue of Materiality 6: Advancement of corporate
foundation for adaptation to the social environment

36

36 Corporate Governance / 37 Compliance /38 Risk Management / 39 List of Directors /41 The Board of Directors and the Audit & Supervisory Board

Financial Performance

1

NIPPON YAKIN KOGYO Sustainability Report 2022

Scope of reporting: Nippon Yakin Kogyo Co., Ltd.
	(including activities conducted as theentire Nippon Yakin Kogyo Group)
Reporting period:
From April 2021 to March 2022
(FY2022, including some activities
Publication:

27 Capital Investment / 28 Occupational Safety and Health/29 Quality

Issue of Materiality 5:
Establishment of sustainable partnerships

Nippon Yakin Kogyo has published Sustainability Report
2022 to present our sustainability policy and contribution to asustainable society and the environment by providing value tocustomers. This report allows our stakeholders, shareholders
and investors to comprehensively understand how we willachieve sustainability. This is the second report, following lastyear’s inaugural issue, outlining our activities based on “thesix issues of materiality” determined for the medium and longterm periods. We aim to enhance communication with all our
stakeholders in order for us to further improve our sustainability
management.

42

conducted before and after the period)
January 2023

Referenced guidelines- GRI Sustainability Reporting Standards-	International Integrated Reporting Framework,
International Integrated Reporting Council (IIRC)-	Environmental Reporting Guidelines 2018,
Japanese Ministry of the Environment
Disclaimer of guarantee
We describe current plans of Nippon Yakin Kogyo andstrategies for the future. It must be noted that prospects for the
future entail risks and uncertainties.

Global Network

3

5

1
2

4
9
7

8

3
5

< In Japan >

6

1, 4
2

< Outside Japan >1 Head Office (1-5-8 Kyobashi, Chuo-ku, Tokyo)

1 Nippon Yakin America, Inc. (Subsidiary in Chicago)

2 Kawasaki Plant (4-2 Kojima-cho, Kawasaki-ku,

2 Nippon Yakin Shanghai Co., Ltd. (Subsidiary in Shanghai)

Kawasaki City, Kanagawa Prefecture)

3 Nippon Yakin Europe Limited (Subsidiary in London)

3 Oheyama Plant (413 Aza Suzu, Miyazu City,

4 Nippon Yakin Asia Pte. Ltd. (Subsidiary in Singapore)

Kyoto Prefecture)

5 NISCO Nippon Yakin Kogyo Nanjing Co., Ltd.
(Joint venture in Nanjing)

4 Tokyo Branch
5 Osaka Branch
6 Nagoya Branch< Major affiliates >7 Kyushu Branch

NAS TOA CO., LTD., NAS STAINLESS STEEL STRIP MFG
CO., LTD., NAS TRADING CO., LTD., Clean Metals Co., Ltd.,NAS CREATE CO., LTD., NAS ENGINEERING CO., LTD.,
NAS TEC CO., LTD., MIYAZU KAIRIKU UNYU CO., LTD. and
NAS TOA (THAILAND) CO., LTD.

8 Hiroshima Branch
9 Niigata Branch* Nippon Yakin Kogyo acquired and merged with NAS CREATE CO., LTD.
on April 1, 2022.

Corporate Profile
Company name:

Nippon Yakin Kogyo Co., Ltd.

Establishment:

August 22, 1925

Head office location:

1-5-8 Kyobashi, Chuo-ku, Tokyo 104-8365

Business details:	Manufacture and sale of stainless steels, heat-resistant alloys and high nickel alloy steel sheets,
plates and strips (in coil form) and forgings and processed products as well as the manufacture of ferronickel alloys
Capital:24,300,910,790 yen

Representative:

Hisashi Kubota, President and Representative Director

Number of employees: 1,106 (non-consolidated), 2,080 (consolidated)
Net sales:

124,778 million yen (non-consolidated), 148,925 million yen (consolidated) (FY2022)(As of March 31, 2022)

2

Introduction of Our Plants
Nippon Yakin Kogyo has unique manufacturing processes, which are based on the globally proprietary technologies.

Oheyama PlantO heyama Plant is located in the vicinity of an area of great
scenic beauty. It is near the Amanohashidate (Heaven’s
bridge) sandbar, one of the three most scenic views in Japan
with the Oe mountains behind. Oheyama Plant is obviously
responsible for conserving the natural environment of thisbeautiful place. (See page 23.)H ere, we produce ferronickel alloy, all of which is sent to
Kawasaki Plant as the major nickel raw material to produce
stainless steels.

O heyama Plant is the only plant in the world utilizing the
Krupp-Renn process* for the production of ferronickel alloy.
We have traditionally been importing nickel ore to produce
ferronickel alloy. The use of recycled materials from so-called“urban mines” along with nickel ore has recently been
expanded thereby contributing to society through efficient
recycling. Further, we have been developing a smelting
technology helping a brand new system contributing to thesustainability of nickel resources. (See page 19.)
* Krupp-Renn process: A smelting process applying rotary kilns toallow the production of ferronickel alloys without electric furnaces.

Ferronickel alloys producing process

Anthracite&
limestone
Nickel ore

limestone
Nickel ore

Drycrashing

Mixing andkneading

Storage

Pulverizedcoal
Wetcrashing

StorageOre briquette

Smelting

Rotary kiln

Vacuumdehydration

Crashing

3

NIPPON YAKIN KOGYO Sustainability Report 2022

Gravityconcentration

Ferronickel
alloys(Intermediate
product)

Outline of Nippon Yakin Kogyo

Kawasaki Plant

Nippon Yakin Kogyo’s
Value Creation Process
SustainabilityIn compliance with environmental laws and regulations, thePlant is operating based on the safe and stable production
system, while fostering harmony with local communities.

K awasaki Plant is an integrated mill to efficiently produce
stainless steels along with high nickel alloys from the melting
process to the rolling process where sheets and plates areproduced establishing a competitive capability in the global
market.

Issue ofMateriality 2H igh nickel alloys (defined as “high-performance alloys”) are
generally produced by a special melting process applying
different equipment. On the other hand, we already developed
a unique process to produce the high nickel alloys withequipment to produce stainless steels. This means that
Kawasaki Plant is the only plant in the world to produce thetwo different products of stainless steels and high nickel alloys.

Issue ofMateriality 1K awasaki Plant faces Haneda Airport across the Tama river.
Specifically, it is in the Keihin industrial area, which is in thevicinity of urban residential areas.

Issue ofMateriality 3

Stainless steel and high nickel alloy plate & strip production process

Iron scrap
Stainlesssteel scrap
Walking beam
(WB) furnace

Roughing mill

Finishing mill

Hot rolling millContinuous annealing andpickling line for hot strips (H-APL)

Issue ofMateriality 4

Ferronickel
alloysElectric arc
furnace Capacity: Argon oxygen Composition
70 tons
decarburization temperature(AOD)
control station(CTS)

Hot strip

Pit-type furnace

Other
alloysIssue ofMateriality 5

Cold strip
Cold rolling(Sendzimir 20H
Continuous annealing andCold Strip Mill) pickling line for cold strips (C-APL)

Ferrochromium
alloysAnnealing, pickling and levelling for plates

Plate

4

Issue ofMateriality 6

Electric arc
Vacuum oxygen
Continuous casting
furnace Capacity: decarburization
machine (CCM)
60 tons(VOD)
Maximum width: 1600 mm

History of Nippon Yakin Kogyo

resistance, designability and workability— to provide value
to Japanese society. Our steels contributed to allow living
standards to rise with higher quality resulting in improving
sanitation, comfort and essentially needed infrastructure.
Nippon Yakin Kogyo has undertaken greater capital
investment to promote the high-performance alloys
business to win against global competitors in stainlesssteels responding to the globalized economic condition in
Japan. As a result, we have been able to establish a
globally unique business model. We are confident to carryon progressing to create new value to further contribute to
the society together with the global environment based on
our long history.

Nippon Yakin Kogyo was founded as Chuo Rika Kogyo
Co., Ltd. in 1925 as a manufacturer and seller of fire
extinguishers. Subsequently, in 1928, the company namewas changed to Nippon Kako Co., Ltd. The company
entered the metallurgical business with the first stainlesssteel product being released in 1935. In 1942, thecompany was renamed Nippon Yakin Kogyo Co., Ltd. In
1943, Oheyama Nickel Kogyo Co., Ltd. was merged with
us to establish an integrated system to produce stainlesssteels utilizing nickel ore. We thereafter achieved significant
growth in line with the vigorous growth of the economy ofJapan. Simultaneously, we continuously supply various
types of stainless steels —with excellent corrosion

1990:	Started to operate the No. 5 rotary kiln (at Oheyama Plant)
Started to operate the 60-ton-capacity CTS*7

II. Establishment of a Mass
Production System for
Stainless Steels

1989:	Completed the expansion of the second cold strip millshop (5AP*4, HK line*5 and finishing equipment)(World’s first combined CAP*6 [5AP*4])
1977: Started to operate the AOD*3 process

1971: Started to operate the 60-ton-capacity VOD*2 process
1968: Started to operate a 60-ton-capacity electric arc furnace*1
1966: Completed a planetary mill (for hot rolling) and started the operation

No. 5 rotary kiln (Oheyama Plant)

1965: Started to operate a continuous casting machine (CCM)
1962:	Started to operate a 30-ton-capacity electric arc
furnace*1 (first large furnace operated by astainless-steel manufacturer in Japan)

5AP*4

1959: Started to operate the Sendzimir 20H Cold Strip Mill
Continuous casting machine

Manufacture of the firststainless steel product

1956: Established a research institute1943: Merged with Oheyama Nickel Kogyo Co., Ltd.
1942: Renamed Nippon Yakin Kogyo Co., Ltd.
1935: Manufactured the first stainless steel product
1934: Established Oheyama Nickel Mining Industry Co., Ltd.
(predecessor of Oheyama Nickel Kogyo Co., Ltd.)

1928:	Renamed Nippon Kako Co., Ltd. and became a manufacturerof fireworks, government-commissioned manufacturer andseller of blasting supplies, and seller of explosives
1925:	Chuo Rika Kogyo Co., Ltd. founded as amanufacturer and seller of fire extinguishers

5

NIPPON YAKIN KOGYO Sustainability Report 2022

I. F
 ounding Period of
Nippon Yakin Kogyo

III. C apital Investment to Be More
Competitive and Sales Promotionfor High-Performance Alloys

Planned for completion in 2024:
Introduction of a highly efficient cold rolling millPlanned for completion in 2023:
Revamping and new establishment of slitter lines

Outline of Nippon Yakin Kogyo

Creation of a Wider
Range of Value

2022: Started to operate a new electric arc furnace (“E furnace”)
2021:	Updated the press equipment at the plate shop
Revamped cut-to-length line for hot strips at the plate shop

New electric arc furnace(“E furnace”)

Nippon Yakin Kogyo’s
Value Creation Process

2018: Started to operate the joint venture in China
2008: Started to operate new AOD*3
New AOD*3

1996:	Started to operate a new hot rolling millFirst 5-feet-wide Steckel
mill in Japan

Sustainability

New hot rolling millIssue ofMateriality 1

Usage of high-performance alloys (Common examples)
1980

1990

2000

2010
H38X

Corrosion-resistant alloys

NW276, NW22

Heat-resistant alloys

254NM

Flue gas desulfurizationequipment
Flue gas desulfurizationequipment

600, 601

High-strength stainless steels

Heat treatment
furnace parts

H840
800H

Electric water heaters andheating equipment
Heat treatment furnaces
for industrial use

Ni201

Clad pipes for oil wells
Caustic soda
manufacturing equipment

630

Steel belts

254N

Developed 254N as aunique and highly corrosionresistant stainless steel
Developed 64 as a unique duplex
stainless steel resistant to chlorine environment

Introduced the manufacturing technology Shadow mask materials forfor use as a material for LNG tankers
CRT television

Umbilical tubes foruse in oil & gas fields
Water electrolysis unit to
manufacture hydrogen

PapermakingSemiconductor manufacturingrelated equipment related equipment
Soy sauce
fermentation tank
Water supply
systems

Issue ofMateriality 5

64

Polycrystalline silicon manufacturing
equipment for solar power generation

Issue ofMateriality 4

825

36

Polycrystalline silicon manufacturing
equipment for solar power generation

Issue ofMateriality 3

Controlled expansion alloys

2020

Issue ofMateriality 2

1970

Scrubbers for marine vessels

Aircraft molds
LNG carrier of membrane type
Bimetals6

Issue ofMateriality 6*1 Electric arc furnace: Furnace that uses electricity to melt metals*2 VOD: Vacuum oxygen decarburization*3 AOD: Argon oxygen decarburization*4 5AP: Abbreviation for Nippon Yakin Kogyo’s fifth annealing and pickling line
*5 HK line: Original name given to Nippon Yakin Kogyo’s product polishing line
*6 Combined CAP: Continuous annealing and pickling line for cold rolled strips that is combined with a skin-pass rolling mill and levelling equipment*7 CTS: Original name given to Nippon Yakin Kogyo’s equipment used to adjust the composition and temperature of molten steel in the finishing process

Nippon Yakin Kogyo’s Value Creation Process

Nippon Yakin Kogyo’s Value Creation Process
Input*Results for FY2022

Business activity

Financial capital (Consolidated)
Total assets……… 187,494 million yen
Net assets…………… 62,169 million yen

Manufactured capital (Consolidated)
Manufacturing bases…… 8 locations
Capital investment…… 12,636 million yen

Human capital (Consolidated)
Number of employees………… 2,080

Intellectual capital (Non-consolidated)
R&D staff*……………………… 65 people
R&D cost*……………… 1,063 million yen* Including engineers working at the plants

Natural capital (Non-consolidated)
Energy:Electricity…………………………3,518TJ
Fuel……………………………………2,665TJ
Water resources……… 11,384,000 m3

Production

SaleThe only integrated production
system in Japan covering
the entire process from thesmelting of materials to thecasting and rolling of stainlesssteel to final products.
Production equipment andtechnology that enables
the provision of a variety of
products with excellent quality
with even providing small lots.

Development of markets andP rocurement ofmaterials

Research andDevelopment

Proactive use of recycledmaterials
Establishment of a
procurement system that can
respond nimbly to market
changes

provision of solutions intended
to meet the needs of society
and customers
Ability to supply a variety of
products in small lots withshort delivery times, including
products for niche markets

Development of products andproposal of optimal materials
based on the identification ofsocial needs rovision of high-quality products
P
and technological services
based on experimental data
accumulated over long years
Location of production and R&D
departments at the same basefor technical communication(between them)

Recycled materials…… 249,000 tons

Social & relationship capital (Consolidated)Harmony with international andlocal communities

Corporate Governance

Relationships of trust withbusiness partners

Management Philosophy

7

NIPPON YAKIN KOGYO Sustainability Report 2022

Outline of
Nippon Yakin Kogyo

OutputSix issues ofmateriality
Provision ofsocially usefulproducts

Outcome

Stainless steel is a material that is excellent
in corrosion resistance, heat resistance andstrength and is also 100% recyclable.
Nippon Yakin Kogyo manufactures andsells stainless steels as well as highperformance alloys that are superior tostainless steels.

