Nippon Paint Group
Medium-Term Plan (FY2021-2023)
Update Report

April 7, 2023
Yuichiro Wakatsuki
Director, Representative Executive Officer & Co-President
Nippon Paint Holdings Co., Ltd.

3.
Sustainability
Strategy3-1. Reinforcing Autonomous Sustainability Structure (1)Established Basic Policy on Sustainability aimed to achieve MSV based on
Asset Assembler model
Basic Policy on Sustainability
Nippon Paint Group recognizes an opportunity for sustainable growth from taking actions such asprotecting natural capital including the environment, enhancing human resources by embracing diversity, and creating innovation with social benefits.
Our group partner companies autonomously develop sustainability strategies and conduct business activities. Furthermore, we identify risks andopportunities related to Materiality based on sound group governance with the sole mission of Maximization of Shareholder Value (MSV)
after adequately fulfilling our legal, social and ethical obligations to customers, suppliers, employees, society and other stakeholders.

Key points of update
バESG Statement〉

Basic Policy on Sustainability

Position ofMSV

Stated that the delivery of sustainability improvement
plans will lead to the creation of new business
opportunities and MSV〉

Clearly state that MSV is the goal ofour sustainability initiatives

Businessmodel

Premised on Nippon Paint being a paint and coatings
manufacturer. Mainly focused on actions to achievesustainable development〉

Basic Policy on Sustainability based on
Asset Assembler model

Procedures

Mainly discussed at the then ESG Committee meeting andreported to the Board meeting in August 2020〉

Discussed and resolved at the Board meetingin March 2023
33-1. Reinforcing Autonomous Sustainability Structure (2)Evolved into a business-driven, autonomous sustainability structure with MSV as the goal
ESG management system (~2021)

Sustainability structure (2022~)〉

Top-down approach

Bottom-up approach
Board of Directors

Board of Directors
Report (quarterly)

Representative Executive Officer& Co-President

Structure

Report(whenever necessary)

Entrustment

Nomination/
Entrustment

Proposals

Director, Representative
Executive Officer & Co-president

Dialogue

Stakeholders

ESG Committee
Committee Chair: Representative
Executive Officer & Co-president

Entrustment

External experts〉

ESG Promotion
Department

Dialogue

Stakeholders
External experts

Sustainability Department

Nomination/EntrustmentProposals

Five Global Teams
Environment& Safety

Working teams
Dialogue

Domestic and overseas partner companies,functional divisions

Innovation& ProductStewardship

Governance

Sustainable
Procurement

Domestic and overseas partner companies
and functional divisions

Supervision by
the Board ofDirectors

ESG Committee reports to the Board of Directors

Strategydevelopment~
Breakdown
into actions⚫ Strategy, policy, and action plans are developed by the ESG
Committee⚫ The working team, which is directly below the ESG Committee,
shares advanced case examples, establishes group-leveltargets, and develop measures in line with the situations ineach region*1 Environment & Safety, People & Community, Innovation & Product Stewardship

People& Community〉

Team Leaders directly report to Co-Presidents,
who then report progress and proposals to the Board of Directors
whenever necessary〉⚫ Autonomous sustainability structure with MSV as the goal
⚫ Global Teams are formed based on three Materiality-based
pillars*1 and two pillars*2 cutting through Materiality*2 Governance, Sustainable Procurement43-2. Sustainability Strategy Updates
Share success cases of each partner company, identify priority issues and developroadmaps for addressing identified issues
TeamMateriality

Main actions/achievements in FY2022

Targets/actions in FY2023 and onwards

Environment &Safety⚫ Climate Change⚫ Resources andEnvironment⚫ Safe People andOperations⚫ Identify further improvement focus areas for• Climate change• Resource usage• Significant safety risk
⚫ Agreed standardized metrics and implementation plan

⚫ Implement and disclose:• Scope 3• Water usage• High potential safety incidents⚫ TCFD risk and opportunity assessment and actions

