ESG Initiatives

Nippon Seiki Group ESG Policy
We aim to achieve both medium-to long-term social
Nippon Seiki Group believes that the sustainable development of society is essential for enhancing corporate value
over the medium to long term and for expanding theprovision of social value to stakeholders.
In order for society to develop with sustainability, it isnecessary for our company, not only to pursue short-term
profits, but also to proactively address environmental andsocial issues from a medium-to long-term perspective. To
achieve this, strong corporate governance is a prerequisite.
By continuously approaching these issues, we believethat solving environmental and social issues will lead to thesustainable development of society. At the same time, we
believe that this will lead to an increase in corporate value
and medium-to long-term sustainability.
Our group consider not only financial information but also
non-financial information such as ESG (environmental,social, and governance) factors, and constructively engages
with stakeholders.

31

Nippon Seiki Integrated Reportdevelopment and business expansion.
When investing, we place emphasis on the perspectivethat ESG is an expansion of business opportunities, inaddition to the perspective that ESG, which has beencommon in the past, is a restraint of business risks.
"The perspective of ESG is a restraint of business risk" isthe perspective of being aware of environmental or social
risk factors, what measures are being taken in response tosuch factors, and what impact do you have on financial
stability.
"The perspective of expanding business opportunities" isthe perspective of whether we can capture changes in social
needs from environmental and social perspectives and linkthem quickly to value creation, thereby strengthening ourcompetitiveness and enhancing our corporate value over the
medium to long term.

01
Overview of Nippon Seiki Group

ESG Management of Nippon Seiki GroupIn order to lead our initiatives to materiality into corporate value improvement, we will manage ESG related indicators based on
our management policies and business strategies.
We will incorporate identified materiality into our strategies and plans and implement P DCA cycles.

02

Annual plan

Evaluation

Materiality
CHECK
Direction

DO
Disclosure03
ESG Initiatives

Implementationand promotion
On a critical issue

Progress
Monitoring

Stakeholder

PLAN

Engagement

Board of Directors

ACTION

Nippon Seiki Group's Value Creation Process

ReportCorrectionof shortfalls

Nippon Seiki Group's ESG Management Indicators
04
・GHG Emission

・Status of collective bargaining

・Energy user

・Board Independence

・Emission by sales volume

・Supplier Code of Conduct

・Energy consumption rate

・Ethics and anti-corruption policies

・Energy mix

・Information Security Policy
・Sustainability reporting

・Sustainability Disclosures

Financial Statements

・Board's diversity

・Water use

Environment
05

GovernanceSocialCompany data

・State of the influx and outflow ofhuman resources

・Ratio of male and female employees
・Percentage of temporary employees
・Anti-discrimination policy

・Occupational Safety and Health Policy
・Human rights policies

・Female Manager Ratio

・Employment rate of persons
with disabilities

Nippon Seiki Integrated Report32

Environmental Initiatives ( E )Basic Vision toward the Environment
Nippon Seiki group has established the Basic Environmental Policy, and has positioned global
environmental issues as an important management issue. With the aim of realizing a safe andsustainable society in harmony with the environment, the Group is making continuous improvements to achieve the realization of the Basic Environmental Policy as well as its environmental
objectives and targets. In the production activities of our manufacturing plants in Japan and aroundthe world, we are developing our business on a global scale to provide safety and security to society.
We will leverage the design and production technologies we have developed over many years withflexibility to enhance our comprehensive manufacturing capabilities through synergies. At the sametime, we will integrate the environmental management system of ISO 14001 (2015 version) into ourbusiness activities on a global scale and promote activities to reduce environmental impact.

Environmental Declaration
We regard the realization of a sustainable society as an important management issue and will continue to provide high-value products andservices to realize a safe and secure society in harmony with the environment through business activities that value "ambition," "society,""customers," and "people."