Sustainability of society
and the environment

Nippon Yakin Kogyo’s Value Creation Process

Nippon Yakin Kogyo delivers a variety of products to society based on the technology and experience that it has longaccumulated as a manufacturer of stainless steels and high-performance alloys. As companies are more strongly required
to fulfill their responsibilities for the creation of a sustainable society, we will work harder to provide even better value
through our business activities.

Stainless steels (Non-consolidated)
Sales volume………… 175,800 tons
Net sales………… 71,553 million yen

High-performance alloys (Non-consolidated)
Sales volume…………… 48,200 tons

Net sales………… 51,309 million yen

Issue ofMateriality 1

Achievement ofsafe and stablemanufacturing

 reation of an affluent andC
comfortable societyContribution to the sustainability of
the global environment
Securing of talent and provision ofeven more comfortable workplacesHarmony and co-prosperity withinternational and local communities
Improvement of the Group’s
earning power
Maintenance and improvementof corporate transparency andcredibility

Sustainability

Reduction of
globalenvironmental
impact throughbusiness activities

Issue ofMateriality 2

Creation of
workplaces where
all people canwork with equality
and satisfaction

Issue ofMateriality 3

Stainless steel coils

Establishment ofsustainable
partnerships

Issue ofMateriality 4

Sustainability as
a company
Stainless steel platesIssue ofMateriality 5

Advancement ofcorporate
foundation foradaptation to thesocial environment

Issue ofMateriality 6

8

Message from the President

Implementing Sustainability Measures in
Search of a Way to Make Our Company
Even More Socially UsefulHisashi Kubota
President and Representative Director

What impacts has Russian’s invasion of Ukraine
affected the Company’s business?

Please outline the specific initiatives implemented
by the Company.

Prices have been rising, including those of nickel, rawmaterials other than nickel as well as crude oil, LNG and
the other energy resources due to the economic sanctions
imposed on Russia by other countries. It is inevitable for usthat these higher prices lead to an increase in our
production costs. However, the geopolitical risk revealedby this crisis has helped us clearly understand theimportance of promoting two types of diversification; one
is of the raw materials which we procure and the other isin developing products. We have to keep in mind thatnickel ore is unevenly distributed around the world, underwhich circumstances we produce stainless steel products.
We have therefore to more efficiently utilize recycledmaterials generated from so-called “urban mines” incombination with the development of products more easily
recycled. I think we need to provide this benefit to society,even if we have to invest a large amount for development.

We will embrace the challenge of “carbonless nickel
smelting” to protect the natural environment aroundOheyama Plant, where we smelt nickel ore to produce theraw material of ferronickel alloys. We aim to reduce perunit CO2 emissions here by 70% relative to FY2014 withthis challenge. We are sure to transition from coal to LNG
as the energy resource along with the replacement of coalas the reductant of nickel ore with waste plastic to achieve
the target. We are also promoting diversification to extend
to apply recycled materials. For example, we aredeveloping a technology to extract nickel from several
hundred types of recycled materials, including spentbatteries from electric vehicles. The recycled materials
contain larger amounts of nickel than nickel ore. We
therefore need to further develop our technology toseparate and extract nickel from such materials without
any waste.

These “two types of diversification” are indeed what
you have been aiming to achieve in your effort toreform the structure of your stainless steel business.
We consume a large amount of electricity to melt raw
materials in the electric arc furnaces in our stainless steel
process. Kawasaki Plant is therefore ranked relatively highamong plants in Kanagawa Prefecture for electricity
consumption. Our furnaces used in various processes also
consume a substantial amount of energy. We need to saveenergy along with enhancing energy transition at our plants
with which we are able directly to contribute to carbon
neutrality. In 2021, Nippon Yakin Kogyo established theSustainability Strategy Promotion Committee, chaired by
the president, and published the first Sustainability Report.
We have since been working to reform our businessstructure, which includes implementing measures to solve
social issues involving those related to the SDGs. I am
therefore confident of the appropriateness of our past
activities and aim to implement more initiatives to create asustainable society to have our business more socially
useful in a systematic manner.

9

NIPPON YAKIN KOGYO Sustainability Report 2022

Outline of
Nippon Yakin Kogyo
Nippon Yakin Kogyo’s Value Creation Process

Please outline your human resource-related measures.

Please share your message for stakeholders.

Issue ofMateriality 6

10Issue ofMateriality 5

The stainless steel industry is susceptible to changes in
the general economic situation and the performance tends
to fluctuate accordingly. The industry has also been
affected by a business restructuring trend. I spent a longtime working in personnel affairs and have many times
faced the need to perform layoffs. In view of these painful
experiences, I aim to provide the Company with a morestable management foundation so that it will not be soeasily affected by the ups and downs of the broader
economy.
Philip Marlowe, the fictional detective created byRaymond Chandler, said: “If I wasn’t hard, I wouldn’t bealive. If I couldn’t ever be gentle, I wouldn’t deserve to bealive.” I have recently felt that this also applies to corporate
entities. In order to make the Company tough as well as
gentle, I am determined to make further efforts.

Issue ofMateriality 4

As a matter of fact, we worked to update and enhance
our facilities for employees as our first initiative forsustainability. Specifically, we renewed Kawasaki Plant
canteen and established a futsal court on the rooftop of
the building. Moreover, in July 2022, our new employee
housing condominium was completed near Kawasaki
Plant. It is composed of 80 units and is so nice that I wantto live in one of the units myself. For sustainability-oriented
management, I believe it is of utmost importance toprovide employees with an environment where they canwork comfortably.
Furthermore, in 2022, to improve the transparency of
governance, we began to include a skill matrix, or a list
showing the capabilities of individual directors, in each of
the convocation notices for the annual general meeting ofshareholders. Moreover, also in 2022, we appointed afemale outside director of the Company for the first time in

If the period for the plan is set to be three years, we willcelebrate the centennial in the final year of the plan in
FY2026. Looking beyond 2025, we are aiming to formulate
the plan by thinking about what we can do in 2030. wehave been upholding the target of reducing the CO2
emissions by 46% relative to FY2014 in FY2031 andachieving net zero emissions by FY2051. In addition, we
have started to think about what kind of company we want
Nippon Yakin Kogyo to be by making predictions about
2030 in a creative manner. We are engaging in free-ranging
discussions based on the assumption that it will be all righteven if we find out later that our predictions are a bit off.
We are in search of something that we can do toward
2030, including things that we cannot achieve by the endof the period of the medium-term management plan.

Issue ofMateriality 3

In 2025, under the medium-term management planthat will start in 2023, the Company will celebrate thecentennial. How would you characterize the plan?

Issue ofMateriality 2

In January 2022, we started to operate a highly efficientelectric arc furnace equipped with the latest functions. In
May 2023, the revamping of the slitter line for hot strips
and the construction of a new slitter line for cold strips will
be completed. Moreover, in November 2024, we plan to
introduce a highly efficient cold rolling mill (to the Plant). All
the equipment is designed for the efficient use of energy,
reduction of workload and improvement of the operators’
working environment and is indeed friendly to both people
and the environment.
Kawasaki Plant is also enhancing collaboration withthe local government. In May 2022, Kawasaki City
established a public-private council for carbon neutrality in
Kawasaki coastal area, in which Nippon Yakin Kogyo isparticipating as a member. At Kawasaki Plant, new plans
are being formulated, including those to foster energy
conversion to LNG and to introduce a new combustion
system that uses synthesized methane and hydrogen.
Going forward, we will contribute to carbon neutrality incooperation with the local government and othercompanies.

Issue ofMateriality 1

our history, aiming to ensure the diversity of the Board of
Directors.
Sustainability

What measures are implemented at
Kawasaki Plant?

Progress with the Medium-Term Management Plan 2021

Outline of the Medium-Term Management Plan 2021
by achieving industry-best quality, delivery andresponsiveness* while ensuring safety and security at our
producing facilities.

We formulated the current medium-term management
plan (April 1, 2020 – March 31, 2023) in order to achieve
resilient and sustainable growth toward and beyond thecentennial of the Company in 2025. To this end, we set
the target of continuing to earn trust from our customers

Vision of the Medium-Term
Management Plan 2021

* Responsiveness to meet customers’ needs in terms of quantity, quality,
cost, delivery date, technology, solutions and others“Continually trusted global supplierwith industry-best quality,
delivery and responsiveness”

Respond to customers’ needs
and contribute to society

Enhance responsiveness to meet customers’
needs in terms of quantity, quality, cost,delivery date, technology, solutions and others

Earn more trust from customers based on
industry-best quality, delivery and responsiveness

Basic Strategy under the Medium-Term Management Plan 2021
We uphold the following three items as our basic strategy.

13Make strategic capital
investment and further
improve our technologicalcapabilities to be morecompetitive

Harmony with theenvironment and society
based on a robust andindependent businessfoundation

Main measures

Main measures

Main measuresP romote sales of high-performancealloys by expanding business in thefield of environment & energyE nhance our customer base andearnings base in the stainless steelbusinessE xpand the product lineup throughthe joint venture in China

112

Respond to customers’
needs and contribute tosociety through the industrial
materials business, mainly inthe fields of environment &energy and infrastructureU pdate facilities including with the
installation of highly efficient electricarc furnaces and make improvements
to reduce manufacturing
bottlenecks for higher productivityE nhance and expand our coretechnologies for high-performancealloysE stablish an environment-friendly
nickel smelting technology that uses
recycled materials

NIPPON YAKIN KOGYO Sustainability Report 2022E nsure the diversity of humanresources and enhance employee
welfare measuresD eal with the aging of equipment as apremise for safe and stable operationM ake investments to improve theworking environment and to savelabor and energy, and also makeuse of AI and IoTE nhance the financial foundation in
response to business expansion
and environmental changesB uild relations of trust withstakeholdersP romote consolidated management
for the optimization of the entire GroupOutline of
Nippon Yakin Kogyo
Nippon Yakin Kogyo’s Value Creation Process

Results of Implementing the Measures
Respond to customers’ needs and contribute to society through the industrial materials
business, mainly in the fields of environment & energy and infrastructure
Promoted the sale of high-performance alloys
With regard to the sales promotion strategy for high-performance alloys, demand for the following
products is steadily expanding: polycrystalline silicon manufacturing equipment for solar power
generation, semiconductor manufacturing equipment, and sheathed heaters and bimetals used in homeelectrical appliances. Also, demand has been brisk for basic products in the energy-related field.
Succeeded in manufacturing ultra-wide plates
By using the wide-strip rolling mill at our joint venture partner in Nanjing Iron and Steel Co.,Ltd., we
succeeded in manufacturing ultra-wide (more than 3 m) plates made of the 800T and 625 highly
corrosion- and heat-resistant nickel alloys and are promoting sales of the plates.

Sustainability

Make strategic capital investment and further improve our technological capabilities tobe more competitive

Issue ofMateriality 1

 ecided to invest in the expansion of finishing equipment at the cold strip mill shop of Kawasaki
D
Plant (May 2021)
Started the operation of a new electric arc furnace, which is highly efficient, energy-saving andenvironment-friendly (January 2022)
Decided to invest in the expansion of the cold rolling mill at the cold strip mill shop of Kawasaki
Plant (January 2022)
Started to implement measures to meet the challenge of carbonless nickel smelting at Oheyama
Plant (March 2022)
For carbon neutrality and the creation of a recycling-oriented society, Oheyama Plant started to
implement measures to meet the challenge of carbonless nickel smelting. To this end, the Plant isfostering reforms for the establishment of a sustainable system for nickel materials. (See page 19.)

Issue ofMateriality 2

Harmony with the environment and society based on a robust and independent
business foundation

Operating profit(Consolidated)

Net D/E ratio(Consolidated)

Total return ratio

Medium-Term Management Plan 2021
Target for the final year (FY2023)

40.5%

41.1%

45%

6.1 billion yen

14 billion yen

9 billion yen or more

7.1%

14.4%

10%

0.79

0.99

Less than 1.0

24.8%

24.9%

Around 25%
12Issue ofMateriality 6(Consolidated)

Results for FY2022

Issue ofMateriality 5

ROE(Consolidated)

Results for FY2021

Issue ofMateriality 4

Sales ratio of
high-performance alloys

Issue ofMateriality 3

Updated the wastewater treatment system at Kawasaki Plant (October 2020)
Built a new employee housing condominium in Kawasaki-ku, Kawasaki City (July 2022)
Made necessary responses to the revised Corporate Governance Code
Implemented measures to deal with environment, social and governance (ESG)-related challenges
We regard measures for the SDGs and ESG issues as essential measures to increase our corporate value
on a medium- to long-term basis, and established the Sustainability Strategy Promotion Committee inAugust 2021 to foster such measures.

Nippon Yakin Kogyo’s Sustainability

Commitment to Sustainability
Nippon Yakin Kogyo’s Management Philosophy and commitment to sustainability
Nippon Yakin Kogyo upholds the vision of becoming a “resilient company” for the creation of a sustainable society.
Accordingly, we are implementing measures to increase the sustainability of Nippon Yakin Kogyo Group itself.
Moreover, in response to changes in the external environment, including increased calls for a sustainable society throughthe achievement of the SDGs and carbon neutrality, we have identified the challenges that we need to embrace as our issuesof materiality.
We will incorporate the identified issues of materiality into our next medium-term management plan to make it more
effective in helping us respond to changes in the external environment. We will also share information about the activity results
and progress as necessary.

Identification of the issues to be addressed from the perspective of sustainability
For details, see Nippon Yakin Kogyo’s issues of materiality on pages 15 and 16.

Grasp changes in theexternal environment

Identify risks andopportunities

Specify the issuesof materiality

Planned to
be started
We will incorporate the measures for the issues of materiality into the plan and take actions. in FY2024

Incorporation into the next medium-term management plan

Updated basedon feedback

Provide information through the Sustainability Report
We will disclose information about the activity results and progress
to foster communication with our stakeholders.

Our vision

Become a resilient company** Company that can respond to difficulties with resilience and recover from hardships

Implementation of the management philosophy
1.Bring about progress and enriched quality of life to society by providing superior products.
1.With independence as our basis, utilize creation and efficiency together to endlessly pursue
growth and improvement.
1.Increase well-being of the ones while progressing with us, and provide society with an evenlarger place to do rewarding work.

13

NIPPON YAKIN KOGYO Sustainability Report 2022

Outline of
Nippon Yakin Kogyo
Nippon Yakin Kogyo’s
Value Creation Process

Sustainability promotion system

Board of Directors

Sustainability

Nippon Yakin Kogyo established the Sustainability Strategy Promotion Committee, chaired by the president, on August 1,
2021, with an eye to addressing the sustainability-related issues of materiality across the board. In FY2022, the committee
held a total of six meetings to identify the issues of materiality, implement measures for carbon neutrality and for TCFD
recommendations, and to publish the Sustainability Report.
As the top-level organization to lead our sustainability-related measures on a companywide basis, the Sustainability
Strategy Promotion Committee is tasked with specifying the Company’s sustainability-related issues of materiality, evaluating
the relevant activities conducted by the Company and fostering strategies concerning the sustainability-related issues ofmateriality set by each of the departments and committees.