People &Community⚫ Diversity & Inclusion⚫ Growth withCommunities⚫ Shared actions to increase the ratio of women in all employees⚫ Decide the group’s target to celebrate the diversity⚫ Established a global CSR framework as a guiding structure forall partner companies⚫ Increase the ratio of women in managerial positions inaccordance with targets in each region⚫ Develop a long-term community engagement strategy with
our global framework and targets

Innovation &ProductStewardship⚫ Stated ESG innovation strategy and roadmap⚫ Innovation for⚫ Redefined sustainable products*a Sustainable Future ⚫ Developed Green Design Review⚫ Established packaging recycled content

Governance

All Materiality
categories⚫ Increase diversity in Board of Directors⚫ Enhance growth strategy discussions by Directors⚫ Established the Nippon Paint Group Global Code of Conduct⚫ Modified the Group Risk Management Basic Policy and established
Global Basic Policy of Whistleblowing Hotline

Sustainable
Procurement

All Materiality
categories⚫ Established global team
⚫ Developed Supplier Code of Conduct and supplier questionnaire⚫ Organize regional teams⚫ Conducted trial supplier survey⚫ Use Sustainability Scoreboard in broader partner companies⚫ Identify and compile Chemicals of Concern and develop
a phase out plan
⚫ Enhance growth strategy discussions and implement succession plans⚫ Continuously improve group management effectiveness⚫ Establish Whistleblowing Hotline and verify its effectiveness⚫ Reform governance framework responding to changes in social
demand (including in compliance and risk management)⚫ Conduct supplier survey⚫ Define supplier ESG assessment methodology⚫ Scope 3 disclosure (raw materials related)*Products with sustainable advantage from the perspective of product life cycle and based on the framework of Sustainable Development Goals (SDGs) adopted by the United Nations53-3. Team 1 (Environment & Safety)
Identify and mitigate risks related to CO2 emissions, recognizing new business opportunities
created from responding to climate change
Nippon Paint Group’s CO2 emissions reduction target (Scope 1 and 2)*1 *2

Roadmap

2022

NIPSEA

CO2 emission reduction
target (Scope 1 and 2) *1

2020

2030
(estimate)

NIPSEA

100

65

TBD

DuluxGroup10050<A$0.5m p.a. expense, investment manageable within
normal minor capex expenditure levels

Dunn-Edwards

10067TBDJapan Group10065¥30 mm in expenses for renewable energy and certificate,etc. (in FY2023 only) *3

Total *410063-2023

Expected expenses and investments required~2030• Measure Scope 3• Aim to reduce emissions intensity (Scope1and 2) by 15%, with a yearly reduction
target of 4% from 2021 levels• Commence Cromology andJUB Scope 1&2 measurement
and inclusion• 50% renewable energy consumption• 50% CO2 emissions reduction by 2030
from 2021 level

DuluxGroup• Commenced development andimplementation of detailed action plansto achieve the 2030 targets

Dunn-Edwards• Started using renewable energysupplied in each state• Measure Scope 3 in 2024

Japan Group• Around 7% renewable energyconsumption• 37% CO2 emissions reduction (Scope 1and 2) from 2019 levels*1 Emission intensity (index 2020=100) *2 Data coverage: NIPSEA and DuluxGroup excluding Cromology and JUB, Dunn-Edwards, and Japan Group*3 Expenses for renewable energy procurement and certificate were calculated using results (unit price) and emissions as of 2022
*4 Total was calculated based on production volumes of 4 Partner Companies in 2022

2050~2060• Net zero carbon (Scope 1&2)

63-3. Team 2 (People & Community)
Enhance human resources by embracing diversity brought by Asset Assembler model
NIPSEA

DuluxGroup

Dunn-Edwards

Japan Group

Ratio of female employees (2022)

25.0%

32.7%

30.0%

22.5%

Ratio of women in
managerial positions (2022)

25.2%

31.5%

34.5%

5.4%

Employee satisfaction level (2022)