Environmental Impact of Nippon Seiki Group(FY2022)
EnergyWater consumption

Europe17,731kL
Total

Americas

6km³

37km³

Japan

6,221kL

Total

40,509kl

683km³(Conversion to crude oil)

Asia

EuropeAmericas1,532kL

Asia

15,025kL

Japan

284km³311km³
INPUT

Number offactories

Japan

4

Asia

9

Americas3Europe2

OUTPUT

Water discharge

Waste emissions
EuropeAmericas

6km³

22km³

Asia

33

Nippon Seiki Integrated Report

1,667t8,363t

6,660tJapan

274km³

Americas1,897tEurope1,083tAmericas

Total

574km³272km³Japan

Europe

671t

Total

CO2 emissions

Asia

2,426tAsia

34,196t

Japan

33,592t
Total

77,234t

01

Action themes

We set environmental objectives and targets every three years and continue to promote activities toreduce environmental impact. The results for FY2022 are as follows.

Item

FY2022 Results

Evaluation

All manufacturing
operation

1.0% reduction (per unit of production)(base year 2021)

1.4% increase×

All indirect
departments

1.0% reduction (electricity consumption)(base year 2021)

2.7% reduction◯

Heavy oil

Designatedmanufacturing sector

1.0% reduction (per unit of production)(base year 2021)

220.4% increase ※×

City gas

Designatedmanufacturing sector

1.0% reduction (per unit of production)(base year 2021)

19.6% reduction◯

Water supply

Designatedmanufacturing sector

1.0% reduction (per unit of production)(base year 2021)

129.2% increase ※×

Amountreleased

Designatedmanufacturing sector

1.0% reduction (per unit of production)(base year 2021)

20.5% reduction◯

Recycling rate

Entire company

99.90% or more

99.79%

×Environmental
factors for products

Design division

For each product group
Improvement of productenvironmental indices

12 themes are implemented,
with an average achievement rate of 92%

×Containing productsManagement ofchemical substances

Design division

Establishment of a system
to guarantee non-inclusion of RoHS2
additionally banned substances

1 theme is developed,
all of which achieved 100% target.

◯

Handling
management

Relevant division

Control and eduction of use of
PRTR-designated substances

6 themes are developed,with an average achievement rate of 100%◯

Environment for suppliers
Improvement of performance evaluation

3 themes are developed,with an average achievement rate of 100%◯Prevention of global warming

To reduce, reuse, and recycle waste

Develop eco-friendly products

Proper Managementof Chemical Substances

Procurement-related
departments

Promotion of green procurement
Global environment performance
improvement

CO2 emissions

TQM Promotion
OfficeTo gather environmental data fromdomestic and international affiliates

Continue to collect common environmental
data from manufacturing affiliates◯

Emergency response

Strengthening
BCP compliance

Risk Management
Related departments

Strengthening our ability to respondto natural disasters

Implementation ofsimulation test for BCP◯

Implementation of activities related
to biodiversity conservation

Conducted environmental conservation
activities outside the company(discontinued in the previous year)◯

Conservation of biodiversity○：Target achieved

Environmental
Conservation

General Personnel
Affairs Department△：Reduction/improvement over the previous year, but target not achieved※Due to the reduction in display manufacturing volume, the basic unit (efficiency) deteriorated.

02

03
ESG Initiatives

FY2022 Targets

Nippon Seiki Group's Value Creation Process

Subjects

Electric power

Conserving Water Resources

Overview of Nippon Seiki GroupThe Eighth Environmental
Target 2020-2022

×：Worsened from the previous year and target not achieved

04Power reduction throughair leak detection

We have applied the electricity consumption reduction
measures implemented by NS Group manufacturing companies using molding machine heat-insulating covers to ourmolding machines, reducing the electricity consumption of ourmolding machines.
In the molding machine cylinder, some of the heat from theheater was being released to the outside, resulting in energy loss.
By attaching a heatinsulating cover to themolding machine cylinderand reducing heat releaseloss, we were able to reduce
the power consumption of
the molding machine by
11%. This improvement isalso expected to be effective
in reducing air conditioning
power consumption in the
manufacturing department.

It was difficult to detect minute air leaks in the compressed airused on the production line. However, by visualizing the air leaklocation with an air leak detector, it is now possible to detect
minute air leaks that were previously unnoticed.
On the production line,
we repaired the leak points(10 locations) discovered
using an air leak detector
and stopped a leak of
112L/min. As a result, wewere able to reduce
compressor power loss by
10,400kwh/year.
This reduction activity is
being
expandedandpromoted at our international group companies.

