NOK CORPORATIONSUSTAINABILITYREPORT
2022

Company Profile

Table of Contents

Company NameNOK CORPORATIONHead Office

1-12-15 Shiba Daimon, Minato-ku, Tokyo 105-8585, Japan

Contribution to Society through Products andTechnologies

3

Established

December 2, 1939

Message from the President

5FoundedJuly 9, 1941

Capital23,335 million yen (as of March 31, 2021)

Concept of Sustainability, Information Disclosure,and the Promotion Structure

8

Number of Employees 37,613 (Consolidated, as of March 31, 2022) /3,489 (Non-consolidated, as of March 31, 2022)

We are “thesavior”, for thesealing & circuit
technologies

Corporate History of NOK Group9

Net sales

682.5 billion yen (Consolidated, FY 2021) /226.3 billion yen (Non-consolidated, FY 2021)

Products

11

Security Code7240

NOK Group's Global Operations

13

Business Lines

Manufacturing, importing, and selling seal products, industrial
mechanical parts, hydraulic equipment, plant equipment, nuclear
power equipment, synthetic chemical products, and electronic
and various other products; installation work and others.

2021 Financial Highlights

152021 Business Highlights

19

NOK Group’s Activities and SDGs

21

Contact

NOK Group's Business and SDGs

23

United Nations Global Compact

24

About the Sustainability Report in generalSpecial Feature: Information Disclosure Based on
TCFD Recommendations

25

Corporate Affairs Office, NOK CORPORATION
1-12-15 Shiba Daimon, Minato-ku, Tokyo 105-8585, Japan
TEL: +81-3-5405-6372 FAX: +81-3-5405-6379

Environmental Report

About the Environment part of the report

Environment

Environmental Management Office, NOK CORPORATION
4-3-1 Tsujido-Shinmachi, Fujisawa City, Kanagawa 251-0042, Japan
TEL: +81-466-35-4612 FAX: +81-466-35-4631

Social Report

Editorial Policy
This report is designed to provide stakeholders with an understanding of NOK's approachto sustainability and its initiatives. To help you understand the overall picture regarding
sustainability, we have organized the data in terms of ESG (Environmental, Social andGovernance), and compiled related numerical data into an ESG Data Book.
We expect this report as an important means of improving communication with you.
We would appreciate your candid opinions and thoughts about it.
• Period Covered
Most of the activities described in this report took place in fiscal 2021 (April 1, 2021,
to March 31, 2022)*Some activities are initiatives that began before the target period, as well very recent activities

28

Human Rights

45

Labor Practices

47

Fair Operating Practices

54

Quality Assurance

57

Community Participation and Development

62

Governance Report
Corporate Governance

64

Third-Party Opinion on the Sustainability Report 2022

74

NOK CORPORATION SUSTAINABILITY REPORT 2022

2

• Covered Organizations
NOK Corporation and 110 domestic and overseas Group Companies• Date of issue
October 2022 (Previous report: September 2021, Next report: October 2023)• Referenced Guidelines and Initiatives- ISO 26000:2010 - Guidance on social responsibility- Global Reporting Initiative (GRI) Standards- United Nations Global Compact- Task Force on Climate-related Financial Disclosures
NOK Corporation has been listed on FTSE4Good Index Series, FTSE Blossom Japan
Index, FTSE Blossom Japan Sector Relative Index.

1

NOK CORPORATION SUSTAINABILITY REPORT 2022

Contribution to Society through Products and Technologies

Potential Contributions to the SDGs through the NOK Group’s Products and Technologies

The functions of the NOK Group's products are as diverse, such as sealing, fluid control, vibration and sound proofing, low friction, and membrane separation.
These are incorporated into our customers' products to conserve the environment by “preventing emission or leakage,” “conveying efficiently,” “reducing
load,” and "extending service life.
The NOK Group is committed to providing products and developing new technologies to help realize a sustainable society.

Stern tube seals

Fixing belts and pressure rollers

AircraftDronesArtificial satellites

Marine vessels

Rockets“Rustector” series, sealing
and grease products toprevent from corrosion on
aluminum

Building inspection system

CameraAstronomical
telescopes

Seals for aircraft
and rockets

Sharing service

Membrance module ofwater-purifier

Fishing tackle

Office automationequipment
Water purifiers

Industrial robot

Pet supplies

Production machineryand equipment

Security Camera

O-rings

Y
TOR
FAC

Housingequipment
Next-generation vehicle

BicyclesMotorcycle

Platform screen door

Bullet train
Construction machinery

Personal computer

Truck

Smartphone and tablet

Power generation
plant

HOS

Amusement equipment

P I TA

Agricultural chemicals

L

Agricultural machinery

Smartwatch

Cosmetic

Products for financial
terminals

Medical andhealthcare devices
ATM

Flexible printed circuits(FPCs)

Automobiles

Multi-lingual guidance system

Traffic signs & safety devices

Oil seals

3

Polyurethane rubber
products

NOK CORPORATION SUSTAINABILITY REPORT 2022

Precision rubber andplastic components

NOK CORPORATION SUSTAINABILITY REPORT 2022

4

Message from the President

We will accelerate our growth toward 100 year
anniversary in 2041
Representative Director, Chief Executive Officer,
NOK CORPORATION

Masao Tsuru

We provide safety and comfort with ourtechnologies to the world
NOK celebrated its 80-year anniversary in July 2021.We are truly
grateful to our customers, shareholders, suppliers, local communities,
and employees for helping us reach this milestone of 80 years since ourfounding in 1941.
Since April 2021, when I became president, I have engaged in aseries of dialogues with employees and other stakeholders to deepen
discussions about the value and purpose of the NOK Group. I was once
again reminded that we at the NOK Group is a company that provides“safety” and “comfort” to the world through our proprietary technology,
and we want to grow further by pursuing it. We are proud of our historyof supporting society by providing unique and useful products, such as oil
seals and O-rings that deliver high safety, vibration and sound insulation
products that provide comfort, and flexible printed circuits (FPCs) thatraise the reliability and functionality of electronic devices.

Implementing a management spirit that respects
human dignity
At the NOK Group, which believes that people are the foundation ofboth the Company and society, we emphasize the practice of humane
management above all else. Human-oriented management refers tomanagement that respects the lives and values of individuals. Now
that we have experienced the pandemic, I feel that the way people
approach their work, how they position their work as part of their life,
and what they look for in a company at each life stage has changed.
To further entrench the practice of people-oriented management,
we are currently reviewing our personnel system so as to provide a
workplace environment where each employee can shine. In addition
to promoting the design of systems to implement diverse work styles
and introducing a personnel system in which work performance andchallenges are evaluated, we will focus on creating a workplace where
psycological safety is ensured so that everyone can freely express
their opinions and ideas. In addition, we will implement measures topromote diversity and inclusion that attract a diverse range of people
and encourage them to demonstrate their strengths, as well as lift
employee engagement.

5

NOK CORPORATION SUSTAINABILITY REPORT 2022

A human rights policy developed

Operating effective BCM

As a precondition for management that respects people, we have aphilosophy of respect for basic human rights. Based on this philosophy,
we signed the United Nations Global Compact (UNGC) when I assumed
the presidency in April 2021.We also formulated the NOK Group Human
Rights Policy in December 2021 to familiarize all internal and external
stakeholders with the Group's basic stance on human rights. We willfurther reinforce our efforts to protect human rights to ensure that
the NOK Group does not overlook forced labor and discrimination,
both internally and externally. In the future, we will communicate anddisseminate the NOK Group Human Rights Policy throughout thecompany, and establish and implement a human rights due diligencesystem based on this policy.

We have built a Business Continuity Management System (BCM) to
prepare for natural disasters, fires and explosions, serious accidents andpandemics. Through this system, we were able to resume production
quickly despite the fact that the Fukushima plant and six affiliatedcompanies were affected by the earthquakes that occurred off the coastof Fukushima in February 2021 and March 2022.
In addition, with regard to the pandemic, we have long consideredissues and measures to address the risk of losses. Although we haveoften struggled to respond to the current outbreak of COVID-19 throughconventional risk management, we believe the fact that we were able
to prepare a manual for COVID-19 response before the government
established its own guidelines for preventing the spread of COVID-19,
and that we were able to take appropriate actions in line with the manual,
was a result of our prior consideration. We could overcome these difficult
conditions, such as the lockdowns in Southeast Asia and China, withouthalting production. We will continue to take measures to ensure thesafety of our employees and to ensure the continuation of our corporate
activities, including thorough infection prevention measures, encouraging
employees to work from home, and revising our rules for dealing withaffected persons as well as our attendance system and rules, to avoid
inconveniencing our customers.

On the progress of the three-year plan
Responding flexibly to change and renewing our quest to be asustainable company
In April 2020, we launched a three-year plan under the slogan“Responding flexibly to change and renewing the quest to become asustainable company.” Since April 2021, in view of the ongoing pandemic,
we have been promoting a two-year revival plan that includes revised
numerical targets for the fiscal years ended March 31, 2022 and March
31, 2023.In addition, we will introduce return on assets (ROA), which
represents the overall profitability of a company, as an indicator tostrengthen our constitution, aiming for a state that can maintain a ratio ofat least 5%.
In the Fiscal year ended March 31, 2022, the second year of thethree-year medium-term management plan, net sales were 682.507
billion yen, operating income was 31.337 billion yen, and ordinary income
was 46.168 billion yen. Although the outlook remains uncertain andunpredictable due to the spread of COVID-19, shortages in the supplyof semiconductors and other components, soaring raw-material prices,and the impact of the situation in Russia and Ukraine, we will make every
effort to achieve the three-year plan.

Making electrification one of the pillars of our business
Since its founding, the NOK Group has continued to develop andprovide products that are useful and safe for society. Our strengths
lie in our achievements, as well as the material technology, evaluation
and analysis technology, and manufacturing technology that we havedeveloped along the way. We will further refine these advantages andposition electrification as one of the pillars of our business, enabling us
to make the most of the NOK Group’s expertise and resources.
In addition, as one of the policies of our three-year plan, we havebeen promoting “weaning ourselves off the dependence on specificcustomers,” and in the electronic products business, which was primarily
used for smartphones, we are steadily expanding our sales channels forautomotive applications. In addition, we are pursuing industry-academia
collaborations, collaborations with other companies, and initiatives tocreate new businesses, and will further accelerate these activities.

Promoting digitalization
The NOK Group has positioned fiscal 2021 as the “first year of
digitalization,” and has formulated policies and promoted digitalization
activities. First of all, to raise awareness within the Company,
management has actively sent out messages and organized study
sessions and events. As a result, there is growing momentum acrossthe NOK Group for the concept of “We want to improve customer
service, improve operational efficiency, and reform work styles throughdigitalization, and build an ‘unrivaled QCD.*’” The ground is being laid fora concerted digital push. The next step is to draw up a specific vision andplan, and implement the plan to advance digitalization throughout the
NOK Group.
* Quality, Cost, Delivery

ESG management to increase corporate value
Toward a structure that promotes sustained growth andresponsible initiatives
In May 2021, the ESG Committee was established directly underthe Board of Directors in order to incorporate ESG into corporate
management. The ESG Committee, which is chaired by thepresident, comprises each general manager and establishes NOK's
environmental, social and governance policies and goals, and also
checks progress toward those goals. The initiatives discussed here
are reviewed by the Board of Directors and developed as management
measures. In fiscal 2021, the ESG Committee facilitated discussions
with relevant departments to deepen mutual understanding, and the
NOK Group as a whole was able to raise its awareness of ESG.

Making NOK renowned for quality

Initiatives for carbon neutrality

For us as a manufacturer, high quality is essential for our customers totrust us. Perpetual quality improvement is crucial for the NOK Groupto continue providing a high level of “safety” to the world, and we must
maintain our effort without being satisfied with short-term success. In
addition, we will continue to promote quality improvement activities, notonly by following in the footsteps of our predecessors, but also by taking
advantage of digital technologies that are evolving with the times.

In April 2022, the NOK Group expressed its support for therecommendations of the Task Force on Climate-related Financial
Disclosures (TCFD), stating that climate change is an important issue
to address. In the future, we will analyze the impacts of climate changein accordance with TCFD recommendations and incorporate measuresagainst climate change into our management strategies.
In response to the global trend toward decarbonization and theresults of TCFD scenario analysis, we revised the NOK Twin Green
Plan 2030 formulated in 2018, and declared that we will aim to achieve

NOK CORPORATION SUSTAINABILITY REPORT 2022

6

Message from the President

carbon neutrality by 2050.The Plan is a long-term environmental vision
for 2030, consisting of “Green Factories,” which stipulates the reductionof CO2 emissions and waste at factories, and a “Green Products,”
which contributes to CO2 reduction through products such as adopting
electrification of vehicles. Under this long-term environmental vision, theNOK Group will work as a team to realize a sustainable society throughits business activities, including the electrification of automobiles and theprovision of carbon-neutral products.

Strengthening corporate governance
We view the strengthening of corporate governance as one of the mostimportant management issues and continue to work on it. At NOK,
directors who also serve as executive officers cooperate with each otherto carry out business operations, while the Board of Directors, including
outside directors, supervises the operations and the corporate auditors,
including outside corporate auditors, audit the management. In May 2022,
the Board of Directors passed a resolution to revise the Operating Officer
Regulations, making the functions of the directors more specialized thanever in the supervision of business execution, and shifting the authority
for individual business execution to the operating officers to clarify thesupervisory and business execution functions.

Realizing what we want to be
As a medium- to long-term goal for the NOK Group, we have set a targetof an equity ratio of 50% or higher and, as mentioned above, a group ROA
of 5% on a consolidated basis. In fiscal 2021, we established the ROA 5%
Steering Committee, consisting mainly of directors, with the mission ofshifting our management focus to capital efficiency to achieve an ROA
of 5%. After much discussion, the KPIs for the entire NOK Group were
determined and quantitative targets for each business segment wereset, upon which the Steering Committee was dissolved. The numbers set
here will be incorporated into the next three-year plan.
The next Medium-Term Management Plan, which begins in fiscal
2023, will form an important part of the Company's efforts to achieve its
vision for fiscal 2031, the 90-year anniversary of its founding. In fiscal
2022, it is essential to first achieve the goals of the three-year plan that iscurrently underway.
Although the journey of the NOK Group from its founding to thepresent has never been smooth, we feel that we are now facing a wave
of major social change. However, I am confident that our 80-year historyof repeatedly taking on challenges without fear of failure and continued
pursuit of our dreams spur us onward and upward. As we approach our100th anniversary in 2041, the NOK Group is taking a new step forward
for growth as we chase even bigger dreams.

Concept of Sustainability, Information Disclosure,and the Promotion Structure
Sustainability concept and information disclosure
The NOK Group's Charter of Corporate Behavior stipulates that “Makeeveryone connected to the Group—the so-called stakeholders—proud,promote management that enables them to pursue their dreams
together, and strive to be a driving force in realizing a sustainable
society.” All business activities are conducted based on the NOK Charterof Corporate Behavior (Management Philosophy, Management Policy
and Principles of Corporate Behavior).We believe that fulfilling corporatesocial responsibility in the areas of the environment, society, andgovernance is integral to the continuation of our business activities.
We also believe that communication with our stakeholders is
crucial in examining a wide range of backgrounds and circumstances
and identifying risks and opportunities in our business. Information
is disclosed with reference to the ISO 26000: 2010 Guide to Social
Responsibility and the Global Reporting Initiative (GRI) Standards, andefforts are being made to enhance the content of these disclosures, withthe aim of publishing an integrated report.

Stakeholders

Customers
Financial
Institutions

NOK Group

The

Group’s Three-Year Plan

Local
Community
and Society

Employees
Shareholders /Investors

Identifying materiality
As mentioned above, the NOK Group is addressing measures against
climate change as one of its key management issues. We are currently
preparing for the identification of materiality, and will continue to deepen
discussions and disclose relevant information in the next three years.

Suppliers

Sustainability promotion structure(Fiscal years ended March 31, 2020 to March 31, 2022)
Slogan [Key Corporate Objective]

Flexible response to changes and Re-challenge
to be a Sustainable Company
Chairman's Initiatives

1. M oving away from dependence on specific customers—Expansion of sales across businesses and creation of new
businesses for a well-balanced mix of customers

The NOK Group has established an ESG Committee under the Board of
Directors to formulate various management policies from a medium- tolong-term perspective. The ESG Committee, which is chaired by the
Chief Executive Officer, is composed of each general manager andis responsible for formulating policies and goals related to NOK's
environmental, social, and governance, as well as confirming progress
toward goals. Initiatives discussed by the ESG Committee are subject toreview by the Board of Directors.
Under the ESG Committee, we have established the Climate Change
Scenario Analysis Practice Subcommittee and the Carbon Neutral

Subcommittee as professional organizations for responding to climatechange. The Climate Change Scenario Analysis Practice Subcommittee
estimates the impacts caused by climate change, and the Carbon
Neutral Subcommittee plans and promotes concrete measures against
climate change. In addition, we have established the Sustainability
Report Subcommittee as an organization responsible for publishingsustainability reports and disclosing information.
These subcommittees take the lead and work with related internalorganizations, locations, and group companies regularly report on the
progress of these initiatives at ESG Committee meetings.

2. Return to the Basics of Quality
3. O perating practical and effective BCM
Board of Directors

4. A
 dvancing digitalization that will lead to higher
competitiveness and profitability

Report5. I mplementing a management spirit that
respects human dignity-Fostering vibrant people and supporting flexible and diverse work styles

Approvals and Directions
Report

ESG Committee (Committee Chairperson: President)
ReportReportDirections

Sustainability Report
Subcommittee

Cooperation

Cooperation

Directions

Practical
Subcommittee on
Climate Change“Scenario Analysis”

ReportCooperation

Promotion and Execution

Promotion and Execution

Directions

Carbon Neutral
Subcommittee

Central Environmental Conservation Committee(Chairperson: President)

Cooperation

Energy Conservation
Subcommittee

Promotion and Execution

Bases and Group companies

7

NOK CORPORATION SUSTAINABILITY REPORT 2022

NOK CORPORATION SUSTAINABILITY REPORT 20228

Corporate History of NOK Group
Our company celebrated its 80-year anniversary on July 9, 2021.
Since its founding as the first oil seal manufacturer in Japan, the Company has expanded its business as the market has grown and contributed to thedevelopment of motorization.
In addition, we have been working closely with customers not only in the automotive industry but also in a wide range of other industries, including
electronics and industrial machinery, to refine our technical capabilities and provide products that are useful to society.
As we approach our centenary in 2041, we will continue to strive to provide safety and comfort.

From a small-town factory to a global enterprise
From foundation to the 1950s

1970s

1990s

2000s

From 2010

1939

1970

Kumamoto Plant (now the Kumamoto Plant)is built

1994

2001

2010

Kitaibaraki Plant is built

1973

2016

Singapore Oilseal Co., Pte. Ltd. is establishedin Singapore

1995

Subsidiary Wuxi NOK Freudenberg Oilseal
Co., Ltd. is established in China

Mektec Manufacturing Corporation (Vietnam)
Ltd. is established

1974

2018

Tsukuba Plant is built

Tokai Plant (now the Tokai Plant) is built

1997

1976

2022

Subsidiary NOK Klueber Co., Ltd. isestablished

Subsidiary Mektec Manufacturing
Corporation (Zhuhai) Ltd. is establishedin China

Moved from the first section of the Tokyo
Stock Exchange to the Prime Market

1941

1951

Edogawa Seiki Co., Ltd. is established (Thecompany was renamed Tokyo Yushi Industry
Co., Ltd. in 1942 and Tokyo Oil Seal Industry
Co., Ltd. in 1948.)
Nippon Bearing Manufacturing Co., Ltd.
is established (The company changed its
name to Nippon Yushi Industry Co., Ltd.
in 1942)
Tokyo Oil Seal Industry Co., Ltd. and Nippon
Yushi Industry Co., Ltd. merged and renamed
Japan Oil Seal Industry Co., Ltd.

1960s
1960

Capital alliance with Carl Freudenberg ofGermany

1961

Listed on the Tokyo Stock Exchange

1964

Nippon Sealol Co., Ltd. is established (presently
Eagle Industries, Inc.)

1967

Shizuoka Plant is built

1968

NOK-USA, Inc. (currently known as NOK Inc.) isestablished in the USA

1939

1941

Subsidiary Mektec Manufacturing
Corporation (Suzhou) is establishedin China
Tottori Plant is built

2005

Shonan Development Center is established

1985

Company name changed from Nippon Oil Seal
Industry Co., Ltd. to NOK CORPORATION

2007

Subsidiary Synztec Co. Ltd. is established

1986

Subsidiary Mektec Corporation is establishedin Taiwan

1987

Nihonmatsu Plant is built

1988

Subsidiary Thai NOK Co., Ltd. is establishedin Thailand

1989

Freudenberg-NOK General Partnership isestablished in the USA

Net sales(Billions of yen)

8,000

7,000

6,000

5,000
2007

Company name changed from
Nippon Oil Seal Industry Co.,
Ltd. to NOK CORPORATION

4,000
Synztec Co. Ltd. is established
2002

3,000

NOK Klueber Co., Ltd.
is establishedNippon Mektron Co., Ltd.
is establishedNippon Bearing
ManufacturingCo., Ltd. is established

2,000
Unimatec Co., Ltd. is established

1985

1,000

1976

1969

1940

9

A subsidiary, Unimatec Co., Ltd. is split froma subsidiary, Nippon Mektron Co., Ltd.

2004

Subsidiary Nippon Mektron Co., Ltd. isestablished

Edogawa Seiki
Co., Ltd. isestablished

2002

Subsidiary NOK Precision Component(Thailand) Ltd. (Currently: Mektec Precision
Component (Thailand) Ltd.) is establishedin Thailand

1980s

Fukushima Plant (now the Fukushima Plant)is built
1969

Mektec Manufacturing Corporation(Thailand) Ltd. is established in Thailand

NOK CORPORATION SUSTAINABILITY REPORT 2022

0
1970

1980

1990

2000

2010

2020
NOK CORPORATION SUSTAINABILITY REPORT 2022

10

Products
Seal BusinessNet sales

336.2 billion yen

Operating income

35.5 billion yen

Major operating companies: NOK CORPORATION, Unimatec Co., Ltd.

Electronic Products BusinessNet sales

320.9 billion yen

Operating income(5 billion yen)

Major operating company: Nippon Mektron, Ltd.

Other BusinessNet sales25.4 billion yen

Operating income

900 million yen

Major operating company: Synztec Co., Ltd., NOK Klueber Co., Ltd.

11NOK CORPORATION SUSTAINABILITY REPORT 2022

Oil seals

O-rings

Industrial rubber products

Rubber vibration / sound isolators

Polyurethane rubber products

NOXTITE

Oil seals are functional parts used to seal oil.
Composed of synthetic rubber, metal rings, andsprings, they prevent oil from leaking from gaps
in machine shafts. They also prevent the entryof dust from the outside.

O-rings are O-shaped rubber ring gaskets.
They are moderately compressed by fitting into
grooves of machinery, and prevent leakage ofvarious fluids, including oil, water, air, and gas.

These are functional parts for industrial use
made of synthetic rubber, such as dust covers,
boots, and diaphragms. We provide a wide
range of products, including rubber products, aswell as rubber-lined metal and resin products.

A wide variety of vibration/sound isolators areavailable, including torsional vibration dampers
to reduce crankshaft vibration in automobile
engines, and a center-bearing support to absorb
and isolate vibration by supporting the propeller
shafts of rear-wheel and four-wheel drive
vehicles such as passenger cars and trucks.

Iron Rubber (polyurethane elastomer), anintermediate product between rubber andplastic, demonstrates excellent performancein resisting abrasion and absorbing shock /vibration. We provide a wide range of products,
including gaskets for machinery pistons andtraffic signs & safety devices that require
superior durability.

The NOXTITE acrylic elastomer has a number
of well-balanced functions, including oil
resistance, heat resistance, high strength, andresistance to permanent compression set.
In addition to use as a material for oil seals
and O-rings, it is used in devices that require
heat resistance and oil resistance, such as thesurrounding surface of automobile engines.

Main Application

Main Application

Automobiles, construction machinery, agricultural
machinery, railroad vehicles, steel mills, industrial
robots, aircraft, marine vessels, office machinery,home electronic appliances, etc.

Automobiles, construction machinery, agricultural
machinery, piping joints, water-resistant cell
phones, etc.

Single-sided FPCs

Double-sided FPCs

Multi-layer FPCs

Component assembly FPCs

Precision rubber and plastic
components

CHEMINOXThe above is a photo of an FPC (flexible printed
circuit board) with circuits on one side. They are
structured to best exhibit the thin and flexible
characteristics of FPCs. They are durable
against repetitive bending and can be mounted
on moving parts while taking up little space.
They are also suitable for multi-dimensional
wiring in narrow gaps.

These have circuits on both sides. Comparedto the single-sided FPCs, they allow for more
complex wiring, and contribute to downsizing andweight reduction through the mounting of parts
on both sides. They can also be used for a variety
of designs because they are freely bendable.

These FPCs have realized higher
functionality, smaller size, and lighter weight
through multi-layered circuits. Integrated
boards and cables contribute to downsizing,as they require no connectors.

FPCs are very thin films and therefore require a
special mounting process. Nippon Mektron not
only manufactures FPCs alone, but also fulfills
requests for FPC module units by mounting
semiconductors, microchip components, andconnectors on them.

These products are sealing parts to prevent theentry of water and dust by fitting them inside
HDDs and smartphones or on the exterior.
Utilizing the technologies fostered in development
and manufacturing processes, Mektron alsooffers products with additional waterproofing
functionality and an anti-shock mechanism(protection) by molding rubber or resin to FPCs.

This is a fluorine chemistry-based compound withrubber additive, available in various forms such as
powder, liquid, and gas. It is used as a material anda modifier for rubbers and resins, and provides
new possibilities for materials.

Main Application
Automobile suspension and steering, housing
equipment, etc.

Main Application
Crankshafts of automobile engines, drive shafts ofrear-wheel and four-wheel drive cars, etc.

Main Application
Special rubber materials

Main Application

Main Application

Main Application

Automobiles, HDDs, digital cameras, media players,
game consoles, medical and healthcare devices, etc.

Smartphones, automobiles, digital cameras, medical
and healthcare devices, etc.

Smartphones, digital cameras, automobiles, medical
and healthcare devices, etc.

Development rollers andcharge rollers

Fixing belts and pressure rollers

Products for financial terminals

Oil

Coatings

GreaseThe developing roller feeds a specified quantityof toner to the photoreceptor, and the charging
roller applies a certain quantity of charges tothe photoreceptor. The electric conductivity ofthese products is controlled with high precision.