Reporting

Sustainability Strategy Promotion Committee (chaired by the president)R espond to external changes
and give instructions for
improvement

Report the progress and results

Take actions

Issue ofMateriality 1

Formulate companywide policies
Evaluate progressExamine and decide on measures

Expansionof socialneeds

Issue ofMateriality 2

Each department & committee** Environmental Committee, Development and Research Committee, Compliance Committee, Investor Relations
Committee, Nippon Yakin Kogyo Group Quality Assurance Committee and Export Trade Control Committe

Process to specify the issues of materiality

Grasp changes in the external environment andconduct examinations to select issues of materiality

Each department worked to grasp changes in the Company’sbusiness environment and conduct examinations to selectissues of materiality based on the risks and opportunities
posed to the Company by external changes.

STEP4

Discussion by management

Meeting on sustainability
A meeting was held to enable the directors to develop a sharedrecognition and understanding of the trends affecting theexternal environment and society at large, and to discuss whatissues the Company should address as priorities.

STEP2

Specify the issues of materiality foreach department

The management team, including outside directors, discussed
and agreed on the issues of materiality in consideration of
corporate governance.

STEP5

STEP3

As a result of discussion at the first meeting of the Sustainability
Strategy Promotion Committee, six issues of materiality were
specified and approved by the Board of Directors.

Transformation of the departmental issuesof materiality into companywide priorities

Decision on the issues of materiality

14

Issue ofMateriality 6

The issues of materiality specified by each department were
examined to transform them into the companywide issues ofmateriality.

Issue ofMateriality 5

After making detailed examinations of the issues particularly
important for society and the Company from among the issues
examined in STEP 1, each department selected the own issuesof materiality.

Issue ofMateriality 4

Board of Directors meeting

Issue ofMateriality 3

STEP1

The following shows Nippon Yakin Kogyo’s process to
specify the issues of materiality.

Nippon Yakin Kogyo’s Materiality: Results of Activities Conducted in FY2022

Changes in the External Environment
Global environment

Business environmentIntensification of natural disasters due to climatechange and global warmingSocial calls for a decarbonized,
recycling-oriented society
Depletion of natural resources
hreat posed by pandemics

Working environment

 hanges in the international political situationCand power balance
Emergence of protectionism
Changes in the global market structure
Enhanced resource nationalism
Trend of business model reforms due to digitaltechnology-based innovation

 espect for diversity and creation of anR
inclusive societyDecrease in national population and inworking population due to the agingof Japanese society and decreasing
birth rate

Main measures and challenges
Issues of materiality(Being implemented
To be achieved possibly by FY2031
To be achieved possibly by FY2051)
Build a flexible production system to be able to respond nimbly to changes in the
demand structure ()

Provision of socially useful products

Promote sales in the newly emerging field of environment & energy(Carbon neutrality, renewable energy, etc.) ()
P17-18

Respond to customer needs in an attentive manner ( )Establish carbonless smelting technology by increasing the use of recycledmaterials ()

R eduction of global environmental impacts
through business activities

Improve operational technology and further reduce per unit energy use ( )Foster fuel conversion for carbon neutrality- Shift from heavy oil to LNG ()- Shift from LNG to hydrogen, ammonia and synthetic methane ( )Use green electricity effectively ( )P19-26

Reduce by-products and waste and increase the recycling rate ()

Make strategic investments on a medium- to long-term basis through the
Manufacturing Process Innovation (MPI) project ( )Achievement of safe andstable manufacturing

Maintain and improve occupational health and safety standards ( )P27-29C reation of workplaces where all people
can work with equality and satisfaction

Make investments for stable operation ( )Promote diversity & inclusion ()

Improve the working environment with automation and labor-saving measure ( )Enhance employee welfare facilities ( )P30-33Make use of advanced technologies for human resource development and thetransfer of skills to younger generations ()
Respect human rights across the supply chain ( )Establishment of sustainable partnerships

Enhance collaboration with business partners ( )Maintain relations of trust with local communities ( )P34-35

Advancement of corporate foundation foradaptation to the social environment

Disclose information to and promote dialogue with stakeholders ( )Enhance the financial foundation to ensure business continuity and foster
business development ( )Continue to implement measures for legal compliance ( )Raise employees’ awareness of sustainability-related measures (P36-4115

NIPPON YAKIN KOGYO Sustainability Report 2022

Enhance corporate governance to meet market needs ( ))Outline of
Nippon Yakin Kogyo

Global environment( :Risks

Business environment

 ecrease in productivity and risk of operationalD
suspension
Increase in cost due to the introduction ofcarbon pricing and expanded capital investment
Expansion of opportunities for technologicalinnovation and investments toward carbon
neutrality
Increase in demand for our products that help
solve environmental issues
Effective use of green energy

Working environment
 abor shortages and difficulty ofLpassing skills on to younger
generations
Diversification of human resources
and utilization of such resources
Labor saving through digitized
operation

Sustainability

 urges in materials cost and difficulty of procuring
Smaterials
Expanded volatility of domestic demand due toborderless market
Stagnant domestic demand due to continued low
economic growth
Promotion of business reform (DX reform), mainly atmanufacturing facilities, by the use of AI and big data
Enhancement of collaboration with business partners
Enhancement of collaboration with local andinternational communities
Pioneering of a new market:Opportunities)

Nippon Yakin Kogyo’s
Value Creation Process

Risks and Opportunities

Activities conducted in FY2022 (including some conducted before and after that year) ucceeded in manufacturing the 625 highly corrosion-resistant and heat-resistant nickel alloy ultra-wide plates as a product to follow on from the 800T product by using theSwide-width rolling equipment possessed by the partner company in the Chinese joint venture
Expanded the sales of the Chinese joint venture
Sales ratio of high-performance alloys: 41.1%
Expanded the sales of the high nickel heat-resistant alloy H38X for use in polycrystalline silicon manufacturing equipment for solar power generation
Development of new alloy types: 2 cases
Used recycled materials on an experimental basis (continued)
Started to implement measures to meet the challenge of carbonless nickel smelting

Issue ofMateriality 1

Started the operation of the new electric arc furnace ( “E furnace”)
Promoted a stepwise shift from heavy oil to LNG
Kawasaki Plant: Concluded an agreement to provide environmental value by responding to a request for demand response (DR) from an electric power company (for FY2023)
Recycling of by-products generated from the manufacturing process: 233,000 tons

Rate of incident victims who took leave (Frequency rate): 0.64%
Rate of lost-time accidents (Severity rate): 0.017%

Issue ofMateriality 2

Installed a highly efficient, energy-saving and environment-friendly leading-edge electric furnace and started the operation
Kawasaki Plant: Decided to introduce highly efficient cold rolling equipment and to revamp the existing cold rolling equipment installed at the cold strip mill shop
Kawasaki Plant: Decided to revamp the slitter line for hot strips and install a new slitter line for cold strips with an eye to enhancing the finishing equipment at the cold strip mill shop
Kawasaki Plant: Revamped the cutting line for hot strips and updated the press equipment at the plate shop to enhance the competitiveness of the plate products

Kawasaki Plant: Updated the motor of the hot rough rolling equipment
Made the host computer system an open system (continued)

Issue ofMateriality 3

Employed 15 new employees as candidates for executive positions (including four women)
Rate of employment of people with disabilities: 1.9%
Improvement of workplaces for female staff
Improved working environment by the introduction of a new electric arc furnace
Completed the new employee housing condominium (July 2022)

Issue ofMateriality 4

Conducted voluntary improvement activities
Provided e-learning-based training
Provided safety education using VR
Regularly checked for the purchase of conflict minerals and other materials of concern as part of human rights due diligence
Publicly announced the Declaration of Partnership Building (June 2022)
Conducted cleanup activities around Kawasaki and Oheyama Plants
Made a donation to the Yuruyaka Koryu relationship building project implemented by Yosano Town in Yosa-gun, Kyoto

Issue ofMateriality 5

Held two IR briefing sessions per year
Dispatched 22 news releases in Japanese (105% relative to FY2021)
Published Sustainability Report 2021 in Japanese
Net D/E ratio (Consolidated): 0.99 (Target for the final year of the medium-term management plan: less than 1.0)
Informed employees of the internal reporting system and operated it appropriately

Regular sharing of information through the in-house magazine

Distributed copies of Sustainability Report 2021 to all directors and employees of the Group
Held an in-house briefing session

16

Issue ofMateriality 6

Disclosed the Board of Directors effectiveness evaluation results and the skill matrix (FY2023)
Responded to the revision of the Corporate Governance Code

Issue of Materiality 1: Provision of useful products for society
Nippon Yakin Kogyo Group provides stainless steels and high-performance alloys that are excellent in corrosionand heat resistance, workability and designability. Each of our products demonstrates high performance whenused in the environment of intended use. By delivering highly functional products to society, we are creating
value in a variety of forms and contributing to the creation of a sustainable society and environment.

Photo provided by Jiangsu Sunpower Heat Exchanger & Pressure Vessel Co., Ltd.

Flue gas desulfurization equipmentused in thermal power plants
In thermal power plants, flue gas
desulfurization equipment is used in avery corrosive environment. 254NM,
NW276 and NW22 demonstratehigh-level performance in this severe
environment.

Hydrogen station
316L is used in the heat exchangers ofhydrogen stations, where fuel cellvehicles (FCVs) are refilled withhydrogen. This product is applied inthis special environment after being
made suitable through the adjustmentof the chemical composition. It thus
contributes to the establishment of
infrastructure for a hydrogen energybased society.

Photo provided by
HONMA CO., LTD.

Photo provided by
TANICO CORPORATION

Photo provided by MITSUBISHI
ELECTRIC BUILDING SOLUTIONSCORPORATION

Sheathed heaters
The photo on the left shows sheathedheaters, a component used in
microwave ovens, electric water
heaters and coffeemakers as a heating
element. H840, 800 and H880, which
demonstrate superior heat resistanceand corrosion resistance, are used as
the material to sheath the heaters.

17

NIPPON YAKIN KOGYO Sustainability Report 2022

Contributing to comfortableliving spaces

Cooking equipment/Elevators
Stainless steels have excellent
corrosion resistance, workability anddesignability and support our lifestylesof comfort and convenience. They areused in household, industrial andcommercial kitchen equipment as well
as being used as an interior material forelevators, thus contributing to thecreation of comfortable living spaces.

Contributing to the conservationof the global environment

Polycrystalline silicon
manufacturing equipment
800H and H38X are adopted forchemical reactors used inpolycrystalline silicon manufacturing
equipment for solar power generation.
In particular, H38X helps make thereactors thinner due to the superior
heat resistance, thereby contributing to
the upsizing and higher productivity ofthe equipment.

Photo provided by ASAHI KASEI CORPORATION

Photo provided by National Astronomical Observatory of Japan

Issue ofMateriality 4needs. For the latter, R&D staff focus on improving theproperties of corrosion-resistant alloys, heat-resistantalloys and electronic alloys that are widely used in theenergy, environment and chemistry fields, in which thesignificance of these materials will further increase.
In providing technological support to customers,
R&D staff are working on the improvement of the basic
properties of our products’ corrosion resistance andheat resistance and are also expanding the databaseregarding the hydrogen environment. We are also
striving to hone their technologies to solve problems incooperation with customers, including those forwelding and processing.

18

Issue ofMateriality 6

For the properties and composition of our products, please refer to our official website: https://www.nyk.co.jp/en/products/

Issue ofMateriality 5

Nippon Yakin Kogyo Group’s R&D department
develops new high-performance alloys, which are
regarded as a strategic field for our Group, andprovides customers with technological support.
Regarding the development of new products, thedepartment conducts activities from the following two
perspectives: process development and alloy
composition. For the former, we cooperate withcustomers’ design departments to identify theirpotential needs and expand the manufacturing scopein terms of thickness, width and others to meet those

Issue ofMateriality 3

Activities of the R&D department

Issue ofMateriality 2

Supporting
scientificdevelopment

ALMA Telescope
The large radio telescope is used in theelucidation of the beginning of theuniverse, origins of life and mechanismsof the birth of planets. In order tominimize the thermal expansion of theantenna to maintain the precision level,
36 is adopted for the platform that
supports the antenna and othercomponents of the telescope as amaterial to control thermal expansion.

Issue of Materiality 1: Provision of socially useful products

Caustic soda manufacturing plant
Caustic soda and chlorine, which arewidely used as industrial materials, aremanufactured by the electrolysis of salt.
The photo on the left shows anelectrolyzer, for which Ni201 is used asa cathode material.

Sustainability

Photo provided by MORIMATSU INDUSTRY CO., LTD.

Nippon Yakin Kogyo’s
Value Creation Process

Panels of water tanks
64 duplex stainless steel is used for tap
water storage tanks. Used for the top
panels of the tank that are locatedabove the surface of the water stored in
the tank, 64 demonstrates excellent
corrosion resistance in an environmentthat is highly corrosive due to theresidual presence of chlorine used forsterilization.

Outline of
Nippon Yakin Kogyo

Contributing to the creation of
an affluent society

The jacket type pier of Haneda
Airport’s runway D
Being highly rated for their corrosion
resistance against seawater, 185N and
354N are used for the pillar cover of thepier at Haneda Airport’s runway D.
Compared with coating the pillars withpaint, the use of the maintenance-freealloys helps reduce the runway’s life
cycle costs. 354N is developed
independently by Nippon Yakin Kogyo.

Issue of Materiality 2: Reduction of global environmental impact through business activities
Nippon Yakin Kogyo Group is proactively working to reduce environmental impacts in the business activities. To this end, we are
implementing a range of measures to curb CO2 emissions, including saving energy and increasing productivity, as well as
reducing the use of materials derived from natural resources to foster a shift to a circular economy.

Special feature

Taking on the Challenge of Carbonless Nickel Smelting

Nippon Yakin Kogyo has an integrated production process from nickel smelting to the production of stainlesssteels and high-performance alloys. At Oheyama Plant, we produce ferronickel alloys as the major raw material
for stainless steels. This system in combination can save a substantial amount of electricity. Meanwhile, a large
amount of CO2 is emitted due to the use of coal. It has been required for us to alter the various resources usedin the process taking into account public demand for carbon neutrality along with the increasing difficulty ofprocuring nickel ore and coal imported from overseas. Accordingly, we have announced a decision to phase out
the conventional nickel smelting process, for which we need imported nickel ore and coal. We embrace thechallenge of carbonless nickel smelting based on the use of recycled materials toward FY2031.

1 Our vision

3 Reduction of CO2 emissions

We will take on this challenge to establish a system
to ensure the sustainability of nickel materials(specifically by implementing the following two items),
thereby increasing our Group’s own sustainability,
while contributing to carbon neutrality and thebuilding of a resource recycling-based society.