Nippon Seiki Integrated Report05
Company data

Power reduction by keeping resin molding
machine cylinder warm

Financial Statements[ Initiatives Related to the Achievement of Environmental Targets ]34

Environmental Initiatives ( E )Information disclosure based on the Task Forceon Climate Change Financial Disclosures (TCFD)
In September 2022, Nippon Seiki announced its support for the TCFD recommendations (Task Force on Climate-related Financial Disclosures) andjoined the TCFD consortium.

The Nippon Seiki Group has a sustainability policy and considers responding to climate change to be one of the most important management

issues within ESG (Environment, Society, and Legal Compliance).

In order to further communicate with all stakeholders involved with our company, we will make further efforts to enhance information disclosure

related to climate change through our website, integrated reports, etc.

GovernanceIn order to strengthen our sustainability efforts, Nippon Seiki established a new "Public Relations

and Sustainability Promotion Department" within the Business Management Headquarters in
2022 to integrate sustainability, including climate change, and public relations activities.

Public relations and sustainability promotion, which is promoting the TCFD, review the risks

related to climate change and the impact on business activities, report policies, goals, progress,

issues, etc. to the Board of Directors and the Environmental System Review Committee, which isa meeting related to the environment, and develop and instruct policies and targets through theEnvironmental Committee, related departments, Group Management Meeting, which is a general
meeting of group companies, etc., share information, and manage progress.

Management discusses, approves, and gives instructions regarding policies, goals, progress,

and issues at the Board of Directors and the Environmental System Review Meeting.

COP 3, United Nations Climate Change conference,
Kyoto, Japan
Quoted form Japan Center for Climate Change Actions

Board of Directors
ReportCorporate Management
Headquarters

Approval, Direction(Environmental Responsible Official)
Report, information sharing

Corporate
Communications
and Sustainability

ReportApproval, Direction

Review Conference ofEnvironment System(President, Representative Director)

Environment Policy Review / Revise
Environment Management
Program Review

Policy and information sharing, Direction

Nippon Seiki Group
Climate Change and Carbon Neutral

Carbon Neutral Theme Activity Promotion

Environment Committee

Environmental issues consideration, Environment Management Program Implementation

Group Management Meeting

Policy Sharing・Sustainability Information Sharing

Business

Environment

SocialGovernanceRisk Management
Regarding the management of risks related to sustainability and climate change, the Environmental Management Officer and the "Public Relations
and Sustainability Promotion" section within the Business Management Headquarters serve as the secretariat to analyze risks that may have asignificant impact on the Nippon Seiki Group and each stakeholder. The results and KPIs are discussed and reported once a year at the Environ-mental System Review Meeting or to the Board of Directors.

Regarding the environmental management program, plans, KPIs, and implementation results are discussed and reported to the environmental

system review meeting.

35

Nippon Seiki Integrated Report

01
Overview of Nippon Seiki Group

Strategy
Due to its risks, climate change has various impacts not only on the business activities of ourcompany and its group companies, but also on us, the society surrounding them, and our
stakeholders.
In order to minimize the impact of risks and take advantage of opportunities, we identify the
impact (risks and opportunities) that climate change will have on business activities throughscenario analysis. We will then promote sustainable business activities by considering thepriorities and reflecting them in our business strategies.
IEA STEPS,WEO

1.5℃,2℃
scenario

IEA SDS,WEO

IPCC RCP8.5

IPCC RCP2.6

Scenario

Approximate
RCP Scenario

Scenario outline
Scenario of restraining temperature rise
under 1.5℃ with sustainable development

None

Introducing policies to restrain temperature rise
under 1.5℃
CO2 emission net zero in the late 21st century

02

Scenario of restraining temperature rise
under 2℃ with sustainable development

・Due to climate change, rising sea levels and increased rainfall will lead toriver flooding and an increase in areas affected by flooding, as well as
widespread droughts and an increased risk of drought.
・Increased risk of death and decreased motivation to work due to heat waves
and increased risk of infection