Fixing belts are made by combining metal
and rubber, with high heat conductivity andpyrogenicity. Pressure rollers are used toprovide evenly distributed pressure whenfixing toner. Stable fixing outcomes that last along time.

These products are used for financial terminal
devices such as ATMs, so require high reliability.
Products include bill-conveying belts thatcombine high-performance urethane rubberwith threads and textiles, and bill-beater rubberthat has excellent durability.

Our high-performance oil provides outstanding
lubricating performance, heat resistance, andoxidation resistance, leading to longer machine
operating life and improved efficiency. NKL
provides products suitable for various fields,
including for large plants, precision machines,
food processing machinery, and semiconductor
manufacturing equipment.

Our coating products offer beneficial effects
such as excellent lubrication performance,
resistance to wear, non-adhesiveness,and insulation performance, through theirapplication to the surface of metal parts,
including in environments where grease and oil
cannot be used. They are employed in various
fields such as automobiles, electric appliances,and office machinery.

Our grease features high reliability and long
operating life even in severe environments
such as extremes in temperature, high-speed
machinery, and high-load applications. It is
used in various fields such as automobiles,
industrial machinery, electric appliances, officemachinery, food machinery, and semiconductor
manufacturing equipment.

Main Application
Area surrounding the office machineryphotoreceptors

Main Application
Fixing parts of office machinery

Main Application

Main Application

Main Application
Construction machinery, automobiles,
semiconductor manufacturing equipment, food
manufacturing machinery, traffic signs & safety
devices, etc.

Smartphones, HDDs, automobiles, digital cameras,
medical and healthcare devices, etc.

Main Application
HDDs, smartphones, automobiles, etc.

Main Application
Surface treatment agents, synthetic chemical
products

ATMs, cash dispensers, etc.

NOK CORPORATION SUSTAINABILITY REPORT 2022

12

NOK Group's Global Operations●NOK CORPORATION

Asia

Freudenberg NOK Pvt., Ltd. / India
Thai NOK Co., Ltd. / Thailand
NOK Asia Company Pte. Ltd. / Singapore
PT. NOK Indonesia / Indonesia
PT. NOK Freudenberg Sealing Technologies / Indonesia
KOREA
CHINA

JAPAN

PT. NOK Precision Component Batam / Indonesia
Vietnam NOK Co., Ltd. / Vietnam
Wuxi NOK-Freudenberg Oil Seal Co., Ltd. / China
NOK (Wuxi) Vibration Control China Co., Ltd. / China

TAIWAN

Changchun NOK-Freudenberg Oil Seal Co., Ltd. / China
NOK-Freudenberg Group Sales (China) Co., Ltd. / China

INDIA

NOK-Freudenberg Hong Kong Ltd. / China
Taicang NOK-Freudenberg Sealing Products Co., Ltd. / China

THAILANDVIETNAMNOK Wuxi Vibracoustic China Co., Ltd. / China
NOK (Wuxi) Water Treatment Technology Co., Ltd. / China

MALAYSIA

Pyung Hwa Oil Seal Industry Co., Ltd. / South Korea●NIPPON MEKTRON, LTD.
SINGAPORE
INDONESIA●Synztec Co., Ltd.
Synztec (Malaysia) Sdn. Bhd. / Malaysia
Synztec Vietnam Co., Ltd. / Vietnam
Synztec Precision Parts (Shenzhen) Co., Ltd. / China
Synztec Precision Parts (Hong Kong) Co., Ltd. / ChinaJapan●NOK CORPORATION●Synztec Co., Ltd.

Head Office (Minato-ku, Tokyo)

Head Office (Minato-ku, Tokyo)

Fujisawa Plant/Shonan Development Center

Yokosuka Plant (Yokosuka City, Kanagawa(Fujisawa City, Kanagawa Prefecture)

Prefecture)

Fukushima Plant (Fukushima City, Fukushima

Fujisawa Plant (Fujisawa City, Kanagawa

Prefecture)

Prefecture)

Nihonmatsu Plant (Nihonmatsu City,●NOK Klueber Co., Ltd.

Fukushima Prefecture)

Head Office (Minato-ku, Tokyo)

UNITED STATES OF
Kitaibaraki Plant (Kitaibaraki City, Ibaraki
AMERICA
Prefecture)

Kitaibaraki Plant (Kitaibaraki City, Ibaraki
Prefecture)

Tsukuba Plant (Tsukuba City, Ibaraki●Unimatec Co., Ltd.

Prefecture)
Shizuoka Plant (Makinohara City, Shizuoka

Head Office and Tokyo Office (Minato-ku, Tokyo)

Prefecture)

Plant No. 1 (Kitaibaraki City, Ibaraki Prefecture)

Tokai Plant (Kikukawa City, Shizuoka
Prefecture)

Mektec Manufacturing Corporation (Thailand) Ltd. / Thailand

Tottori Plant (Saihaku-gun, Tottori Prefecture)

Mektec Precision Component (Thailand) Ltd. / Thailand

Kumamoto Plant (Aso City, Kumamoto

NOK Precision Component Singapore Pte. Ltd. / Singapore

Prefecture)

Mektec Manufacturing Corporation (Zhuhai) Ltd. / China
Mektec Manufacturing Corporation (Suzhou) / China
Mektec Corporation / Taiwan
Mektec Manufacturing Corporation (Vietnam) Ltd. / Vietnam

MIYAGI●NIPPON MEKTRON, LTD.
Head Office (Minato-ku, Tokyo)
Ushiku Plant (Ushiku City, Ibaraki Prefecture)

FUKUSHIMA

Tokyo Office (Taito-ku, Tokyo)●Unimatec Co., Ltd.

IBARAKI

NAGANO

Unimatec Singapore Pte. Ltd. / Singapore
TOTTORINOK Group Head Office TOKYOKANAGAWA

North America

EuropeSHIZUOKAFUKUOKASAGAOITAKUMAMOTOMIYAZAKIGERMANY

UNITED STATES OF
AMERICAGroup Company

KOREA

Japan

CHINA
Miyagi NOK Corporation (Kami-gun, Miyagi Prefecture)●NOK CORPORATION
Freudenberg-NOK General Partnership / USA●NOK CORPORATIONNOK Europa GmbH / Germany
Unimatec Chemicals Europe GmbH / Germany●NIPPON MEKTRON, LTD.
Mektec Manufacturing Corporation Europe DE GmbH / Germany

13

NOK CORPORATION SUSTAINABILITY REPORT 2022

JAPAN

MYK Corporation (Makinohara City, Shizuoka Prefecture)
NOK Fugaku Engineering Co., Ltd. (Kikugawa City, Shizuoka Pref.)NOK Metal Co., Ltd. (Toda-gun, Miyagi Prefecture)

Kikugawa Seal Industry Co., Ltd. (Kikugawa City, Shizuoka Prefecture)

TAIWAN
Tenei Seal Industry Corporation (Iwase-gun, Fukushima Prefecture)
INDIA Corporation (Tamura-gun, Fukushima Prefecture)
Miharu Industry

TVC Co., Ltd. (Saihaku-gun, Tottori Prefecture)

Tohoku Seal Industry Corporation (Yama-gun, Fukushima Prefecture)
THAILAND City, Fukushima Prefecture)
Nihonmatsu NOK Corporation (Nihonmatsu

Saga NOK Corporation (Ureshino City, Saga Prefecture)

VIETNAM City, Ibaraki Prefecture)
Isohara Polyurethane Industry Corporation (Kitaibaraki

Kumamoto NOK Corporation (Aso City, Kumamoto Prefecture)

Isshin Industries Corporation (Kitasaku-gun, Nagano Prefecture)

Aso NOK Corporation (Aso City, Kumamoto Prefecture)

Kanasei Corporation (Motomiya City,MALAYSIA
Fukushima Prefecture)

Nichinan NOK Corporation (Nichinan City, Miyazaki Prefecture)

SINGAPORE
INDONESIANOK Elastomers Processing Co., Ltd. (Kama City, Fukuoka Pref.)Kusu NOK Corporation (Kusu-gun, Oita Prefecture)

NOK CORPORATION SUSTAINABILITY REPORT 2022

14

2021 Financial Highlights
Financial highlights (consolidated) over the last six years

Change in net sales / operating income/ operating income to net sales ratio

Fiscal year
ended March
31, 2017

Fiscal year
ended March
31, 2018

Fiscal year
ended March
31, 2019

Fiscal year
ended March
31, 2020

Fiscal year
ended March
31, 2021

Fiscal year
ended March
31, 2022

Net sales

Millions of yen

713,138

729,341

669,482

626,815596,369

682,507

Operating income

Millions of yen

39,77644,934

23,14012,028

14,46731,337

Operating income to net sales ratio

%

5.6

6.2

3.5

1.9

2.4

4.6

Ordinary income

Millions of yen

45,70956,291

31,135

17,373

18,33946,168

Ordinary income to net sales ratio

%

6.4

7.7

4.7

2.8

3.1

6.8

(Millions of yen)(%)

800,000

16

682,507700,000
600,000

12

500,000

10

400,000

8

300,000

Profit (loss) attributable to ownersof parent

200,000

27,32835,281

3,419(2,218)(1,361)

3.8

%

4.8

0.5

-

-

6
4

31,337

25,8350

Net income to net sales ratio

4.6

100,000
Millions of yen

14

'05

'06

'07

'08

'09

'10

'11

'12

'13

'13

'14

(References) *

3.8

'15

'16

'17

'18

'19

'20

'21 (FY)(Result)

20

Net sales (left axis)
Operating income(left axis)
Operating income to
net sales ratio (rightaxis)*Since fiscal year ended March 31, 2015, NOK has unified the accounting period of the overseas business and changed its depreciation method. Therefore, the values are for reference purposes only.

Profitability
ROE (Return on Equity)

%

6.7

8.0

0.8

(0.5)

(0.3)

5.4

ROA (Return on Assets)

%

3.8

4.6

0.4

(0.3)

(0.2)

3.1

EPS (Earnings per Share)

yen

158.4

204.2

19.8

(12.8)

(7.9)

149.4

PER (Price Earnings Ratio)

times

16.3

10.1

87.2

(93.0)(190.7)

7.7

Financial position
Total assets

Millions of yen

751,797

793,314785,133

728,695

803,000

857,324

Owner’s equity

Millions of yen

418,666

459,655444,177

407,092

457,352

502,262

Equity ratio

%

55.7

57.9

56.6

55.9

57.0

58.6

Capital expenditure

Millions of yen

65,13558,38870,11847,66925,72841,030Depreciation

Millions of yen

40,391

43,97046,82943,312

40,664

42,591Net R&D expenditure

Millions of yen

8,274

9,443

10,45911,29810,053

10,410

Dividend

yen

50

50

50

37.5

25

60

Payout ratio

%

31.6

24.5

252.9

-

-

40.2

Operating activities

Millions of yen

68,03869,52663,854

71,37045,82454,999Investing activities

Millions of yen(62,035)(58,681)(79,259)(50,425)(18,719)(37,972)

Financing activities

Millions of yen(7,327)(13,010)

6,633(17,497)

5,884(32,070)

Cash and cash equivalents, end of
periodMillions of yen

90,62989,42080,761

82,366

120,385

111,247

Shareholder return

Analysis of operating results
Fiscal 2021 operating results
The business environment surrounding our Group during this fiscal year
fluctuated significantly due to the repeated stagnation and resumptionof economic activities resulting from the declaration of a state of
emergency and the repeated issuance of priority measures to preventthe spread of COVID-19. While there are signs of economic recovery amid
the vaccination drive, the outlook is more uncertain due to the impactof the lockdown in China and the situation in Russia and Ukraine. This
is in addition to the shortage of supplies of semiconductors and othercomponents and the soaring cost of raw materials.
In the automotive industry, domestic and international demand
declined in fiscal 2020 due to the impact of COVID-19, but the recovery
trend continued throughout the year. On the other hand, the supply
shortage of semiconductors and other components became more severe,
coupled with the lockdown caused by the resurgence of COVID-19 in theSoutheast Asian region, and the production of automobiles in Japan andoverseas has contracted recently.
In the electronics industry, production of smartphones and harddisk drives remained steady despite the impact of the semiconductor
shortage in some sectors.

In this circumstance, our Group reported net sales of 682.507 billion
yen (up 14.4% year on year), operating income of 31.337 billion yen (up116.6% year on year), ordinary income of 46.168 billion yen (up 151.8%
year on year), and net income attributable to owners of the parent of
25.835 billion yen (compared with a net loss attributable to owners of theparent of 1.361 billion yen in the same period of the previous year).

Cash flows

15

NOK CORPORATION SUSTAINABILITY REPORT 2022

NOK CORPORATION SUSTAINABILITY REPORT 2022

16

2021 Financial Highlights

Fiscal 2021 overview by business segment
Other Business
25,375

3.7%

Seal Business

General industrial
machinery

111,966

In the automotive sector, sales increased due to a significant recovery
in demand, despite a shortage in the supply of components such as
semiconductors and the spread of COVID-19 in Southeast Asia. Sales
for general industrial machinery also increased as the markets forconstruction machinery, machine tools, and robots strengthened. As aresult, net sales increased by 14.7% year on year to 336.189 billion yen.
Operating income increased by 53.0% year on year to 35.482 billion yen
due to the effect of higher sales, despite higher raw-material prices andhigher personnel and overhead costs.

Net sales

682,507

Other
Business

700

16%

Net sales byapplication

682,50737%

Unit: Millions of yen

Seal Business
336,189

49.3%

47.0%

■Net sales (left axis) ■Operating income (right axis)(Millions of yen)

(Millions of yen)

336,189

400,000

Electronic Products Business

40,000100,000

20,000

0

0

2017

2018

2019

2020

2021 (FY)

Other Business

Sales for high-performance smartphones and hard-disk drives increased
due to a recovery in demand, partially offset by production cuts due toa shortage in the supply of semiconductors and other components. In
the automotive segment, sales increased due to the recovery of demand
and the expansion in sales of products for electric vehicles. As a result,net sales increased by 13.9% year-on-year to 320.942 billion yen. The
operating loss was 5.04 billion yen (compared with an operating loss of
8.371 billion yen in the same period of the previous fiscal year) due to theeffect of higher sales, despite an increase in personnel and expenses.

In the roll business, sales increased due to a recovery in demand for
multifunction devices and repair parts, which had been depressed due tothe impact of COVID-19. Sales of specialty lubricants also increased due
to strong demand for general industrial machinery and other products.
As a result, net sales increased by 17.6% year on year to 25.375 billion
yen. Operating income was 893 million yen (compared with an operating
loss of 361 million yen in the same period of the previous fiscal year).

■Net sales (left axis) ■Operating income (right axis)■Net sales (left axis) ■Operating income (right axis)(Millions of yen)

(Millions of yen)

320,94280,000300,000

60,000200,000

40,0005,040

1720,000
0

0
2019

2020

47%

Capital expenditureby business
50%

10,41041,03047%

Millions of yen

Millions of yen

2021 (FY)NOK CORPORATION SUSTAINABILITY REPORT 2022

251,051

Automobile
related319,489

Electronic
Products Business

1,074

Seal
Business

Electronic
Products Business

8,635

20,377

Seal
Business

19,26160,00035,482200,000

2018

R&D expenditure bybusiness

80,000300,000

2017

3%

83%

Electronic
Products Business
320,942

100,000

1,391

7%
10%

Millions of yen

Electronicdevice related

400,000

Other
Business(Millions of yen)

(Millions of yen)

25,37530,00020,0003,000

Key Risks and Opportunities by Business

Seal BusinessIn the automotive sector, sales are expected to increase as demand forautomobiles increases both domestic and overseas against the backdropof the elimination of shortages in the supply of components such as
semiconductors, as well as economic stimulus measures in various
countries. Sales for general industrial machinery are also expected
to increase as demand for construction and agricultural machinery,machine tools and robots remains strong. On the other hand, as theexternal environment is expected to be highly uncertain, including theimpact of persistently high global raw-material prices, supply concerns,
and geopolitical risks, we will swiftly address these changes. In addition,
we will establish a production system that will enable us to achieve
more stable quality and product supply than ever before. Moreover,
we will work to develop new businesses and new products to deal withmid- to long-term changes in the business environment, such as theelectrification of automobiles.

Electronic Products Business
Sales are expected to increase as a result of further expansion of salesof products for electric vehicles, but as with the sealing business, theexternal environment is expected to be highly uncertain. At the sametime, there are challenges in meeting the fluctuating demand forhigh-performance smartphones and the growing demand for electricvehicles. To address these issues, we will continue to build a structurethat is less susceptible to fluctuations by expanding business areasthat experience low demand fluctuations, and will respond to the risingdemand for electric vehicles around the world by manufacturing in themost suitable locations based on the concept of local production for
local consumption.

Other BusinessIn the specialty lubricants business, demand for general industrial
machinery is expected to remain strong. In the roll business, there isconcern that demand for printers and consumables will continue todecline due to changes in work styles caused by the impact of COVID-19,
in addition to the previous slowdown in the growth of the officeequipment market. Therefore, the challenge is to change our corporate
structure to one that is appropriate and in line with demand. In response,
we will coordinate sales, technology and production to improve
productivity, improve competitiveness in terms of quality and cost, andfurther enhance management efficiency to improve profitability.

2,000

893

10,00001,000
020,000
2017

2018

2019

2020

2021 (FY)1,000

NOK CORPORATION SUSTAINABILITY REPORT 2022

18

2021 Business Highlights
Focus on the Electrification of Automobiles
In response to global coalition for carbon neutrality, the auto industry
is moving toward eco-friendly e-Mobility. At NOK, we see this once-ina-century period of change as a business opportunity, and continue todevelop products that contribute to conserving the environment.
Demand for existing sealed products is expected to apply to e-Mobility
as well, including Battery Electric Vehicles (BEV).In addition, the useof developed products by customers in newly installed batteries, drive
motors, and control devices will help to solve environmental problems.

Items for motors and PCUs

Disposable Urination-detection Sensor Developed
In addition to new product lines, we will continue to develop new
products backed by technology based on customer feedback andneeds around the world. The Group will also contribute to a carbonneutral era by satisfying our customers and expanding sales within the
e-Mobility industry.

NOK and Nippon Mektron, Ltd. (MEK), a group company have jointly
developed a disposable urination detection sensor, C-Letter proprietary
technology turns traditional RFID tags into moisture-sensitive devices,and by inserting the devices between thin, soft nonwoven fabric, they
can be used without any discomfort to the wearer. In addition, by linking
with the monitoring and recording systems used in nursing homes, it ispossible to automatically record the timing of a user's excretion.
In Japan, where the birthrate is declining and the population is aging,
the nursing care industry is experiencing a serious labor shortage, andone of the solutions is expected to be the use of technology to support
the independence of the elderly and provide high-quality nursing care.
Excretion care, among other things, is frequently performed in daily
life and is a sensitive matter that concerns the dignity and privacy ofthe elderly. Since independence for excretion greatly affects the qualityof life of the elderly and their caregivers, there is a need for tools thatcan efficiently obtain and analyze excretion records and utilize themeffectively for excretion care.
In the future, we will aim to commercialize the developed productnot only by conducting demonstration experiments at nursing care sites
and expanding nursing care systems linked to the product, but also
by promoting the development of solutions for effective analysis andutilization of collected and accumulated recorded data for excretion care.

C-Letter, a disposable urination detection sensor

Celebrating 80 Years anniversary
NOK celebrated its 80-year anniversary on July 9, 2021.We held the following 80-year anniversary events as an opportunity to express our gratitude to
all the stakeholders who have supported us to date.

Major initiatives to celebrate 80 years of business

Items for batteries

Creation of company anniversary logo
We created an anniversary logo to commemorate our 80-year
anniversary. The 80 silhouettes are named the “Rainbow Bridge to the
Future” and the “Trajectory of Value Reflected on the Water Surface,”
expressing the image of many dreams being connected and drawn fromthe past to the present and the future.

Launching a special website
A special 80-year anniversary site was established within the NOK
corporate website, featuring content such as a video showing NOK’s
progress and a message from employees expressing their appreciation
to all our stakeholders.

Special website for the 80-year anniversary
80-year anniversary logo

19

NOK CORPORATION SUSTAINABILITY REPORT 2022

NOK CORPORATION SUSTAINABILITY REPORT 2022

20

NOK Group’s Activities and SDGs
The NOK Group's activities to date have contributed to the achievement of the Sustainable Development Goals (SDGs) adopted by the United Nations.
The results of linking the NOK Group's activities to SDG targets are listed here.
We are committed to solve the social issues surrounding us continuously.

Human Rights

3.4
3.6

Labor Practices

Society

4.4

5.1
5.5

8.5
8.8

5.1
5.4
5.5

8.5
8.8

10.2
10.3

Fair Operating Practices

Quality Assurance
Participation in
Communities andCommunity Development

Governance

12.4
12.5

9.5

2.1

3.4

4.4

16.2
16.4
16.5

12.2
12.5

10.2

9.5

17.16

11.4

14.1

17.17
16.5
16.7
16.b

Corporate Governance

The
Environment

The Environment

6.3
6.4

7.2
7.3

9.4

11.6

12.2
12.4
12.5
12.6

17.17

13.1

14.1

15.4

17.16
17.17

17.17

Details of Our Efforts
Goal 2: Conduct activities such as distributing food to needy families in need
Human Rights

Goal 3: Sponsorship for sports events and school sports activities, rent facilities as playgrounds

Goal 5: Advance female employees
Goals 8 and 10: Respect and commit to basic human rights related to employees

Participation in Communities
and Community
Development

Goal 3: Promote welfare benefits and the health of employees
Labor Practices

Goal 9:Pursue activities to cultivate an environment that can form the foundation of innovation, such as the robot contest, Kid Engineers, and theStudent Formula Japan Tournament

Goal 11: Partipation in activities such as the preservation of traditional culture and temples, road safety program, and local fire brigades
Goal 14: Conduct cleaning activities at the seaside

Goal 4: Provide education and training programs and develop human resources

Goal 17: Cooperate with various organizations

Goal 5: Promote active social participation by women and maintenance of work-life balance
Goal 8: Undertake the task of providing a safe and comfortable working environment for employees, and employment of people with disabilities

Goal 4: Provide educational support for elementary schools and internship program for universities and technical colleges students

Corporate Governance

Goal 16: Build a compliance/governance system and pursuing initiatives against corruption
Goal 17: Create corporate management commitments and initiatives that take into account the interest of all stakeholders
Goal 6: Clean up lakeshores and waterways, prevent water pollution and respond to water-stressed areas

Goal 10: Formulate and implement a fair procurement policy
Fair Operating Practices

Goal 9: Promote innovation by setting forth the improvement of our unique technologies in our basic policy, centered around “product quality and
Goal 12: safety”Promote reduction of loss due to waste by declaring to that effect in the Group Quality Assurance Policy
Goal 17: Create new partnerships with external organizations, companies, etc. in the supply chain and delivery destinations

21

Goal 9: Improve resource efficiency, introduce anti-pollution technology, and develop environmentally friendly products

Goal 16: Implement CSR-based procurement
Goal 17: Create new partnerships with external organizations, companies, etc. in the supply chain

Quality Assurance

Goal 7: Enhance energy efficiency and introduce renewable forms of energy

Goal 12: Implement Green Procurement

NOK CORPORATION SUSTAINABILITY REPORT 2022

Goal 11: Manage hazardous substances and waste
The Environment

Goal 12:Reduce input energy (natural resources), manage of input resources and emissions in the course of business operations,and disclose these in the relevant CSR report at regular intervals

Goal 13: Respond to climate change
Goal 14: Manage water discharge effluent and cleaning activities at the seaside
Goal 15: Establish the NOK Biodiversity Conservation Policy and implement activities such as tree planting and open burning
Goal 17: Implement environmental programs in coordination with significant participants in the supply chain, including Kyoeikai and Kyoryokukai

NOK CORPORATION SUSTAINABILITY REPORT 2022

22

NOK Group's Business and SDGs
Contribution to SDGs
achieved by NOK Groupbusinesses

NOK Group is helping to solve environmental and social problems by providing products, and our customers using these products.
The products of the NOK Group are built into our customers' products and then become the end product, so it is difficult to see what kind of issues our products arecontributing to.
Therefore, we would like to introduce the specific targets of the SDGs to which NOK Group products are contributing. By being integrated with the products
themselves and with the products of our customers, we are helping to solve each problem in various fields, including in automobiles.
We will continue to help solve environmental and social issues through providing products and developing new technologies.

Product type

Biological rubber electrodes,
gaskets

5
SDGs Our Products are Helping to Attain

Products and technology that are particularly helping to improve environmental
and social issues

Biological rubber electrode

Biological rubber electrodes have opened up new possibilities
that were difficult with existing metal electrodes, such as themeasurement of brain waves, electrocardiac signals, andmyoelectric signals. With the adoption of these products, we
expect to contribute new R&D related to promoting people’s
health and wellness.

Pipette packing

A gasket that is attached to pipette tips and enables reagentsto be injected into small devices. This contributes to cell
culturing and the automation of testing.

Median strip blocks

We produced a recycling system for median strip blocks usedon roads whereby 98% of the raw materials are recycled. The
blocks are highly durable, which extends their service life.

Tran-Q Clay Fluoride
Tran-Q RubberThis is a soft clay-like heat-conducting member. Insulation
allows it to be used in electronics. It has a high degree of
deformation freedom and can be easily embedded in solid,
curved, or complex spaces.

High-damping anti-vibration rubber,high-damping rubber

High-level quietness requirements for electric vehicles with
our high-damping anti-vibration rubber, which features
significantly improved damping characteristics.

FPC

Regarding parts needed for monitoring the voltage andcurrent of lithium-ion batteries, we have developed FPCs
that are thin, light, flexible, and have excellent component
mountability. We are helping to spread the adoption ofelectric vehicles through downsized and lighter batteries.

Stable supply ofnecessary parts fordevices that protect
people’s health
Biological rubber electrode

Recycled plastic products
3.9

6.1

7.2

6.3

7.3

9.4

11.6

12.4

13.1

14.1

15.1

17.16

12.5

6

6.4

Contribution to SDGs
achieved by NOK Groupbusinesses

1

Not generating andemitting substancesthat affect theenvironment

Product typeOil seals, O-rings, gaskets,electromagnetic shielding
rubber (EM Guard),
mechanical seals, metal
bellows, etc.

Dust-resistance
improvement technology

Oil seals

The Le-μ's series,
Polyurethane rubber products,
accumulators, solenoid valves,
actuators, Thermal conductive
rubber, etc.

Efficient energy
transfer

Technology that prevents sand and dust from entering an engine while
maintaining stable seal performance in demanding environments such as
in deserts and very cold regions, and the rough and dwirty roads seen indeveloping countries.