The recycled materials contain a larger amount ofnickel. Some contain more than 10 times that foundin nickel ore of the same weight. We therefore help
reduce the total amount of materials by utilizing
recycled materials leading to a decrease in the
consumption of energy and reductant. We have been
consuming a substantial amount of fuel necessary forthe heavy machines in the ore mines withtransportation of the thereby mined nickel ore bylarge marine vessels. Accounting for Scope 3, we
focus on reducing CO2 emissions with the shift fromthe use of nickel ore to the use of recycled materials.
We aim to reduce per unit CO2 emissions at
Oheyama Plant by 70% in FY2031 relative to FY2014.
We will also reduce the use of imported ore and coalto establish a sustainable system for nickel materials.

(1) Support Kawasaki Plant’s carbon neutrality
measures; Supply nickel resources producedwith carbonless technology without exposure
to procurement risks, available at affordable
price, also contributing to resource recycling.
(2) Utilize recycled nickel resources including
both scrap and internally generated waste
containing nickel within our Group.

Illustration of carbonless nickel smelting<Present status>

2 Measures for carbonless nickel smelting
We will achieve carbonless nickel smelting in FY2031,
while maintaining our cost competitiveness byimplementing the following four measures.

Coal

Rotary kiln

Nickel ore
Recycled materials
Coal (Reducing agent)Ferronickel alloys recovery<Carbonless nickel smelting>

1

Energy conversion
For energy resources, enhance the transition from coalto LNG with renewable fuels

2

Carbon replacement (chemical recycling)
For the reductant of nickel ore, enhance the transition fromthe use of coal (anthracite) to waste plastic (RPF, etc.)

3

Diversification and extended use ofrecycled raw materials
Promote a shift from the use of nickel ore to the use ofrecycled materials through the diversification ofrecycled materials

4

Reduction of byproducts, waste promoting theireffective use
Reuse/reduction of byproducts (NASFINESAND)

LNG and others

Rotary kiln

Ferronickel alloys recovery

Rotary kiln at Oheyama Plant

19

NIPPON YAKIN KOGYO Sustainability Report 2022

Recycled materials
Reuse of by-products
Waste plastic and others(Reducing agent)Outline of
Nippon Yakin Kogyo

Our approach

Nippon Yakin Kogyo’s environmental management structure

Environmental Committee

HeadofficeOheyama
Plant

Kawasaki
Plant

Branchmanagers

General Plant
Manager

General Plant
Manager

Environmental
manager

Environmental
manager

Environmental
Promotion Committee
Each department
in charge

Environmental
Promotion Committee
Each department
in charge

Environmental policies
We have implemented measures for our plants to achieve
the environmental policies and environmental
management planed by the environmental strategy
promotion committee of the plants. We post theenvironmental policies of the plants on our official website(only in Japanese).
https://www.nyk.co.jp/about/environment/policy.html

N ippon Yakin Kogyo’s CO2 emissions reduction targets(Scopes 1 + 2)

Aim fornet

zero

Our approach

Our CO2 emissions reduction targets

Down
46%

2014

2031

2051 (FY)

Scope 1: Direct greenhouse gas emissions from the company
Scope 2: Indirect greenhouse gas emissions due to the use of electricity,heat and steam supplied by other companies to the company

Roadmap to carbon neutrality

20

Issue ofMateriality 6

Nippon Yakin Kogyo formulated a roadmap to achievecarbon neutrality by FY2051. We aim to facilitate theusage of recycled materials at Oheyama Plant to establish
a carbonless operation technology targeting Scope 1
emissions. We will strengthen the shift to LNG and otherenergy along with working on installation of a new
synthetic methane/hydrogen combustion system. As for
Scope 2 emissions, the new electric arc furnace
contributes to energy conservation. We will consider

Issue ofMateriality 5

We aim to reduce our CO2 emissions (Scopes 1 + 2) by
46% in FY2031 relative to FY2014 considering the global
trend toward decarbonization because of theintensification of natural disasters due to climate change.
We also aim at net zero emissions by FY2051 toward thecreation of a carbon neutral society.

Baseline year

Issue ofMateriality 4

The steel industry is a large emitter of CO2. As a memberof this energy-intensive industry, Nippon Yakin Kogyo is
proactively working for carbon neutrality to fulfill the social
responsibility.

Affiliatedcompanies

Issue ofMateriality 3

Climate ChangeCountermeasures

Sustainability Strategy
Promotion Committee

Issue of Materiality 2:
Reduction of global environmental impact through business activities

We have the Environmental Committee, chaired by adirector appointed by the president to smoothly progress
environmental management by Nippon Yakin Kogyo
Group, The Committee makes deliberations to report theenvironmental management plans implemented at our two
plants and the issues related to energy conservation.
Moreover, the Sustainability Strategy Promotion
Committee, chaired by the president, addresses issues
related to sustainability promoting measures for theseissues across the board. Kawasaki and Oheyama Plants
have standardized ISO 14001/JIS Q 14001 environmental
management systems, certified in March 1999 andNovember 2001, respectively.

President

Issue ofMateriality 1

Environmental management system

Sustainability

We are well aware of the importance of environmental
protection. We promote environmentally friendly businesscomplying with environmental treaties, laws, regulations,etc. In addition, we are proactively implementing
environmental initiatives, including effective use ofresources, saving energy and facilitating green
procurement.

Nippon Yakin Kogyo’s
Value Creation Process

Environmental Management

Issue of Materiality 2: Reduction of global environmental impact through business activities

introducing green power in the near future during therenewal of equipment, one of which is equipping with aninverter controller. We will consider conducting carbon
offset activities for CO2 emissions in order for us to
implement all possible countermeasures for energy saving
and emissions (from purchased products and services)
accounting for 75% of the total.
Roadmap to carbon neutrality
Measures toward FY2031

non-consolidated basis came to 411,000 ton-CO2 including
emissions from Kawasaki and Oheyama Plants. The
amount of emissions from the entire Nippon Yakin Kogyo
Group totaled 443,000 ton-CO2. It is generally recognizedthat the amount of CO2 emissions significantly depends on
the amount of production. However, we are aiming at
achieving our reduction targets by steadily decreasing perunit emissions by adjusting the production rate. We aim to
reduce CO2 emissions from Nippon Yakin Kogyo Group by
46% in FY2031.

Measures toward FY2051

CO2 emissions
Expanded use of recycled materials and establishment ofcarbonless operation technology (Oheyama Plant)
Scope 1

Fuel conversion(Heavy oil to LNG, etc.)

Introduction of a new combustion system(Synthetic methane and hydrogen
combustion technologies)

Reduction of standby fuel consumption by the rationalizationof heating and higher yield/productivity
Saving energy by the use of newelectric arc furnaces and better
operation by the use of EMS control

800

Scope 2

Use of inverter controllers and updating to more energy
efficient equipment for energy saving(t-CO2/t)

44

4

41

3.03

600

2.28

3

36
2.10

400

30 1.92

32
1.83

768

572

200
0

2014

2019

488
2020

CO2 emissions (1,000 ton-CO2)
Nippon Yakin Kogyo
Nippon Yakin Kogyo Group(excluding Nippon Yakin Kogyo)

368
2021

2
1

411
2022 (FY)0

Emissions per sales volumeof 1 ton (non-consolidated)

CO2 emissions from the entire supply chain

Effective use of green power

Reduction of standby power consumption by higher yield,
more energy-saving processes and higher productivity
Consideration for carbon offsetting(CCUS and credit trading)

Progress with measures
Nippon Yakin Kogyo has been thoroughly implementing
energy-saving countermeasures in all the businessactivities. We use the devices equipped with inverters andLED lamps at Kawasaki Plant. We also installed anefficiently energy-saving electric arc furnace (“E furnace”) in
the plant in December 2021 to start operating the following
month. Moreover, we began operating a system
responding to demand enabling flexible operationaccording to changes in the electricity supply-demandbalance. In addition, since FY2023, we have been
operating an internal carbon pricing (ICP) system on a trial
basis to set carbon prices and virtually convert our CO2
emissions into monetary costs for capital investment to
reduce our CO2 emissions. We announced that we would
embrace the challenge of carbonless nickel smelting at
Oheyama Plant producing ferronickel alloys as the major
raw material for stainless steels. We extended the use ofmaterials recycled from “urban mines” to decrease per unitof fuel to suppress the CO2 emissions to meet thischallenge. (See page 19.) The total amount of CO2
emissions for FY2022 from Nippon Yakin Kogyo on a21

(1,000 ton-CO2)

NIPPON YAKIN KOGYO Sustainability Report 2022

In order to grasp the amount of CO2 emissions generated
across the entire supply chain that supports our businessactivities, we estimated our Scope 3 emissions based on
the basic guidelines (Ver. 2.4) for the estimation ofgreenhouse gas emissions across the supply chain
published by the Ministry of the Environment and theMinistry of Economy, Trade and Industry. As a result, ourtotal Scope 3 emissions were estimated to be 669,000
CO2 emissions (Scope 3)
Calculation target: Nippon Yakin Kogyo (non-consolidated)

Category for Scope 3 emissions

CO2 emissions
Composition(1,000 ton-CO2)

1. Purchased goods and services

502

75%

2. Capital goods

39

6%

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

38

6%

4. Upstream transportation anddistribution

89

13%

5. Waste generated in operations

0.7

0%

6. Business travel

0.1

0%

7. Employee commuting
Total

0.3

0%

669

100%

Scope 3: Indirect emissions other than those included in Scope 1 andScope 2 emissions (Those emitted by other companies but
related to the activities of the company)
Sources for emission factor data: (1) Emission factor database to calculate greenhouse gas
emitted by organizations across their supply chains (Ver. 3.2) and (2) Inventory Database forEnvironmental Analysis (IDEA) Ver. 2 (for the calculation of greenhouse gas emissions across a
supply chain)

Outline of
Nippon Yakin Kogyo

Scenario

Impact assessment item
(Social changes)

Impact assessment*
Countermeasures

Large

Increase in the manufacturing cost
due to the additional cost caused
by carbon pricing-C apital investment and operational improvement
for energy conservation and carbon neutrality-F uel conversion to hydrogen, ammonia, synthetic
methane and biofuels-D evelopment of carbonless nickel smelting
technologies

Large- Higher electricity/fuel prices-H igher cost of procuring materials,
transportation services, etc.

-P
 romotion of energy-saving operation (decreaseof per unit energy use)
- Appropriate product pricing in consideration of the cost-

Increase in the amount of capital
investment for CO2 emissions
reduction- Investment decisions in consideration of theenvironmental impact reduction effect- Appropriate product pricing in consideration of theinvestment cost-

Shrinkage/elimination of demand infields with large CO2 emissions (Fluegas desulfurizers for low-efficiency
coal-fired thermal power plants,
boilers and EGR systems)

Below 2°C
and 1.5°C

Introduction of carbon pricing
Policies Laws & regulations-

MarketTransition risk

Shift to a carbon
neutrality-oriented
society
Technologies

MarketReputation

Large

-

Acute

Degradation of theworking environment
due to rise intemperature

Chronic

Large-

Tight supply of recycled materials- Diversified use of recycled materials by the
introduction of a new electric arc furnace- Securing of supply sources that offer reasonable
prices (Oheyama Plant)

More frequent and intense natural
disasters (heavy rain, strong winds
and storm surges) that cause thesuspension of production,
fragmentation of the supply chain
and the suspension of logistic
services-E xamination and implementation of natural
disaster countermeasures (inspection andenhancement of equipment, BCP measures, etc.)-S hared use of equipment with other companies
through outsourced production and others-E ffective use of domestic resources and securing of
stable sources for logistics, sales and surveys for theestablishment and diversification of the supply chain

Expanded risks of health damage
caused by infectious diseases andheatstroke- Improvement of the working environment andinvestment to increase labor productivity-E nhancement of BCPs against infectious diseases
and heatstroke

Issue ofMateriality 5

Physical risk

: Opportunities -: No or few impacts

22

Issue ofMateriality 6: Risks

Impact ofabnormalweather eventson businessNew demand in the environmentand energy-related fields

Issue ofMateriality 4--D evelopment of environment-friendly products in
response to customers’ needs-S ale of solutions to meet new demand forhydrogen, renewable energy sources, electricvehicles (EVs), fuel cell vehicles (FCVs), secondary
batteries and CCUS

Issue ofMateriality 3

Risks and opportunities

4°C

Issue of Materiality 2:
Reduction of global environmental impact through business activities

Scenario analysis results

Issue ofMateriality 1

For the creation of a decarbonized society, each country
has announced their respective greenhouse gas emissions
reduction targets. We likewise regard the risks andopportunities posed by climate change as an important
issue for our own sustainability. Accordingly, we haveanalyzed the risks and opportunities in line with therecommendations made by the Task Force on ClimateRelated Financial Disclosures (TCFD).
The Sustainability Strategy Promotion Committee
chaired by the president leads the execution of a plan-docheck-act (PDCA) cycle for the risks and opportunities
posed by climate change, fosters relevant measures forthe entire company, and reports the details as necessary
to the Board of Directors, as shown in the figure showing
our sustainability promotion system on page 14.
We analyzed the risks and opportunities based on the“4 degrees Celsius” scenario (“business as usual”
scenario) and the “below 2 degrees Celsius” scenario

Sustainability

Risks and opportunities posed by climate change(promotion of climate change countermeasures andintroduction of carbon pricing), as well as the stricter“1.5 degrees Celsius” scenario. We predicted theworldwide situation in 2030 based on each of the
scenarios and identified the risks and opportunities, andthen divided the identified risks into transition risks andphysical risks. For transition risks we referred to the IEAWorld Energy Outlook for future energy supply anddemand and carbon taxes and for physical risks wereferred to the hazard maps created by local
governments. By using these materials, we quantified theimpact of the risks on our business to make impact
assessments. Also, each of our departments discussed
countermeasures against the risks. The following tableshows the results.
Against this backdrop, in September 2022, Nippon
Yakin Kogyo announced the support for the TCFD’s
recommendations. Going forward, we will conduct moredetailed examinations for the scenario analysis andcontinuously enhance our climate change
countermeasures while disclosing the related information
to the public.

Nippon Yakin Kogyo’s
Value Creation Process

ton-CO2, which is about 1.5 times the total amount of our
Scope 1 and Scope 2 emissions. By category, Category 1
emissions (from purchased products and services)
accounted for 75% of the total.