RCP2.6Introducing policies to restrain temperature rise
under 2℃
CO2 emission net zero in the late 21st century

Scenario of introducing climate change
measures with centrist development

Almost the same as the cumulate of eachcountries' reduction goal (NDC) until 2030

・Strengthening climate change control policies and regulations will lead to anincrease in carbon tax burden and increase in EV vehicles, ICE vehicles
decrease
・Development of new products and new technologies for a low-carbon society

Nippon Seiki Group's Value Creation Process

4℃
scenario

IPCC the 6th Assessment Report
SSP Scenario

RCP4.5close to RCP6.0
until 2050

Scenario of not introducing climatechange measures with regional conflict
development

Between
RCP6.0 & 8.0

Maximum emission scenario of not
introducing climate change measures withhighly fossil fuel dependent development

RCP8.5

Quoted form Japan Center for Climate Change Actions
Scenario

FactorCarbon Price

Energy Price(Electricity, oil, gas)

GHG regulatoin
become strict

Plastic
Restrictoin
RecycleRestriction

Heavy rain
and ﬂood
increase･Cost increase by carbon taxation to materials･Product weight saving, design andproduction engineering improvement･Introducing sustainable material･Cost increase by carbon taxation to fuel･Various renewable energy(solar,hydrogen, alternative fuel, etc.)･Cost increase by alternative energy investment･Choosing eﬀective investment･Energy cost soaring･Manufacturing cost increase by energy costsoaring･Transport cost increase by fuel cost soaring･Various renewable energy(solar,hydrogen, alternative fuel, etc.)･Restriction by GHG emmision regulation･Material cost soaring･High energy
development･Plastic emmision regulation･Material cost increase by plastic emission
restriction･Introducing sustainable material･Recycle material cost soaring, D&D cost
increase by design change to recycle material･Introducing sustainable material
・Recycle process development･Heavy rain, sea level rising･Operation stoppage by ﬂood
･Moving factory, warehouse location to avoid
ﬂood risk･Product shipping stoppage by supply chain
discontinuation･Tranformation to resilient factory･Unstable labor resource

・Introducing eﬃcientworking way

eﬃciency

Eﬀect

Countermeasures･Energy eﬃciency production(introducing hugheﬃciency machinery)･Energy eﬃciency design（material saving, alternative
material usage）

High

03

･Change to renewable energy, installing solar panel
Purchasing non-fossil certiﬁcate,reducing GHG byelectriﬁcation･Making GHG reduciton plan and implementation･Introducing internal carbon pricing

HighequipmentHigh･Reducing GHG by electriﬁcation･Change to renewable energy･Installing solar panel･High energy eﬃciency prodution and design･High energy eﬃciency equipment development

Middle･Considering alternative material, and appling to
products

Middle･Considering alternative material, and appling to
products･Reducing material purchase and emission by recyle

04･BCP improvement･Disaster prevention manual･Enhancing ﬂood resilience

Financial Statements

Physicaleﬀect in4℃ climatechangeOpportunity

ESG Initiatives

Transfereﬀect to1.5℃/2℃
society

Risk

High
and

ﬂexible・Flexible remote working

Goals and indicators
Nippon Seiki Group has set a 50% reduction target for CO₂ emissionsin Scope 1 and Scope 2 (based on 2019) in 2030 as a goal related to2050 Carbon Neutral Image

climate change in order to realize a sustainable society. . After that, we

Energy usage increases as the company grows
Renewable energy usage ratio: Expansion

set a goal of 100% reduction (carbon neutral) in 2050.

100,000

70,34779,352■D&D・Sales・Automotive Sales

77,234
4,387

60,0003.Purchase

79,95040,00072,84839,975

CO2 t/yr

CO2 t/yr

2019

2019

2020

2021

2022

※Consolidated manufacturing bases will be covered until 2021, and manufacturing, development design, sales, and vehicle
sales bases will be covered from 2022 onwards. *From 2022 onwards, the Emission Factor published by the International
Energy Agency will be used as the CO2 emissions coefficient for electricity.