To keep up with the ever-advancing and ever-evolving trend toward morecompact and lighter in-vehicle units as vehicles become more fuel-efficient,
we have developed a space-saving design for seal products, plus the ability
to keep up with dimensional variations (tolerance expansion) and creep
associated with changes in housing materials.

Oil seals treated with a special coating called “TF Coat” achieve 30% torquereduction than existing oil seals. In addition to saving energy and reducing
heat caused by sliding, the effect lasts for a long time because the coating ishighly durable.

The Le-μ's series

3

Reducing
environmental impact

Industrial membrane modules

Industrial membrane
modules

Toothed surface clothlined belt with reduced
friction coefficientLe-μ's series, special lubricant
grease, special coating,Rustector series

4

Rustector specification
soft metal gaskets andspecial lubricant greases

Extending product life

Special lubricant grease23

NOK CORPORATION SUSTAINABILITY REPORT 2022

Provision of parts forelectric vehicles
7

Products used inelectric vehicles

TTran-Q clay fluorine, Tran-Q
rubber, conductive rubber
rings, high-speed rotating
seals, Rustector series, Fla (m)tector, Le-μ's series, FPCs forautomobiles, FPCs for high-speedtransmission, cushion rubber,anti-vibration and anti-noisetechnology, space-saving gaskets,
high-heat-resistant and highcurrent FPCs

https://www.nok.
co.jp/product/ev.html

Tran-Q Rubber

TF Coat oil seals

Noise and Vibration control
product, special lubricant
products, coating products,
wastewater treatment
membrane modules, waterpurifier membrane modules,
etc.

Median strip blocks

Products and technology that are particularly helping to improve environmental
and social issues

Space-saving baked
gasket2

Recycling of raw
materials

Industrial membrane modules are used to remove fine particles from waterat various kinds of sites, including water purification and recovered water
treatment. NOK's industrial membrane module uses polysulfone,a membrane material with excellent pore size and flow rate balance,
to achieve high filtration performance and contribute to the effective use ofwater, a global issue.

Has the exceptional properties of high mechanical strength, high wear
resistance, low noise and low vibration. Used as next-generation powertransmission belts and transfer belts in the production lines ofvarious industries.

We have developed soft metal gaskets and greases resistant to saltwater
corrosion that can be used for aluminum housings such as electric vehicle
units. The Rustector specification soft metal gasket features a seal witha unique cross-sectional shape that effectively prolongs the life of units
by slowing down the advance of corrosion while maintaining high sealing
performance. Corrosion can be contained further by using the seal in
combination with highly water-resistant grease.

UN Global Compact
NOK is developing businesses globally in regions
such as China and Southeast Asia. In April
2021, we became a signatory of the UN Global
Compact (hereinafter, the UNGC) to announce
to the world that NOK is a company that aims torealize a sustainable society and is a company
that addresses human rights issues. We are also
actively collecting information and exchanging
views by participating in several subcommittees.
We also support the Ten Principles of the
UNGC and implement them in our businessactivities to contribute to the developmentof a sustainable society. The details of ourinitiatives will be disclosed to our stakeholders
in a timely manner.

Human Rights

Principle 1

Principle 2

Support and protect human rights

To not be complicit in human rights abuses

Respect for Human Rights

P. 46

Respect for Fundamental Rights
and Dialogue

P. 47

Diversity

P. 49

Occupational Safety and
Healthcare

P. 51

Respect for Human Rights

P. 46

Labor Standards
Principle 3

Recognize the freedom of association and the right tocollective bargaining

Respect for Fundamental Rights
and Dialogue

P. 47

Principle 4

Eliminate forced labor

Respect for Human Rights

P. 46

Principle 5

Effectively abolish child labor

Respect for Human Rights

P. 46

Principle 6

Eliminate discrimination with respect to employment
and occupation

Diversity

P. 49

Environmental Management
SystemP. 32

Environmental Management

P. 28

NOK's Mid-Term Goals andProgress

P. 30

The Environment
Principle 7

Take a precautionary approach to environmental
challenges

Principle 8

Undertake initiatives to promote greater environmental
responsibility

Principle 9

Develop and disseminate environmentally friendly
technologies

Environmentally friendly products

P. 42

Embrace all forms of anti-corruption initiatives,
including extortion and bribery

Corporate Governance

P. 44

Anti-Corruption
Principle 10

NOK CORPORATION SUSTAINABILITY REPORT 2022

24

SPECIAL TOPIC

Information Disclosure Based on TCFD Recommendations
Results of scenario analysis (4°C and 2°C)

The NOK Group's approach to climate change
Recognizing that climate change is an important issue that must
be addressed so as to create a sustainable society, the NOK Group
expressed its support for the recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD), established by the
Financial Stability Board (FSB), in April 2022.The NOK Group had beenpromoting initiatives on climate change under the NOK Twin Green
Plan 2030, its environmental vision for 2030, and now, based on its
endorsement of TCFD, the Group intends to further strengthen its efforts.
Based on the TCFD's recommendations, we will identify the risks andopportunities that climate change poses to our business activities, reflect
them in our business strategies, and actively disclose information toenhance our corporate value.

Envisioned world

4°C scenario

2°C scenario

Temperature rise

By the end of the 21st century, the global temperature rises by about 4°C
compared to the pre-industrial era.

By the end of the 21st century, the global temperature rise is kept to lessthan 2°C higher than the pre-industrial era.

Policies/energy

Little or no progress in decarbonization policies, no carbon tax introduced,
limited deployment of renewable energy.

Carbon taxes are introduced, the share of renewable energy grows,
business costs rise accordingly.

The automotive industry gradually moves towards electrification, but thebulk of vehicles still run on internal combustion engines.

The automotive industry undergoes rapid electrification, which results in a
decline in the number of internal combustion engine vehicles.

Gradual advances in electrification are accompanied by a gradual rise in theprice of related raw materials.

 arkets related to renewable energy and the reduction of environmentalM
footprints expand, and the robotics and semiconductor markets also expand
with the acceleration of digitalization. The expansion of these markets isaccompanied by rises in prices of related raw materials to levels evenhigher than in the 4°C scenario.

Rising temperatures increase damage from flooding and tropical cyclones,
which affects factory operations and supply chains.

While rising temperatures cause damage from flooding and tropical
cyclones, their impacts are smaller than under the 4°C scenario.

Markets/raw
materials

Physical risks

Scenario definition Period covered: 2030 Scope of coverage: NOK Consolidated Global Referenced scenarios: IEA WEO (Stated Policies Scenario, Sustainable Development Scenario), RCP2.6, RCP4.5, RCP6.0,
RCP8.5, etc.

Risks and opportunities
Governance structure for initiatives

Impacts

Markets

Group-wide• Rising procurement costs due tocarbon taxes on raw materials.
• Rising raw-material prices due toRawmaterials shifts in supply-demand balance.

Directions

Carbon Neutral Subcommittee

ReportCooperation

ReportDirections

Promotion and Execution

Bases and Group companies

NOK CORPORATION SUSTAINABILITY REPORT 2022

Actions
Group-wide• Expand sales to the electric vehicle (EV/FCV) market and growthindustries.
(renewable energy, semiconductors, etc.)
Seal Products• Create more opportunities to expand sales of seal products
for electrical units and batteries for electric vehicles, as well as newly
developed products.
• Develop and expand sales of products with smaller environmental
footprints.
(Low friction, long life, high durability, bio-based raw materials, etc.)

Group-wide• Reduce raw-material costs through recycling
and other effective uses of resources.
• Reduce costs by improving supply chain
efficiency.

Group-wide• Monitor supply-and-demand forecasts for raw materials, and optimize
procurement costs and prices.
(Seal products: raw-rubber materials, steel materials, etc., Electronic
components: copper, etc.)• Strategy for developing material-saving fabrication methods (to improveyields)• Consider increasing the use of reused materials and product recycling.

CarbonpriceGroup-wide• Rising operating costs due to carbon
taxes.

Group-wide• Promote manufacturing efficiency and energysaving initiatives.
(Improve motivation to save energy.)Group-wide• Revise the targets in the NOK Twin Green Plan 2030.
• Introduce in-house carbon pricing.
• Develop new low-energy materials and fabrication methods.

EnergyGroup-wide• Rising energy procurement costs due
to shifts in electricity demand andpower source makeup.

Group-wide• Intensifying competition among electric
power suppliers.
• Promote the introduction of in-house renewableenergy power sources using public subsidies,
etc.

Group-wide• Optimize our power procurement sources.
• Introduce renewable energy sources such as solar power generation.

Group-wide• Corporate valuation negatively
impacted due to insufficient
External
environmental initiatives.
evaluation • Concerns that these will become astandard for making investment andloan decisions.

Group-wide• Attract ESG investment by improving external
evaluation.

Group-wide• Proactively disclose corporate information in accordance with the ESG
Framework.

Related internal organizations

Practical Subcommittee on Climate
Change “Scenario Analysis”

Promotion and Execution

25

Group-wide• Demand for control/electrical units and electronic
components grows with electrification.
• Carbon neutrality increases opportunities togrow sales of low-friction, long-life products.
• Markets related to renewable energy,
semiconductors, and labor- and powersaving (robots, etc.) grow.

Approvals and Directions

ESG Committee(Committee Chairperson: President)

ReportElectronic Components• D eclining market competitivenessdue to delays in response toenvironmental issues (prices,
customers’ purchasing policies).

Opportunities

Electronic Components• Develop and expand sales of FPCs for electric vehicle batteries.
• Expand sales in the renewable energy storage battery market.
• Cultivate the electric vehicle infrastructure market (charging stations).

Board of Directors

ReportSeal Products• Declining sales of conventional
products for internal combustion
engine applications due to theincrease of electric vehicles.

internal organizations, locations, and group companies to promoteclimate change initiatives, and regularly report on the progress of these
initiatives at ESG Committee meetings.

The NOK Group has established an ESG Committee under its Boardof Directors as an organization responsible for formulating various
management policies, including our climate change actions, based on
medium- to long-term perspectives. Initiatives discussed by the ESG
Committee are subject to review by the Board of Directors.
In addition, the Climate Change Scenario Analysis Subcommittee
and the Carbon Neutral Subcommittee have been established under
the ESG Committee as specialized bodies for climate change actions.
The Climate Change Scenario Analysis Subcommittee estimates
the potential impacts of climate change, while the Carbon Neutral
Subcommittee formulates and promotes specific climate against change
actions. These subcommittees take the lead and work with related

Risks

Cooperation

Central Environmental Conservation
Committee
Internal Control Audit Committee
Risk Management Committee
BCM Committee
Information Security Committee
Safety and Health Committee
Labor-Management Council

Group-wide• Supply chain disruptions due todisasters.
Disasters • Suspension of operations at Company
plants and damage to inventory instorage.

-Group-wide• Carry out hazard risk assessments and tropical cyclone/disastercountermeasures (water protection) at all locations.
• Secure inventory levels that are appropriate for the risk exposure.

NOK CORPORATION SUSTAINABILITY REPORT 2022

26

SPECIAL TOPIC

Information Disclosure Based on TCFD Recommendations

Environmental Report
Environmental Management

Strategies, indicators and targets

Social BackgroundIn recent years, a variety of environmental problems have emerged andare affecting our lives. To solve them and achieve a sustainable society,we must reduce the environmental burden in all aspects of our economic
and social activities. In the Sustainable Development Goals (SDGs),
environmental issues are regarded as one set of the social issues thatmust be resolved, and many countries are tightening environmental
regulations and working to protect the environment. Companies are

required not only to comply with the regulations of each country, butalso to help realize a sustainable society by taking the environment into
account in their overall corporate activities.

Human Rights

TargetAs part of our climate change actions, the NOK Group has formulated
the NOK Twin Green Plan 2030, and has been promoting the reduction of
CO2 emissions and development of next-generation eco-technologies. To
strengthen our climate change actions, we have recently raised the CO2
emission reduction targets set in the NOK Twin Green Plan 2030 basedon results from our TCFD scenario analyses. With the aim of achievingcarbon neutrality by 2050, we will continue to promote efforts to address
climate change and consider revisions to our targets from time to time
based on the results of scenario analyses and social conditions.

Environment

Strategy
We recognize that climate change is an important management issue
that will affect our finances into the future. As such, we have carriedout scenario analyses in accordance with TCFD recommendations
in order to assess the impact and reflect measures against climatechange in our management strategy. Based on data from sources suchas the International Energy Agency (IEA), we assessed the impact ofclimate change on our businesses under two scenarios, the 4°C and
2°C scenarios. Based on the results of these scenario analyses, we will
be reviewing and promoting actions to address the identified risks andopportunities as outlined on the right. We will also continue to expand
our scenario analyses and incorporate their results into our businessstrategies and management plans. The goal is to improve the resilienceof our management strategy.

UNGC
Principle 8

NOK’s Policy
Labor Practices

Based on the notion that the Company is a member of society, we strive to ensure that all our employees understand that our businessactivities, products, and services have a complex relationship with environmental impacts on a global scale. We have set and implement the
Basic Policies on Environmental Conservation from a longitudinal perspective in order to help realize sustainable development of a society for
future generations.

Basic Policies on Environmental Conservation

3

We will set targets at the NOK Central Environmental Conservation Committee and work together with our suppliers and otherrelated companies to make continuous improvements in reducing our environmental burden. We will also strengthen our efforts
to manage chemical substances, prevent global environmental pollution, and enhance our efforts to reduce water use.

4

We comply with related laws and regulations, local government ordinances, and regional agreement, etc., and promote activities
for environmental conservation.

5

We comply with self-imposed restrictions by the industry and customers, and endeavor to meet the expectations of our
stakeholders in regard to environmental issues.

6

We disclose information on environmental conservation and social contribution activities, and proactively communicate with local
and broader society.

7

As a good corporate citizen, all our employees recognize the importance of biodiversity and global environmental conservation andwill strive to raise awareness of the global environment, as well as continuously improve our environmental management system.

Enacted: September 17, 2001
Revised: June 24, 2022

Representative Director, Chief Executive Officer, NOK CORPORATION
Committee chairperson of the NOK Central Environmental Conservation Committee

To promote our environmental management activities smoothly andconsistently, Company-wide efforts are made under the following frame.
The ESG Committee has been established directly under the Boardof Directors as an organization that formulates various management
policies, including measures to address climate change, from a
medium- to long-term perspective. Initiatives discussed by the ESG
Committee are subject to review by the Board of Directors. As specializedorganizations for responding to climate change, we have established
the Climate Change Scenario Analysis Practice Subcommittee andthe Carbon Neutral Subcommittee to estimate the impact of climatechange and to consider and promote specific measures. In addition,

27

NOK CORPORATION SUSTAINABILITY REPORT 2022

Masao Tsuru

the Central Environmental Conservation Committee, chaired by thepresident, meets twice a year to determine risks and opportunities inenvironmental conservation management and Company-wide business
policies. Key issues such as identified risk and opportunity priorities
and outcomes are reported to the Board through the ESG Committee.
Substantial environmental protection activities are promoted mainly by
the Corporate Environmental Secretariat and the Energy Conservation
Subcommittee under the supervision of the Corporate Environmental
Protection Supervisor, and environmental protection activities are
conducted at each business site in accordance with environmental goals
and policies.

NOK CORPORATION SUSTAINABILITY REPORT 2022

28

Corporate Governance

Environmental Management System

Participation in Communities andCommunity Development

We will promote energy conservation to prevent global warming, reuse and recycle resources, and reduce waste for a recyclingoriented society.

Quality Assurance

2

Fair Operating Practices

1

Based on the Company’s unique conventional technology, we promote the improvement of technology and development of
products, as well as strive to reduce our environmental burden.

Environment

Environmental Management of the NOK Group

NOK's Mid-Term Goals and Results

and provide environmental value to society by providing products that
contribute to the environment.

Board of Directors
ReportApprovals and Directions

ReportDirections

ReportCooperation

CarbonNeutralSubcommittee

Cooperation

EnergyConservation
Subcommittee

The Eighth Corporate Environmental Conservation Targets (FY 2020 to FY 2022) Slogan: Creating corporate value by increasing environmental value
Category

Promotion andExecution

Bases and Group companies

Environmental
management

and business activities in response to electrification of automobiles andcarbon neutrality.

Measures against climatechangeResource conservation
and waste recycling

Green Product• We aim to achieve carbon neutrality by 2050.

• We will respond to the electrification of automobiles and offer products that
contribute to carbon neutrality through various approaches.

• As a milestone toward achieving carbon neutrality, reduce domestic CO2
emissions by 50% by 2030 (compared to 2018) and overseas CO2 emissions
intensity by 30% (compared to 2018) to promote.

• Contributing to CO2 reduction through our products by developing low-friction
technology that helps to reduce fuel consumption.

• We will actively promote the use of renewable energy.

• A sustainable company that provides products which contribute to the spreadof renewable energy and promote the formation of a sustainable society.

• We will develop production facilities that reduce energy consumption by 20%• We will provide products that contribute to the spread of next-generation• Introduce internal carbon pricing to help reduce CO2 emissions.

energy technologies such as fuel cells.

Resource circulation

Resource circulation• We aim to conserve resources, reduce waste, and achieve a recycling rate of 100%.

• Thorough control of chemical substances in products improves
environmental quality.

Water risk
• We will work on reducing water use and ensuring cleaner water discharge.

[Fostering and establishing an environmental spirit]
Promoting activities that contribute to a better environment, tailored to the characteristics of each region[Improving the management level of the environmental management system]
Promoting and expanding education by rank and developing environmental human resources
Reducing environmental protection risks through a steady PDCA cycle[Strengthening the prevention of environmental non-compliance]
Promoting environmental risk assessments for equipment and facilities

Evaluation

Result

○

P. 32

P. 34

Electricity consumption

Domestic

FY 2018

Reduced by 10%○

CO2 emissions

Global

FY 2018

Reduced by 10%△

CO2 emissions Intensity

Domestic

Previous fiscal year

Average intensity change over the
past five years
1% or more reduction○[Resource conservation]
Promoting resource conservation through design and process changes, optimization of material INPUT, etc.
[Waste reduction]
Promoting recycling and countermeasures for product non-conformity, reducing the amount of waste disposal in landfills
by converting waste to recyclable materials, and improving the recycling rate
Waste recycling rate

Conservation of water
resources

Maintaining a rate of more than 98%○

GlobalP. 39

Previous fiscal year

Controlling an increase△[Reducing the environmental burden]
Reducing VOC emissions[Strengthening the chemical substance management system]
Promoting green procurement (thorough management of chemical substances by suppliers)
VOC emissions

Environmentally friendly
products-

Checking the volume of water withdrawals and water discharge in and outside Japan
Controlling the increase in water withdrawals
Water withdrawals

Measures on substancesof concern

Domestic

P. 37

Global

FY 2010Developing environmentally friendly products
Improving the level of environmental conservation assessment in products

Less than FY 2010 results

P. 41
○
○

P. 42

Water risk
• We will supply products that contribute to the effective use of water (sanitarywater supply and water circulation).

Biodiversity• We will promote biodiversity conservation activities tailored to
local characteristics.

Relevant SDGs

Supply chain• We will work with suppliers to revitalize our efforts to address climate change,
resource recycling, water risk, and biodiversity.

29

NOK CORPORATION SUSTAINABILITY REPORT 2022

NOK CORPORATION SUSTAINABILITY REPORT 202230

Corporate Governancecompared to conventional facilities.

TargetParticipation in Communities andCommunity Development

Climate change

Climate change

Base Year

Quality Assurance

NOK Twin Green Plan 2030
Green Factory

Item[Reducing CO2 emissions]
Developing energy-saving equipment for production processes
Reducing CO2 emissions in logistics processes
Actively introducing renewable energy

Formulation of the Long-term Environmental Vision for 2030
In response to the global trend toward decarbonization and the resultsof TCFD scenario analysis, we revised the NOK Twin Green Plan 2030
formulated in 2018 and declared that we will aim to achieve carbon
neutrality by 2050.
Under this long-term vision, the Group will work together to realize
a sustainable society through the provision of eco-friendly products

Initiatives and goals
Scope ofcoverage

Fair Operating Practices

Promotion andExecution

Promotion andExecution

Directions

Labor Practices

Climate change
Scenario analysis
Practical
Subcommittee

ReportCentral Environmental
Conservation Committee(Chairperson: President)

to work hard to reduce them because of the significant impact of fluctuationsin production trends arising from COVID-19 situation.
In fiscal 2021, we launched the Carbon Neutral Subcommittee,
a specialized organization for measures against climate change , toprepare a roadmap for reducing CO2 emissions for 2030 and to consider
specific measures to reduce CO2 emissions. Details are provided in the
results of each item.

Human Rights

ESG Committee(Chairperson: President)

The NOK Group has set goals related to environmental management,
measures against climate change, resource conservation and waste
recycling, conservation of water resources, measures on substances ofconcern, and environmentally friendly products as its 8th Company-wide
environmental conservation goals for fiscal years 2020 to 2022.The progresshas already met the target level, except for the targets for CO2 emissions andwater withdrawals. In addition, although we are making steady progress in
reducing our CO2 emissions and water withdrawals targets, we will continue

Environment

With the Paris Agreement adopted in 2015 and the SDGs agreementfor 2030, society's perception of environmental issues is also changing.
The Task Force on Climate-related Financial Disclosures (TCFD) has
proposed “climate-related disclosures that have an impact on corporate
finances” and scientific CO2 emission reduction targets (SBT) consistent
with the levels required by the Paris Agreement have stimulated
activities aimed at realizing a sustainable society, and corporations arebeing urged to implement “environmental management,” which is a businessactivity that takes the environment into account.
The NOK Group established the NOK Twin Green Plan 2030,
a long-term environmental vision for the year 2030 as its environmental
management plan. Under this plan, we have been engaged inenvironmental protection activities such as measures against climatechange, resource conservation and recycling, conservation of water
resources, measures on substances of concern, development ofenvironmentally friendly products, and conservation of biodiversity.
To realize a sustainable society, we will continue to fulfill our social
responsibility by promoting environmentally friendly business activities

UNGC
Principle 8

Environment

Material Flow

Environmental Management System

FY 2021 NOK

INPUT
Total raw-material input

89,157t13,154t

Additives & Adhesives

11,012t

Plastics

1,149

t

Metals63,842t

EnergyTJ

Electric Power

1,352

TJ

Gasoline

4

TJ

Kerosene

3

TJ

Heavy Oil A

37

TJ

Light Oil

2

TJ

Liquefied Petroleum Gas (LPG)

69

TJ

City Gas

28

TJ

・Environmental Impact
Assessment
・Green Procurement
・Environmental Conservation
Inspection of Machinery andEquipment

1,000 m3

drinkable water664

1,000 mIndustrial water31

1,000 m3

groundwater137

1,000 m3

3

Production
・Life Cycle Assessment (LCA)・Pollution Prevention
・Chemical Substances Control
・Energy Conservation
・Waste Reduction
・Environmental Impact
Assessment

Logistics
・Efficient Transportation
・Promotion of Modal Shift

1,000 tons

9

1,000 tons-CO2

Scope 2 (Electricity/heat)

189

1,000 tons-CO2

Scope 3 (Indirect emissions)275

1,000 tons-CO2

NOX (Nitrogen Oxides) *2

8.0t

SOX (Sulfur oxides) *2

2.6

t

VOCs
(Volatile Organic Compounds)

At NOK, the Environmental Management Office is in charge ofen­vironmental audit and periodically checks and evaluates the op­erationof the management system, compliance with environmen­tal laws
and regulations, and the management of environmentally hazardous
substances. The results of the audit are reported to the president andheads of business units for prompt correction and im­provement. The
company strives to improve its environmental per­formance and reduce
environmental risks by reflecting the results in our environmental
protection management policy as necessary.

1.7

1,000 tons

627

1,000 m3

Rivers512

1,000 m3

Sewage system

115

1,000 m3

5t

Environmental Education
The NOK Group conducts a variety of education programs tofoster a company-wide environmental spirit. The NOK Group conducts
education by rank for its employees as well as specialized education thatcovers ISO 14001 management, energy, waste, and chemical substancemanagement, as well as education to prepare for emergency situations.
The result is raising the environmental awareness of every employee.

Water discharge

BOD load *3

Results of environmental education in FY 2021
Item

Level-specificeducation
Industrial waste, etc.

Contents

Number of attendees

New employee training

Basic education on environmental conditions and corporate
environmental protection activities

344

General employee education

Environmental conditions and the status of NOK’s environmental
protection activities, etc.

9,310

Education for management positions

Environmental conditions and the status of NOK’s environmental
protection activities, etc.

1,201

Emergency-related education

Education for environmental accidents and emergency response

2,080

Education for internal auditors

Education for ISO 14001 auditors

146

Waste-related education

Proper waste disposal

1,140

By-product generation50

1,000 tons

Industrial waste

21

1,000 tons

Amount of waste recycled

21

1,000 tons

Final disposal

0.06

1,000 tons

Energy-related course

Course for energy managers

286

Valuable waste

29

1,000 tons

Chemical substances-related education

Education on the management of toxic and hazardous materials

3,005

Specialized
education

Customers

Chemical substances subject to the
Pollutant Release and Transfer Register(PRTR) system (discharge volume)

123t

Chemical substances subjected to the
Pollutant Release and Transfer Register(PRTR) system (amount of movement)

32tCorporate Governance

1.6

Scope 1 (Fuel)

Environmentally hazardous substances

Environmentally hazardous substances
Chemical substances subject to
the Pollutant Release and Transfer
Register (PRTR) system

Environmental audit

Participation in Communities andCommunity Development832

1,000 tons-CO2

Total water discharge discharge

Water
Total water withdrawals

198

Quality Assurance

1,495

Procurement

Total CO2 emissions(Scope 1 + Scope 2)*1

*1Total CO2 emissions: Calculated based on the “Greenhouse gas emissions accounting and reporting manual.” The emission factor is based on the national emission factor by country published by the International Energy
Agency (IEA).
*2 NOX (nitrogen oxides) and SOX (sulfur oxides): Total amount of NOX and SOX generated from specified facilities under the Air Pollution Control Act.
*3 BOD load: Biochemical oxygen demand (BOD) is one of the indicators of water pollution, and represents the amount of oxygen used by microorganisms to decompose pollutant organic material in water. The figure for
BOD load was obtained by multiplying the BOD measurement by the amount of effluent entering rivers.

31

NOK CORPORATION SUSTAINABILITY REPORT 2022

Fair Operating Practices

Total energy input

・Environmental Conservation
Assessment of Products, etc.
・Environmental Impact
Assessment

Gas emissions

NOK has a third-party organization inspect mainly the company’s
production sites involving in environmental burden and have themacquire and maintain the ISO 14001 certification. In fiscal 2021, there
were no significant findings and the company received an evaluationthat the management system is operating properly and undergoing
continuous improvement.