Issue of Materiality 2: Reduction of global environmental impact through business activities

Reduction of Environmental Impact
 OD of water released into the environment byC
Nippon Yakin Kogyo

Preventing air pollution

COD (ton/year)

We regularly monitor the air emissions discharged fromour facilities according to the related laws to manage andimprove them. We combined a wet-type precipitator anda leading-edge electrostatic precipitator at Oheyama Plant
to decrease particulate matter by replacing the previous
system equipped in 2021 to comply with the Mine Safety
Act along with meeting the regulatory standards
determined under Kyoto Prefecture’s ordinance forenvironmental protection. Here, we have applied a burnerwith low NOx for a furnace since this is a major source ofnitrogen oxide emissions. We are also trying to reduce
emissions of nitrogen oxides through appropriate
combustion control.
Release of nitrogen oxides into the air by Nippon Yakin Kogyo
Emissions (ton/year)
200
150

150

150
114

100

126
95

50
0

2018

2019

2020

2021

2022
(FY)

60
50

50
42

40
33

36

37

2021

2022
(FY)

30
20

2018

2019

2020

Management of chemical substances
We quantify the amounts of pollutants released andtransferred into the environment (air and public waters)from our sites according to the pollutant release andtransfer register (PRTR) system*. We annually submit areport on the released amount to the national government
continuously ensuring the most appropriate control ofchemical substances. We stock PCB waste in an
appropriate manner coinciding with the plan to complete
the management by the deadline indicated by the national
government based on the Act on Special Measuresconcerning Promotion of Proper Treatment of PCB Waste.
 elease and transfer of substances regulatedR
under the PRTR system

Preventing water pollution
We recycle at least 70% of the water in the production
process at Oheyama Plant. We release the wastewaterout of the plant after cleaning the water so as to meet all
the regulatory standards relevant to prevention of waterpollution. At Kawasaki Plant, as well, we recycle morethan 90% of the water utilized in the production process
at the treatment facilities. We further perform regularanalysis of the contained hazardous substances withconstant monitoring of the contents of water pollutants(nitrogen and phosphorous) and chemical oxygen demand(COD). Thus, we are safely able to release only
wastewater meeting regulatory standards from Kawasaki
Plant. The measured results of nitrogen, phosphorous and
COD included in the target to constantly monitor areautomatically sent to Kawasaki City in accordance withthe city’s guidelines on the maintenance and managementof measuring instruments to be followed for the municipal
emitting source automatic monitoring system.

23

NIPPON YAKIN KOGYO Sustainability Report 2022

(Ton/year)

ReleaseTransfer

2018

2019

2020

2021

Into the air

1.6

1.4

0.9

1.0

Into public waters

53

49

41

42

To outside the sites

573

245

94

203

* PRTR system: Companies measures the amounts released from their sites
into the environment (air, water and soil) and the amounts contained inwaste transferred to outside of their premises to report the results to thenational government under this system treating the chemical substances
potentially harmful to human health and ecosystems. The government
calculates the total amounts of release and transfer referring to the reports
and relevant estimates to disclose the data to the public.

Outline of
Nippon Yakin Kogyo

Information System (NETIS) of
the Ministry of Land,
Infrastructure, Transport andTourism.

Sustainability

NASFINESAND

Stainless-steel slag: NASFILLER certified
under the Low CO2 Kawasaki Brand andKawasaki Mechanism Certification Systems

Electrostatic precipitator

Effective use of by-products
We utilize the ferronickel and stainless steel making slag,
by-products from Oheyama Plant and Kawasaki Plant,
respectively, as substitutes for concrete aggregate inroadbed materials. The effective use of slag alsosignificantly contributes to the conservation of natural
resources.

NASFINESAND

Amount (1,000 tons/year)
10
9.3
8
6
3.9
4
2
0

2011

2018

5.4

5.3

2019

2020

3.8

3.8

2021

2022
(FY)

Issue ofMateriality 5

24

Issue ofMateriality 6

NASFINESAND is produced from the ferronickel slag
generated in the unique nickel ore smelting process at
Oheyama Plant. The slag is granulated into fine particles(with diameters of 75μm or smaller) which composes 90%
of NASFINESAND. This material can be widely applied forembankment, backfilling, land development, foundation
for drainage and the use of heavy machinery. The material
produced by our unique method has already been
patented and registered with the New Technology

 inal disposal amount of industrial waste generated byF
Nippon Yakin Kogyo

Issue ofMateriality 4

NASSAND is the ferronickel slag
generated at Oheyama Plant and it iscertified as concrete aggregatematerial under JIS-A-5011 (Slagaggregate for concrete – Part 2: Slagaggregate for ferronickel alloys slag).

Nippon Yakin Kogyo has been suppressing the generationof industrial waste and promoting the recycling of such
waste to reduce the final disposal amount. Relative toFY2012, the final disposal amount has been almost halved
in recent years.

Issue ofMateriality 3

JIS certification for ferronickel alloys slag
used as concrete aggregate

Waste generation

Issue of Materiality 2:
Reduction of global environmental impact through business activities

Stainless steel slag generated from Kawasaki Plant, called“NASFILLER,” is certified as a product made in Kawasaki,
contributing to reduction of CO2 emissions throughout thelife cycle under the Low CO2 Kawasaki Brand Certification
System and the Kawasaki Mechanism Certification System.

Issue ofMateriality 1

An electrostatic precipitator in service since March 2021
was partially replaced at Oheyama Plant. Soot and dust
generated from the rotary kilns with high temperature
operation are filtered by a cyclone and spray wet-typeprecipitator. The finer dust and soot are collected bydischarged electricity to meet the regulatory standards ofrelease into the air. The revamped equipment can collect
more dust, requires less maintenance and is more durable
and efficient due to its higher corrosion resistance.

Nippon Yakin Kogyo’s
Value Creation Process

Electrostatic precipitator installed at
Oheyama Plant

Issue of Materiality 2: Reduction of global environmental impact through business activities

Building a Recycling-Oriented Society
Our approach

Water recycling

The 20th century has been recognized as a period ofmass production, mass consumption and mass disposal,
all of which are outgrowths of the progress of science andtechnology. The excessive pursuit of economic growth
has resulted in both environmental destruction and climatechange as serious negative legacies of humankind. This
fact in obvious contrast to the enriched living standards
with allowing diverse cultures to flourish. Stainless steels
are 100% recyclable and collectable as end-of-use
stainless steel products as scrap for recycling. Our
Kawasaki and Oheyama Plants apply the raw materials
reclaimed from “urban mines” in the community based on
efficient equipment. Thereby we minimize the impact on
climate change and the environment while supporting theprosperity of society.

Usage rate of recycled materials

Binder

66

63
60

50

Recoveryof metal

57

2014

2018

2019

2020

2021

2022
(FY)

Briquetting machine

25

Heating66

Drying

71

68

70

Dust,
sludge frompickling, etc.

Briquetting(%)
80

In the stainless steel process, byproducts are generated
including dust from the electric arc furnace and sludge
from the pickling process of wastewater treatment. NAS
TEC CO., LTD., one of our Group companies locatedinside Kawasaki Plant, mixes the byproducts with water
after which they are kneaded into briquettes, which arethen dried followed by melting in a submerged arc furnace
to extract the valuable metals by separating slag. They
contain valuable metals including iron, chromium, nickel,
molybdenum and others. The extracted metal is collected
and put into the electric arc furnace at Kawasaki Plant as
a recycled material to help produce stainless steels. We
installed a new briquetting machine in 2012 withequipment to add binder to strengthen the briquette. This
investment also contributed to the recovery rate ofvaluable metals. We applied the subsidy provided by thenational government for companies using rare earths forthe installation. This equipment allowed us to operate thesubmerged arc furnace at higher temperatures to increase
the recovery ratio.

Kneading

 sage rate of recycled materials (in terms of the net
Uamount of nickel) by Nippon Yakin Kogyo

Recycling of sludge and dust

Reduction by melting

We have to choose recycled materials suitable for theprocesses of Kawasaki and Oheyama Plants. Therefore,
we develop technologies allowing us to more effectively
use them to increase the usage ratio of recycled materials.
Accordingly, we developed a technology resulting in thenickel amount extracted from recycled materials to beapproximately 70% of the net amount of nickel used at
Kawasaki Plant. This amount of nickel includes ferronickel
alloys supplied by Oheyama Plant. We indeed need tofurther develop technologies responding to the probablechanges depending on the coming eras that may alter thecompositions, grades and the shapes of recycledmaterials. We will definitely carry on developing ourtechnologies to address the probable changes.

As an important resource we recycle water in our
production processes. The recycling rate attained is morethan 70% and more than 90% at Oheyama and Kawasaki
Plants, respectively. We also reuse the water used to cool
the production processes indirectly by storing water again
in the cooling tower.

NIPPON YAKIN KOGYO Sustainability Report 2022

Briquettes made by the machineOutline of
Nippon Yakin Kogyo

Results for FY2022
We mainly use the recycled materials in our processes
effectively adaptable contributing to the creation of arecycling-oriented society. We are proactive in use ofmaterials extracted from stainless steel scrap widely
available in society together with materials from so-called“urban mines.” We are also making an effort to improve

Issue ofMateriality 1

Material Flow

Input

Manufacturing process

OutputOheyama Plant

Materials

CO2: 411,000 tons
SOx: 86 tons
NOx: 126 tons

Recycling of by-products
233,000 tons

Ferronickel alloys (Intermediate product)

By-products

Final disposal

Kawasaki Plant
Skin-pass rolling and finifhing

Continuous annealing and pickling

Cold rolling

Continuous annealing and pickling

11,384,000 m3

Hot rolling

Water resource

Continuous casting

Smelting

Melting

Ore
151,000 tons
Coal
24,000 tons
Recycled materials
249,000 tons
Nickel, chrome andother materials
87,000 tons

Issue of Materiality 2:
Reduction of global environmental impact through business activities

Dry crashing

Into the air
Gravity concentration

Wet crashing

Crashing

3,518TJ
2,665TJ

Smelting

Electricity
Fuel

Prior processing

Energy4,000 tons

Stainless steels andhigh-performance alloys
224,000 tons
Coils

PlatesIssue ofMateriality 3

Internal circulation
Water

Reuse ofwaste heat

Reuse ofintermediate
product
scrapsIssue ofMateriality 4- Oheyama Plant
Recycled
70% or more
- Kawasaki Plant
Recycled
90% or more

Sustainability

our technology through capital investment allowing us tooffer more value to society. We have developed our own
in-house recycling process efficiently using the byproducts
generated in our production processes. We are also
considering new applications for the byproducts. For
example, we are working on the recycling of slag into aroadbed material for sale outside the company.

Nippon Yakin Kogyo’s
Value Creation Process

Material Flow

Issue ofMateriality 5
Issue ofMateriality 6

26Issue of Materiality 3: Achievement of safe and stable manufacturing
Nippon Yakin Kogyo Group is committed to continuing the safe and stable production to fulfill the supplier responsibility to customers,
while also fulfilling the corporate responsibility to all the stakeholders, including local communities and employees. We are reducing the load
imposed on our employees, improving their work efficiency through automation, striving for the elimination of disaster-related risks, andupdating our equipment for the prevention of equipment failures. We are thus making improvements in both tangible and intangible ways.

Capital Investment
Example of strategic capital investment

Plans for new operational improvements

New electric arc furnace (“E furnace”)
Nippon Yakin Kogyo held a ceremony to launch theoperation of a new electric arc furnace*1 in December 2021
and it has subsequently been in operation on a full scale
since January 2022. Significant attention has been paid toelectric arc furnaces in the steel industry in the trend
toward a decarbonized society. The leading-edge highefficiency electric arc furnace installed in Kawasaki Plant isequipped with a driving system to rotate the furnace bodyin combination with an electromagnetic stirrer. The furnace
is covered by an openable and closeable wall to collect
more dust while preventing noise to a significant extent.
Moreover, many of the tasks to be conducted prior tooperations have been automated to substantially decrease
the workload imposed on human operators. In addition,
we introduced the furnace body detachment method*2 forthe replacement of bricks of the furnace. Thereby, thismethod allows the offline replacement to be made at any
time obeying our required schedule and improving theenvironment for furnace maintenance staff. Full operationof the new highly efficient electric arc furnace will reduce
our energy cost and environmental impact toward
contributing to the creation of a sustainable society.

Plan 1: Introduction of a highly efficient cold rolling millNippon Yakin Kogyo, as a part of the strategic investment
in Kawasaki Plant, announced it would install a highly
efficient cold rolling mill in the cold rolling shop to replace
one of existing cold rolling mills in January 2022. The mill
will start operation in November 2024, for which the total
investment amount will reach around 11 billion yen. We
will further replace the two existing cold rolling mills with aleading-edge cold rolling system in response to the
expansion of demand for high performance alloys, ourstrategic products. This investment will solve the shortageof capacity in the cold rolling process resulting from theprofile of products becoming thinner, while also remodelingone of the existing cold rolling mills to increase theproduction capacity. We will acquire sufficient productsupply capacity through the investment to meet demand.
We are further able to increase our production efficiency
and stabilize our product quality. This allows us toestablish a production system to promptly respond thediversified needs of customers. The newly installed coldrolling mill will simplify strip inserting along with a reduced
problem-recovery time. Moreover, the rolling conditions
can be automated owing to equipping with a highperformance automatic shape control function leading toa substantial reduction in workload. We will additionallyconstruct a building for the equipment and upsize thefume collector*3 to improve the working environment.
*3 Oily smoke generated in the rolling process

Ceremony to launch the operation of the new electricarc furnace

The body of the new electric arc furnace*1 We call the new electric arc furnace an “E furnace,” which means “Electricarc furnace with high Efficiency, Energy saving and Environmental
improvement.”*2 Furnace body detachment method: In the past, furnace bricks could be
replaced only during the regular furnace maintenance period, but now
the furnace body itself can be detached to replace the bricks whenever it
is necessary.

27

NIPPON YAKIN KOGYO Sustainability Report 2022

Plan 2: Revamping and new installation of slitter lines
We have decided to revamp the existing slitter line for hot
strips by newly installing a slitter line for cold strips tostrengthen the finishing equipment of the cold strip millshop in Kawasaki Plant. We announced the predictedeffects in May 2021. The total investment amount for theslitter lines will be around 2.5 billion yen scheduled forcompletion in May 2023. The capital investment
significantly increases our production capacity satisfying
the needs for higher precision processing. The production
capacity will be expanded by approximately 50% afterrevamping the existing line. This will mainly increase theefficiency of the preparatory work. Besides, installing a
new line will bring the maximum possible automation.
Further, we will be able to meet more diverse andadvanced customer needs through the introduction of thehigh precision leading-edge slitter equipment. It is
generally known that it takes a long time to learn to be an
operator with advanced skills including the positioning ofslitters. This investment will surely reduce the workload on
the operators with automation.

Outline of
Nippon Yakin Kogyo
Nippon Yakin Kogyo’s
Value Creation Process

Occupational Safety and Health
Our approach

Carry out a risk
assessment

Occupational safety andhealth targets andaction guidelines
Formulation of a planfor occupational safety
and health activities

Respond to an emergency
Do (D)

Check (C)Act (A)

Implementation of
the occupationalsafety and healthactivity plan
Daily inspection
and improvement

Incorporation ofworkers’ opinions

Frequency rate

Disclosure of
related information(%)
5

System and roles

4

Document
management

3

Recordmanagement

System audit

210Management system

2017

2018

Manufacturingindustry

2019

2020

Steel
industry

2021

2022
(FY)

Nippon Yakin Kogyo

Severity rate
(%)
0.5
0.4
0.3
0.2
0.1
0.0

2015
All
industries

2016

2017

Manufacturingindustry

2018

2019
Steel
industry

2020

2021

2022
(FY)

Nippon Yakin Kogyo

Issue ofMateriality 6

28

Issue ofMateriality 5

In line with the Industrial Safety and Health Act, we havean occupational safety and health system in place at both
Kawasaki Plant and Oheyama Plant.
The plant head serves as the occupational safety andhealth supervisor and appoints an occupational safety andhealth manager (from among department managers) andan industrial physician, whose roles are defined in our

2016

Issue ofMateriality 4*1 The occupational safety and health management system (OSHMS) is
designed to prevent labor accidents, promote workers’ health and create
comfortable workplaces to raise the level of on-site safety and health by
setting and implementing a plan-do-check-act cycle, or PDCA cycle, forthe voluntary and continuous management of on-site safety and health.
Since January 2009, Kawasaki Plant has been certified as a JISHAcompliant OSHMS-certified business site (certification no.: 09-14-9)
based on the guidelines set by the Ministry of Health, Labour and Welfare.