75%80%(2021)-89%(2021)

Roadmap

2022

2023

~2025

NIPSEA• Kicked off D&I Week toraise employee awareness• Implemented Global
CSR Framework• Launching D&I Policy• Encourage countries to own the roadmap towards achieving 35% female
representation in both management & emerging leader category• Weave D&I into Employee Engagement campaigns• Implementation of roadmap towards the goal ofachieving 35% female representation in bothmanagement & emerging leader category• Monitor progress towards the goal

DuluxGroup• Revised draft D&I framework andstrategy, encompassing
dimensions beyond gender(indigenous reconciliation;disability; cultural diversity)• Promote our EVP to all employees, but particularly to women in SC and Sales• Quarterly reporting to the CEO on SBU diversity statistics against ambition• Reviewing our attraction strategies and recruitment processes for accessibility
by people with a disability• Meaningful actions to sustain and increase ourpercentage of women in managerial positions to 35%• Meaningful internal programs to foster inclusion

Dunn-Edwards• Launched DEI Training• Launched phase 2 of DEI curriculum for all employees• Share DEI curriculum with NPHD People and Community DEI Committee• DEI committee building company-wide interactive activity for April’s
celebration of diversity, highlighting the diversity that exists within DunnEdwards• Continuously review and adapt company polices toensure that all charter objectives are met

Japan Group• Kicked off D&I Committee• Developed action plans towards 2025
• Act on Promotion of Women’s Participation & Career Advancement in theWorkplace• Increase the ratio of women in managerial
positions to 10%7

3-3. Team 3 (Innovation & Product Stewardship)
Create new markets by rolling out sustainable products with low carbon emissions andreduced chemical substancesGroup-level R&D framework (2022)

19.5%
Engineers

2022 New Product Sales Index (NPSI)
of Japan Group and NIPSEA

Roadmap

3,895 persons

R&D expenditures

28.1 bn yen

No. of new patents registered

158 cases

2022

2023~2027

SustainableProducts• NIPSEA: Redefined sustainable products• NIPSEA, Japan Group: Developed Sustainability
Scoreboard• DuluxGroup: Established sustainable products targets
and developed roadmaps for ANZ*1 businesses• Life Cycle Assessment (LCA) of selected products
can be calculated at each Partner Company• DuluxGroup: Develop Scope 3 reduction roadmap• Manage the performance of Sustainability Scoreboard ofeach partner company every quarter• Promote creation of more innovative sustainable products• DuluxGroup: Implement sustainable products and Scope 3 roadmaps

Chemicals ofConcern• Each Partner Company responded to US
Environmental Protection Agency (EPA) and REACH• DuluxGroup developed position statements for 50% ofhigh concern CoC• Dunn-Edwards: Incoming Chemical Management /Selection per Chemicals of Concern• Consider the phase out plan of Chemicals ofConcern in each partner company• NIPSEA: Focus on 4 hazardous heavy metals*2• DuluxGroup: Complete position statements for75% of CoC and develop a structured program ofCoC in Europe• Create sustainable products based on phase out plan

• Developed Green Design Review• R&D activities for sustainable products from
Partner Companies beyond Japan and NIPSEA,e.g. DuluxGroup, Dunn-Edwards, etc.

• Drive innovation towards UN SDGs and carbon neutrality

R&D

ProductStewardship• DuluxGroup established packaging recycled contenttargets and developed roadmaps for ANZ businesses*1 Australia and New Zealand••••

Identify inquiry items
Stakeholder questionnaire
NIPSEA: Reinforce PS&RA*3 team
DuluxGroup: Implement Product Vision to help withformulation management & regulatory tracking*2 Lead, Chromate (Cr6+), Cadmium, and Mercury••••

Implement inquiry management database
Inquiry response training
Training for customers and business partners
DuluxGroup: Implement packaging roadmaps*3Product Stewardship & Regulatory Affairs