Labor Practices

RubberDesignOUTPUT

External Inspection

Human Rights

Raw materials

NOK has established a system in accordance with the ISO 14001
standard, promotes environmental management, and strives toimplement environmental management with the next generation in mind,
thereby reducing its environmental burden. The current percentage of
NOK Group establishments with ISO 14001 certification is 98.5%.

Environment

INPUT materials and industrial waste associated with business activities

UNGC
Principle 7

NOK CORPORATION SUSTAINABILITY REPORT 2022

32

Environment

Environmental Communication

In recent years, extreme weather events such as typhoons, heavy rains,droughts and heat waves have increased in frequency around theworld, and there is concern that they may threaten the survival of thehuman race. In 2016, the Paris Agreement came into effect at the United
Nations, spurring efforts to reduce CO2 and other greenhouse gases andto conserve energy. In addition, a growing number of countries havedeclared their intention to be carbon neutral by 2050, setting the world
on a path toward carbon neutrality in unison. In October 2020, Japandeclared that it too would be carbon neutral by 2050, and in April 2021,
it significantly raised its 2030 CO2 reduction target from the previous
one. The trend toward decarbonization is accelerating both in Japanand abroad, and it is becoming increasingly important for companies topursue decarbonization as a factor that will influence their management.
We are required to actively reduce greenhouse gas emissions anddisclose information, including energy conservation and the introductionof renewable energy based on long-term management strategies.

In terms of progress toward the current three-year (FY 2020 to FY 2022)
targets, we have achieved a 4.4% reduction in CO2 emissions from FY 2018,
which is below the target level, and a 4.0% reduction in CO2 emissions
intensity. The impact of production fluctuations caused by COVID-19 has
been significant, with the spread of the disease subsiding and production
recovering, resulting in an increase in CO2 emissions. We will continue topromote production efficiency and energy-saving measures, as well as
expand efforts to reduce our CO2 emissions globally.

Status of compliance with environmental laws and regulations
During FY 2021, the NOK Group was not involved in any fines, penalties
or lawsuits related to environmental incidents or complaints.

Recognizing that climate change is an important global issue thatmust be addressed in order to create a sustainable society, the NOKGroup is working to achieve carbon neutrality by 2050.In line with TCFD
recommendations, we are analyzing the impact of climate change on our
Company and promoting the incorporation of measures against climatechange into our management strategies. We are also working to reduce
CO2 emissions throughout the product life cycle, including throughenergy-saving activities, the active introduction of renewable energy, andthe reduction of fuel used in logistics.

Energy conservation measures (Japan)
The NOK Group is promoting energy-saving measures for “It all adds up.”At the Shizuoka Plant, we reduced CO2 emissions by approximately
133.2 tons per year by adopting LED lighting in the laboratory building,tent storage, and exterior lighting, as well as changing the air-blowing
method and taking measures against air leaks at all business units,
including at other Group companies. At the Fukushima Plant, we have
reduced CO2 emissions by as much as 644 tons per year by improving
the efficiency of air conditioners and promoting energy-saving measures
such as the use of LED lights for experimental areas in the office building.
The Kitaibaraki Plant owns seven large compressors, one of which wasalways in operation on holidays. Therefore, even on holidays,
we switched to supply from new small compressors only for equipmentthat requires air supply, and stopped all large compressors fromoperating on holidays. As a result, we were able to reduce CO2 emissions
by 35 tons per year and, in turn, environmental costs by 1.1 million yen
per year.

CO2 emissions targets for fiscal 2022 and results for fiscal 2021
Base Year

Baseline figure

Target Fiscal
Year

Target figure

FY 2021 results

Evaluation

CO2 emissions
reduction target(global)776[1,000 tons-CO2]

2022

Reduced by 10%
CO2 emissions
698 [1,000 tons-CO2] or
below

4.4% reduction from baseline

2018△
CO2 emissions
Did not achieve reduction of
2.5% or more per year

CO2 emissions
intensity reduction
target (domestic)

Previous fiscalyear(2020)

Average change reduced by
1% or more over the past
five years
CO2 emission intensity
1.201 [ton-CO2/million yen]

Average change reduced by
4.0% or more over the past
five years
CO2 emission intensity
1.160 [ton-CO2/million yen]

1.225
[ton-CO2/
million yen]2022

CO2 emissions
741［1,000 tons-CO2］○
CO2 emission intensity
5-year average change
1% reduction achieved

Corporate Governance*CO2 emissions are the sum of fuel and electricity consumption multiplied by the conversion factor. Fuel CO2 conversion factors are calculated using emission factors based on the Law Concerning the Promotion of
Measures to Cope with Global Warming.
The CO2 conversion factor for electric power is “CO2 Emissions from Fuel Combustion” from the International Energy Agency (IEA) (based on location criteria).

TVC Corporation honored by the Director of the Chugoku Bureau of Economy, Trade and Industry

33

NOK CORPORATION SUSTAINABILITY REPORT 2022

NOK CORPORATION SUSTAINABILITY REPORT 2022

Participation in Communities andCommunity Development

TargetQuality Assurance

Efforts to reduce the environmental load in our supply chain
NOK conducts an environmental survey for its suppliers in order to work
together in the supply chain to reduce environmental impact. Throughthis initiative, we have been able to ascertain up to 76% of suppliers' CO2
emissions from NOK alone. In addition, we have confirmed our water risk
assessment initiatives, and 79% of the suppliers who responded to oursurvey have conducted water risk assessments. We will continue ourefforts to promote environmental awareness among our suppliers, and will
expand the scope of our efforts to include consolidated companies so that
we can promote the reduction of environmental impact in the value chain.

The policy of NOK Group

Concrete Activities

Fair Operating Practices

External Awards/Commendations
Under the philosophy of “green development,” NOK (Wuxi) Vibration
Control China Co., Ltd. has made significant reductions in VOC emissions
by prioritizing the use of green materials, making improvements using
green technology, and reviewing the treatment of environmentallyhazardous substances released to the outside. These achievements
received high praise and the company was commended as a model
green development enterprise at the Wuxi City 1st Green Development
Company Evaluations in fiscal 2021.From among 10 outstanding
businesses out of 10,000 companies in Wuxi, we have also been selected
as an even more prestigious Model 4 company.
TVC Corporation received the Director of the Chugoku Bureau of
Economy, Trade and Industry Award as an excellent energy manager inrecognition of its efforts to significantly reduce electricity consumption
and its steady energy-saving efforts by promoting the visualization ofelectricity usage in its factories.

Targets and Results

Labor Practices

The action of cleaning up a river

Social Background

Human Rights

NOK Elastomer Co., Ltd., winner of the Director of the Kyushu Bureau of Economy, Trade andIndustry Award

Environment

Environmental activities in collaboration with the government
The Tokai Plant is participating in the Shizuoka Prefecture River
Friendship System, a collaborative project between the prefecture,municipality, and businesses and local residents. Our Company has
exchanged letters of agreement with the prefecture and Kikukawa City
to act as a river friend, and has been engaged in the action of cleaning up
a river, such as mowing and cleaning up about 250 m of the banks of theEgawa River bordering our site, in an effort to conserve thelocal environment.

Measures against climate change

NOK Elastomer Co., Ltd. received the Director of the Kyushu
Bureau of Economy, Trade and Industry Award in recognition of its
continued environmental activities, including ISO 14001 activities, overa decade, and has maintained the S rank in the industry classification
evaluation system of the Ministry of Economy, Trade and Industry for fiveconsecutive years.

34

EnvironmentNOK Group Medium- to Long-Term Targets
TargetEnergy Conservation Subcommittee
Baseline figure

Target figure

FY 2021 results

CO2 emissions reduction
targets(Domestic)

2018

258
[1,000 tons-CO2]

2030

50% reduction
CO2 emissions
129[1,000 tons-CO2]以下

21% reduction
CO2 emissions
204[1,000 tons-CO2]

CO2 emissions intensity
reduction target(overseas)

2018

1.309
[t-CO2/million yen]2030

30% reduction
CO2 emission intensity
0.916 [t-CO2/million yen]

Up 8.7% from the base year
CO2 intensity
1.423 [t-CO2/million yen]

CO2 emissions reduction
target (global)

2018

759
[1,000 tons-CO2]

2050

Carbon neutral

4.5% reduction from the base year
CO2 emissions
725[1,000 tons-CO2]

Activities of the Energy Conservation Subcommittee*CO2 emissions are the sum of fuel and electricity consumption multiplied by the conversion factor. Fuel CO2 conversion factors are calculated using emission factors based on the Law Concerning the Promotion of
Measures to Cope with Global Warming.
The electric power CO2 conversion factors are: domestic— emission factors by electric utility; and overseas — “CO2 Emissions from Fuel Combustion” by the International Energy Agency (IEA) (using both market-based andlocation-based methods).

CO2 emissions reduction targets (Domestic)

250

Target Figure50% reduction

204

200

CO2 emissions

GWP reference

CO2 emissions
not from energy
sources

150

IPCC Fourth Assessment Report(AR4 value for a 100-year time horizon)

150
100
50
2018

2019

2020

2021

CH4

267

IPCC Fourth Assessment Report(AR4 value for a 100-year time horizon)

N2O

99

IPCC Fourth Assessment Report(AR4 value for a 100-year time horizon)

HFCs

256

IPCC Fourth Assessment Report(AR4 value for a 100-year time horizon)

0

IPCC Fourth Assessment Report(AR4 value for a 100-year time horizon)

PFCs

2030 (FY)64

IPCC Fourth Assessment Report(AR4 value for a 100-year time horizon)

NF3

0

IPCC Fourth Assessment Report(AR4 value for a 100-year time horizon)

CO2 intensity of the NOK Group (overseas)(t-CO2/1 million yen)

1.423

1.600
1.425
1.250

FY 2021 Scope 3 breakdown (global)(1,000 tons-CO2)
CO2
emissionsPurchased goods and services

2

Capital goods

163

Fuel- and energy-related activities(not included in Scopes 1 and 2)

87

4

Upstream transportaion and distribution

10

5

Waste generated from operations

23

6

Business travel

5

CO2 emissions Reduction Target (Global)

7

Employee commuting

16(1,000 tons-CO2)

8

Upstream leased assets

0

800

9

Downstream transportation and distribution-

10

Processing of sold products-

11

Use of sold products-

12End-of-life treatment of sold products-

13

Downstream leased assets

014Franchises

015

Investments

0.725
0.550
0.375
0.200

2018

2019

2020

Intensity

2021

2030 (FY)

Target Intensity

725

700
600
500
400
Target Figure
Achieving carbon
neutrality

300
200

Total

100
0

35

current status.

2019

2020

Production
factory building

2021

NOK CORPORATION SUSTAINABILITY REPORT 2022

2050 (FY)

Production facilities• Increasing
production
efficiency• Retrofitting• Upgrading to high-efficiency
equipment• Optimizing air conditioning operation

Motors• Configuring equipment to savepower
• Controlling and reusing heatdissipation and exhaust• Inverter motors, pumps, etc.

Process monitoring

0
2,169

Visualization of Power Consumption
Amount of electricity used

(kWh)

9 Normal preheat

Normal preheat

Normal preheat Energy-saving preheating

8
7

3.33kWh(22 hours)

65
4 7.91kWh
3 (8 hours)

6.44kWh(15 hours)

7.66 kWh(7 hours)

2

Operatinginformation

1

2,012

*Categories 9, 10, 11 and 12 are not included in the calculation because it is difficult to calculate their

2018• Improved fuel economy by improving
the loading ratio

0:00• Repairing air leaks• Visualizing the amount of electricity• Optimizing operating conditions• Visualizing operating status

Figure 2

12:00
0:00
2022/3/3 (Thu)

12:00
0:00
2022/3/4 (Fri)

12:00
0:00 (Time)
2022/3/5 (Sat)• Upgrading to high-efficiency
equipment

Development of an analysis technique for vulcanizing equipment
After the rubber material is molded into the shape of the productby vulcanizing heat pressing, there is a process called secondary
vulcanization to stabilize the rubber properties. In this process, products
are put into a furnace controlled to a specified temperature for a certain
time to stimulate the vulcanization reaction, and the equipment used iscalled a secondary vulcanization furnace.
In the furnace component of the secondary vulcanization furnace, thesupplied air is heated by an electric heater, and the temperature is raisedby sending hot air into the furnace. The temperature sensor in the furnace
is used to control the electric heater to keep the furnace temperature
constant. Because hot air is constantly sent in to regulate the temperature,
the air in the furnace is discharged into the atmosphere. We are examining
the possibility of using this waste heat energy as follows.
A heat exchanger was installed in the exhaust duct from the furnace
to enable the supplied air to pass through (a schematic diagram of the

Corporate Governance1• Improving vehicle fuel efficiency

Participation in Communities andCommunity Development

Category

FY 2021 CO2intensity
8.7% increase
compared to FY
2018

0.900

• Proper distribution routes• Introducing renewable energy

Target Figure 30% reduction

1.075• Promoting idling stop

• Frequent turning off, automatic turning
on/offQuality Assurance

SF6• Switching to LED lighting

NOK provides IoT-based tools for visualizing energy consumption tocontinuously promote a higher level of factory energy management activities.
Figure 2 shows an example of improving energy conservation by
combining plant equipment with tools that collect equipment operating
information. We analyzed the combination of equipment operation andthe amount of electricity used, and turned our attention to the preheatingprocess during standby when the amount of electricity used was high.
Changing this operation is expected to save about 9,000 kWh annually.
We also post the current electricity usage of our plants to raise
employee awareness of energy conservation.

Fair Operating Practices

FY 2021 CO2emissions 21.0%
reductioncompared to
FY 2018

Visualization of Power Consumption

Logistics(t-CO2)

Greenhouse gas

Figure 1

Labor Practices

300

0

GeneralGreenhouse gas breakdown (Domestic)(1,000 tons-CO2)

As a Green Factory initiative in the NOK Twin Green Plan 2030, the NOKGroup is aiming to reduce domestic CO2 emissions by 50% from the 2018
level by 2030.To this end, we are working to develop low-energy production
methods and utilize renewable energy as our main reduction activities.
In the “Development of a Low-Energy Production Methods,” we set out
a plan to reduce domestic energy use by 18%.To promote the plan, theEnergy Conservation Subcommittee is introducing and sharing low-energy
technologies developed at each site, and developing effective technologies atmany sites. We have also promoted the establishment of a robust low-energy
management system through applying IoT technology to “visualize” theamount of electricity consumed. The Energy Conservation Subcommittee
will continue its improvement efforts to reduce CO2 emissions by 50%.

structure is shown in Figure 1).The purpose is to reduce the load onelectric heaters by preheating the air at room temperature with waste
heat from a heat exchanger. As a result, energy savings of about 30%
have been obtained inexperiments, dependingon the model andoperating conditions.
Many secondary
vulcanizing furnaces
operate within the NOKGroup, and this new
design is expected to havea significant ripple effect.

Human Rights

Target Fiscal Year

Environment

Base Year

Displaying the amount of electricity used to employees

NOK CORPORATION SUSTAINABILITY REPORT 2022

36

Environment

Resource conservation and waste recycling

Concrete Activities

In fiscal 2021, the amount of waste sent to domestic landfill was 1,112
tons, a significant reduction from the 1,986 tons of waste sent to landfill
in fiscal 2018, when the foundry began operations. The recycling rate
has also improved to 98%, meeting the target level. Going forward,
we will continue to reduce the amount of waste by taking measures
to conserve resources and prevent non-conforming products, suchchecking mold shapes and reviewing the proper weight of rubber
fabric, promoting recycling, and converting waste into valuable
resources, in order to achieve the NOK Twin Green Plan 2030 target of
a 100% recycling rate. In addition, the NOK Twin Green Plan 2030, which
was revised in fiscal 2022, clarifies our vision for resource recycling,
and we aim to realize a recycling-oriented society through activities
such as waste plastic reduction.

The policy of NOK Group

Fair Operating Practices

The NOK Group has been promoting the 3R initiative to realize a
recycling-oriented society. The Group strives to contribute to asustainable society and to enhance our corporate value through a rangeof measures throughout the product life cycle, including the efficientuse of raw materials, water, and energy as well as waste reduction andrecycling of resources by improving each process.

Turning waste solvents into valuable resources (Japan)
NOK Klueber Co., Ltd. converts waste solvents such as post-washsolvents and solvents containing raw materials into valuable materials.
In fiscal 2020, we began material recycling to recover DMF, IPA, andhydrocarbon detergents by distillation, and in fiscal 2021, we began
additional NMP recycling. As a result, we were able to reduce industrial
waste by about 22 tons annually.
Nippon Mektron, Ltd. is reducing industrial waste by 685 tons
annually by converting acidic water discharge into valuable resources
and converting wooden pallets into valuable resources for biomass
power generation fuel.

Labor Practices

We have been living a convenient and prosperous life surrounded bymany things in a social system of mass production, mass consumption
and mass disposal. At the same time, we are consuming large amounts ofthe Earth's finite resources and energy, as well as generating enormousvolumes of waste, and we are facing various problems such as thedepletion of natural resources and environmental destruction. Today,
many around the world are calling for a shift from a mass-production,
mass-consumption, mass-waste society to a recycling society andrequiring that businesses promote the efficient use of resources, taking
into account the entire product lifecycle from the procurement of raw
materials to disposal and 3Rs (Reuse, Reduce and Recycle).

Human Rights

Targets and Results

NOK's original designed umbrella

Resource conservation and waste-related targets, and FY 2021 results
Target figure

FY 2021 results

Evaluation

Continuous efforts to conserve
resources

-

-

-

-

Amount of industrial waste disposed ofin landfill (domestic)

2030

0t

1,112 t○By-product recycling rate (domestic)

2020

More than 98%

98%○

Participation in Communities andCommunity Development

Target Fiscal Year

Quality Assurance

Target Items*By-product: General term for industrial waste and valuable resources *Recycling rate: “Recycling rate = 1 – amount of landfill disposal / amount of by-product generated × 100”

NOK’s final amount disposed of in landfill and waste recycling rate (domestic)
(t)

(%)

70

3,000

98.0

100.0

97.9

98.0

52

60
50

1

1,500

30
20

29

10
0

2018

2019

■ Valuable waste ■ Amount recycled

37

2020

2021

(FY)

■ Amount disposed of in landfill

NOK CORPORATION SUSTAINABILITY REPORT 2022

96.0

2,000

22

40

Target figure (Recycling rate)

2,500

1,112

Wooden pallets reused as fuel for biomass power generation

94.0

1,000

92.0

500

90.0

0

2020
2021 (FY) 88.0
Waste recycling rate (right)

2018
2019
■ Amount disposed of in landfill (left)

Corporate GovernanceAmount of by-products generated by the NOK Group (domestic)(1,000 tons)

Environment

Social Background

Promotion of waste reduction (China)
Mektec Manufacturing Corporation (Zhuhai) Ltd. is actively promoting
waste reduction activities. In addition to the reduction of acid, alkaline
effluent, and nickel from the plant, the reduction of slag and sludge
and the recycling of empty chemical containers have resulted in
cutting 1,900 tons of effluent and 229 tons of solid industrial waste
per year. We were able to reduce general waste by 42 tons per
year through reusing internal and external resources. Regarding
outsourced waste disposal, we use resource recycling to recycle up to
80% of plastic waste and 95% of metal waste.

Sponsoring the Aikasa Project (Japan)
NOK is participating in the 2030 Disposable Umbrellas 0 Project of
Aikasa, an umbrella-sharing service sponsored by Nature Innovation
Group, Inc. The annual consumption of vinyl umbrellas in Japan is said
to be about 60 million, and most of them are not recyclable, causing
problems such as a lack of landfill space. NOK agrees with the company's
goal of zero disposable umbrellas, and by participating in this initiative,
NOK will raise awareness of the issue of waste and help to solve theproblem of plastic waste.

NOK CORPORATION SUSTAINABILITY REPORT 2022

38

Environment

Conservation of water resources
NOK Group’s total water withdrawals

Social Background(1,000 m3)

10,000*AQUEDUCT: A water risk assessment tool published by the World Resources Institute (WRI).It
provides a world map with information on water risks such as quantity of water, water quality,
regulations, and reputation.

9,027

9,000
8,000

Water stress

7,000

25%

6,000
5,000

2019

2020

2021

(FY)

NOK Group’s water dischargeAll(1,000 m3)

8000
7250
6500
5750
5000

49%

8,000
7,250

6,189

6,500
5,750
5,000

2019

2020

2021 (FY)

Targets and Results

Increase-controlled water
withdrawals
Monitoring the volume ofwater discharge (Global)

39

FY

Volume of water Volume of water
withdrawals
discharge

2019(Base Year)

8,768[1,000 m3]

7,386[1,000 m3]

2021

9,027
[1,000 m3]

6,189[1,000 m3]

NOK CORPORATION SUSTAINABILITY REPORT 2022

Water discharge Control
While complying with the laws and regulations regarding water discharge,
NOK has been using voluntary standard values that are about 20% stricter
than standard values stated in the laws and regulations. In addition, NOK
is working to maintain a database system that enables measurements
at the factories to beshared and checked.
NOK Group factories andthe Environmental Risk
Assessment Department
are working together toprevent water discharge
accidents/problems.

Improvement of water discharge treatment facilities (Japan)
Unimatec Co., Ltd. is upgrading its water discharge treatment facilities
for better water discharge treatment and to ensure stable water quality.
In addition to cleaning up the aeration tank by drawing out sedimentand sludge, the fixed bed inside the tank was removed in an attempt toimprove fluidity. In addition, the air vent in the aeration tank was updated
to a high-efficiency ejector, and the inside of the tankhas been arranged
so the entire contents would be in a state of total flow. As a result, water
discharge treatment has improved by 10 m3/h, and the BOD removal rate
has improved by 10 to 15%."

Wastewater treatment equipment installed at a plant

Water Risk Assessment
The NOK Group uses high-quality water in the manufacturing processesof our products. A stable supply of high-quality water is important in
conducting our business activities, so if a natural disaster or other event
prevents a stable supply of high-quality water, we expect this to impact
a variety of value chains and disrupt supply chains. This means businessactivities and water are closely related.
Moreover, since water discharge after use in the manufacturing
process may contain harmful substances, there is a concern that if
water discharge exceeding the effluent standard prescribed by law
is discharged, it may cause environmental pollution and harm to the
local community. For this reason, we regularly carry out thorough(After)Cleaning of wastewater treatment facilities

Groundwater recharge (Japan)
In an effort to protect water resources, the Kumamoto Plant supports
a project to recharge groundwater in the Kumamoto area promotedby the Kumamoto Groundwater Foundation. This is an activity inwhich farmers with rice paddies in groundwater recharge areas andcompanies and organizations that have signed owner agreements
grow rice together, so that the water stored in the paddies penetrates
underground and promotes groundwater recharge. Continuing fromfiscal 2020, in fiscal 2021, rice planting was conducted on behalf of
farmers due to the spread of COVID-19. In addition, by donating 180
kilograms of harvested rice to food banks, we not only conserve water
resources, but also actively contribute to society. We will continue topromote proactive activities in cooperation with external organizations
to conserve water resources.

NOK CORPORATION SUSTAINABILITY REPORT 202240

Corporate GovernanceTargetConcrete Activities

Participation in Communities andCommunity Development

Water resource targets and FY 2021 performance

The survey revealed that of the total 76 sites, 6 sites in Thailand
and China and 2 sites in Germany are production sites with high water
stress. The NOK Group is currently working to grasp and control water
withdrawals on a consolidated global basis. In addition, we will conduct
water risk assessments when new facilities are established, and we will
strive to produce and conserve water resources with consideration forwater withdrawals and water discharge.

Quality Assurance

As a result of global efforts to grasp the volume of water withdrawals
and water discharge at each plant and to reduce the volume of water
withdrawals, the volume of water withdrawals and water discharge
was 9,027,000 m3 and 6,189,000 m3, respectively, in fiscal 2021.In the
production process, efforts were made to reduce water withdrawals by
optimizing water circulation facilities in cooling towers that use water,and reusing water discharge. The actual amount of water taken in fiscal
2021 was higher than in fiscal 2020 due to COVID-19 subsiding andincreased production activities.
In light of growing concerns about water risks worldwide, the NOKGroup has set a clear three-year (FY 2020 to FY 2022) goal of curbing
increases in water withdrawals globally. To attain this goal, we arepromoting activities to reduce water withdrawals within the Company,
and also participating in external conservation of water resources
activities such as groundwater recharge activities to conserve water
resources both internally and externally.

Chilled Water System Rubber(Before)Fair Operating Practices

The NOK Group works to protect water resources by identifying andreducing the amount of water used in the manufacturing process of our
products, and by taking thorough measures to clean water discharge. In
addition, the NOK Group assesses the water risks in each country andregion to respond to different water risks according to the country andregion, and promotes conservation of water resources activities tailoredto the characteristics of each country and region.

76 locations

Labor Practices

The policy of NOK Group4% ■ Extremely high6% ■■ High
Medium to highto medium16% ■■ Low
Low

Human Rights

Currently, the global shortage of water resources is a problem arisingfrom the increase in water use due to population growth and thedevelopment of developing countries. Moreover, intensifying climatechange has led to different precipitation patterns as well as unusual
intensity and frequency of rain, which may result in the destabilization ofwater resources, such as the expansion of drought areas and worsening
flood damage. To address these water risks and create a sustainable
society, it is becoming more and more important for businesses to makeeffective use of water resources.

Refurbishing the cold water system (Indonesia)
PT. NOK Indonesia's cold-water system was a semi-open system supplied
from a cooling water circulator (chiller) to the factory via a storage tank,turned into hot water that was stored in the storage tank, and circulated
again by chiller cooling.
From here, we removed the storage tank and the distribution pumpfor the hot water, and adopted a closed system that has become a cycle
for chillers, distribution pumps, and rubber factories. The refurbishment
is expected to reduce the amount of water supplied supply water tothe plant by 60 m3/month, as well as the blowdown by 10 m3/month byremoving the storage tank and the drain pump for hot water.

