Value Creation Story

Key Issues (Materiality) and Identification Process

The planet we live on faces many social issues that require urgent solutions. At the Nihon Parkerizing Group,
we have identified six key issues (materiality) that we must address by identifying risks and opportunities in ourbusiness activities under “Vision2030”, our management vision that we announced in May 2021. We havedecided to actively work to solve social issues by enhancing our corporate value as a specialist in surfacemodification.

● Development and sales of products thatreduce the environmental load
● Development and sales of products forelectric vehicles● Expanding the application of surface modification technologies into new markets

Creating a more
affluent society
through surface
modification
technologies

Creating a corporate
culture that respects
diverse values and turns
them into strengthe
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Nihon Parkerizing Co., Ltd. Integrated Report 2023

● Thorough management of chemical substances inour products● Ensure 100% compliance by suppliers with “theGreen Procurement Guidelines,” and continuously
reduce energy intensity● Promotion of initiatives for stable procurement andstable supply through multi-sourcing and business
continuity planning (BCP)

gtGroupbu● Eliminating dangerous work andcontinuously improving the workenvironment

Ensuring a safe andsecure workplace● Establish a working style and work environmentthat enable diverse human resources to flourish

Takingresponsibility
for creating asustainablesocietysM● Safety and environmental initiatives● Initiatives to eliminate occupational andtraffic accidents● Increase the ratio of women in management

yating● Strengthening quality control and the quality assurance system to ensure the supplyof high-quality products and services

alue through● Development of products and services that
contribute to achieving SDGs

High value-added
products andservices forcustomers aroundthe worldoci
al v● Research and development in fields otherthan metal corrosion prevention treatments● Recruitment of women, people with disabilities,
non-Japanese, mid-career and senior workers

Initiatives to ensure
the continuing integrityof the Group● Standardization of essential rules at eachcompany to strengthen Group governance● Continue Group-wide initiatives on training
and awareness of compliance● Building a close relationship andcollaboration with all stakeholders

Nihon Parkerizing Co., Ltd. Integrated Report 202326

Value Creation Story

Key Issues (Materiality) and Its Identification Process
Creating social value through businessAt the Nihon Parkerizing Group, we have identified social issues related to our activities, reevaluated themagnitude of their impact in light of societal changes, and prioritized specific problems. We used the Sustainable Development Goals (SDGs) proposed by the United Nations as a basis and referred to several significant

Creating a more affluent
society through surface
modification technologies

guidelines in identifying key issues (materiality).

□ Developing new fields, making the most of surface modification technologies
As surface modification specialists, we will utilize our technological capabilities to develop business areas in non-metallic, multifunctional, and new markets and contribute to solving a wide
range of social issues.

Process of identifying key issues (materiality)
STEP 1

Understanding social issues

STEP 2

Identifying issues andevaluating their significance□ Developing new products and technology that are environmentally friendly
We contribute to preserving the global environment by reducing the environmental impact of ourcustomers’ manufacturing processes with the development of new products and technologies,
such as diverse chemicals, that meet the demands of EVs and lighter vehicles. These chemicals
do not contain hazardous chemicals. We also use equipment with a reduced environmental
impact, together with low-temperature treatment technologies.

□ Promoting open innovation
We are committed to creating new value by actively promoting collaboration with various companies and research institutions, academia, and government in Japan and overseas, developing
technologies from new perspectives, and creating new value.

Identifying social issues regarding international standards and frameworks (SDGs, ISO26000, GRI Standards) and evaluation items of ESG evaluation organizations
Considering their relevance to our business and industry-specific content

Organizing and focusing on the management issues that were examined and extracted in

High value-added products
and services for customers
around the world

We provide our customers worldwide with solutions that contribute to solving social issues. To thisend, we will strengthen our research and development, production, and quality control systems,
creating a global organization that swiftly supplies high added-value products and services thatmeet the demands of customers and society.

Ensuring a safe andsecure workplace

We are committed to providing a safe and secure working environment for all employees of ourGroup by continuing our efforts to improve safety through the reduction of hazardous and harmful
operations in manufacturing and processing processes, as well as through safety training andhealth promotion.

terms of two axes: their importance for stakeholders and their importance for us
Evaluating them from the viewpoints of “creating social value through business” and“meeting the requirements of society,” respectively

Long list (universe)
Considering industryspecific content inaddition to global anddomestic social issues
SDGs
Future investment
strategies
Industry-related issues

Industry-specificcontent was added tointernational standards
and guidelines that arecommon worldwide.

deliberation by management
Identifying six key issues (materiality) as priority issuesFocusing on materiality

Significancefor usSignificance forstakeholders

Evaluating theproximity of therelationship withthe business

Evaluation ofconformity withsocial demands

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Nihon Parkerizing Co., Ltd. Integrated Report 2023

Key
issues

Evaluation ofimportanceKey
issuesKey
issuesCreating a corporate
culture that respects
diverse values and turns
them into strength□ Utilizing diverse human resources
We will realize a workplace in which all employees of our Group can play an active role and feel
fulfilled in their work. To achieve this goal, we will promote diverse working styles, recruit and train
global human resources, and encourage the recruitment of women, people with disabilities, nonJapanese, and mid-career and senior workers.
□ Respect for human rights
We foster a corporate culture that respects the rights of all people, regardless of country or region,
by respecting human rights, establishing rules that prohibit discrimination and harassment, andbuilding good labor-management relations.

Significance for stakeholders(Value creationarea)

Taking responsibility
for creatinga sustainable society

Defense(ESG area)

ISO26000GRI StandardsResponding to Social Demands

Creating a materiality map andshortlisting

Significance for us

Identifying materiality

Receiving approval by the Board of Directors following a dialogue with experts andSignificancefor usSignificance forstakeholders

Evaluating themagnitude of
relevance to ourbusiness(Combining themwith the mediumterm plan)

Areas overlappingamong externalrating agencies(FTSE, MSCI, DJSI)

Significance for us

STEP 3Key
issues

Evaluation ofimportanceKey
issuesKey
issuesSignificance for stakeholders□ Building a sustainable supply chain
We will build cooperative relationships with customers and suppliers and engage in initiatives tobuild a sustainable supply chain by working on resource management and production and realizing a circular society.
□ Contributing to reducing the environmental load
We will contribute to protecting the global environment by continuing to take initiatives to reduce
the environmental load, such as reducing emissions of CO2 and other greenhouse gases, hazardous chemicals, wastewater, and promoting renewable energy utilization.

Materiality forus

Initiatives to ensure
the continuing integrityof the Group□ Faithful and sincere corporate management
We will conduct transparent management by encouraging information disclosure, including nonfinancial information, and communicating with various stakeholders, including shareholders, toachieve sustainable growth and improve corporate value over the medium to long term.
□ Improving risk management
We will reduce the risk of changes in the business environment, accidents, and disasters byestablishing a system to appropriately assess various possible risks in our business and takeremedies according to the degree of risk.
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