（Benchmark year）

Energy2030（50％Less）

・Purchasing renewable energy

0

CO2 t/yr

20,0000・Electric energy saving
・Introducing energy-saving equipment when
updating equipment, etc.
・Reducing operating time by improving
productivity

2.Renewable
・Installing solar power generator
EnergyUsage

80,00079,9501.Energy
Saving■Manufacturing

Company data

CO2 emissions results（t-CO2）05

3 Measures for Carbon Neutral

2050（Carbon Neutral）

Improves
Corporate
Value

Renewable energy

Nippon Seiki Integrated Report36Social Initiatives ( S )Basic approach to society
Nippon Seiki group will not focus only on improving inorganic production
efficiency, but will strive to conduct business operations in accordance with ourgroup's management philosophy, based on compliance with laws andregulations and respect for the human rights of employees.
We will also contribute to the development of a sustainable society throughmanagement of human resources, safety, and quality, as well as activities that
contribute to local communities.

Safety management policy
Based on the "Respect for Human" philosophy of safety, we will realize our management philosophy through ourglobal and diverse business activities, including the development, design, procurement of materials, manufactur-

Learn
more

ing, sales, and quality assurance of products and parts, and through these activities, we will strive to improve andpromote continuous and aggressive initiatives for risks and opportunities related to occupational health and safety,
with the aim of eliminating occupational accidents.

Occupational Safety and Health Management System
In addition, as a company-wide organization, we hold regular

In August 2020, Nippon Seiki acquired the Occupational Safety and

Health Management System (ISO 45001) certification and compliedcompany-wide secretariat meetings in which safety and health

We have established the Environmental and Occupational Safety

information on the status of safety and health activities at eachcommittee members from each business site participate to sharewith the process.

business site, good practices, and improvement cases, thereby

and Health Manual, established the Occupational Safety and Healthraising the level of the company as a whole.

Policy and the Health and Safety Objectives, and created an environ-

We have also established a system for sharing information withment in which all employees can work safely and healthily. In eachdomestic and overseas Group companies, and will continue todivision, occupational health and safety-related items are included in

improve our occupational health and safety management.

the plan at the beginning of the fiscal year, and occupational healthand safety activities are promoted systematically.

Occupational Safety and Health Management Process
Occupational Safety and health policy and environmental and occupational safety and health manual

Planning and operation
Operational
control
Preparation
for incidents

Monitoringandmeasurement

To identify
the cause
Assessmentof compliance

Review

Targets andimplementation plans

・Needs and expectationsof stakeholders
・Roles of the Organization /Internal and External Issues
・Requests for occupationalsafety and health・Reflection in the previous
review[Structure and Role], [Training], [Communication], [Document and Record Management]

Based on management reviews and various requests, we formulate targets and implementation plans and implement them in a planned manner.
Events that occur in the planning and operation process are reflected in various policies, manuals, training, etc., as appropriate to promote
optimization, monitor and measure the results, and record the evaluation information that goes through each process as a management review.

日本精機株式会社 統合報告書

37

Nippon Seiki Integrated Report

01
Overview of Nippon Seiki Group

Quality management policy
Nippon Seiki group is committed to meeting customer
requirements and establishing the industry's highest
quality and technology based on the concept of "quality

For more
information
This way.

first" in all activities of planning, design, development,
manufacturing, and sales of electronic and mechatronics

02

products, including automobile, consumer and display

Nippon Seiki Group's Value Creation Process

products in accordance with the following items.

Quality Management System
Based on our Group Management Philosophy and Basic Quality

The processes that support the activities of the quality manage-

Policy, we are developing TQM activities from the customer's

ment system start with the management philosophy as shown below,

As for the quality management system, in fiscal 2017, the head

and its employees are aligned and operated in a planned manner. The

standpoint to provide safety and security to earn the trust of society.

office adopted the Automotive Industry Quality Management System
Standard, an international standard.

compliant with (IATF 16949) and integrated it with our businessresults of implementation are reviewed, fed back, and adapted tochange. Communication and education tools such as management
In the future, we will further adapt our businesses to the evolution

processes. Group companies completed the transition to IS O 900 1

of industry and automotive technology.

improve their products and services by deploying unified standards

will pursue quality that meets customer expectations while making(2015 version) and I ATF 169494 in fiscal 2020, and are working to
globally based on the concept of quality first.