Environment

water discharge treatment control, run emergency drills, and check
response procedures.
The NOK Group conducts water risk assessments across the Groupto efficiently promote response measures to water risks. The resultsof the study on water stress at global production locations obtained byusing AQUEDUCT*, operated by the World Resources Institute (WRI), areas follows:Environment

Measures on substances of concern

Target VOCemissions(global)Base Year2010

Total VOC emissions of the NOK Group

Target Figure

5,000
4,000

3,164

3,000
2,000

Emissions (132 t)

0

2010

2019

2020

2021 (FY)

PollutantRelease andTransfer
Register(PRTR)

129

PublicLandfillwaterways

3

0

Transfers (231 t)
Soil

SewagesystemOff-site

0

0

231

The policy of NOK Group

Concrete Activities
VOC reduction by switching to water-soluble paints (China)
NOK (Wuxi) Vibration Control China Co., Ltd. began switching towater-soluble paints for its products in fiscal 2020, and completed thefull switch in December 2021.Efforts to improve the cleaning process andexhaust treatment also helped reduce VOC emissions by approximately
85% from the start of the switch to completion.
In addition, with the increased use of painted exhaust treatment
equipment introduced in 2014, we improved the exhaust combustion
efficiency in 2021 by increasing the air volume of the exhaust treatment
system and other measures, and we were able to stabilize theconcentration of hydrocarbon emissions to meet the legal requirements.
Since the exhaust from the alkaline cleaner was discharged directly
to the outside, we were able to reduce VOC concentration by 63% byinstalling more condensers and performing combustion treatment.
VOC reduction through process changes (Japan)
Unimatec Co., Ltd. has been able to reduce VOC emissions by 2,448 kg(2.4 t) annually by replacing the organic solvent (toluene) used to react
products with water. By establishing a way to eliminate the drying process
for organic solvents, we were able to reduce energy consumption not only
by using organic solvents but also by omitting the process, contributing toa reduction in electricity consumption of 7,338 kWh per year.
Promotion of green procurement
Please refer to p. 56 for details on our promotion of green procurement.

To help reduce the environmental burden, the NOK Group is developing
products that contribute to next-generation eco-technologies, taking into
account the entire product lifecycle from procurement of raw materials
to manufacturing, transportation, use and disposal.

Products the Help to Conserve the Environment
NOK has developed ethylene propylene rubber (EPDM) using
biomass-derived raw materials. This material reduces CO2 emissions
during the manufacturing process of raw materials (polymers) byapproximately 40% compared to conventional general-purpose EPDM,
helping to achieve carbon neutrality.
NOK Klueber Co., Ltd. is promoting sales of biodegradable lubricants.
Biodegradable lubricants are physical lubricants that break down into
CO2 and water by microorganisms, and are products that will have a low
environmental impact even if they leak in an unexpected accident.
They are used in equipment and machinery that may come into directcontact with the environment, such as port cranes, amusement facilities,
construction machinery, and dental lubricants.

Environmentally friendly NOK products
All NOK products help to conserve the environment by supporting ourcustomers' products behind the scenes.
The functions of NOK products, backed by technology, range
broadly from sealing, liquid control, and vibration and sound isolation
to low friction, membrane separation and more. These NOK products
are incorporated into our customers‘ products, and in a variety of end
products, performing environmental protection functions such as “Don’t
let it out, don't leak it,” “communicate efficiently,” “reduce load,” and“extend life.” The NOK Group is committed to providing products anddeveloping new technologies that help realize a sustainable society.

Development of ethylene propylene rubber(EPDM) using biomass-derived raw materials

Biodegradable lubricants on display

Not generating and emitting substances that
affect the environment
Oil seals, O-rings, gaskets, electromagnetic
shielding rubber (EM Guard), mechanical seals,
metal bellows, etc.
Efficient energy transfer
The Le-μ's series, Iron Rubber (polyurethane
elastomer) products, accumulators, solenoid
valves, actuators, thermally conductive
rubber, etc.

Corporate Governance

1,000

○

Participation in Communities andCommunity Development(t)3,164 [t]Recently, environmental risks have been recognized and are causing
increasing concern across the world, including those related to climatechange, resource depletion, waste treatment, and growing demand forwater resources. To reduce those risks and create a sustainable society,we cannot ignore the environmental burden of the products we use
on a daily basis. Accordingly, companies must develop products andtechnologies that contribute to environmental protection in ways thatconsider the entire life cycles of their products, from the procurementof raw materials to the products’ manufacture, transportation, use, anddisposal. Companies also need to make better use of renewable energy,
thereby helping to solve environmental issues such as climate change
and resource depletion.

Product development related to new energy(fuel cells)
Cell seal for fuel cell, humidifying membrane
modules, etc.

Quality Assurance

The NOK Group‘s VOC emissions during fiscal 2021 were 3,164 tons,
keeping its VOC emissions below the Group’s target of 5,855 tons.
NOK will continue to seek ways to reduce emissions from adhesives
and paints at each stage of production so that we can maintainor reduce VOC emissions. We will also study the development oftechnologies to prevent an increase in VOC emissions when the use oforganic solvents increases due to increased production.

5,855 [t]VOCemissionsless than
FY 2010
results

Social Background
Evaluation

Fair Operating Practices

Targets and Results

FY 2021
results

Reducing the burden on products and theenvironment
Noise and Vibration control product special
lubricant products, coating products, water
discharge treatment membrane modules,
separation membrane modules, etc.
Extending product life
Le-μ's series, special lubricant grease, special
coating, Rustector series, etc.

41

NOK CORPORATION SUSTAINABILITY REPORT 2022

Labor Practices

NOK believes that it is the social responsibility of a business to comply
with chemical substance regulations and customers’ self-imposed
standards, which are becoming stricter every year. For this reason, theNOK Group will reduce the substances of concern used and emitted
in the production process, identify and manage chemical substances
throughout the product life cycle, and contribute to reducing theenvironmental impact of the entire supply chain.

TargetFY 2021 PRTR Results

Atmosphere

The policy of NOK Group

Baseline
figureHuman Rights

Chemical substances are essential to our lives, but they may also cause
problems such as destruction of ecosystems and damage to people.
And regulations on substances of concern are becoming stricter year
by year in every country. To protect the Earth’s ecosystems and guard
people from the adverse effects of these substances, companies
are required to comply with the regulations and manage and reduce
their use of chemical substances, taking the entire life cycles of theirproducts into consideration.

Target Items

UNGC
Principle 9

Environment

VOC emission targets and FY 2021 results

Social Background

6,000

Environmentally friendly products

NOK CORPORATION SUSTAINABILITY REPORT 2022

42

Environment

Trends in environmental investments and costs

Environmental Impact Assessment for Design

Waste

Use

• Longer service life of products

Energy consumption• Minimizing the heatdissipation range of molding
machines

464

495

Environmental
conservation costs

473

620

550

Total

1,372

1,084

1,045

Social BackgroundOur life is supported by the various benefits of biodiversity, such as theprovision of food and water and stable climatic conditions, which areessential for the continued existence of all humanity. In recent years,
an increasing number of living organisms have become extinct due tothe destruction of the natural environment, overfishing, and climate
variability, leading to a rapid decrease in biodiversity. Conservation of
biodiversity is positioned as one of the critical global issues among theSDGs, with countries across the world making efforts toward that end. To
create a sustainable society, business enterprises also need to carry out
their business activities with a sensitivity to conserving biodiversity andthe natural environment.

1,500

1,045

Occurrence ofdisposal

500• Reuse• Low-waste
design for easy
disassembly,
recycle design

550

0

495
2019

2020

2021 (FY)■ Environmental conservation investments ■ Environmental conservation costs

Effects of Environmental Conservation and Economic Effects• Energy-saving design by low
friction of products

Application of the Standard on Environmental Impact Assessment for Design in FY 2021
Applicable cases

Fukushima

651

116

Kitaibaraki

776

56

Shonan Development Center

170

143

Shizuoka

372

372

33

12

92

57

Kumamoto

179

10

Total

2,273

766

Economic effect of environmental conservation measures
Energy-saving effect …………………………………………………………… 107 million yen
Gain on sales of recyclable materials ……………………………… 1,256 million yen

FY 2021 NOK environmental accounting
Category(Millions of yen)
Investments

Costs

Environmental conservation costs to control environmental burden caused by business activities within business areas

224.0

310.0

Pollution prevention costs

Investment in and maintenance and management costs related to pollution prevention activities

93.0

112.0

Global environmental
conservation costs

Investment and maintenance and management costs related to global warming countermeasures, including
energy conservation

131.0

16.0

Resource circulation costs

Investment and maintenance and management costs related to resource recycling activities, including waste
disposal and recycling

0

182.0

Upstream and downstream
costs

Costs of controlling the environmental burden that occurs in upstream and downstream processes, such as
green procurement, etc.

00Management activity costs

Costs associated with management activities such as ISO14001 maintenance and operation

0

116.0

Research and development
costs

Costs of research and development that contributes to the environment, such as the development ofenvironmentally friendly products

272.0

121.0

Social activity costs

Costs related to greening of business establishments and support for the activities of environmental
conservation groups0

1.0

Costs involved in dealing withenvironmental damage

Costs associated with the removal of environmental burdens, such as special equipment and facilities

0

2.0

496.0

550.0

Business area costs

Aggregate total

43

NOK CORPORATION SUSTAINABILITY REPORT 2022

Volunteers cleaning Suizenji Ezuko Park (Japan)
As part of its environmental conservation activities, the Kumamoto
Plant participated in volunteer activities to remove alien waterweedsthat breed on the surface of Lake Ezu. This initiative was sponsored by
Kumamoto Prefecture’s Environmental Conservation Council. To preventthe decline of native species, they were able to enter the lake and use
sickles to drag the spreading waterweeds on the surface of the waterto land, where they were carried out in bucket relays and collected until
one garbage truck was full. We will continue to help conserve the local
environment so that the area can remain a place where people can comein contact with nature, including valuable aquatic life and birds.

Mangrove tree planting activities

Fines, penalties and/or legal costs associated with the settlement of environmental accidents and complaints
Total

NOK promotes biodiversity activities based on the characteristics of theregion in cooperation with local governments and residents, including
environmental-cleanup and tree-planting activities in the neighborhoodof its factories. We are also developing products that take biodiversity
into consideration, and will continue to help conserve biodiversity
through our business activities and products.

Reforestation activities (Thailand, Indonesia)
Thai NOK Co., Ltd. conducts tree planting activities on the factory
grounds. Plantation is planned over a period of three years, with a total
area of 7,200 m2.In fiscal 2021, 100 employees participated in planting
320 trees. Planting trees is expected to contribute to carbon neutrality byabsorbing CO2 in the future.
In addition, PT. NOK Precision Component Batam is participatingin the Go Green initiative, which involves planting mangroves inpartnership with NGOs. We sowed 100 mangrove seeds on a beach in
Tanjung Piai.
To protect the environment and raise awareness of conservation, we
will continue to strive to provide children and adults alike with enjoyable
contact with nature.

Corporate Governance

Main Contents

Concrete Activities

Clean-up of Kuniyasu Beach

Participation in Communities andCommunity Development

Tokai
Tottori

Effects of environmental conservation
Reduction of CO2 emissions………………………………………………………… 4,258 t-CO2
Reduction of landfill disposal volume…………………………………………………… 10 t

Based on the results of a survey of the impacts on and dependence on
biodiversity and ecosystem services, the NOK Group is confirming which
direction to take in its biodiversity response. We have supported theKeidanren Declaration on Biodiversity and Guidelines for Action since
December 2019, and in fiscal 2021, we reviewed our internal standards
and established a new guideline, the Guidelines for Natural Environment
Conservation Activities. The standards clarify the relationshipbetween business activities and biodiversity, and promote biodiversity
conservation activities at each business site.

Quality Assurance

PlantsNumber of
improvements (cases)

NOK tracks the amount of investment and costs required forenvironmental conservation in its business activities each year, with theaim of efficiently and effectively promoting environmental conservation
efforts toward achieving sustainable development.
In fiscal 2021, we took energy-saving measures that focused on thedevelopment of energy-saving manufacturing equipment, the renewal ofenergy-saving equipment, the introduction of a demand control system
for air conditioners, and the use of LEDs for lighting. We have also beenpromoting the installation of solar power generation facilities that serve
the purpose of BCM.

The policy of NOK Group

Fair Operating Practices• Energy-saving equipment
maintenance design byadopting energy-saving parts

Local environmental protection activities (Japan)
The Tokai Plant cleans up Kuniyasu Beach, where the Egawa River inthe Kikukawa River system flows. About 30% of the employees at thebusiness site took part in the activities, picking up garbage ranging
from small plastic waste to a large fishing float more than 1 m long,collecting the equivalent of three light trucks (approximately 180 kg) oftrash and bringing it to the administrative resource recovery site. We
will continue to help protect the local environment through our efforts
to conserve biodiversity.

Labor Practices• Product design withenvironmental load
process selected

899

1,000

• Improved product yields• Resource by conservation
downsizing

Environmental
conservation
investments

Human Rights• Non-use of substancesof concern

2021

2,000

Use of resources
Diffusion of substancesof concern

2020(Millions of yen)Standard on Environmental Impact Assessment for Design
Design - Production

2019

Environment

We assess the environmental impact of designs of new products, newmaterials and new production machines in accordance with NOK's
Standard of Environmental Impact Assessment for Design.
Taking the entire product life cycle into account, NOK is working
on various designs including ending the use of substances of concern,
energy-saving designs, improved product yields, downsizing, longer
service life, low-friction and low-wear performance, reuse of products,
and low waste and recycling.

Conservation of Biodiversity(Millions of yen)FY01,046.0

NOK CORPORATION SUSTAINABILITY REPORT 2022

44

Social ReportSociety

Formulation of the NOK Group Human Rights Policy

Future Actions

NOK's principles of corporate behavior include management that
respects human rights. To more specifically address respect forhuman rights, we have formulated our Human Rights Policy with theaim of making our basic stance on human rights known to people
inside and outside the Company, gaining their understanding andcooperation, and promoting respect for human rights.

Based on the NOK Group Human Rights Policy, we will carry out humanrights due diligence and work to constantly evolve resting on our laurels.

Future Penetration Through the GroupNOK Group Human Rights Policy

4

Remedies and corrections
We have established a contact point for non-compliance and consultation regarding human rights. If it is found that we havecaused or encouraged a negative impact on human rights, we will take steps to remedy and correct it.

5

Education and training
To ensure that each and every executive and employee properly understands and practices the Policy, we will continue to raiseawareness and provide training and education on the themes of human rights and harassment.

6

Key implementation themes and information disclosure
In our endeavors to respect human rights in accordance with this policy, we will focus our efforts on the priority implementation
themes specified separately, and report on the results of our activities through our corporate website, etc.

Masao Tsuru

45

NOK CORPORATION SUSTAINABILITY REPORT 2022

Basic Concept

Respect for Basic Human Rights in Relation to Employees

Our management principle is “Respectful management of people basedon love and trust.” We value the life of each employee and respect their
humanity, and at the same time, we strive to maximize the potentialof each employee. This is a key way we maintain and reinforce theCompany's competitive edge. That is to say, we firmly uphold the stanceof respecting human dignity across all aspects of our operations.
A precondition for such management based on respect for thehuman dignity of employees is the idea of respect for basic humanrights. Based on this principle, we respect the human rights outlinedin the International Bill of Human Rights and the ILO Declaration on
Fundamental Principles and Rights at Work, and we became a signatoryof the UN Global Compact.
The NOK Principles of Corporate Behavior features the following
declaration: “We will carry out management that respects the human rights
of all people,” and develop our business in accordance with this declaration.

Our Principles of Corporate Behavior set forth “Respect for Human Rights”
and “Provision of a Safe and Comfortable Working Environment,” and ourBehavioral Guidelines on Employee Compliance stipulate as follows:

Review of Human Rights Compliance
Regarding respect for human rights and compliance with labor laws
at overseas subsidiaries, every year we check whether there has been
any discriminatory treatment of employees, harassment, child labor,
and forced labor.
Also, as a consultation service for human rights, in Japan we have set
up an internal reporting service and an external reporting service witha lawyer. We have also established an internal reporting service at ouroverseas subsidiaries. Every year several consultations are received,
and we take corrective action for those in which non-compliance has
been confirmed.
In the supply chain, we conduct human rights due diligence as
stipulated in our human rights policy, and when human rights violations
are identified, we take corrective action.

1. Diversity, character and personality must be respected, andthere shall be no discrimination based on race, skin color, creed,
religion, nationality, age, gender, sexual orientation, gender identity,
national origin, or physical or mental disabilities. Moreover, suchdiscrimination shall not be tolerated.
2. We must not conduct acts of harassment that have adverse effects on
the workplace environment, such as impairing the dignity of individuals
and causing disadvantage to or posing threats to them. In addition, suchacts of harassment shall not be tolerated.

Major Initiatives Related to Human Rights(Implementation of Activities and Various Education Programs for Promotionof Human Rights)
We are conducting education for managers at the new manager training
and manager follow-up training to prevent all kinds of harassment,
including the prevention of power harassment that was legislated inJune 2000 in Japan. For employees, we are raising awareness by taking
advantage of opportunities such as harassment prevention monththrough Company-wide educational materials. In addition, we haveestablished systems to prevent harassment, and take swift andappropriate action after harassment has occurred not only for theoccurrence of harassment within the Group but also for harassment
at external affiliates.

NOK CORPORATION SUSTAINABILITY REPORT 2022

46

Corporate Governance

December 16, 2021
Representative Director, Chief Executive Officer, NOK CORPORATION

UNGC
Principle 5

Participation in Communities andCommunity Development

3

Human rights due diligence
The NOK Group has established and implements the necessary human rights due diligence mechanisms in accordance withthis policy. We expect our suppliers to respect human rights in accordance with the NOK Group Procurement Policy and the CSR
Procurement Guidelines.

UNGC
Principle 4

Quality Assurance

Scope of application
This policy applies to officers and employees of the NOK Group. We will also ask our suppliers and those involved in the NOKGroup's business to respect human rights so as not to be complicit in human rights violations throughout the supply chain.

UNGC
Principle 2

Fair Operating Practices

2

UNGC
Principle 1

Labor Practices

1

Respect for Human Rights

Human Rights

We have made our human rights policy well known throughout theGroup, and will further promote respect for human rights by providing
basic education on human rights in general education, new employee
training, management training, and other training at different levels.

Basic views on human rights
Based on the NOK Group's management principle of “Respectful management of people based on love and trust,” we at the
NOK Group are committed to valuing the lives of each and every employee and respecting their humanity. As a signatory of
the United Nations Global Compact, we also respect human rights set forth in international norms such as the International
Bill of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, and the Ten Principles of theUnited Nations Global Compact.
NOK Group supports the United Nations Guiding Principles on Business and Human Rights, has established this policy based onthese principles, and follows the principles of corporate behavior - “Conduct business in a manner that not only respects the lawsof the countries and regions in which it operates and international norms, including human rights, but also considers culture,
customs and the interests of stakeholders.” - to respect human rights in all countries and regions where we operate.

Environment

Human Rights

Background and Thoughts on Policy Formulation

Society

Labor Practices
Respect for Fundamental Rights and Dialogue

UNGC

UNGC

Principle 1

Principle 3

Compliance with Labor-related Laws
Our domestic Group companies are instructed to ensure compliancewith the Labor Standards Act, the Labor Union Act, and any and all otherlabor-related laws. Our overseas Group companies are also instructedto ensure compliance with labor-related laws of each relevant country
corresponding to these labor-related laws.
Domestic business establishments that accept foreign technicalinterns have been checked for compliance with the Immigration Control
Act, working environment, living environment, and working conditions toensure that there were no problems overall.

Training time results
FY

2018

2019

2020

2021

Training time

12,866 hours

13,992 hours

15,762 hours

17,512 hours*Including Group companies

Level-specific education
The fourth year follow-up training is a junior training program
collectively targeted at employees in their fourth year after joining theCompany as new graduates. In the sessions, trainees share the detailsof their daily work and their experiences, and hold panel discussions
with senior employees invited from various types of jobs. Through thesesessions, trainees can receive a variety of advice on concerns that manyjunior employees currently have, such as how they should carry out theirjobs, how to interact with people in and outside the Company, and theneed to improve their linguistic abilities and other skills. This training
provides participants with opportunities to share a sense of unity and bein friendly rivalry with their peers, as well as to reconsider their roles andways of performing their jobs at their respective workplaces. Educationthat could not be provided in fiscal 2020 due to the spread of COVID-19
was shifted to fiscal 2021.
Development/specialized education
Development/specialized education is carried out for participants toacquire the necessary skills to perform their duties.
As part of our Business Skills training, we held a seminar to
improve logical writing skills for more than 300 applicants in order toraise the level of logical communication skills in the workplace. After
participants take the course, we conduct an assessment to measure
its effectiveness, and by objectively assessing the participants’ own
abilities, we use this assessment to promote efficient work in the future
and to continue self-improvement.
The goal of the Global Human Resource Development program isto develop people who can work in English, not people who can justspeak English. Practical training has been difficult due to the spread

Operating
Officer

Executive officer
training

Department
Manager

Department manager
training
Manager follow-up
training

SectionManager

New manager training
Worksite leader
training

Sub-section
Chief, AssistantSection Manager

4th year

4th yearfollow-up training

3rd yearInterview

New employee

Corporate Governance

NOK CORPORATION SUSTAINABILITY REPORT 2022

*Including Group companies from FY 2019

Participation in Communities andCommunity Development

47

1,524

Quality Assurance

Employees education program of NOK consists of level-specific educationand development/specialized education. The level-specific education isintended to enable attendees to correctly understand their own roles andthe expectations from the Company, and to contribute to the creation of
workplaces where attendees themselves and their colleagues can findsatisfaction in their jobs and feel that they are growing.

1,027

Special training

Employees education program of NOK

1,103

Temporary assignment training“Development of employees who take pride in their work and respect
their colleagues”

736

Global human resources development

Basic Principle of Employees education plogram“Employees grow with their jobs, and workplaces grow with them”
Vision for Employees education plogram

2021

Business skills training

It is in the respective workplaces where employees can feel that the
management is carrying out “management that respects people basedon love and trust” as stipulated in the Management Principles. Under
the Basic Principle of Employees education plogram and the Vision for
Employees education plogram NOK aims to create workplaces where
employees can find satisfaction in their jobs and feel that they are
growing. To this end, we are working hard to develop human resources
who can contribute to the creation such workplaces throughvarious programs.

2020

System of NOK’s human resources development program

Development of Human Resources
Basic Concept

2019

Fair Operating Practices

Dialogue between management and employees is essential for“management that respects people based on love and trust” andpromoting healthy development. Through respecting the right toorganize, the right to bargain collectively and other rights of workers,
the NOK Group has built a healthy labor-management relationship.
The employees subject to the Labor-Management Agreement
account for 90% of all employees of NOK. Regular labor-management
meetings are held with the participation of the top management. Not
only do we carry out negotiations on working conditions, but also explain
business conditions and present management issues. Also, discussions
on the Company’s important policies and measures take place so thatboth the labor side and the management side can cooperate in realizing
business development and employee wellbeing. Measures that havea significant impact on employees are explained and discussed in advance.
The Company explains the business environment and management
plan for the next fiscal year to the labor union and holds consultations
about them. With that in mind, the union submits a demand for consensusbased compensation and working conditions for its members. In the springof 2022’s negotiations, the request was fully discussed and concluded.

2018

Labor Practices

To practice the management principle of respecting human dignity
is to respect and protect workers‘ rights. In practicing managementthat respects human dignity, we comply with Principles 1 to 6 of the
UN Global Compact. Moreover, practicing one of NOK’s Management
Principles, “a company with open communication,” leads to the active
promotion of dialogue among employees and dialogue between the
Company and employees. Under these Management Principles, NOK is
striving to create a workplace where employees can work with vitality
and peace of mind.

FY
Number ofparticipants

New employee training

Junior training program

Human Rights

Establishment of a Healthy Labor-Management Relationship based on Dialogue

Number of participants
Environment

Basic Conceptof COVID-19, but to improve overall English communication skills,
in addition to regular language training, we provide opportunities toexperience as many different cultures as possible while still in Japan,
and we are nurturing human resources who will be active globally.
Special-purpose training is targeted at employees who need focused
education or development from time to time. Usually, the program is
implemented under the themes of active participation of reemployedretirees and of strengthening workplaces.
As the points above demonstrate, NOK endeavors to develop andenergize employees by increasing opportunities for them to undertake
various kinds of training. Such training is done not only to provide
employees with opportunities for simple capacity building, but also
opportunities to establish solid relationships with their seniors andpeers, which will be very helpful for ensuring smooth communication ateach workplace.
Training records of programs are managed and monitored in thein-house training management system. In FY 2021, 1,524 employees
received training through the above programs, and the total training timewas 17,512 hours.

Management program

Level-specific education

Top management program

Special skills training
program

Human resources
development program

Development/specialized education

NOK CORPORATION SUSTAINABILITY REPORT 2022

48

Society

Labor Practices

Diversity

UNGC

UNGC

Principle 1

Principle 63

Human Resource and Welfare System
Environment

Enhancing the Employment and Support System for People with Disabilities

Basic Concept and Initiatives for Work-style Reform

Initiatives by Business Type and Theme, and Cooperation

The NOK Group upholds the stance of recruiting and appointing
various and diverse human resources regardless of their gender, raceor nationality. On a global consolidated basis, approximately 38,000
employees of diverse and different nationalities, races, genders, andemployment types are currently working in the NOK Group. We ensurethat executives at both domestic and overseas bases understandmanagement based on respect for human dignity, which is thebasic principle of the NOK Group, and promote the practice of suchmanagement in accordance with the circumstances in each region.
We are working to ensure that the percentage of women, foreign
nationals and mid-career hires who are promoted to management
positions is at the same level as that of regular hires, and there is nodiscrimination regarding promotion.

NOK furthers the employment of people with disabilities so that they
can take jobs according to their abilities and competencies, and live
independent lives in their communities. Divisions around Japan promote
the allocation of people with disabilities to jobs that satisfy them and thecreation of workplaces that enable them to work comfortably to establish
an environment where people with disabilities can work with vitality.

As part of management based on respect for human dignity, NOK ismaking efforts to create a working environment where employees canbalance their job satisfaction with a comfortable lifestyle. In addition topast measures taken to help employees achieve both professional andpersonal goals, we now consider and undertake various other measuresfrom the viewpoint of work-style reform.
To realize flexible and diverse work styles, we are also working on
implementing and improving a flextime system, childcare leave, nursing
care leave and other employee benefit systems, lowering the upper limit
on overtime work hours to shorten working hours, and improving therate of paid leave taken by employees.

By participating in regular meetings and working-group activities
related to human resource policies of industry associations of autoparts companies, we are able to obtain information on industry trends
related to diverse work styles and revisions of labor-related laws andregulations, which helps us to consider better human resource systems.