2015
All
industries

System review

Issue of Materiality 3:
Achievement of safe and stable manufacturing(to identify risk factors)

Occupational safety
and health policies

The following figures show Nippon Yakin Kogyo’s safety
record. Compared with other industries and the steel
industry overall, our rate of accidents requiring leave(frequency rate) was higher for some fiscal years.
However, we have been able to maintain the rate oflost-time accidents (severity rate) at a low level for many
years. We have thus been successfully preventing theoccurrence of serious accidents but have not yet reduced
the number of minor accidents to zero. Zero accidents isa challenge that we should meet. Deeply recognizing theresult, we will work to further improve our safety level forzero accidents.

Issue ofMateriality 2

Plan (P)

Safety records

Issue ofMateriality 1

Outline of the PDCA cycle

Sustainability

A number of occupational safety and health activities arecarried out at our production sites in line with the Industrial
Safety and Health Act combined the individual rules of thecompanies. We have introduced an occupational safety
and health management system (OSHMS)*1 making aneffort to take our occupational safety and health to thenext stage. The OSHMS is a system to organizationallyand systematically comply with the laws and regulations
and manage the implementation of voluntary rules. By
executing a PDCA cycle as a core element of the OSHMS,
we will continue to step up the level of the occupationalsafety and health. Thereby, we prevent the occurrence ofoccupational accidents along with providing all employeeswith safe and healthy workplaces.

occupational safety and health management rules. Also,
each of the plants has the own occupational safety andhealth committee composed of the occupational safety
and health supervisor, occupational safety and healthmanager, industrial physician and a representative of thelabor union. The committee meets once a month todiscuss and monitor legal issues and works to raise
employees’ awareness of the plant’s annual safety andhealth plan and monthly initiatives.

Issue of Materiality 3: Achievement of safe and stable manufacturing

Quality
Our approach

Kawasaki Plant is strict with the quality policy and quality
assurance activity-related concept decided by General
Plant Manager. The policy and concept are communicatedacross the Plant in a manner helping all on-site workers
understand the details. The quality policy is intended tohave the following attributes:
1. B
 e appropriate for the purpose and situation of the
Plant and help it to make progress in a strategic manner
2. P rovide a framework for the Plant to set the quality
targets
3. Include a commitment to meeting the requirements
applied to the Plant
4. A
 lso include a commitment to improving the quality
management system on a continual basis

Quality improvement initiatives
Nippon Yakin Kogyo is executing a PDCA cycle as provided
for under JIS Q 9001 for the maintenance and improvementof the product quality. Specifically, we make a plan (P) in
consideration of risks and opportunities, do (D) things asplanned for the achievement of our quality targets, check(C) the improvements made, and then act (A) by reporting
the results for review by the management team.

Make a quality management plan

Quality policy

Quality policy

Nippon Yakin Kogyo produces products that meetcustomer needs and specifications while complying withrelated laws, regulations and standards. As a method tomanage and increase our product quality, we arecommitted to establishing, implementing, maintaining andconstantly improving our quality management system thatmeets the requirements determined by JIS Q 9001/ISO
9001 and JIS Q 9100.

M easures for risks and opportunities(PDCA cycle executed under the QMS)

P

Customer-oriented
Quality policy set by top management

Plan
Consideration to risks and opportunities
Identification of risks and opportunities
and plans to deal with them
Quality targets
Decision on themes for quality improvement

Implementation
D

Measures toachieve thequality targets

Review by
management(1) Make and manage theimplementation plan andcarry out necessary processes(2) Implement measures
to deal with risks andopportunities- Understand theneeds andexpectations ofstakeholders- Identify customers’
requirements

PerformanceC

Examination of the
improvement details- Understand theorganization andthe status- Identify the internaland external
problems

Examination andevaluation of the effectImprovement
A

Reporting of the effectNippon Yakin Kogyo’s quality assurance system
President
Sustainability Strategy
Promotion Committee
Nippon Yakin Kogyo Group Quality Assurance Committee

Quality assurance system
We have the Nippon Yakin Kogyo Group Quality AssuranceCommittee, chaired by a director appointed by thepresident to continuously improve the Nippon Yakin Kogyo
Group’s quality assurance system. This committee istasked with the following roles:- Formulate policies on the improvement of the quality
assurance system

PlantsAffiliated companies

Kawasaki Plant

NAS TOA CO., LTD.
NAS STAINLESS STEELSTRIP MFG CO., LTD.
NAS TRADING CO., LTD.,and others (Eight in total)

Oheyama Plant(For example, introduce an automatic Rockwell hardness testing machine
to increase the reliability of test/inspection data by fostering datatransmission)- Carry out audits at Group companies’ major
manufacturing bases (once a year in principle)- Organize a meeting of Group companies’ employees incharge of quality assurance (once a year)
Automatic Rockwell hardness testing machine

29

NIPPON YAKIN KOGYO Sustainability Report 2022

Nippon Yakin Kogyo’s
Value Creation Process“Business and human rights” is globally attracting more attention as an issue related to corporate social responsibility. Nippon
Yakin Kogyo Group aims to create workplaces where all people can work with equality and satisfaction by implementing measures
to employ and develop diverse people, improving the workplace environment especially at our manufacturing facilities, andenhancing welfare facilities for employees.

Human Rights
Background and our approach

Prevention of harassment

Issue ofMateriality 3

Reemployment of post-retirement workers
Nippon Yakin Kogyo operates a system for the
reemployment in principle of all retirees who want to keep
working so that they can remain with the company until
they reach the age of 65. For FY2023, the number of
those reemployed was 52, or 5% of the total workforce(as of April 1, 2022).

Employment of people with disabilities

Issue ofMateriality 6

30

Issue ofMateriality 5

Nippon Yakin Kogyo also fosters the employment ofpeople with disabilities for the creation of a society where
all people can make valuable contributions. Kawasaki
Plant provides the employees with disabilities with a
special office space where they can work in comfort,
giving due consideration to their individual characteristics.

Issue of Materiality 4:
Creation of workplaces where all people can work with equality and satisfaction

Diversity
Nippon Yakin Kogyo upholds a call to “Respect diversity
and heterogeneity and demonstrate comprehensive
abilities with a spirit of harmony” as one of the action
guidelines. According to the results of a survey conductedby the Ministry of Internal Affairs and Communications,Japan’s working population has been decreasing sincereaching a peak in 2008 and will continue to drop at anaccelerating rate. Against this backdrop, women andolder people are increasingly expected to join theworkforce. Also, in line with the changes of the times,
values have become diversified and a range of flexible
work arrangements are needed. We believe that thediverse backgrounds and ideas of employees will help us
achieve sound growth and are promoting diversity in theworkplace accordingly.

Issue ofMateriality 2*F or our measures for supply chain-related human rights, please see
page 35 (“Issue of Materiality 5: Establishment of sustainable partnerships”).

Our approach

Issue ofMateriality 1

Nippon Yakin Kogyo has the own rules to prohibit
harassment and all other forms of misconduct, including
sexual harassment, abuse of power and harassment ofpregnant employees and employees taking maternity,
paternity, parental or long-term care leave. Workplaceharassment undermines personal dignity and integrity.
Such unfair acts, which degrade the workplaceenvironment, should never be permitted. Based on thisrecognition, we provide employees with education toprevent harassment and, in FY2023, conducted an online
harassment prevention training seminar targeting all
managers. We also provide employees with contact points
to seek advice about harassment, including an internal
contact point that they can access by email as well as areadily accessible external contact point. To protect thevictims of harassment, we have also set rules to safeguard
the privacy of anyone who uses the advisory service andprevent any disadvantageous treatment of them.

Sustainability

Companies are required to avoid human rights
infringements recognizing the fact that they may havedirect and/or indirect impacts on human rights throughtheir business activities. Accordingly, Nippon Yakin Kogyo
respects and protects the human rights of all theemployees based on the code of conduct. We determined
the rule to prevent harassment set out to clarify thesuitable actions to be taken in the Company. We alsoestablished our own internal consulting and reporting
system to promptly detect and take corrective action
against unfair acts by organizations and individuals within
the Group and formulated Nippon Yakin Kogyo Group
Helpline Rules. In 2020, Japanese government
determined the National Action Plan on Business andHuman Rights, since then issues related to human right,
including those related to supply chains, have been
attracting considerable attention. In response, Nippon
Yakin Kogyo aims to create an even better system thanmandated by the above government rules to protect
human rights based on the recognition of the importanceof the issue with ongoing discussions at the meetings of
the Sustainability Strategy Promotion Committee.

Outline of
Nippon Yakin Kogyo

Issue of Materiality 4: Creation of workplaces where all people can work with equality and satisfaction

Issue of Materiality 4: Creation of workplaces where all people can work with equality and satisfaction

Empowerment of women
Nippon Yakin Kogyo is taking on the challenges ofproactively employing women and assigning them to diverse
workplaces and of providing women with workplaces where
they can work with peace of mind. To meet thesechallenges, we are implementing the following initiatives.
First, we have set the target of increasing the rate of
women hired as candidates for executive positions to atleast 20% of the total number of candidates in our action

plan made in line with the Act on the Promotion of Female
Participation and Career Advancement in the Workplace.
Among the 15 such employees who joined the company
in April 2022, four are women.
We have a total of 12 female production operators asof April 2022. To help our female operators work in greater
comfort, we have introduced electric tools, workbenches
and lifters to reduce the physical load imposed on them.
We have also installed shower rooms and powder rooms
for exclusive use by female employees.

Action plan based on the Act on the
Promotion of Female Participation andCareer Advancement in the Workplace*

1 Period
April 1, 2022 to March 31, 2025

2 Our challenges
 roactive employment of women and theirP
assignment to diverse workplaces
Provision of workplaces where women canwork with peace of mind

3 TargetsIncrease the number of women hired as
candidates for executive positions to at least
20% of the totalConsistently maintain the rate of paid
holidays taken at 70% or higher*W e disclosed the relevant information on our official website in
March 2022. To access this information, please visit thefollowing site (in Japanese only).
https://www.nyk.co.jp/pdf/about/women_plan.pdf
Powder room for exclusive use by female employees

Data on employees for last three years
Basic information

Turnover rate*
Men

Women

Total

1,043

Rate (%)
As of Apr. 1,
2020
Average age (years old)

88.4

7.7

-

As of Jan. 1, 2019

1,128

44

3.9%

41.3

41.1

41.3

As of Jan. 1, 2020

1,119

35

3.1%

Term of service (years)

19.2

19.2

19.2

As of Jan. 1, 2021

1,130

20

1.8%

No. of employees (persons)

1,082

98

1,180

Rate (%)
As of Apr. 1,
2021
Average age (years old)

91.7

8.3

-

41.4

40.3

41.3

* The turnover rate was calculated by including retirees (who did not wish to
be reemployed and who were transferred to other Group companies) inaddition to those who resigned from the company for their own reasons

Term of service (years)

19.1

18.3

19.0

No. of employees (persons)

1,077

102

1,179

Rate (%)
As of Apr. 1,
2022
Average age (years old)

91.3

8.6

-

41.7

40.2

Term of service (years)

19.6

18.1

31

91

No. of employees No. of those who
Turnover rate
(persons)
resigned (persons)No. of employees (persons)

NIPPON YAKIN KOGYO Sustainability Report 2022

1,180

Rate of employment of people with disabilities
2019

1.89%

41.6

2020

2.00%

19.4

2021

1.93%

Outline of
Nippon Yakin Kogyo

Educational system for production operators

Our approach

Online collective training
Head office

Issue ofMateriality 2

We introduced a remote online communication system tomake it possible for employees to receive training,participate in group discussions from their own bases orfrom home because COVID-19 made it difficult to safely
gather people.

Issue ofMateriality 1

Provision of collective training through an
online conference system

For production operators, we clarify the skills necessary
for them to perform their jobs and formulate specificdevelopment plans to help them acquire those skills
through OJT and OFF-JT. We use an evaluation table tocentrally manage their education to help them develop theskills they need.
For new employees, we have a training system called“shop adviser” under which they receive one-on-one
education from senior staff members. Through thissystem, we hope to better motivate new employees while
also helping them promptly acquire the necessary skills as
they gradually adjust to the workplace.
In our safety education, we make effective use of VR
technologies to provide trainees with virtual experiences ofwork hazards in a safe and immersive manner, thereby
preventing accidents and raising their safety awareness.

Sustainability

In recognition of the structural changes in our businessenvironment, we are promoting human resource
development to ensure that Nippon Yakin Kogyo cancelebrate the 100th anniversary of the founding in 2025
and continue to achieve resilient and sustainable growth
beyond that date.

Nippon Yakin Kogyo’s
Value Creation Process

Human Resource Development

Kawasaki Plant
Web conference
Issue ofMateriality 3Group discussion

Employees working from home

Issue of Materiality 4:
Creation of workplaces where all people can work with equality and satisfaction

Branches

Oheyama Plant

Hands-on safety training using a VR system

Introduction of e-learning
We have a system to help career-track employees develop
their abilities. As a part of the system, we provide themwith online video training. We have thus improved theenvironment for learning by providing opportunities tolearn on a daily basis without restriction of when andwhere different from the conventional education style.
Under the system, employees can choose for themselves
the items they wish to learn depending on their job duties.

Training provided in FY2022 (Examples)- Training for new employees and follow-up training foryoung employees- Training for personnel evaluators- Training on how to instruct subordinates and juniorstaff members- “Shop adviser” training

Financial support for capacity building

Issue ofMateriality 5

We provide the financial support to take external training
to encourage career-track employees, manager
candidates and experts in practical operations, toindependently acquire additional skills outside of theirjobs. This includes correspondence courses and bookpurchases to boost their management, leadership, andfinancial skills, accounting knowledge and increasing their
IT literacy.

Issue ofMateriality 6

32

Issue of Materiality 4: Creation of workplaces where all people can work with equality and satisfaction

Measures for Work-Life Balance
Our approach

Workplace vaccination against COVID-19

We are implementing measures to help employees
maintain a work-life balance so that they can perform theirduties and achieve job satisfaction while also spendingtime outside the workplace meeting family responsibilities,
participating in their local communities and pursuing
personal goals, thereby leading a healthy and fulfilling life.

Major systems and initiatives
Results concerning the major systems and initiatives
SystemResults for FY2022

Childcare leave

6 people

Shorter working hours for childcare

10 people

Long-term nursing care leave

1 person

Shorter working hours forlong-term nursing care

Not usedNursing care leave for children

15 people (67.5 days in total)

For encouraging employees totake paid holidays

Rate of paid holidays used:42%

For the accumulation of
paid holidays*

30 people (298 days in total)* Employees can accumulate paid holidays not taken before the expirationof the two-year period and use them for specific purposes, such asrecuperation and volunteer activities.