03

documents, education, and training support these activities.

ESG Initiatives

We have completed the transition to a quality management systemand the various strategies are clarified, and the vectors of the group

Aiming to establish the world's highest quality and technology, we

continuous improvements.

Global Quality Manual + Management Document

04

Individual Company Quality Manual + Management Document

Mid-term plan(policies and targets)
Focused theme
Formulation of strategies
Plans of each divisionand each company

Departmental
action plansfor individualcompanies

Implementation

Financial Statements

Management Philosophy,
Corporate Culture
Management Vision,
Action Guidelines
Quality Policy andOther Policies Internaland external analysis

Various reviews

Systems and roles, training, communication, and documentation and records

05
Company data

Responsible Mineral Procurement
Conflict minerals (tin, ta, w, gold, etc.) originating from conflict zones and high-risk areas (CAHRAs) pose risks such as support for armed groups,

human rights violations such as child labour, bribery, money laundering, tax evasion, and environmental degradation (OECD Annex II risks). We

are conducting supply chain surveys using CMRT provided by RMI. We will work with our suppliers to make our supply chain more transparent
and reduce risks.

Nippon Seiki Integrated Report38Social Initiatives ( S )Social Contribution Activities
Participation and Sponsorshipof local festivals

Sports Promotion /Regional Revitalization

Community Collaboration
through Industry-Academia
Collaboration Classes

Nagaoka City, Niigata Prefecture, where
the headquarters of Nippon Seiki islocated, is an area where many people
were killed in air raids during World War II.
In Nagaoka City, the Nagaoka Festival isheld every August to pray for lasting peace,and our group participates in the danceand sponsors the Nagaoka Fireworks
Festival, one of the largest fireworks
festivals in Japan, to contribute to the local
community.

Together with Albirex Niigata Ladies, wevisit local elementary schools to holdsoccer hands-on sessions and career
education under the theme of "creating abright future together and developing
human resources who can contribute tosociety. Our employees also participate in
the planning and management of events
together, contributing to the local community and developing human resources.

We hold industry-academia collaboration
classes with the Nagaoka College ofEngineering, a local public university
corporation.
Under the title of "Visualization of Information in Daily Life: Regional Collaborative
Creation Exercise 2023," we will try to
propose everyday items (tools) for
students to use in their homes by utilizing
the sensing technology of Nippon Seiki (tomake the invisible visible). For students,
this is an opportunity/opportunity tocollaborate with local companies and share
their ideas with the world.

Responding to local issues

39

Operation of Programming Schools

Agreement on the Supply of Fuel inTimes of DisasterNS Computer Services Co., Ltd. is running programming school in
Nagaoka City. The school provide children with a place to learn IT
skills. As part of our activities, we also create opportunities forelementary school students to experience IT technologies, suchas drone operation. We plan and promote the development of local
human resources and the revitalization of IT industry by participating in and planning local events.

Nissei Service Co., Ltd., a group company that handles ourlogistics, has concluded an agreement with Nagaoka City tosecure fuel (diesel oil) for Nagaoka City's official vehicles in theevent of a disaster. This is the first initiative in Niigata Prefecture toestablish a system in which private service stations of logistics
companies and local governments work together. We will support
the disaster response of Nagaoka City, which has introduced
clean diesel vehicles, and contribute to the creation of adisaster-resistant community.

Nippon Seiki Integrated Report

01
Overview of Nippon Seiki Group

Community Contribution Activities
of International Subsidiaries[Wuhan Nissei Display System Co., Ltd.] (China)

Da Nang Nippon Seiki Co., Ltd., a software designer in Da Nang
City, Vietnam, donated used PCs to a local elementary school inMarch 2023 when updating (replacing) business PCs. The
school received a favorable reputation as a reusable item. With
the increasing importance of IT training, this program was a great
way to contribute to local training and human resource development.