Strengthening Efforts to Shorten Working Hours and Encouragement Towards
Employees to Take Paid Leave

1. Workplace communication
The NOK Group strives to always be an open and comfortable workplace.
Managers and managers take the initiative to achieve and maintaina level of communication between superiors and subordinates,
colleagues and workplaces. For example, in addition to holding monthly
departmental meetings, supervisors and subordinates are required
to meet at least once every six months. An IT environment is also inplace that enables employees to easily communicate with superiors,colleagues and subordinates even when working from home.
2. Support for retiree associations
To help employees enrich their lives after retirement, NOK establishedretiree associations around Japan (eight regional blocks), and supports
each association through holding regional gatherings and other eventsfor retirees to interact with each other.

Corporate Governance

NOK has endeavored to shorten the total actual working hours to help
employees to pursue comfortable and prosperous lifestyles.
The labor-management committee annually develops a plan for
new initiatives and review the performance of previous initiatives.
Specifically, we check the record of overtime work hours and paid
leave actually taken on both a departmental and individual basis byusing the relevant data, and thereby identify problems and develop a planfor countermeasures.
At the Central Labor-Management Council, we review the problems andthe plan to establish medium- to long-term targets.
The current targets are as follows:

Other Welfare Systems

1. In principle, the total of overtime work and work on a holiday is to bewithin 45 hours in a month and 360 hours in a year
2. 17 days or more of paid leave is to be taken in a year.
To achieve these goals, we have adopted a policy of promoting
digitization to improve operational efficiency, and are making active
efforts to this end. The use of Web conferencing and the paperlesssystemhave taken root, and we will continue to promote digitization of business
operations.

49

NOK CORPORATION SUSTAINABILITY REPORT 2022

Participation in Communities andCommunity Development

NOK takes various measures to increase the number of females
recruited for management-track positions. We also provide training andguidance to enable existing female employees in non-management-track
positions to be actively promoted to management-track positions and on
to executive positions according to their willingness and abilities.
The medium-term plan for these initiatives is to increase thepercentage of new female recruits for management-track positions to ten
percent by the end of FY 2022. The plan has also set the target of tripling
the number of female employees in management positions comparedwith the number at the end of FY 2019.
Although we have achieved a target of increasing the percentage ofwomen among the total number of general managers hired in FY 2021 toten percent, we will continue to work on this target because the numberof managers is still short of the target.

To ensure that each and every employee can work in a way that suits
them, we have in place support systems that go beyond the legallyrequired minimum, such as the system of shorter working hours for
employees with children up to the fourth grade and the family care leavesystem, which allows employees to take up to one year of leave. To makeit easier for employees to use these resources, we are working to ensure
the system works properly by disseminating information and providing
advice about it.
In addition, to create a more pleasant workplace, we have eased
restrictions on using flexible working hours (no core time), working from
home, and taking half a day of paid leave. In FY 2022, to further promotesupport for balancing work and family life, we introduced a special leavesystem that enables employees to take special leave for treatment andrecuperation related to personal injury, pregnancy and childbirth, andnursing and care for family members.

Quality Assurance

Advancement of Female Employees

Work-life Balance (Support for Balancing Work and Family)

Every year, NOK provides employees with an opportunity to report on
their workplace situation and the job they aspire to have in the future.
Depending on the content of the report, such as the desired career path,an interview with a supervisor is arranged as needed, which is also
an opportunity for employees to communicate with their supervisor. The
results of self-reporting are used to develop and utilize human resources
effectively to ensure that the right people are appointed to the rightpositions, thereby improving the workplace environment.

Fair Operating Practices

With the stance of localizing business execution by overseas bases, theNOK Group promotes development and appointment of human resources
who acknowledge and understand local conditions regardless of theirrace or gender.
Interaction among executives and the technology, manufacturing,sales, operations and other departments of both domestic and overseas
bases is facilitated so that they can utilize the outcomes to develop
the people and improve the operational quality and efficiency ineach department.
Furthermore, non-Japanese employees are appointed to the
executive positions of overseas subsidiaries. In addition, we proactively
advance the appointment, development and participation of employees
of foreign nationalities by providing training for the technical andmanufacturing employees of overseas subsidiaries in the technology andmanufacturing departments, and hiring non-Japanese students in Japan.

In 2006, NOK introduced a system to rehire employees who have reachedmandatory retirement age. We seek to improve the system so that retired
people who still wish to work can make full use of their abundant work
experience and the advanced skills gained through their career at NOK.
For example, retired employees can pass their work-related knowledge
and techniques on to younger generations while maintaining theirlivelihood through reemployment under the system.
In FY 2016, flexible working patterns were introduced, and working
conditions were revised. While revising working conditions from time totime since then, we have established an internal job posting system anda human resources registration system for senior employees. Moreover,through providing seminars on life planning for livelihood support
after retirement and training prior to retirement as initiatives toward
maintaining the will to work, we continue to help senior employees totake on more active roles and enhance their job satisfaction after retirement.

Self-evaluation and Reporting System

Labor Practices

Global Promotion of Diversity

Senior Employee System (Reemployment after Retirement)

Human Rights

Basic Concept

NOK CORPORATION SUSTAINABILITY REPORT 2022

50

Society

Labor Practices

Occupational Safety and Healthcare

Representative Director, Chief Executive Officer
Central Safety and Health Committee (Chairperson: Safety Officer)
NOK Safety and HealthControl Division
NOK
Domestic plants

Head office/branches

Safety and HealthCommittee(Chairperson: Head ofBusiness Unit)

Safety and Health Committee(Chairperson: General Managerof the Safety and Health
Division)Group Companies
Safety and HealthCommittee (Chairperson:
Person responsible forsafety)“Safety is the foundation for implementing management
spirit that respects human dignity, my desires, andmy mission”

NOK CORPORATION SUSTAINABILITY REPORT 2022

NOK Group (domestic)

0.27

0.21

0.28

*Severity of injuries represented by the number of workdays
lost per 1,000 hours

FY 2019

FY 2020

FY 2021

Average among manufacturers

0.10

0.07

－

NOK Group (domestic)

0.004

0.004

0.004

Major safety activities

FY 2019

FY 2020

FY 2021

Line manager
Safety, hygiene and healthtraining for line managers

129

161

150

Facility safety training(simulation/safety standard
training)

59

146

102

No. of units undergoing facility
safety improvements

1,131

994

646

Investment in facilities andequipment for safety measures

320
million yen

68
million yen

170million yen

80
60
Denger experience training

40
20
0

（Cases）

80

70
51

60

64

40
20
0

8

6

7

FY 2019
FY 2020
FY 2021
Injuries not accompanied by lost time
Lost time injuries*NOK Group (domestic)

Corporate Governance

51(2) Safety declaration by the heads of divisions, and Safety Day activities
The heads of divisions, including the head office, make a safety
declaration, taking the lead in promoting safety activities in each division.
Furthermore, we have a designated Safety Day every month, on which
all employees at each workplace work on improving their awareness ofsafety, mutual enlightenment, identifying risks at our own workplaces
and the countermeasures.

－

Participation in Communities andCommunity Development

Although the NOK Group does not have a certified occupational healthand safety management system, it has established a health and safety
management organization headed by the president to promote health andsafety activities in accordance with the Company’s management system.
A Company-wide policy on activities is determined throughthe Central Safety and Health Committee, whose members are
representatives of labor and management. The policy is distributed toeach business site, head office, branches, and Group Companies, wherean annual plan for health and safety management is formulated.
The health and safety management plan is verified and reviewed
quarterly based on the PDCA cycle, and a radar chart diagnosis isconducted once a year to strengthen the weaknesses.
Business units that have prepared improvement plans aredesignated as “specified management business units, ” and the Safety
and Health Promotion Department follows up on their individual
improvement plans.
In addition, the Safety and Health Promotion Department, which
oversees the entire Company, collaborates with the safety and healthsecretariats of each business site, head office, branches, and Group
Companies to actively support the creation of a system that can maintainand improve the level of safety and health management.

1.21

Quality Assurance

Occupational Health and Safety Promotion System

1.20

Number of Industrial Accidents*Number of cases in FY 2022 compared with the number in FY 2018

NOK Group’s Basic Safety Principles posted in a factory

Average among manufacturers

Lost-time injury severity rate*

1.Improving the level of safety management to eliminate lost-time injuries andreduce the total number of occupational accidents to half *2.Equipment safety measures through risk assessment
3.Zero explosions and fires and thorough implementation of measures toprevent recurrence

Safety and health activities(1) Distribution of a video of a message from the president to all employees
To ensure that each and every employee fully understands that safety
is paramount in the conduct of business, as in the previous year, top
executives repeatedly watched videos of themselves talking about safetyat each workplace to foster and establish a culture of safety.

FY 2021

Fair Operating Practices

Activities during FY 2021
Development of the medium-term occupational safety and health plan
The NOK Group established and has been continuously implementing
the medium-term occupational safety and health plan (FY 2019 to FY2022), focusing on the following three items:

FY 2020

Labor Practices

NOK Group Safety Principles*Rate of lost-time injuries per 1 million hours

FY 2019

Human Rights

Respect for human dignity is one of the NOK Group's Management
Principles, and we believe that safety is a crucial precondition for sucha principle. Safety represents both a mission for management anda desire of all employees. We have always operated our businessaccording to the principle that safety is a top priority in everything we do.
To explicitly communicate a message on safety from top management
to employees as well as improve and ensure safety awareness andeliminate industrial accidents, we formulated the NOK Group Safety
Principles in FY 2017, and are promoting our safety activities accordingly
through a unified effort.

Occupational Health and Safety Promotion System

Lost-time injury frequency rate*(5) Safety and health education
Our Safety and Health Guidelines weredeveloped in 1976 with the aim of maintaining
and raising the safety awareness of
employees and helping them acquire safetyknowledge. The Guidelines have been used asan educational tool for all employees to shareawareness of safety in their work.
For line managers, health and safety
education is offered at the time of their new
appointment and in their fourth year to
Safety and Health Guidelines
ensure a unified awareness. They also receive
practical training using our in-house danger experience training machine.
In terms of education, training, and equipment safety, we haveestablished Company-wide “safety and health related standards,” which
are managed and implemented by the relevant departments.
With the aim of raising the level of safety awareness and mutual
enlightenment among safety secretariats, training workshops take place
periodically with the participation of the secretariats at domestic Group
Companies and plants.
To secure the safety of contractors doing work on NOK premises, weshare near-miss incident information and conduct risk prediction training
before they start their work.

Environment

Basic Concept

U NGC
Principle 1(3) Measures for securing facility safety
To reduce work-related risks, we continuously implement measures
to ensure the safety of equipment, such as by installing safety devices
and safety covers, based on the risk assessment of equipment andwork. We are working to ensure the safety of our workers and reduce
the workload, and are promoting the development of a safer and more
comfortable work environment. These activities will continue until thenumber of work-related injuries caused by equipment is reduced to zero.
(4) Zero explosions/fires
Regarding fire management, we focus on preventing fire disasters/
small fires and so have established and utilize a system that enables
us to share company-wide information on near miss incidents and takepreventive measures against their recurrence in a unified manner.

NOK CORPORATION SUSTAINABILITY REPORT 2022

52

Society

Society

Labor Practices

Fair Operating Practices
Compliance with Fair Operating Practices

In FY 2019, NOK launched activities to analyze employees’ health data,
seeking to help improve their health. Meetings with occupational healthnurses and public health nurses are held to share information.
To meet the mental health needs of employees, we have developed asystem that incorporates individual interviews by clinical psychologists.
As such, we can offer counseling, in addition to efforts realizing self-care,line care and care provided by in-house occupational health staff. We
have also made it possible for industrial physicians and public healthnurses to conduct Web interviews so they could respond even whileworking from home, which made it easier for them to consult with us andhelped strengthen primary prevention.
Also available is a free 24/7/365 telephone hotline staffed by an
external professional institution to deal with mental health problems at
an early stage and continue to provide support for a smooth return to work.
As part of our efforts to promote physical health, in addition
to providing guidance on preventing lifestyle-related diseases incollaboration with industrial physicians (at our head office) and holding
training sessions on preventing lower-back pain and stiff shoulders (atour workplaces), we are also promoting activities to encourage people
to get into the habit of exercising while having fun by holding “remoteworkouts.” These include walking rallies (at our workplaces) and online
muscle training with aerobic exercise taught by our company athlete
employees and members of the Safety and Health Promotion Department.
In particular, as in the previous year, the “Remote Workout” program
was held five times, with a total of 281 participants.

The NOK Group first launched activities to improve our work
environments in 1993. Since then, we implemented work environment
controls (noise, heat and cold), safe work practices (working posture andthe handling of heavy objects), and support systems (providing facilities
for relaxation).In the Medium-Term Safety and Health Plan from FY 2019,
we have reinforced endeavors to improve our working environmentswith an emphasis on Group companies.
In FY 2021, we focused on improving the work environment inworkplaces where temperatures are high, and improved the temperatureand humidity environment of 22 workplaces.

We believe that to fulfill our corporate social responsibility, it is essential
to share common awareness across the procurement supply chain whilebuilding relationships based on mutual trust.
In addition, today's society faces many problems such asenvironmental and human rights issues, and companies are expected
to help solve them in order to build a sustainable society. To this end,

we established the NOK Group Procurement Policy for conducting our
procurement activities with suppliers.
At the same time, we will respect our Charter of Corporate Behavior,
the NOK Group Human Rights Policy, the CSR Procurement Guidelines,
and the NOK Group Green Procurement Guidelines as we work
across the entire supply chain to achieve fair, equitable, socially andenvironmentally friendly procurement, and a sustainable society.

Traffic Safety Initiatives

Supply Chain Management

Labor Practices

NOK Group Procurement Policy
We will comply with laws, regulations and social norms.

2

Based on the idea of free competition, we will select suppliers in a stringent manner by providing fair and equal opportunities.

3

We will share mutual interests and benefits with suppliers based on the idea of mutual prosperity.

4

We will engage in open communication and build relationships of trust with suppliers.

5

We will conduct improvement activities proactively in collaboration with suppliers.

Quality Assurance

1

Fair Operating Practices

The NOK Group is committed to creating a climate of traffic safety as acompany involved in the transportation community through its products.
To eliminate traffic accidents and violations, the Group has been
implementing safe-driving management and education and guidance
throughout the Group for many years. For example, since the 1970s,
before the Road Traffic Act made it mandatory to wear seatbelts, wehave been working to ensure that all occupants of our vehicles, not justdrivers, are wearing a seatbelt.
In addition, in an effort to maintain and improve road safety
awareness among employees, excellent drivers who continue to drive
safely are awarded according to the number of years they have not had
an accident or committed a violation.
In addition, as part of each workplace's own safe-driving activities,
traffic safety seminars are held in cooperation with the Japan Automobile
Federation (JAF) and local police stations, in addition to using traffic
safety sentries to raise awareness.

Participation in Communities andCommunity Development

The Fukushima Plant received a certificate of appreciation for its traffic-accident prevention activities

Remote workouts by our athlete employees

Major mental and physical health initiatives

FY 2019

FY 2020

FY 2021

Number of health consultation calls

850

715

581

Rate of receiving comprehensive a healthexamination

99.9%

99.8%

99.9%

Rate of receiving a secondary examination

89.9%

91.9%

91.1%

Total number of
employees commended
for safe driving (Thosecommended for 30 years
or longer)

FY 2020

FY 2021

910
(124)

908
(139)

963
(158)

Number of traffic accidents where NOK was responsible and NOK andthe other party were both responsible (NOK Group)

120（Cases）
120
100
100
80
80
60
60
40
40

NOK CORPORATION SUSTAINABILITY REPORT 2022

FY 2019

Corporate GovernanceIn addition, in response to COVID-19 infection, we believe that wewere able to control the spread of the infection within the company byrevising and implementing the manual for infection prevention and initial
response in the event of an outbreak in line with the actual situation.

53

Basic Concept

Human Rights

Activities to improve the workplace environment

Environment

Mental and Physical Health

9351
FY 2019

FY 2020

43
FY 2021

NOK CORPORATION SUSTAINABILITY REPORT 2022

54

Society

Fair Operating Practices

CSR Procurement Guidelines

6

Elimination of anti-social forces
We will not deal with any organized crime groups, any of their members and related individuals, any other antisocial forces, or any
business entities associated with them.

7

Activities regarding conflict minerals
We will strive to avoid purchasing minerals and their processed products sourced from countries where inhumane armed forces
are active and mining minerals for their financial resources.

8

Contribution to local community and society
We will contribute to the development of the local community and society by proactively doing business with local suppliers.

9Information disclosure
We will disclose business information related to management and finance, product handling and safety, quality, environment
information, etc., to all stakeholders in a timely and appropriate manner, and develop and maintain mutual understanding andtrust through open and fair communication.

10

Deployment of CSR into suppliers’ own supply chain
To advance initiatives throughout the supply chain, we will ask suppliers to implement initiatives equivalent to those described in
the NOK Charter of Corporate Behavior and CSR Procurement Guidelines throughout their own supply chain.

Promotion of Green Procurement
The NOK Group globally publishes the NOK Group Green Procurement
Guidelines, which describe NOK's environmental policy and green
procurement policy. We are working to reduce our environmental impact
in the entire supply chain in cooperation with suppliers by asking themto submit cooperation agreements to the NOK Group Green Procurement
Guidelines to ensure that suppliers are aware of our environmental
philosophy and policies, and that they can procure raw materials andparts in an environmentally conscious manner.

Corporate Governance5

Confidentiality
We will deal with suppliers that can appropriately manage and control the confidentiality of information on customers, individuals
and technologies, etc., obtained through business transactions.

Participation in Communities andCommunity Development

4

Green procurement
We will carry out procurement activities based on the NOK Group Green Procurement Guidelines with consideration forconserving the global environment.

Quality Assurance

SafetyWe will prioritize the safety of customers and consumers, and purchase products that satisfy safety regulations.

In recent years, in addition to natural disasters and accidents that affectour stable production and procurement activities, various problems
such as an infectious disease pandemic and even international conflicts
have occurred. However, we have established a system by which we canquickly obtain information on the status and impact of disasters and takeappropriate measures in collaboration with our suppliers.
Since FY 2019, we have been sending a BCM Check Sheet to our
suppliers and clarifying problems through self-checks. Since FY 2020, we
have been working had to build a resilient supply chain while providing
guidance on effective measures.
These efforts have been successful and have not impacted our
supply to our customers.
We will continue to consider measures to ensure that our supply
responsibilities are met when problems arise, and will take various
measures to strengthen our supply chain BCP and BCM.

NOK Group Green Procurement Guidelines

In November 2020, the NOK Group revised the basic principle and rights on labor stipulated in the Guidelines in line with the UN Global Compact.
We request our suppliers to take action in line with the revised Guidelines, and then, based on the fundamental principle that the working environment isadequately safe, to treat workers with respect and dignity, and to conduct work ethically and responsibly toward the environment.

55

NOK CORPORATION SUSTAINABILITY REPORT 2022

Fair Operating Practices

3

Strengthening Supply Chain BCP / BCM

Labor Practices

2

Respect for human rights
・We will not deal with business entities that use forced or child labor, that engage in unlawful employment of foreign nationals or
any other illegal employment, and that do not satisfy occupational safety and health regulations.
・We will not discriminate on the grounds of race, ethnicity, creed, gender, age, marriage, physical characteristics, disability, etc.,
in any employment or treatment (application, recruitment, promotion, remuneration, right to receive education, work grants,
wages, welfare, punishment, dismissal, retirement, etc.).
・We will comply with the laws and regulations of each country and region where employees are entitled to minimum wages,
overtime, wage deductions, piece-work payment, other benefits, working hours (including overtime), holidays, and annual
paid holidays.
・We will communicate and engage in discussions with employees directly or with their representatives in good faith.
We recognize the rights of employees to associate freely, or not to associate, in accordance with the laws and ordinances ofindividual countries and regions.
・We do not accept any form of harassment, including power harassment and sexual harassment.

We at the NOK Group conduct procurement activities throughout the
supply chain to ensure that illegal profits are not offered to antisocial
forces or armed insurgents who violate human rights.
In addition, as a member of the Conflict Minerals Regulatory
Response Working Group in the Procurement and Production Subcommittee of the Japan Auto Parts Industries Association, we collectinformation through the Working Group’s activities and implement
conflict minerals initiatives in the supply chain.

Human Rights

1

Compliance with laws and regulations
We will comply with laws and social norms in each country, including competition laws, trade-related laws, andenvironment-related laws.

We believe that mutual development with our suppliers is important, andare committed to building strong relationships of trust andlong-term cooperation.
In September 2016, the Minister of Economy, Trade and Industry
announced the “Toward Future-Oriented Trading Practices,” aimed
at “proper trading” and “enhancing added value” for both parent
and subcontractors, as well as improving the trading environment
throughout the supply chain. In December of the same year, amendments
were made to the Operational Standards in relation to the Act against
Delay in Payment of Subcontract Proceeds, etc., to Subcontractors(the Subcontract Act) and the Promotion Standards in accordance with
the Act on the Promotion of Subcontracting Small and Medium-sizedEnterprises (the Subcontract Promotion Act), and the Notice on Meansof Payment of Subcontract Proceeds was issued. Furthermore, theframework of the Declaration on Building Partnerships was establishedin July 2020 based on the Conference on Building Partnerships
for the Future, which was organized by government ministers andrepresentatives from the business and labor sectors.
In addition, the Japan Automobile Manufacturers Association and
the Japan Auto Parts Industries Association have formulated andannounced the Initiative for Promotion of Fair Trading and Enhancementof Productivity-Added Value.
In light of these trends in government and industry, the NOK Groupjoined the Declaration on Building Partnerships in April 2022, and has
held training sessions on topics for those involved in procurement
operations to keep in mind, as well as guidelines for dealing with types ofconduct that are likely to be seen as problematic.

Efforts to Deal with Conflict Minerals
Environment

To fulfill our corporate social responsibility, we request that not only our Group but also our suppliers refer to these guidelines and actively
promote CSR activities, including within their supply chains.

Building relationships of Trust with Suppliers(Coexistence and Co-prosperity with Suppliers)

NOK CORPORATION SUSTAINABILITY REPORT 2022

56

Society

Quality Assurance
Product Quality and Safety

1.Thorough adherence to basics
To earn customers’ trust, our top priority is to stick to the basics.
More specifically, we will aim to educate our employees in quality
assurance against correct standards and have them comply
with them, thereby continuously improving their skills in quality
assurance. We will ensure that the products we deliver to ourcustomers do not cause any inconveniences due to inadequate work
decisions or non-compliance with some work.
2.Prevention of serious quality problems
As demand for product safety and quality increases, and withincreasingly sophisticated demands from customers for complianceand responses to product defects identified in the market, a new
approach to process development is required. Therefore, we will
enhance our workmanship in manufacturing processes ranging
from development to production sites to prevent such defects
from occurring.

In this way, Group Companies in and outside Japan can easily exchange
information on the quality management system in an effort to ensure that
NOK's products have a uniform level of quality on a global basis, thereby
enhancing customer satisfaction.

Quality Assurance System Overview
Policy/Decision Making

President

Domestic Group Companies

Quality Control Office

Overseas bases

Quality Officer
Control over the functions
involved in quality
assurance, such asplanning, coordination andpromotion

Quality Control
Representative

QA review

Divisions
Quality Control
Representative

Factory
Quality Control
Representative• Deployment of bestpractices• Sharing of lessons
learnedCorporate Governance

Formulation of a QA
Activity Plan andapplication of it to eachdepartment and eachproduction subsidiary
under his/her control.

Quality Officer

Quality Control
Department Managers'
Meeting

As a mother factory

Production
Subsidiaries

57

NOK CORPORATION SUSTAINABILITY REPORT 2022

• Product transfers and launches of overseas production• Support for quality assurance activities• Promotion of priority issues

NOK CORPORATION SUSTAINABILITY REPORT 2022

Participation in Communities andCommunity Development

4.Quality control improvement by utilizing IT
By promoting the digitization of operations, we will streamline
tasks and strive not to rely too much on individual skills, tips, andexperience. In addition, we will improve the speed and accuracy of
traceability by further enhancing the digitization of quality records.

We have expanded the NOK Quality Assurance Policy and quality
targets to cover all business divisions, and each business division has
formulated its own QA Activity Plan. In the QA Activity Plan, priority
action items and target values for achieving the quality goals are set,
and these are concretely reflected in the operational implementation
plan of each department, with all departments engaged in quality
activities. Its performance is evaluated through QA review andmanagement reviews of business divisions, which leads to effective andcontinuous improvement.

Quality managers from domestic and overseas Group Companies gather
regularly to exchange information on the year-by-year development ofpriority implementation items and the status of activities at each site.
This occasion provides the participating managers with an opportunity to
not only share good activity cases presented by other bases, but also toshare lessons learned from their activities. Recently, we have been doingthese meetings online due to the COVID-19 pandemic.

Quality Assurance

3.Non-conformance reduction activities
From the perspectives of environmental conservation andcontribution to the bottom line of an organization, we need toreduce non-conformity loss arising at production sites. Items
with a high number of non-conformities will receive top priority,and each department will support and promote these activities.
Non-conforming products can also be the cause of complaints
that inconvenience customers. Therefore, we have introduced
and deployed an AI-based failure resolution method to identify thecauses of non-conformities and ensure that measures are taken toprevent them.

To have all departments conduct quality activities

Quality Assurance Activity Plan (QA Activity Plan)

Horizontal connections within the Group to ensure mobility

Quality Control Department Managers' Meeting

Fair Operating Practices

Behavioral guidelines
1.All employees work together to make constant efforts to improve quality
2.Improve our unique technology
3.Continuously improve quality-control technology
4.Thoroughly comply with laws and regulations
5.Continuously manage the policy

Priority Action Items
Under the Chairman’s initiative of “Return to the Basics of Quality,”
we will be getting back to basics, with the following four points inplace for three years of making a fresh start toward ensuring NOKGroup quality that customers can rely on.

Quality Assurance System
At NOK, the Quality Officer also acts as a supervisor for the functions
associated with quality assurance, such as planning, coordinationand promotion for Group Companies’ products. We develop Quality
Assurance Activity Plans (QA Activity Plans) in line with the NOK Quality
Assurance Policy, and conduct Quality Assurance Review (QA review) on
site in a systematic manner.
In addition, the domestic mother factory takes the lead in supporting
the launch of overseas production transfers, promoting quality priority
implementation matters, and solving quality problems. The Quality
Control Office is also involved in important matters associated with theabove operations, striving to ensure that they are implemented smoothly.

NOK‘s Quality Officers conduct on-site QA reviews. Specifically, we
diagnose whether an implementation plan has been formulated
based on an understanding of the policy’s intent and whether quality
improvement activities are being effectively implemented. However,in recent years, we have been working on weaknesses by conducting
production-site-driven diagnoses.