To prevent the further spread of COVID-19, we started toprovide employees who wanted it with vaccination against
the disease in July 2021. We offered vaccines to a total ofaround 2,600 people through the workplace vaccination
campaign, including three additional rounds of vaccination
at our facilities.
We offered vaccines not only to our own employees
but also to their family members who wanted it as well as
employees of our partner companies and their families tohelp prevent the spread.

Workplace vaccination

Mental health measures
To help each employee to keep working in good physicaland mental health, we are implementing measures to help
them ward off mental illness and detect any issues at an
early stage. We conduct a stress check test of employees
every fall and annually provide employees in charge ofoccupational safety and health at each of our workplaces
with mental health training.

TOPICS

Construction of a new residential building for employees
In July 2022, our new employee housing condominium (composed of
80 units) was completed in Kawasaki-ku, Kawasaki City. We decided tointegrate the two aged residential buildings into one new building andincrease the number of units in order to provide employees withhousing support. Based on this decision, construction work was started
in April 2021.
The name chosen for the condominium was “Cradle Egawa,”
indicating our intention to provide employees and their families withsuitable homes for rest and rejuvenation and for starting their new life.
The new building for employees was constructed as part of our coremeasures related to society, specifically for the retention of diverse
human resources and enhancement of employee facilities. We hope thatthe green spaces surrounding the condominium will also contribute to therevitalization and beautification of the local community, as will theprovision of a community room housed within the condominium foractivities of the local residents’ association.

33

NIPPON YAKIN KOGYO Sustainability Report 2022

Community room

Outline of
Nippon Yakin Kogyo

Issue of Materiality 5: Establishment of sustainable partnerships

Nippon Yakin Kogyo’s
Value Creation Process

For corporate sustainability, companies need to understand what their stakeholders expect from them and what they areinterested in. To this end, Nippon Yakin Kogyo Group is promoting communication with various stakeholders, including local
communities. Through this communication we aim to help them deepen their understanding of the Group and to achieve
harmony and co-prosperity with them by listening to their opinions.

Stakeholder Engagement
Communication with local communities:
social contribution activities

Issue ofMateriality 3
Issue ofMateriality 4

Clean-up activity for the Amanohashidate sandbar
A total of 20 employees, including the head of the Plant,
participate in the activity to clean up the Amanohashidate
sandbar, which is regarded as one of Japan’s three mostscenic views, every spring and fall for the beautificationand protection of the scenic beauty.

Issue ofMateriality 6

34

Issue of Materiality 5:
Establishment of sustainable partnerships

Clean-up activity on a public road
Employees of Kawasaki Plant conduct a clean-up activity
on the public road in front of the Plant (the Itsukushima
Bridge [overpass] and Tonomachi Yakosen) twice amonth.

Issue ofMateriality 2

Summer festival
Together with the labor union, Nippon Yakin Kogyo annuallyholds a summer festival to reward employees for theirefforts and to promote exchange with the local residents’associations and others related to the company. (However,in FY2022 we canceled the event due to COVID-19.)

Issue ofMateriality 1

Kawasaki Plant
Inari festival
The Plant has an Inarishrine on the premises
where we hold a festival
every year on November 3.
We invite local residents toattend the festival, at which
we pray for the safe
operation of the Plant andfor the safety of the local area and also dedicate a dance
to the god of the shrine.

Sustainability

Nippon Yakin Kogyo, under the leadership of Kawasaki and
Oheyama Plants and in cooperation with the related Group
companies, communicates with local residents to help
them deepen their understanding of the Company and tocontribute to the creation of a safe and comfortable living
environment and the revitalization of local communities.

Oheyama Plant
Donation made to Yosano Town through the regional
revitalization support tax system
Through the regional revitalization support tax system(hometown tax system for companies), in November
2021, we donated 10 million yen to the regional
revitalization project implemented by Yosano Town, Kyoto
Prefecture, where Oheyama Plant is located. Specifically,
the donation was made for the construction of a storage
shed to protect the old Kaya Railway cars under the
town’s cultural asset protection and utilization project.
(The shed was completed in April 2022.)
In the shed, three steam locomotive cars, which had
been displayed in Kaya SL Square (operated by Miyazu
Kairiku Unyu Co., Ltd., an affiliate of Nippon Yakin Kogyo, andclosed in March 2020) were stored and exhibited. The threecars were transferred gratis from MIYAZU KAIRIKU UNYU
CO., LTD., to Yosano Town, and one of the cars is designatedby the national government to be an important cultural asset.
We will continue to contribute to the protection andpassing on of local culture and tradition while working tofoster harmony with the environment and society.

Issue of Materiality 5: Establishment of sustainable partnerships

Communication with shareholders and investors
Nippon Yakin Kogyo aims to further increase the corporate
value, for which we promote information disclosure toshareholders and investors in an appropriate manner andas necessary through year-end reports, reports publishedafter the end of the second quarter of each fiscal year, andother documents. We also hold briefing sessions attended
by the president twice a year for institutional investors toprovide explanations about our financial results andmanagement plans.
In 2019, as a new initiative, we invited individual
shareholders to take a tour of Kawasaki Plant. We
subsequently suspended this initiative due to COVID-19
but are hoping to resume it sometime in the future whenconditions allow.

Communication with customers
As we are required to supply products that meet theneeds of our customers, we aim to continuously earn theirtrust by providing the industry’s top-level products andservices in terms of quality, due dates, cost, andtechnologies and solutions in order to be a sustainable
company.
Our products have a significant effect on the quality
and performance of the final products made bycustomers. Accordingly, it is essential for us tocommunicate appropriately with our customers at theconsulting stage, before we receive orders from them, andsubsequently, including at the manufacturing, delivery andfollow-up stages. While responding to changes in themarket environment including the trends for globalizationand carbon neutrality, we are sincerely working to meet
our customers’ requests from a long-term viewpoint.
For the provision of solutions, we are fosteringcommunication with customers mainly through theMaterial Solutions Sales Department. We offer advice on
product selection based on sample testing and property
confirmation, guidance on processing and welding
methods, and proposals that utilize our database andtechnical knowledge. Moreover, we closely cooperate withour customers for product improvements and thedevelopment of new products, thereby building evenstronger relationships with them.

Procurement
Our approach
For responsible mineral procurement, a range of guidelines
have been set across the globe including the Dodd-Frank
Wall Street Reform and Consumer Protection Act of theUnited States, the OECD Due Diligence Guidance and the
EU Conflict Minerals Regulation. Moreover, the types ofminerals included in the target are increasing.
In addition, the risk coverage has been expanded toinclude all human rights violations, and the geographic
area covered has been expanded to include “high-riskareas (CAHRAs).”
Most recently, sanctions have also been expanded
following Russia’s invasion of Ukraine and stakeholders
are promoting due diligence across the supply chain.
Nippon Yakin Kogyo is working to avoid the risk of any
involvement in human rights abuses or armed conflict bymonitoring industry trends and enhancing information
sharing and cooperation between related departments forthe detailed examination of the supply chain.

35

NIPPON YAKIN KOGYO Sustainability Report 2022

Management of conflict minerals
We have established the Conflict Minerals Management
Rules (hereinafter, “the Rules”) for the management of
so-called Conflict Minerals (i.e., gold, tin, tantalum,
tungsten, and other minerals themselves, or alloying
materials containing such minerals).
We obtain the CRT (Cobalt Reporting Template) and
CMRT (Conflict Minerals Reporting Template) from raw
material suppliers via trading companies, and otherwise
collect and confirm information on conflict minerals.
We also incorporate into our rules and regulations
inquiries about raw materials and other supply chain
issues related to countries and regions of human rights
concern, such as the Xinjiang Uyghur Autonomous
Region.
At Nippon Yakin Kogyo, the Export Trade Control
Committee deals with issues related to conflict minerals.
The Export Trade Control Committee checks theCompany’s responses to conflict minerals, which are also
examined through internal auditing, and reports the detailsof its activities at the Management Meeting.

Corporate GovernanceOur approachAppointment/dismissal

Issue ofMateriality 4

General meeting of shareholders

Issue ofMateriality 3

For our Board of Directors to wholly fulfill the management
supervisory role and respond promptly to changes in the
management environment, the number of directors is set
at nine. Moreover, in order to ensure the transparency andobjectivity of our business management by incorporating
the viewpoints of third parties in decisions made by the
Board, we have been appointing outside directors sinceJune 2013, and presently have four outside directors.

Issue ofMateriality 2

Corporate governance system

Issue ofMateriality 1

Our management philosophy states our commitment to“Bring about progress and enriched quality of life tosociety by providing superior products.” We are working
to do this in our business activities to meet the
expectations and trust of all our stakeholders including
shareholders and business partners and thereby
increasing our corporate value. For our sustainablecorporate growth and the medium- to long-term increaseof our corporate value, we need to pursue effective
corporate governance. To ensure the soundness of ourbusiness management and further increase our credibility
as a company, we are striving to enhance our corporate
governance as one of our priorities, for which we aredisclosing our management information in a timely andappropriate manner while ensuring compliance.

Sustainability

Nippon Yakin Kogyo has introduced the executive
officer system to increase the efficiency and speed ofbusiness execution while clarifying the related responsibilities
and roles. We presently have 15 executive officers.
Furthermore, as an optional advisory organization for
the Board of Directors, we have the Nomination andCompensation Committee, which is chaired by thepresident and composed of four members who serve as
outside directors of the Company. This committee
deliberates the following issues in a fair and transparent
manner and reports to the Board as appropriate:
important issues related to the appointment andcompensation of directors and officers including thoserelated to the nomination of candidates for director andauditor positions; dismissal of directors; appointment anddismissal of executive officers; and compensation paid to
directors and executive officers.
Nippon Yakin Kogyo also appoints auditors to ensure
the appropriate auditing of the directors’ fulfillment of theirduties. Presently, our Audit & Supervisory Board iscomposed of four members (two full-time auditors andtwo outside auditors). Auditors attend the important
meetings such as the Board of Directors and check
important final decisions to audit the execution of duties
by the directors. We also have the Internal Control Officeunder the direct control of the president, which carries out
internal audits on the execution of business by theentire Group.

Nippon Yakin Kogyo’s
Value Creation Process

It is essential to create a system to help leaders make managerial decisions in a prompt and appropriate manner, while monitoringthem and providing them with appropriate advice for a company to achieve sustainable growth while increasing the corporate
value continuously on a medium- to long-term basis. Based on this recognition, Nippon Yakin Kogyo is striving to advance thecorporate foundation under an even better governance system. Hereby, the system can progress business smoothly by meetingthe changing requests and expectations of the public based on the background of the continuously changing social environment.

Outline of
Nippon Yakin Kogyo

Issue of Materiality 6: Advancement of corporate foundation for adaptation to the social environment

Appointment/dismissal

Appointment/dismissal

ReportingBoard of Directors

Nomination andCompensation Committee

Accounting auditor

Audit & Supervisory Board
Auditing

Issue ofMateriality 5(Advisory board)

Auditors
Cooperation

Decision and supervision

Auditing

Auditing

Business execution

Internal reporting system

Management Meeting*1

Helpline

President
Compliance Committee

Managing Executive
Officer Meeting*2

Reporting(Internal audit staff)(Contact
points)Internal Control OfficeInternal Control Evaluation
Team for Financial Reporting

Internal auditing

Promotion- Full-time auditors- Head of the Internal
Control Office- Head of the General
Affairs Dept.
- External contact
point

Head office departments, other bases, and affiliated companies*1 Management Meeting: Held weekly in principle with the participation of the directors and full-time auditors*2 Managing Executive Officer Meeting: Held with the participation of directors who also serve as executive officers. Members of the Audit & Supervisory Board
examine the meeting materials and participate as necessary or receive explanations from the related departments.

36

Issue of Materiality 6:
Advancement of corporate foundation for adaptation to the social environment

Cooperation

Issue of Materiality 6: Advancement of corporate foundation for adaptation to the social environment

Compliance
Our approach

Compliance activities

We established the Compliance Committee to make surethat all directors, officers and employees are aware ofcorporate ethics and the importance of complying withlaws and regulations. The Committee deliberates
compliance-related policies and monitors compliance withthe policies in cooperation with the related departments.
We have also posted our declaration on compliance on
our official website to inform the public of our commitment
to continuously enhancing our compliance awareness.
For our declaration on compliance, please visit thefollowing website (only in Japanese):

Through the Compliance Committee, the members, who
are departmental heads, share information about theannual compliance education plans and how they are
implemented as well as compliance-related cases andmeasures across the Group. The secretariat of theCommittee supports the activities by providing information
to the members and employees through the intranet andby giving them cautions and helping them increase theircompliance awareness.

Internal reporting system (Helpline)

https://www.nyk.co.jp/about/governance/compliance/compliance.html

Internal control
We set out our code of conduct to show the items to becomplied with by all of our directors, officers andemployees in our effort to conduct our corporate activities
appropriately by complying with laws and regulations bothin Japan and abroad and respecting social norms. Also,
through the Compliance Committee headed by one of ourfull-time directors, we have established a system toprevent legal noncompliance or any acts that might leadto noncompliance.
For our action guidelines and code of conduct, pleaserefer to the following website (only in Japanese):

Nippon Yakin Kogyo Group has established rules
regarding the internal reporting system (“Nippon Yakin
Kogyo Group Helpline Rules”). For the business activities
of Group companies, employees can seek advice fromand make reports to the contact points set by Nippon
Yakin Kogyo upon detecting any acts that constitute or
may constitute a violation of laws, regulations or theCompany’s code of conduct. We have several cases ofreports being made/advice being sought each year, andto make it function more effectively we are continuously
raising awareness of the importance of making internalreports and whistleblower protection through our in-housemagazine and others.

https://www.nyk.co.jp/about/governance/compliance/principles.html

Internal reporting system: Nippon Yakin Kogyo Group Helpline
Group employees*, temporary workers*
and directors and officers

Business partners** Including employees who
have resigned from their jobs
within the past one year

Reporting and consultation(anonymous use is possible)

Notification
Internal contact point 2
Head of the Internal Control Office or
Head of the General Affairs Dept. (Head office)External contact point
Law firm

Compliance Committee’s investigation team
Reporting and proposal

Audit & Supervisory Board

37

NIPPON YAKIN KOGYO Sustainability Report 2022

President

Implementationof the measures(Including punishment basedon the working rules)

Investigation

Examination of
the measures

Corrective and reoccurrence
prevention measures

Cooperation

Alleged perpetrator,
head of the dept. or company

Contact Internal contact point 1
point
Full-time auditor

Outline of
Nippon Yakin Kogyo
Nippon Yakin Kogyo’s
Value Creation Process

Risk Management
Our approach

Issue of Materiality 6:
Advancement of corporate foundation for adaptation to the social environment

38

Issue ofMateriality 5

We are working to minimize the risks posed to us throughrisk management. However, we are still subject to certain
inherent and residual risks, and in the event that any suchrisks or other unexpected risks do materialize, we will
implement our emergency response system as planned in
preparation against such risks. We are thus appropriately
managing risks by formulating a plan to collect andcommunicate information, launch an emergency responseorganization, and set emergency response measures incase of an emergency.