8

3-3. Team 4 (Governance)
Reinforced global risk management system underlying our Asset Assembler model◼ Identify high-risk items and monitor changes

Risk heatmap
High risk items identified in FY2022

Change from FY2021

Risk details• Compile results of risk self-assessment*1 and identify high riskitems• Assigned a score to risk sensitivity of related items and ranked
them in the order of degree of change from FY2021

Human resources

SlightlyhigherLeadership succession planning

Business Continuity Plan (BCP)
responses

SlightlyhigherGlobal raw material inflation, FX and BCP responses
incl. pandemic, natural disaster and IT security

Compliance

HigherSocial risks including information leakage andemployee misconduct

Supply chain

MuchhigherInventory, logistics, and credit management

International taxation, etc.

MuchlowerInternational taxation due to greater Group-wide collaborationin brands and technology

Roadmap
Board ofDirectorsgovernance

Execution
governance•••••◼ Overview of high-risk matters• No major change from FY2021 in high-risk item list
• However, there were signs of change in the following✓Risk sensitivity regarding international taxation decreased✓Risk sensitivity in both BCP and supply chain increased

2022

2023

Increased diversity in Board of Directors
Enhanced growth strategy discussions
Streamlined the Board of Directors’ operations
Increased contribution by Independent Directors
Strengthened the Board of Directors secretariat
functions• Further streamline the Board of Directors operations• Further increase contributions by Independent Directors• Enhance succession plans• Established the Group Global Code of Conduct• Modified Global Risk Management Basic Policy andestablished Global Basic Policy ofWhistleblowing Hotline~2026• Increase effectiveness of risk management through risk
self-assessment based on Global Risk
Management Basic Policy• Establish and increase efficiency of whistleblowing
system at each Partner Company Group*1 Carried out annually by each Partner Company Group and results will be reported to Co-Presidents• Further sophistication of growth strategy
discussions by Directors• Enhance and implement succession plans• Verify effectiveness and refine-risk management system through risk self
assessment-whistleblowing hotline• Reform governance framework*2 to respond tochanges in social demand*2 Including compliance and risk management

93-3. Team 5 (Sustainable Procurement)
Create new opportunities by building closer communication and stronger trust with suppliers
Key items of the Supplier Code of Conduct
Compliance

Environment

SocialGovernance

Legal Compliance

Minimize impact

Freedom of association

Anti-corruption

Subcontractor compliance

Waste management

Child labor

Gifts and entertainment

Forced laborConflict of interest

Discrimination

Confidentiality

Working conditions

Record keeping

Conflict minerals

Fair competition

Product safety and complianceInternational trade

Environment, health and safety compliance

Safety training

Roadmap20222023• Conduct supplier survey

Team activities• Launched the global team• Define supplier ESG assessment methodology• Organize regional teams• Define Scope 3 disclosure(raw materials related)• Conduct supplier survey• Conduct supplier ESG assessment• Refine Scope 3 disclosure(raw materials related)• Conduct supplier questionnaire(target 40% by value)• Conduct supplier questionnaire(target 90% by value)• Developed Supplier Code of Conduct
Evaluations/questionnaires, etc.

~2025

• Developed supplier questionnaire103-4. Sustainability Strategy Updates: ESG Index/Rating Evaluations
Due to our progress in our sustainability initiatives and disclosure enhancement, we have been
included in ESG indexes adopted by GPIF and showed improvement in ESG rating scores
ESG index
S&P/JPX Carbon Efficient Index

Sep. 2018~MSCI Japan Stock Index (WIN)

June~

MSCI Japan ESG Select Leaders Index

June~

FTSE Blossom Japan IndexJune~March~

FTSE Blossom Japan Sector Relative Index

ESG rating

2019

2020

2021

2022

Climate Change

DCB

B

Water Security

D

B-A-A-MSCI

ESG Rating

BBBA

A

A

FTSE

ESG Score

2.1

2.3

2.5

3.5
11