Labor Practices

Basic policy“Putting quality first, we provide services and products that consumers
can trust at all stages of research and development, design, production,
sales, service, etc.”

Return to the Basics of Quality

To continue to supply products that meet the needs of our customers,
NOK has established and operates a quality management system
based on international standards such as ISO9001, and is working on
continuous improvement.
▶For details, please see p. 8 of the ESG Data Book.

Human Rights

The NOK Group has maintained workmanship in manufacturing
processes under the concept “Quality is made in the manufacturing
process. ”Since the foundation of NOK, our products have been used invarious fields by many customers who have confidence in our technology
and quality.
With the aim of achieving quality in the manufacturing process,we have concentrated our efforts on developing human resources
who engage in manufacturing under our Management Principles ofrespecting human dignity. We have a variety of educational curricula forthis purpose, and recently, have concentrated particularly on developing
managers and supervisors. Our efforts are focused on passing the
manufacturing basics on to future generations as experienced senior
employees retire from the manufacturing sites.
To earn the trust of customers, it is crucial to consider all matters as
our own responsibility in every department, whether it’s research anddevelopment, design, manufacturing, or sales, and return to the basics toachieve the three-year plan. This is how we establish our quality.
While communication between departments has not been easy amid
the COVID-19 pandemic, we will strive to return to the basics of quality byflexibly responding to a crisis the we regard as an opportunity.

NOK Group Three-Year Quality Assurance Policy (2020–2022)

To diagnose the Quality Assurance System

Quality Assurance Review (QA Review)Environment

Basic Concept

Quality Management System

58

Society

Quality Assurance

Quality improvement activities

The Quality Officer judges whether to put a newly developed product into mass production.

Special quality evaluation meeting

Overview of quality improvement activities
Management process

Policy deployment

Quality Assurance Activity Plan

Audit/review

Quality Assurance Review

Communication

Quality Control Department Managers' Meeting

Activities to prevent non-conforming products

Product realization process

Customers

Order receipt

DesignTrial production

Mass production
Trial production

Mass production
InitialMass production

Customers

DeliveryJudgment at quality gates

Mass-production process improvement

Customer satisfaction

Field quality monitoring activities

Special quality evaluation meeting

Activities to non-conformity reduction

Commendation by customers

SuT Program

Development of Human Resources

Development of administrators and supervisors

Motivation

In-house Quality Award System

Revitalization of the workplace

QC circle activity

Support process* SuT is an acronym for Speed-up Tools of Problem Solution, meaning a tool that expedites the solutionof problems.

Overview of the SuT Program
Advancedcourse(Specialized
course)KT method of experiment
design, etc."
Seven QC tools QC story

Field
Introductory course

Root-cause analysis, etc.

Customers
Proposal of improvement measures

Collection of actual products for survey

Corporate Governance

Sales Department• Grasp of customer
information• In-house information
development

Database*MFQ: Monitoring Field product Quality

NOK CORPORATION SUSTAINABILITY REPORT 2022

analysis DRBFM, etc.

Overview of field quality monitoring activities

Field quality monitoring activities

59

method Weibull

Participation in Communities andCommunity Development

Intermediate
courseNOK uses field quality data to regularly monitor for anything that could
lead to significant complaints from the market. This activity is called
MFQ* activity, which is managed in a database and performs market
quality data analysis. This activity also leads to improved product quality.
If we are successful in exploring an improvement based on our pastachievements and/or the results of surveys and analysis, we suggest an
improvement to our customers and work in collaboration with them.
There were no violations of various regulations or voluntary codes in
FY 2021.

Response surface"Multivariate analysis* Represents Fault Tree Analysis, a method of failure and accident analysis.

Taking advantage of field quality data

Quality Assurance

Education/training

Fair Operating Practices

Field quality

NOK promotes activities to non-conformity reduction for the purposeof improving quality and cut back on waste. To avoid causing trouble tocustomers, we need to take care to avoid the production of
non-conforming products in relevant processes. To this end, we carryout a series of actions where we, from the outset, act against one
single phenomenon of non-conformity until the product becomes freeof it. Then, we replicate the process for another phenomena until theyphenomenon no longer occurs for the product, either. In this way, we
conduct a one-by-one check until non-conformities are precluded at allstages. The Zero Non-conformity Initiative is promoted annually fora multitude of themes at operation sites. It has gained a foothold and is
now run independently at Group Companies in Japan and abroad.
Basically, this project requires the repeated observation in the gemba(on site), gembutsu (actual thing) and genjitsu (actuality) stages, andverification based on a mechanism. It has helped employees develop
their abilities to solve problems on site. Regarding mechanisms, theresults of the verification are represented in an FTA* to be managed as
proprietary technology for use in the future.

Labor Practices

Activities to reduce non-conforming products in conjunction withelucidation of mechanisms

NOK provides quality control education for each level of the organization.
Among other things, in the field of problem solving, we have been
advocating the importance of logical analysis and improvement based on
facts and data under the motto “Let's say something with data,” which
is a hallmark of QC-oriented way of thinking.
Recently, in the field of problem solving, quick response is required.
To meet such needs, we hold the SuT* Program with a focus on diffusing
the use of tools that will help speed up problem solving.
In the early days of its launch in 2001, we had only eight courses
for the Technology Department. Since then, the program coverage
has expanded to include people from the Manufacturing Department
and Group Companies. During that time, we have come to learn about
peoples’ educational needs for more fundamental knowledge as well as
advanced techniques. At present we have more than 20 courses, ranging
from the “Seven QC tools” to “Multivariate analysis” and “How to design
an experiment.” We have also organized a curriculum so that advanced
methods can be learned through practical exercises.
In FY 2020, we introduced quality education using web lectures in
response to the restrictions on human flow caused by the pandemic. In
FY 2021, video materials were developed to provide an environment inwhich people who want to learn can take classes anytime, anywhere.
SuT is pronounced as “sat to” in Japanese. Many employees who
participated in the course have applied the methodology they learned
to various improvement activities, such as QC circle and non-conformity
reduction activities.

Human Rights

To ensure the delivery of consistent-quality products to customers,
NOK engages in activities that prevent problems. This involves dividing
the development of a new product from design to production into threestages: 1) prototype design; 2) trial mass production; and 3) managementof initial mass production. We have criteria in place that warrant us tomove on to the subsequent stage so that we can solve any problem at an
early point.
In particular, for products that involve new development, a “special
quality evaluation meeting” is held at each stage for members from theresponsible business division and relevant offices to conduct design
review, and the Quality Officer makes the decision on moving to thenext stage.

Environment

NOK is taking unique initiatives to improve quality in each process, fromorder receipt up to delivery.

Let’s say something with data.

Improvement activities through quality control education and practicaloperations based on Quality Control-oriented thinking

Technology Department(business division)

Quality Assurance
Department• Actual product survey• Examination and implementationof improvement measures• Accumulation of our unique
technology• Early detection of abnormalities
through data monitoring andanalysis• Selection of survey target
products

NOK CORPORATION SUSTAINABILITY REPORT 2022

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Society
Society

Quality Assurance

At NOK, we are working on the Quality Dojo as a place to develop people who
can convey, practice and instill quality-first thinking in their daily work.
Each division has quality trainers (Quality Dojo Masters) who run
the Quality Dojo training center and provide students with training andeducation. Students who have graduated from the Dojo are responsible
for providing guidance and training to their subordinates as part of their
daily work in addition to their own quality improvement activities.
In recent years we have strengthened our training, with a particularfocus on managers and supervisors.

The NOK Group has an in-house quality award system in place for the
purpose of boosting quality improvement activities and enhancing
motivation. Under this system, we encourage all employees of NOKGroup Companies in Japan to apply for the system in units of their
nearby action group or organization to raise their awareness of quality.
Once a year, we commend organizations that have actively promoted
quality improvement activities and have achieved excellent results.
Articles on the outstanding improvements they have achieved appear in
Company newsletters.
The previous award-winners include not only the Production
Department but also the Logistics Departments. This indicates thatthe system is used to help create a work environment where all
departments directly or indirectly make united efforts to promote
quality improvements.

Growing activity overseas

QC circle activity

Publication of best practices awarded for quality in company newsletters

2.5%

Social Welfare

3.6%

The
Environment

11.4%

Total

80.79
million yen

Academic /Research /Education

35.9%

Crime Prevention/ Disaster
Prevention

25.0%

Category

Content Example

Academic / Research /Education

Accepting internship participants, granting
scholarships, and supporting events for nextgeneration development and school events

Participating in blood donation events, the Ecocap
Health / Medicine / Sports activities and medical assistance, sponsoring sports
events, supporting and donationing school sports events
Crime Prevention /Disaster Prevention

Participating in and donating to crime prevention
and traffic safety activities, participating indisaster prevention activities, and visiting victims
after disasters

Social Welfare

Donations and donations to the Red Cross and social
welfare organizations

Local Community Activities/ Sponsoring local festivals, making donations toshrines, donating goods to the neighborhood, andTraditional Culture
inviting local residents to festive events at the plants
Conservation
The Environment

Participating in local cleanup activities, tree planting
activities, and activities for water purification by
utilizing paddy fields, and recycling

Academic / Research / Education
In addition, the Company conducts community-based activities suchas hosting company visits and factory tours for local junior high school
students, and holding sales events for high school students to learn
about the sales experience.
Accepting interns from universities and technical colleges
From the perspective of human resource development throughcollaboration between industry and academia, we actively provide work
experience opportunities for students in various workplaces within the
Company. Due to an increase in the number of new cases of COVID-19,
only a few internships were accepted in FY 2021.

Participation in Communities andCommunity Development

Supporting events to help develop the next generation
NOK is committed to providing educational support to the next
generation, who will shape our future.
Since FY 2015, we have been sponsoring the NHK Student Robot
Contest hosted by NHK and NHK Enterprises, Inc., as well as the ABU
Asia-Pacific Robot Contest hosted by ABU (Asia-Pacific Broadcasting
Union), to do our part as a manufacturing company that encourages
future engineers. And in FY 2019, we also started sponsoring Robocon
for Elementary School Students, hosted by NHK Enterprises, Inc. and theScience Museum, to provide children with a chance to learn about the funof making things.
In 2008 we started sponsoring the Student Formula SAE Competitionof Japan, hosted by the Society of Automotive Engineers of Japan, Inc. We
support students by providing oil seals and O-rings to participating schools.
In addition, since FY 2019, we have supported the Nikkei Education
Challenge, a career education event for high school students sponsoredby Nikkei Inc.

A sales event for farm products held by students of Fukushima Prefectural Fukushima MeiseiHigh School on the premises of the Fukushima Plant

NHK Student Robocon

NOK CORPORATION SUSTAINABILITY REPORT 2022

NOK CORPORATION SUSTAINABILITY REPORT 2022

62

Corporate GovernanceTotal of 757 circles

61

Quality Assurance

Articles published in the NOK Group's in-house magazine, Tanetomato

Commendation by customers

Group Company
block
1 circle each

5.3%

Fair Operating Practices

OverseasSoutheast Asiablock
2 circles

NOK Group's Social Contribution Activities
Other

16.3%

We have received favorable evaluations from our customers in terms ofactual quality achievement and improvement activities.
In FY 2021, we received 15 commendations concerning quality.
Overseas
China block
1 circle

Local Community
Activities / Traditional
Culture Conservation

Health / Medicine /SportsRoad to Qualify for the Group Convention(FY 2021)
NOK Group QC Circle Convention

Expenditures on Social Contribution Activities andPercentage by Field (FY 2021)

Labor Practices

The NOK Group encourages employees to form quality control (QC)
circles. These are autonomous small groups that engage in quality
improvement activities.
These QC circles also provide a place for theirmembers’ growth and personality development
through activities in which all the members ofeach circle endeavor to solve the matters they
deal with in the workplace, which also leads torevitalization of the workplace.
Each year, NOK Group companies holdpresentations on their activities, but since FY
2021, the presentations have been made online to prevent the spreadof COVID-19. In FY 2021, 757 domestic and overseas clubs participated.
Circles selected at each company's activity presentations participated in
the NOK Group QC Circle Convention, which determines the top circle,
and presented their results in their respective QC stories.
The competition first took place in 1963, and has been held 69
times as of 2021.In the NOK Group, QC circle activities are extensively
conducted at many of our operation sites and Group Companies in Japanand abroad.

NOK Domesticblock
2 circles

Social / Local Area Activities

In-house Quality Award System

Human Rights

Which organization will be chosen as the company's representative this year?

Quality Dojo initiatives

Environment

Passing down “quality-first thinking”

Participation in Communities
and Community Development

Society

Participation in Communities and Community Development

Governance Report

Health / Medicine / Sports

The Environment

NOK helps athletes out of our string desire to contribute to society
through the dreams and inspiration that sports can provide to people.
In April 2019, the company hired competitive swimmer Rintaro Okubo
through the Athlete Navigation System (Athnavi), a program run by theJapanese Olympic Committee (JOC) that offers job-search support for
top athletes. In October of the same year, swimmer Yukina Hirayama wasrecruited, followed by Junya Tozawa in April 2022.While athletes devote
themselves to athletic activities, they also organize and conduct remoteworkouts and training sessions for employees to promote employee health.
We also support the activities of professional sports teams, as weshare in their vision of achieving a prosperous coexistence with theirlocal communities and society. Moreover, the NOK Group’s plants
in Japan and overseas Group Companies provide support to local
elementary schools, junior high schools, high schools, and sports clubs,
such as by offering the use of our gymnasiums and grounds.
In addition, we support theactivities of local elementary,junior high and senior highschools and sports clubs by
opening gymnasiums andgrounds at the NOK Group's
domestic business sites andoverseas Group Companies.

The environmental situation is changing dramatically with various
problems arising around the world, such as the ecological effects
brought on by climate change and the increase in marine plastic waste.
The NOK Group is implementing a range of initiatives, both in and outsideof Japan, to pass on our beautiful natural environment to future generations.
Since FY 2019, the Shonan Development Center has sponsored the“Enosui eco” program promoted by Enoshima Aquarium (Enosui) for
ecology under EcoAction 21.*NOK actively participates in beach cleanup
activities, in addition to assisting in conservation efforts including
investigation and research into the biological and ecological diversity of
Sagami Bay, community cleanup, and waste reduction.
Furthermore, staff members from the Fukushima Plant volunteeredin the Umigomi Zero Week activities held to reduce marine debris,and also did volunteer work to gather Lake Inawashiro shore cleanup
activities. At the Tokai Plant, cleanup activities were also conducted on
the Kuniyasu Beach and waterways.
In addition, we make donations to the Keidanren Nature Conservation
Fund, a charitable trust, andsupport the activities of the
National Land Afforestation
Promotion Organization (umigomi
is a combination of the Japanesewords for ocean (umi) and waste or
trash (gomi)).

Crime Prevention / Disaster Prevention
Social Welfare
NOK is a sponsor of the World Food Day campaign “Zero Hunger
Challenge: Food Loss x Zero Hunger” organized by the WFP (United
Nations World Food Programme).
We also support the activities of Palette, an NPO that helps to arrange
employment for people with disabilities, and hold a confectionery andmiscellaneous goods sales event in the Company building.
In addition, the organization donates canned food, new rice andmasks for stockpiling to children's cafeterias and food banks.

Local Community Activities / Traditional Culture Conservation

Donation of canned food from the Fukushima
Plant to Children‘s Cafeteria NET, a group ofchildren’s cafeteria operators in Fukushima City

Readings by employees of Changchun NOKFreudenberg Oil Seal Co., Ltd. with hearingimpaired children

Corporate Governance

NOK Group’s domestic plants and overseas Group Companies regularly
conduct cleaning activities in the areas around those plants or company
sites. We also sponsor local
festivals and invite local residents
to workplace festivals, among othercommunity-oriented activities.
Every year at the Kumamoto
Plant, employees volunteer for open
burning to preserve and restore thegrasslands of Aso.
The open burning of the grasslands of Aso,NOK has adopted the format of a company with a board of corporate
auditors. To develop and provide products and services from thecustomer's perspective in a business environment where technologicalinnovation and the needs of end users are rapidly changing, we believe it
is important that directors who are well-versed in operating a businessbe involved in making key management decisions. From this point ofview, the directors of the board who concurrently serve as executive
officers cooperate with each other in the execution of their duties, while
directors of the board, including external directors, mutually monitor
each other. The corporate auditors, including external auditors, audit
management. The Board of Directors and the Board of Corporate
Auditors, which include personnel from outside the company, are the key
to strengthening the checking function.
In order to improve objectivity and transparency regarding
nomination and remuneration, the Board of Directors has establishedwhich are home to a wide variety of plants
and animals.

63

NOK CORPORATION SUSTAINABILITY REPORT 2022

Participation in Communities andCommunity Development

prevention management.

Corporate Governance System

Quality Assurance

As a company that manufactures automotive parts, NOK is focusing on
activities that promote safe driving and prevent accidents. The company
promotes its own traffic safety activities
throughout the year and cooperates
with the activities of the Safe Driving andTraffic Education Association.
We also support local disasterprevention efforts by opening ourfacilities as sites for disaster prevention
SYNZTEC Co., Ltd. received a certificate
warehouses and cooperating withof appreciation from the mayor of
firefighting efforts as a firefighting squad.
Yokosuka for its outstanding fire

The NOK Group aims not only to contribute to the development of
economic society by creating added value through fair competition, butalso to become a company that benefits society at large by promoting
management that can make all stakeholders proud of the company andcontinue pursuing their dreams together. We are also promoting
a management plan to secure economic growth with stability and strong
increases in revenue over the medium to long term.
For this reason, the NOK Group considers continuously
strengthening the corporate governance system as one of our business
management priorities, and we are committed to this goal.

the Management Oversight Council with key members from outside thecompany as an advisory body to the Board of Directors, which regularly
confirms important matters such as nomination and remunerationand provides appropriate advice to the Board of Directors. In addition,
significant management risks are checked and assessed at theManagement Oversight Council periodically.
In terms of the internal audit function, the Internal Control Audit
Committee, an advisory body to the Board of Directors, regularly audits
the systems to ensure the proper operation of NOK and its subsidiaries inaccordance with the Internal Control Regulations, and reports the results
to the Board of Directors and the Board of Corporate Auditors.
In an attempt to further strengthen the functions of the Board of
Directors, the Board of Directors of our company resolved at its meeting
held on May 20, 2022 to revise the Executive Officer Regulations, andsince June 24 of the same year, the functions of the Board of Directors
have been further specialized to supervise the execution of business.
With regard to individual business execution, authority has beendelegated to executive officers, and a system has been established toclarify supervisory and business execution functions. Specifically, thefunctions of the Board of Directors have been shifted to a management
agenda-oriented structure (focusing on supervising business execution),and the Board of Directors is dedicated to making decisions on importantmanagement policies and plans and overseeing business execution.
The President, who is at the top of the executive team, has appointed
several people who are suitably qualified in our company's management
and business operations from the perspectives of sales, technology,
production, overseas operations, financial accounting, general affairs
and human resources. In addition, the Management Oversight Council
consists of the Chair of the Board of Directors, Representative Director
and Chief Executive Officer, and three outside directors, the majority ofwhom are independent outside directors.

Fair Operating Practices

Employees clean up beaches

Basic Concept

UNGC
Principle 1 0

Labor Practices

formulated by the Ministry of the Environment

Corporate Governance

Human Rights*An environmental management system

Corporate Governance

Environment“Dream Caravan,” a basketball class held at a
gymnasium at the Kumamoto Plant, inviting players
and coaches from the Kumamoto Volters

Governance

NOK CORPORATION SUSTAINABILITY REPORT 202264GovernanceCorporate GovernanceCorporate Governance System

NOK Charter of Corporate Behavior
Shareholders’ Meeting

Management Oversight Council

Consult
Supervise

Nine directors (including threeexternal directors)

Appoint/Remove
Audit/
ReportFive auditors (including threeexternal auditors)

ReportInformation Exchange

ReportInternal Control Audit
Committee/
Internal Audit Department

Consult and direct
Report・Promote business execution

Hold

DirectReport・Share management
policies and plans
Consult ・Consult on and monitor
business execution
Share
ReportCentral Labor
Management Council,
etc.

DirectExplain or discussbusiness plans, importantorganizational changes,
management policies, etc.
ReportHead Office Divisions
DirectPrinciples of Corporate Behavior

2. Fair and Appropriate Trade

We will ensure that we engage in fair, transparent, and free competition, that transactions are appropriate, andthat responsible procurement is carried out, when selling products and purchasing materials. Also, we will
maintain a sound and proper relationship with political bodies and government agencies.

3. Proper Disclosure and Management ofInformation

We will disclose accurate information about the Company timely and appropriately, and have constructive
dialogues with the various stakeholders who surround our business in order to increase the corporate value.
Also, protect and properly manage personal and customer data and other types of information as well as
intellectual property rights.

4. Thorough Risk Management andSeverance of all relations with
Antisocial Forces and Groups

We will resolutely provide systematic risk management to prepare against activities of antisocial forces,
terrorists, cyberattacks, natural disasters, and other elements that threaten the lives of the public andbusiness activities. Especially we will resolutely confront any antisocial forces or groups and sever all
relations with such groups.

5. Commitment to Environmental
Conservation

We will proactively initiate environmental conservation activities while taking into account the fact thatcommitment to solving environmental issues is a prerequisite for a company to engage in business activities
as a going concern.

6. Promotion of Social Contribution
Activities

As a good corporate citizen, we will actively participate in communities and contribute to their development.

7. Cooperation with the International
Community

As a global corporation, we will comply with laws and regulations of the countries and regions where our business
operations are based , and respect human rights and other international norms of behavior (ex. prohibition of childlabour and forced labour). Also, conduct business by taking into consideration the local culture and customs aswell as the interests of stakeholders, and contribute toward the development of the local economy and society.

8. Respect for Human Rights

We will carry out management that respects the human rights of all people.

9. Provision of a Safe and Comfortable
Working Environment

We will realize a work style that enhances the abilities of employees while respecting their diversity, characterand personality, and by drawing a line between public and private matters, and maintaining order in theworkplace, we will realize a comfortable working environment that takes cleanliness, health, and safety into
consideration.

10. Responsibilities of Our Officers

Our officers, while carrying out management with the recognition that it is their role to realize the spirit of thisCharter, will establish effective internal control systems, and will take the lead in an exemplary manner toimplement the Charter within the entire NOK Group, while encouraging our business counterparts to act
in a manner consistent with this Charter.

11. Response to Problems

In the event that a matter in noncompliance with this Charter arises, which causes society to lose trust in us,
our officers will take steps such as taking the lead in solving the problem, identifying the cause, and taking
measures to prevent the recurrence of similar problems, thus fulfilling their responsibilities. Moreover, they
will publicly disclose relevant information promptly and appropriately, fulfill their accountability requirements,
indicate those who are in authority and those who are responsible, and severely punish those involved,
including them.

NOK CORPORATION SUSTAINABILITY REPORT 2022

Corporate Governance

We will develop and provide socially useful and safe products through the creation of new value, and provide
pertinent information regarding products and have sincere dialogues with end users and customers while also
working to achieve sustainable economic growth and solve social issues, thereby gaining their satisfaction
and deeper trust.

Participation in Communities andCommunity Development

1. Provision of Socially Useful Products

Audit

Quality Assurance

NOK CORPORATION SUSTAINABILITY REPORT 2022

1.We are committed to be a strong and unique parts supplier
while focusing its managerial resources on core business areas.
2.We are committed to be a profitable and robust company while
fulfilling company-wide cost reduction programs ranging fromfront-line sales to manufacturing floor.
3.We are committed to continuously improving our quality while
producing and selling our products that are proven to betechnologically unique and socially useful, on a global scale.

Audit

Plan and promote execution plans for the business in charge

65Management Policies

Fair Operating Practices

Operating Divisions/Group Companies

ESG, risk management,compliance, quality
and environment
management, etc.

Management Principles

Labor Practices

ReportGroup Strategy
Council andManagement Council

Enacted on May 1, 2006 Revised on July 1, 2019

1.The Management has to run the Company based on feelings oflove and trust in its employees.
2.The Management has to run the Company while uniting toensure full ventilation without forming any cliques.
3.The Management has to run the Company while making
absolutely incredible efforts against all odds and risks.
4.The Management has to run the Company while pursuing
dreams with management plan.

NOK Representative Director, Chief Executive Officer ・Draft business execution plans
ReportAccounting Auditor

We, NOK Corporation, are committed to being an entity that fulfills the role of driving efforts toward the realization of a sustainable society
according to the Management Principles under the NOK spirit. We will pursue this through developing the Management Policies in such a
way that all our stakeholders are proud of us and chase their dream with us; and, while upholding the principle of fair and free competition,
through creating added value that is socially useful, generating employment, and acting autonomously and responsibly. In order to achieve
this realization, we will behave according to the eleven principles set forth below in the Principles of Corporate Behavior in both domestic
and overseas operations, so as so respecting human rights, complying with related laws, regulations, and international rules as well as thespirit behind those, and discharge our social responsibility with a strong sense of ethical values.

Human Rights

Submit importantbusiness execution
plans
Discuss importantmatters and report on
business execution(Consolidated, Segments and Companies)

・Directions for executing
management policies and plans
・Appoint/Supervise
・Request report

Appoint/Remove

Environment

Appoint/Remove

66GovernanceCorporate Governance

Steps to enhance corporate governance2004

Established the Crisis Management Office

Prevent and minimize negative impacts on business continuity

Jul.

Established the Accounting and Audit Division

Established as the Internal Audit Unit

May

Established the Basic Policy for the Internal Control System

Formulate basic policies for the internal control system

Enacted the NOK Charter of Corporate Behavior

Enacted and declared Management Principles, Management Policies, andPrinciples of Corporate Behavior

Enacted the Behavioral Guidelines on Employee Compliance

Enacted and disseminated guidelines on matters for employees tocomply with

Compliance Rules established

Provisions on the handling of compliance with laws and regulations andcompany rules and regulations

Mar.

Established the Risk Management Rules

Provisions on responses to the occurrence of business risks
and emergencies

Oct.

Established the internal control subsidiary management rules

Prescribes instructions to subsidiaries and compliance by subsidiaries

Established the internal control rules for financial reporting

Prescribes methods for developing and evaluating internal controls overfinancial reportingJan.

Established the Internal Control Audit Committee

Audit and maintain the state of the internal control system

2009

Jun.

Introduced the Operating Officer System

Separate management oversight and executive functions, and establish an
agile management system.

Changed the term of office of directors to one year

Separate management oversight and executive functions, and establish an
agile management system.