Issue ofMateriality 4

Nippon Yakin Kogyo has acquired around 140 patents inJapan to maintain the technological superiority in highperformance alloys, and we also have a range of patentrights outside Japan, including in China.

Issue ofMateriality 3

Emergency response system

Management of intellectual property

Issue ofMateriality 2

Accordingly, Nippon Yakin Kogyo Group has set out
Nippon Yakin Kogyo Group Risk Management Rules. The
Company’s president serves as the risk management
supervisor, and the director in charge of each department,
chairpersons of the permanent committees, and thedepartmental managers in charge serve as risk managers.
Under their leadership, we implement the following risk
management process: (1) Identify risks; (2) Analyze andevaluate the risks and decide on countermeasures; and(3) Formulate and carry out plans to implement themeasures. As for specific risk management activities, we
discussed at the Management Meeting, Sustainability
Strategy Promotion Committee and others for thepromotion of these activities as regular activities. In
addition, according to the types of risks, the permanentcommittees, such as the Compliance, Environmental,
Quality Assurance and Export Trade Control Committees
conduct activities to deal with the relevant risks. We also
monitor each Group department to check their risk
awareness and responses, and review the monitoring
results under the leadership of the heads of theadministrative departments to conduct group-wide
working group activities.

Issue ofMateriality 1

Management system

We have various information security-related rules,
including the Information Security Policy, Information
Security Implementation Criteria, Confidential Information
Management Rules and Information Systems Security
Management Rules. These rules have been establishedwith a view to protecting the safety of the information that
we own as well as the information systems that we use,
while also ensuring the protection and appropriate
management of our internal information, including
personal information. We have thus clarified our rules on
information security management, including our policies
on information security management measures, protectionof our trade secrets, ensuring of data confidentiality,
completeness and availability, and the prohibition of
insider trading. Moreover, we are working to implement
the rules in an effective manner.
The Information Security Implementation Criteria
include policies on the information security management
system and punishments for noncompliance. We takeinventory of our information assets and carry out a risk
assessment of the assets once every year to identify the
related risks and their magnitude and assess the level ofvulnerability to incidents as well as the possible frequency
of incidents. Based on the risk assessment results, weupdate the list of information security risks that we will
manage and eliminate through spending up to the amountavailable for each risk. We also educate relevant personnel
about the management of information security based on
the risk assessment results, the updated list and the resultof implementing the measures. The secretariat annuallyreports on the maintenance and management of
information security, the updated list and security-related
incidents and problems at the Management Meeting.

Sustainability

Nippon Yakin Kogyo Group defines risks as factors that
could hinder Group companies from implementing theirbasic management policies (management philosophy,
action guidelines and code of conduct) and management
plans (business policies, medium-term management plans
and budgets). We are working to ensure the corporatesoundness and sustainability of the Group by precisely
understanding the risks posed to our business
management, establishing a system to appropriately
manage the risks, and implementing the system in an
effective manner.

Information security

Issue of Materiality 6: Advancement of corporate foundation for adaptation to the social environment

List of Directors
Directors
President and Representative Director

Hisashi Kubota
Board of Directors meeting participation
rate: 100% (16/16 times)
1

2

4

Representative Director and Senior
Managing Executive Officer

Shingo Kobayashi
In charge of the General Affairs, Human
Resources and Accounting Departments
Board of Directors meeting participation
rate: 100% (16/16 times)
1

4

6

Director and Managing Executive Officer

Director and Managing Executive Officer

Shigemi Urata

Hiroshi Toyoda

In charge of the Corporate Marketing
Division (Sales Planning Dept., Material
Solutions Sales Dept.), six branches
engaging in sales activities, the Overseas
Sales Department, and overseas subsidiaries

In charge of the Corporate Planning, Legaland Public Relations, and IT Systems
Department

Board of Directors meeting participation
rate: - (Newly appointed)
1

2

5

Board of Directors meeting participation
rate: - (Newly appointed)
1

6

4

5

6

Director and Managing Executive Officer

Hisashi Yamada
General Plant Manager of Kawasaki Plant
Board of Directors meeting participation
rate: - (Newly appointed)
1

3

6

Audit & Supervisory Board members
Full-time auditor

Full-time auditor

Yasuhiro Kiuchi

Yasuhiko Kobayashi

Board of Directors meeting participation
rate: 100% (16/16 times)
Audit & Supervisory Board meeting
participation rate: 100% (18/18 times)

Board of Directors meeting participation
rate: 100% (16/16 times)
Audit & Supervisory Board meeting
participation rate: 100% (18/18 times)

1

1

2

4

5

6

4

6

Outside auditor

Outside auditor

Yasuji Kawabata

Tetsuo Hoshiya

Board of Directors meeting participation
rate: 100% (16/16 times)
Audit & Supervisory Board meeting
participation rate: 100% (18/18 times)
1

2

Outside director,
Yakiniku Sakai Holdings Inc.
Board of Directors meeting participation
rate: 100% (13/13 times)
Audit & Supervisory Board meeting
participation rate: 100% (11/11 times)
1

39

NIPPON YAKIN KOGYO Sustainability Report 2022

4

5

Outline of
Nippon Yakin Kogyo
Nippon Yakin Kogyo’s
Value Creation Process

Outside directors
Outside director

Takashi Michibayashi

Kenji Tani

Board of Directors meeting participation
rate: 100% (16/16 times)
1

4

5

Outside director,
Daiki Aluminium Industry Co., Ltd.
Board of Directors meeting participation
rate: 100% (13/13 times)
2

5

Outside director

Taizo Suga

Naomi Eto

Board of Directors meeting participation
rate: 100% (13/13 times)

Outside director, Morinaga & Co., Ltd.
Outside director,
The Nisshin OilliO Group, Ltd.

5

Issue ofMateriality 2

Outside director

4Issue ofMateriality 1

11

Sustainability

Outside director

Board of Directors meeting participation
rate: - (Newly appointed)
1

1

Corporate
management

4

Financial, accounting
and personnel affairs

2

Sales (in and outside
Japan) and marketing

5

Global issues

3

Manufacturing,equipment and R&D

6

IT and risk
management

Issue ofMateriality 4

Nippon Yakin Kogyo categorizes the skills required of the directors into
those for 1 corporate management; 2 sales (in and outside Japan) andmarketing; 3 manufacturing, equipment and R&D; 4 financial, accounting
and personnel affairs; 5 global issues; and 6 IT and risk management.
The skills possessed by each of the Board of Directors members are shownby using the icons indicated on the right.

6

Issue ofMateriality 5

Message from one of the new directors
operating in an energy-intensive industry, carbon neutrality
poses a great challenge. However, the Company has alreadybeen steadily implementing measures for this, including starting
the operation of a highly efficient electric arc furnace at
Kawasaki Plant this year.
On the other hand, it is also essential for the Company toensure the diversity of the personnel so that it can respond tochanges that are underway in our society. Also, the first priority
should always be given to appropriately ensuring quality andthe safety of all people related to the business operations.
Going forward, from the viewpoint of society at large, I hope
to monitor whether or not Nippon Yakin Kogyo is implementing
necessary measures in an even more proactive manner and ismaking adequate efforts to raise the public’s awareness of themeasures, and to then express my opinions frankly to theCompany.
Outside Director

Naomi Eto
40

Issue of Materiality 6:
Advancement of corporate foundation for adaptation to the social environment

I have worked for 2 companies that have completely different
features for a total of more than 40 years, specifically, a leading
manufacturer that was founded in Japan before the war and a
relatively new company operating in the restaurant industry.
During those years, tasked with issues related to PR, theenvironment and shareholders, I served as a point of contact
between the companies and society.
Over this period, I have examined the companies from theviewpoint of society at large and hope to draw on myexperience to contribute to the advancement of Nippon Yakin
Kogyo’s sustainability-oriented management and thedevelopment of the business through sustainability
management.
Nippon Yakin Kogyo has already implemented a range ofinitiatives that contribute to the solution of social issues,
including the use of recycled materials at a high rate andsupporting environment- and energy-related projects throughthe supply of high-performance alloys. For a company

Issue ofMateriality 3

About the skill icons

4Issue of Materiality 6: Advancement of corporate foundation for adaptation to the social environment

The Board of Directors and the Audit & Supervisory Board
Evaluation of the Board of Directors’ effectivenessNippon Yakin Kogyo deems it essential to ensure theeffectiveness of the corporate governance for thesustainable growth and to increase the corporate value on
a medium- to long-term basis. To this end, we have been
evaluating the effectiveness of the Board of Directors
since FY2017 by checking the results of and progresswith our corporate governance measures and identifying
related problems.
For the evaluation, we send a questionnaire survey toeach member of the Board of Directors and of the Audit &Supervisory Board, asking them to perform a selfevaluation by answering the questions. Then, under theleadership of outside directors, the answers are analyzed,
evaluated and discussed by the Board of Directors.
Regarding the evaluation results for FY2022, high marks
were given for the Company’s prompt implementation of
measures for sustainability. Specifically, the Sustainability
Strategy Promotion Committee was founded to deal withenvironment, social and governance (ESG) issues, theBoard of Directors discussed and decided on the issuesof materiality for the Company based on the risks andopportunities identified in consideration of theenvironmental issues, and the Company published theSustainability Report 2021. In consideration of the detailsof other answers, it was concluded that the effectivenessof the Board of Directors was well maintained.
Going forward, the Board of Directors will formulate
and implement measures to deal with the issues identified
and shared through the evaluation process. In FY2023,
we will continue to discuss and promote measures forsustainability-related issues of materiality based on therecognition that our stakeholders are expecting us tocontinuously make proactive responses to ESG issues.
We will also examine how to improve the Board of
Directors effectiveness evaluation framework and theevaluation method.
For details of the evaluation results about theeffectiveness of Nippon Yakin Kogyo’s Board of Directors,
please refer to the following website (only in Japanese).

Compensation system
The compensation paid to our directors is composed of(1) basic salary; (2) stocks of the Company; and (3)bonuses for directors/officers. However, to ensure their
independence from management as well as theirobjectivity, outside directors and Audit & Supervisory
Board members are paid only a basic salary.
For the first component of compensation, basic salary,
the amount is set by job rank and is paid at a fixedamount in cash on a monthly basis. For the second
component, as a medium- to long-term incentive thataligns the directors’ interests with those of shareholders,
restricted stock units are distributed to directors excluding
outside directors in the amount equivalent to 10% of theirbasic salary at a certain timing each year. For the third
component of compensation, as a short-term incentive, abonus is paid to directors according to their individual
performance. The amount paid in the form of stocks isequivalent to one-tenth of that paid as basic salary, while
the bonus is linked to the Company’s performance andmay not be paid depending on such performance.
For the total amount of basic salary and bonus paid,
the Board of Directors makes a resolution in reference tothe report made by the Nomination and Compensation
Committee, which is mainly composed of independent
outside directors. The amount paid to each director isdecided by the president, being commissioned by the
Board of Directors and based on the deliberation report
made by the Nomination and Compensation Committee.
The total amount paid in the form of stocks is decided
by the Board of Directors in reference to the deliberation
report made by the Nomination and Compensation
Committee. The specific amount paid to each director isdecided by the president in the form of a certain ratio totheir basic salary.
The basic salary to be paid to individual auditors is
decided by themselves in reference to the deliberation
report made by the Nomination and Compensation
Committee.

https://www.nyk.co.jp/about/governance/board.html

Total amount of compensation paid in FY2022
Category

No. of targeted
persons(persons)

Total payment
amount(millions of yen)

Directors(Outside directors)

8(4)

Auditors(Outside auditors)

5(3)

Total payment amount by category (millions of yen)
Basic salary

Performance-linked
compensation (bonus)

Non-monetary compensation(restricted stock units)

230
(20)

137
(20)

81
(-)

12
(-)

38
(12)

38
(12)

(-)

(-)

Notes 1. The total payment amount includes the payments made to one director and one auditor who resigned during the fiscal year.
2.	As performance-linked compensation, the Company pays a bonus to directors excluding outside directors. For the calculation of the amount to be
paid, the consolidated operating profit is referred to as it is one of the targets listed in the medium-term management plan. In addition, the total amountof dividends paid to shareholders and others is taken into consideration in deciding whether or not to pay a bonus to directors and in determining thetotal payment amount. For the fiscal year, consolidated operating profit totaled 13,966 million yen.
3. As non-monetary compensation, the Company distributes restricted stock units (RSUs) to directors excluding outside directors.

41

NIPPON YAKIN KOGYO Sustainability Report 2022

Outline of
Nippon Yakin Kogyo

Financial Performance

Nippon Yakin Kogyo’s
Value Creation Process

Financial Performance
FY2018FY2019FY2020

FY2021

FY2022

Net sales (millions of yen)

4,168

9,443

7,838

6,145

13,966

Operating profit margin (%)

3.50

6.57

5.75

5.46

9.38

Ordinary profit (millions of yen)

3,386

8,178

6,342

4,990

12,807

4,575

7,686

5,325

3,764

8,471

Net assets (millions of yen)

41,82947,94051,131

55,127

62,169Total assets (millions of yen)

147,624

150,115

158,568

161,230

187,494

5,031

9,172

7,979

11,182(697)(2,852)(6,207)(5,511)(6,776)(15,656)(2,475)(2,417)

8,692(7,995)15,049

Capital investment (millions of yen)

5,812

4,854

5,028

12,083

12,636Return on Equity (ROE) (%)

11.6

17.1

10.8

7.1

14.4

Earnings per share (EPS) (yen)295.85497.02350.09247.85561.25

Dividend per share (DPS) (yen)

4.0

6.0

33.0

45.0

120.0

2,704.48

3,099.68

3,368.36

3,629.02

4,121.13

Profit attributable to owners of parent(millions of yen)

Other financial data (Consolidated)
Cash flows from operating activities(millions of yen)

Cash flows from investment activities(millions of yen)

Cash flows from financing activities(millions of yen)Book-value per share (BPS) (yen)(Note) On October 1, 2019, we consolidated 10 stocks into one stock.
We calculated the BPS and EPS based on the assumption that the stock consolidation was carried out at the beginning of FY2018.

42

Issue of Materiality 6
Advancement of corporate foundation for adaptation to the social environment

Operating profit (millions of yen)

Issue ofMateriality 5

148,925

Issue ofMateriality 4

112,482

Issue ofMateriality 3

136,373

Issue ofMateriality 2

143,740

Issue ofMateriality 1

119,091

Sustainability

Profit & Loss Statement and Balance Sheet (Consolidated)

Contact information

Nippon Yakin Kogyo Co., Ltd.
Corporate Planning Department
1-5-8 Kyobashi, Chuo-ku, Tokyo 104-8365 Japan
Tel: +81-3-3273-3612 Fax: +81-3-3273-3618

https://www.nyk.co.jp/en/

Published: January 2023