Revised the executive compensation system

Introduce a long-term performance-based and performance-linked
compensation system

Established internal control rules

Consolidate Internal Control Subsidiary Management Rules and otherinternal control-related rules

2015

Jun.

Established the Risk Management Committee

Minimize risk probability and losses through cross-organizationalverification and evaluation

One external director took officeStrengthen the management oversight function.

Installed a whistle-blowing system (that covers domestic Group Companies)

Created a whistle-blowing system by establishing the Whistle-Blowing
Hotline (in and outside of the company)

2016

Apr.

Started assessing the effectiveness of the Board of Directors

Improve the effectiveness of the Board of Directors

Jun.

Increased the number of external directors to two

Strengthen the management oversight function.

Oct.

Established the CSR Committee

Raise the awareness of CSR throughout the company and promote effective
CSR activities

Established the Central BCM Committee

Increase the effectiveness of the business continuity plan and help toimprove corporate value

Jan.

Seal Segment BCM Committee established

Build and maintain the BCM within the segment as a sub-organization of theCentral BCM Committee

Mar.

Electronic segment BCM committee established

Build and maintain the BCM within the segment as a sub-organization of theCentral BCM Committee

Jan.

Established the Business Continuity Management Rules

Provides a business continuity management systemJul.

Established the Management Oversight Council (composed of the President
and Representative Director, external directors and auditors).

Check, assess, and advise on key management issues and serious risks

2020

Oct.

Expanded the internal reporting system (China Group companies excluding
Taiwan and Hong Kong)

Strengthen the reporting system by expanding the establishment of somewhistle-blowing desks at overseas bases

2021

May

Established the ESG Committee

Promote the company’s continued sustainable growth and theimplementation of responsible initiatives

2022

Mar.

Expanded and introduced a whistle-blowing system (Asian Group Companies
outside mainland China)

Strengthen the reporting system by expanding the establishment of somewhistle-blowing desks at overseas bases

2017

2019

67

NOK CORPORATION SUSTAINABILITY REPORT 2022

Nozomu Maehara

Masao Tsuru

Kensaku Hogen

Hideki Watanabe

Jiro Iida

Makoto Fujioka

Osamu Kobayashi

Yasuhiko Kuroki

Naoki Shimada

Hideki Ogawa

Akira Watanabe

Atsushi Kajitani

Skill Map

Corporate
management

Business andtechnology
strategy

Masato Tsuru〇〇

Masao Tsuru

〇

〇

Name

Director

Jiro Iida〇

Yasuhiko Kuroki〇

Financial,accounting andcapital policies

Globalmanagement

External〇

Makoto Fujioka

External〇

Naoki Shimada

External

〇

〇
〇
〇
〇
〇
〇

Nozomu Maehara〇〇

Hideki Watanabe〇〇

Osamu Kobayashi

External

Hideki Ogawa

External〇

Atsushi Kajitani

External〇

ESG(Environmental,
Social,Governance)〇〇

Kensaku Hogen

New business〇〇Akira Watanabe
Junichi Orita

Auditors

Sales strategy

Corporate GovernanceMay

Junichi Orita

Participation in Communities andCommunity Development

Jul.

Masato Tsuru

Quality Assurance

2013

Auditors

Fair Operating Practices

2008

Director

Labor Practices

Apr.

Aug.

2007

PurposeHuman Rights

2006

PolicyEnvironment

Year and month

List of Directors and Corporate Auditors〇〇〇(Note) The above list contains up to two items that are particularly expected of each person, and does not represent all the knowledge and experience that each person has.

NOK CORPORATION SUSTAINABILITY REPORT 2022

68

GovernanceCorporate Governance

External Directors and External Auditors

NOK CORPORATION SUSTAINABILITY REPORT 2022

In May of each year, NOK administers a self-evaluation questionnaire
to all directors and auditors, including those from outside the company,
asking them questions about the composition, operation, and agendasof the Board of Directors, as well as questions about the structure that
supports the Board of Directors. The aggregate results of responses
are shared with the Board of Directors. In FY 2021, the analysis andassessment indicated that the Board of Directors as a whole was effective.

Internal Control
The NOK Group has implemented an appropriate “System for Ensuring
the Propriety of Operations (Basic Policy for the Internal Control
System)” established in accordance with the provisions of the Companies
Act, and is committed to establishing this system under the basic policyof continuing to strengthen corporate governance in accordance with the
Corporate Governance Code stipulated by the Tokyo Stock Exchange.

The NOK Group works to fight against bribery and corruption by
stipulating the following in its Principles of Corporate Behavior: “We will
engage in fair, transparent, and free competition and ensure appropriate
transactions and responsible procurement. We also maintain a soundand proper relationship with governments and administrative agencies.”
Pursuant to the Principles, the Behavioral Guidelines on Employee
Compliance prohibit collusive relationships and corrupting behaviors
involving business partners and public officials, including excessive
entertainment and bribery. The Guidelines also forbid embezzlement
and misappropriation and other acts that may affect Company profits.
Specific prohibitions and legal and proper handling of gifts with business
partners are stipulated in the Fair Trade Rules and the Internal andExternal Rules for the Handling of Congratulations and Condolence. In
the event of a violation of the Group's anti-corruption policy, the Risk
Management Committee is primarily responsible for taking action.
Information on violations of the anti-corruption rules can also be shared
via the Whistle-Blowing Hotline.
The Internal Control Audit Committee also conducts an annual
anti-corruption audit of all domestic and international business sites andall Group subsidiaries, and reports the results to the Board of Directors.
During FY 2021, there were no violations in the NOK Group.

Corporate Governance

69

Assessing the Effectiveness of the Board of Directors

Anti-Corruption Initiatives (Anti-Bribery)
Participation in Communities andCommunity Development

Basic policy
The NOK Group aims to become a strong company with high profitability
by producing unique, technology-backed products that are useful tosociety at reasonable prices around the world. We believe that pursuingthis policy as a group with a medium- to long-term perspective will help
to enhance the NOK Group's medium- to long-term corporate value andraise stakeholder satisfaction.
In carrying out this policy, we believe it is necessary to encourage
management, including the directors of the core companies of the NOK

Advisory body on nomination and remuneration(Management Oversight Council)
To improve objectivity and transparency regarding nomination andremuneration, the Management Oversight Council was established as
an advisory body to the Board of Directors. The Council regularly checks
important matters such as nomination and remuneration, and provides
appropriate advice to the Board of Directors. The Management OversightCouncil primarily comprises external officers with members including
the Chair of the Board, the President and Representative Director, twoexternal directors and one external auditor. The council checks and advises
on key management issues, such as nomination and remuneration.
Effective June 24, 2022, the Management Oversight Council consistsof the Chairperson of the Board of Directors, Representative Director andChief Executive Officer, and three outside directors, with independent
outside directors forming a majority.

Quality AssuranceWith respect to the remuneration of directors and auditors, the company
has established the following policy for determining the details of
remuneration for directors and auditors. Based on this policy, theamount of remuneration for directors is decided by discussions at Boardof Directors meetings and the amount for auditors by discussions ofauditors respectively, within the limits of the total amount determined at
the general meeting of shareholders.

Policy on remuneration for auditors
As auditors are responsible for auditing the execution of duties acrossour Group, they are paid only basic compensation (money) according totheir position.

Based on the Principles of Corporate Behavior, the NOK Group stipulates
in the “Behavioral Guidelines on Employee Compliance” its stance andrelationship with agencies, distributors, competitors and suppliers,
and complies with the Act on Prohibition of Private Monopolizationand Maintenance of Fair Trade, the Act against Delay in Payment
of Subcontract Proceeds, etc., to Subcontractors, and the Unfair
Competition Prevention Act, etc. The NOK Group continuously raise
employees’ awareness of the principle by distributing an introductorycompliance booklet and through education, etc., by the department in charge.
In addition, to ensure fair trade, the Company has established “Fair
Trade Regulations,” which stipulate prohibitions and management
methods to ensure fair transactions.
In the event of a violation of the Group's anti-corruption policy, theRisk Management Committee is primarily responsible for taking action.
Information on violations of the anti-corruption rules can be shared via
the Whistle-Blowing Hotline.
The Internal Control Audit Committee conducts an annual audit
on the status of compliance with the Act on Prohibition of Private
Monopolization and Maintenance of Fair Trade, the Act against Delayin Payment of Subcontract Proceeds, etc., to Subcontractors, and the
Unfair Competition Prevention Act and reports its results to the Board of
Directors. During FY 2021, there were no violations in the NOK Group.

Fair Operating Practices

Remuneration of Directors and Auditors

Compliance with the Act on Prohibition of Private Monopolization and
Maintenance of Fair Trade, the Act against Delay in Payment of Subcontract
Proceeds, etc., to Subcontractors, and the Unfair Competition Prevention Act

NOK stipulates in its Principles of Corporate Behavior to “Disclose
accurate corporate information in a timely and appropriate manner,
engage in constructive dialogue with a wide range of corporate
stakeholders, and enhance corporate value.” We also practice this in ourinvestor relations activities, where senior executives and executives, led
by the department in charge of investor relations, engage in dialogue
with shareholders and investors.
The NOK group holds two financial results briefings every year:
one in May for annual results and another in November for interim
results. Securities analysts, institutional investors, research institutions,journalists and financial institutions are invited to these sessions, where
we explain the financial results and forecasts, and the representative
director or other directors answer questions. During thequestion-and-answer session, questions about next-generation vehicles
were asked, and the sales status and future prospects of products forelectric vehicles were explained in detail. Presentation materials used
for financial results briefings are available on NOK's website. In addition,from the standpoint of fair disclosure, NOK participates in events forindividual investors every year. In FY 2021, we participated in online events.

Labor Practices

NOK decides candidates for directors and auditors at meetings of theBoard of Directors, taking into account their abilities, insight, character,etc., in a comprehensive manner. Specifically, the Company nominates
directors and auditors based on their qualifications and aptitude for the
position in accordance with the following nomination policy.
The Company believes that it is important for directors who executebusiness operations to be well-versed in the NOK Group's operations andinvolved in making key management decisions.
In addition to complying with the external requirements set forthin the Companies Act and the independence criteria of the Tokyo Stock
Exchange in nominating external directors, the company expects external
directors to be able to advise on the company's corporate activities froman objective, wide-ranging and high-level perspective based on theirwealth of experience and high-level insight. In this way, the company
nominates external directors on the basis that there is no conflict ofinterest with general shareholders.
Corporate auditors are expected to perform functions and roles suchas conducting objective and appropriate audits based on their expertise.
The Company nominates them on the basis that there is no risk of conflictof interest with general shareholders.
In addition to the above approach, candidates for external auditor
positions are nominated in accordance with the external requirements
set forth in the Companies Act and the independence criteria of the Tokyo
Stock Exchange.

Policy on remuneration for directors
Compensation for directors is divided into three categories: basic
compensation (money), short-term performance-linked compensation(money), and medium- to long-term performance-linked compensation(stock). Thus, compensation comprises a fixed component, a short-term
performance expectation component, and a long-term performance
expectation component, to ensure that directors take responsibility for
improving performance in each fiscal year and increase the medium- tolong-term corporate value. On the other hand, outside directors are paid
only basic compensation (money). This is because we expect them toprovide objective opinions and suggestions from an external perspective,
independent of the execution of business.

Communication with Shareholders and Investors

Human Rights

Nomination of Directors and Auditors

Specifically, the Company has established Internal Control
Regulations based on the Basic Policy for the Internal Control System.
NOK’s Head Office divisions provide rules for the internal control system
and give directions to NOK’s operating divisions and subsidiaries,
while the Internal Control Audit Committee periodically audits theinternal control system to determine the progress of improvement andimplementation. The results of these audits are reported once a year to
the Board of Directors. During FY 2021, there were no legal violations or
lawsuits that could have seriously affected the Company’s performance.

Environment

We have appointed outside directors who have a wealth of experienceand insight in industrial policy and diplomacy, as well as tracks record ofcorporate management. They provide advice on our company's businessactivities from an objective, broad, and high-level perspective.
In addition, we have appointed external auditors, including a licensed
tax accountant, a certified public accountant, and an attorney, whoprovide us with opinions based on their extensive experienceand knowledge.
The secretariat of the Board of Directors provides support forexternal directors and external auditors. In addition, NOK has staff
members who assist auditors in their audit work, such as throughresearch on laws and regulations. The secretariat of the Board of
Directors sends and explains to the external director and external
auditors materials on agendas for the Board of Directors meetings prior
to such meetings.

Group, to achieve their goals and to improve the satisfaction of theirstakeholders through compensation. For this reason, we have introduced
a new stock-based compensation plan for the management of the NOKGroup’s core companies, in which a certain percentage varies according
to the level of achievement of KPIs related to the priority implementation
measures in the NOK Group's medium-term management plan. The
goal is to increase corporate value over the medium to long term and toenhance stakeholder satisfaction through monetary andstock-based compensation, which varies according to the degree towhich performance targets are achieved in a single fiscal year.

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GovernanceCorporate GovernanceComplianceManagement and Supervisory Bodies
Labor Practices

Board of Directors
Guide and Supervise

Business Execution Bodies
ReportPresident (Risk Management Officer)
Fair Operating Practices

1. Respect for Human Rights, Prohibition against Discriminationand Harassment
2. Fair and appropriate trade
3. Regulations against Insider Trading
4. Export/Import Procedures (Security Trade Control)
5. Laws Related to Intellectual Property Rights
6. Severance of all relations with Antisocial Forces
7. Environmental Conservation
8. Safety and Health
9. Provision of Useful and Safe Products
10. Appropriate Management of Information
11. Prohibition Against Acts that May Damage the Company’s Interests
12. Reporting Violations of Ordinances, etc.

The NOK Group has established the NOK Group Reporting Desk andWhistle-Blowing Hotline to detect and correct illegal conduct that
violates the Compliance Rules at an early stage.
Any employee who has noticed a violation can contact the Reporting
Hotline. If the violation continues even after the report to the Reporting
Desk or the employee finds it difficult to report the case, he or she cancontact the Whistle-Blowing Hotline.
The Whistle-Blowing Hotline consists of the Internal Control
Audit Committee and independent lawyers. Reports can be madeanonymously, provided that they are objective and specific. Moreover,
the whistle-blower is protected against disadvantageous treatment
under compliance regulations. Whenever a report or consultation isreceived, the Company takes appropriate action, such as investigating
and correcting the situation in question.
Regarding overseas bases, in FY 2019 and 2020, the WhistleBlowing Hotline was set up (in and outside of the company) at ourGroup Companies in China. Furthermore, in FY 2021, we expanded andestablished whistle-blowing hotlines at 22 Group Companies in the restof Asia to strengthen our whistle-blower system.

“Business strategy risk” is assessed at meetings for examining
the Group's management strategy, where risks associated with thepromotion of business and new projects at Group companies are
identified and discussed to maximize returns in a timely and appropriatemanner. As for “risk of loss,” the Risk Management Committee isestablished to assist the chief risk management officer, who periodically
identifies and analyzes risks, as well as quantifies them throughrisk-level assessments that take into account the frequency (timing)of occurrence and the scale of loss (amount of damage); thus, the Risk
Management Committee examines issues and response measures byprioritizing their importance and urgency.

NOK's “Risk Management Regulations” stipulate the basic policy andmanagement system for risk management across the entire Group.
Based on these regulations, the Company has established a management
system in which the President is responsible for risk management
and promotes risk management for the Group. There are two typesof business risks that may affect the management of the company:“business strategy risk,” in which we seek to maximize returns while
maintaining a balance with the risks of increasing corporate value; and“risk of loss,” in which we seek to prevent or minimize the probability oflosses occurring to maintain corporate value.

DirectBusiness Strategy Risk Management

Check and Evaluate“Risk of Loss” Management

ReportEnacted on August 1, 2006 Revised on January 1, 2020
*Refer to the CSR information (Governance - Risk Management/Compliance) on the NOK website fordetails of each provision.

Reporting Desk

Risk Management Committee

ReportReportRefer for Discussion

Illegal Conduct
Subsidiaries

Head Office Divisions(Business Administration Department)

Business Execution Division
Thorough Awareness(2)Investigation/
Correction

Employees(3)Response

Participation in Communities andCommunity Development(1)Report

Reported to
An illegal act by a colleague

Department head

An Illegal act in other departments

Department in charge of individual laws
and regulations

When the department in charge is unknown, etc.

Department in charge of office operations

ReportCorporate GovernanceIn the “Compliance Regulations,” the NOK Group designates departmentsin charge of individual laws and regulations to promote complianceactivities in their respective operations. These departments act as
contact points for reports and consultations on related laws, internal
regulations, and rules.
The NOK Group has designated October of every year as thecompliance promotion month to regularly inform employees of NOK'scompliance initiatives and to help raise their awareness of compliance,such as by conducting a survey of all employees on their complianceawareness. The Company also provides compliance education at training
for new employees and newly appointed managers, as well as distributes
compliance handbooks to all employees and publishes a series of articles
titled “An introduction to compliance” in the Company’s newsletter,
thereby continuously promoting awareness.

Group Strategy Review Meeting

Quality Assurance

Compliance Promotion System and Initiatives

Whistle-Blowing Hotline
Illegal Conduct(3)Investigation/
Correction

Responding to Disaster Risk

Employees(4)Response(4)Response

Choose(1)Reporting

Internal Hotline (NOK)Internal Control Audit Committee
Audit Committee (Legal Affairs Dept.)71

NOK CORPORATION SUSTAINABILITY REPORT 2022

Human Rights

Behavioral Guidelines on Employee Compliance (Plan)

Reporting and Whistle-Blowing System

Environment

The NOK Group established the “Compliance Regulations” in 2006, basedon the “NOK Charter of Corporate Behavior,” which stipulates compliancewith laws and regulations as well as the company's various rules andregulations. The company established the “Behavioral Guidelines on
Employee Compliance” as a guide for specific details of the regulations.
This document specifies the items that employees must comply within their business activities, and we ensure that all Group employeesfamiliarize themselves with the Guidelines.

Risk Management(1)Reporting

External Hotline (Lawyer)(2)Cooperation

1. Business Continuity Management (BCM) System
Regarding business risks and emergencies, NOK defines natural
disasters, fires, explosions, serious accidents and epidemics of infectious
disease as “events that interfere with business continuity.” The company
established the Business Continuity Management System to ensurebusiness continuity and to promote business continuity activities
consistently and effectively should such an event occur.

Specifically, the NOK Group BCM Committee was established asa standing committee to promote business continuity management
activities. The management system, which consists of the BCM
Committee, is responsible for formulating, maintaining, and updating
the business continuity plan (BCP), securing budgets and resources
to implement them, implementing preventative measures, conducting
education and training, conducting inspections, and engaging inongoing activities.
In the event of an emergency, the Company must immediately set
up an emergency response headquarters at the head office and on-site
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GovernanceCorporate Governance

Third-Party Opinion on Sustainability Report 2022

response headquarters at local business establishments. Depending on
the situation, relevant departments and divisions will work together todeal with the situation promptly and appropriately.
NOK Group Business Continuity Management System
Central BCM Committee

Segment BCM Committee

Seal BusinessElectronic Products
Business

Other BusinessSub-committee in Segment

Cybersecurity
IT utilization is an essential component of today's corporate activities.
However, the threat of cyber-attacks, which are becoming increasingly
sophisticated every year, is causing serious damage not only tocompanies but also to the general public. The NOK Group also recognizes
that dealing with cybersecurity risks is one of the most importantmanagement issues, and has therefore taken systematic steps toaddress it. Unfortunately, in FY 2021, a cyber-attack took its toll, but
fortunately there were no major information leaks and the impact on our
performance was minor. Based on this experience, in addition to the NOKGroup Basic Policy on Information Security, which had previously been
established for internal use in general, we established the Cybersecurity
Response Policy at the end of FY 2021, focusing on the IT field.
In future, based on these policies, we will make even stronger efforts
to identify risks and take measures in a planned and continuous manner.
We will also be actively involved in strengthening measures not only in
our Group but also throughout the supply chain via industry associations.

Sub-committee by organization(by business division and location)

Protection of Intellectual Property
Sub-committee by function (cross-functional)*A sub-committee is established in each segment’s BCM Committee.

2. Planning and promoting business continuity plans (BCP)NOK will proceed with business continuity measures based on thefollowing basic policy:
1. Give top priority to ensuring safety, protecting people, and saving
people's lives.
2. As a member of the local community, actively cooperate with therecovery of the whole region.
3. Minimize the impact on customers and stakeholders, and fulfill
responsibilities as a business operator.
Each business site, including domestic and overseas Group Companies,
has a plan that outlines policies, systems, and procedures to ensurethat important business operations are not interrupted or are restored
as quickly as possible if an unforeseen event should occur. At the sametime, the Company verifies the plan’s effectiveness through training andresponding to identified issues. It also continues to implement measures
to minimize damage, improve emergency communication methods
and reporting systems, and reinforce the earthquake resistance of
our IT infrastructure.
We are also working with suppliers to strengthen the business
continuity of our supply chain BCM*.
*We report on our supply chain BCM in the aforementioned “Strengthening Fair Operating Practices
and Supply Chain BCP and BCM.” (p. 56)

The NOK Group has put together important points regarding intellectual
property-related laws in the Behavioral Guidelines on Employee
Compliance, ensuring that all employees are aware of these points.
In this way, the Group promotes the application and acquisition of
intellectual property rights for our own inventions, as well as respects
the intellectual property rights of others and strives to prevent
infringements of others’ rights by researching and identifying the patents
belonging to other companies.
To protect NOK's brands, we combat counterfeiting, even outside
Japan, through our Anti-Counterfeit Committee. During FY 2021, thecompany uncovered 9 cases of counterfeit factories in China, andremoved web pages selling counterfeit products from online sales sites
in 5,093 cases.

Opinion
The new title of this issue, Sustainability Report 2022, gives theimpression that the Company has taken a step in the new direction
proposed in last year's report, which marks the 80-year anniversary of
its founding. While maintaining its basic character as a multi-stakeholder
communication tool by a B-to-B corporation, the number of descriptions
related to long-term corporate value has increased, indicating a strong
awareness of the sustainability perspective.
The Message from the President clearly expresses this point. A clear
message of “A company that provides ”safety“ and ”comfort“ to the world
through its proprietary technology, and we want to grow by mastering
it” have been presented, and the focus themes of the ongoing threeyear plan, such as electrification, quality, business continuity (BCM),
and digitization, have been explained. The report has also covered the
management stance toward the sustained enhancement of corporate
value, including “management that respects people,” which forms
the basis of the series of initiatives. We can see that the sustainability
promotion system put in place last year is operating consistently.
In terms of specific content, two points in particular stand out. First,
the composition has changed, and “environment” has been brought
to the forefront, replacing “society” in the past. As announced in last
year's CSR report, scenario analysis was conducted in accordance with
TCFD recommendations and disclosed along with risk and opportunity
analysis. Based on this analysis, the NOK Twin Green Plan 2030, ourlong-term environmental vision, was revised to include a significant
increase in the 2030 milestone target and the introduction of internalcarbon pricing to achieve carbon neutrality by 2050.One of the highlightsof the Company's business is the electrification of automobiles. Many
readers will be interested in these topics, including how the sealbusiness and other existing businesses will be used for electric vehicles,
and where new business opportunities lie. Putting the environment at
the center of the reporting theme suggests that the aspect of creating
corporate value through solving social problems has gained weight, andthis is a major change from the CSR Report to the Sustainability Report.

Next is the formulation of the NOK Group’s Human Rights Policy. Thisinitiative embodies “management that respects human beings,” as statedin the Principles of Corporate Behavior, and the speed with which theCompany signed the United Nations Global Compact (UNGC) last year isastonishing. This is a very meaningful development for the Company as
it expands its business globally, and I look forward to further initiatives
such as the implementation of due diligence. This initiative can be seen
as an extension of the “people are the foundation” tradition of valuing
employees, as well as part of ESG management in response to capital
market demands.
As steady progress is made in this new direction, future expectations
are naturally an extension of this. In terms of details, I expect to see some
sort of launch, including the downstream portion of Scope 3, to takeadvantage of the features of the Company’s long-term environmental
vision, which states that it contributes to the environment throughits products. As a major theme, I would like to ask you to continue
presenting your value creation story as you did last year. The storyof simultaneously pursuing solutions to social problems and growththrough providing original technologies can be read from individual
efforts, but now that all the major parts have been assembled, I think it istime to present them in concrete terms.
This is symbolic of the response to TCFD, but I think the characteristicof your company report is the willingness to communicate not only the
results but also the processes underlying your efforts. In this regard,even though it is not the right time to launch a major new initiative in the
run-up to the next medium-term management plan, this issue gives apreview of what discussions are currently underway for the next phase,including consideration of “what we want to be” for 2031 (the 90-year
anniversary) and identification of materiality. Expectations are high thatthe next issue will present your Company's value creation story in a more
vivid way. I look forward to the steady evolution that is unique to you.

Dealing with COVID-19
With regard to pandemics, we have previously considered issues andmeasures to address them under the heading of “risk of loss occurrence.”
However, COVID-19 has spread at an unprecedented scale andrapidly around the world, and conventional risk management has notbeen able to cope with it. We have responded to it with a variety ofmeasures, focusing on “thorough prevention of infection and spread.”On the other hand, from the perspective of business continuity,
infectious diseases are different from sudden events such as natural
disasters that are difficult to control after the fact, and it has been difficult
to restore operations without interrupting them or in the shortest timepossible. Based on our experience in responding to a sharp decline in
our operating capacity through implementing countermeasures andmeasures to prevent mass infections, as well as to the declarationof a state of emergency and the response to lockdowns, we are now
considering the formulation of a business continuity plan (BCP) in
response to infectious diseases.

Development Bank of Japan
Research Institute of Capital Formation
Executive Fellow

Keisuke Takegahara

Response to the Third-Party Opinion
We would like to thank Mr. Takegahara for his valuable opinions andsuggestions, which we have received continuously since FY 2020.
We established the ESG Committee last fiscal year to strengthen oursustainability promotion structure. In this report, we have changed thename from “CSR Report” to “Sustainability Report” and have organized
the report in terms of ESG (Environmental, Social and Governance)
factors so that readers can understand the overall sustainability picture
in terms of sustainability. In addition, in the Message from the President,

we expressed our corporate value and the vision of what we want to be,
and our strong desire to strive for sustainable growth and help bringabout a sustainable society.
We aim to publish an integrated report in the future. We will further
deepen our ESG initiatives and actively communicate our efforts toaddress social issues through our business, including presenting thevalue creation story of the NOK Group that you have pointed out, to build
our corporate value.

Operating OfficerDirector, Corporate Affairs Office73

NOK CORPORATION SUSTAINABILITY REPORT 2022

Yuko Furukawa

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