Wuhan Nissei Display System Co., Ltd.. in Wuhan city, china,
promotes activities based on its annual social contribution
activity plan. In 2023, we called for active participation involunteer blood donation activities in July.
As a result, 27 employees volunteered to participate.
The blood donation volume exceeded 10,000ml. We received
words of gratitude from the Chinese Red Cross Society andpresented blood donation certificates to the participants.

02
Nippon Seiki Group's Value Creation Process[DaNang Nippon Seiki Co., Ltd.] (Vietnam)

03
ESG Initiatives[Thai Matto NS Co., Ltd.] (Thailand)

Thailand's Ministry of Education highly evaluated ourcontribution to social education, In April 2023, we received SEMA
Kunupakran(Thailand Ministry of Education Contribution Award
Prize for Contributions from the Thai Ministry of Education. In
connection with the government and the Ministry of Education'semphasis on "human resource development to support industry,"
Thai Nippon Seiki has been hiring a large number of interns
every year, which led to the award from the perspective ofcontribution to school education.

In recognition of our environmental improvement activities at the
Amata City Industrial Park in Thailand, we were awarded the''PLATINUM LEVEL'' at the 2022 awards ceremony.
This is the result of environmental (waste) improvement
activities at the industrial park that began in 2017. Activities that
initially started with garbage separation have continued to evolveand develop into initiatives such as the reduction of food waste(bio-based food waste processing).

04
Financial Statements[Thai Nippon Seiki Co., Ltd.](Thailand)

05
Company data

Nippon Seiki Integrated Report40Social Initiatives ( S )Improving Workplace Environment
Promoting Diversity
Nippon Seiki's growth is supported by the active
participation of diverse human resources. We believethat respecting and utilizing diverse values, ways ofthinking, and backgrounds will enhance organizational
creativity, secure excellent human resources, andimprove competitiveness. We are implementing
measures to promote diversity, such as in-house training
for executives.

In addition, as part of diversity, we conduct coaching
training and other programs for female employees whowish to advance their careers in order to develop female
managers. As a result of these efforts, we have received
the highest award of "3 stars" in the "Eruboshi"
certification, which is given to companies that excel inpromoting the advancement of women.

Supporting Employees in Juggling both Work and Family
We aim to be a company where all employees maintain abalance between work and family life, and continue to work withhigher motivation and higher performance.
We have set targets such as the rate of annual paid leave
taken, the percentage of women among hires and managers,
and the rate of men taking childcare leave and reduced working
hours for childcare. The results for FY2022 are shown in the tableon the right. These attitudes and achievements were highly
regarded by Niigata Prefecture as a "Happy Partner Company".

Indicators, targets and FY2022 results
Plan items

Goal

Results (FY2022)

Proportion of Annual Paid
Leave Taken

Maintain 70% or higher

70.2%

Overtime Working

Maintaining Monthly average
overtime work of all
employees within 18 hours

15 Hours

Female employee ratio in
new employment

Maintain 10% or higher

18.8%

Percentage of male workers
taking childcare leave

Maintain 30% or higher

61.3%

Percentage of female workers
in managerial positions

3% or more by April 2025

2.5%

Supporting Diverse Work Styles
We are working to deepen understanding of work-life balance throughout the workplace and to create a culture that accepts a variety of working
styles for each individual. We have established a variety of systems to create a comfortable working environment for employees at various life
stages, including pregnancy, childbirth, childcare, and nursing care. We also monitor the working engagement level of our employees once a year.

Flex-time system
Hourly annual paid leave system
We have established this system with theaim of promoting a way of working thatsuits the lifestyles of our employees and away of working that is autonomous, and weare expanding the freedom of work styles.

Voice
Voice of Employees
Taking Childcare Leave

For a long time
I can spend timewith my family.
It was a precious time.
Legal Affairs,
Corporate Planning
Department

Kengo Ikarashi

41

Nippon Seiki Integrated Report

Telework system

Shorter work hours

Teleworking is possible if the employee
wishes to obtain the approval of theworkplace. The goal is to reduce thephysical and mental burden and improve
work efficiency and productivity by
maintaining concentration.

We are working to create an environment
in which the child-rearing generation canbalance work and family life by waiving
overtime work until the child turns three
year's old and allowing them to choose towork shorter hours (6 hours) until the childturns 12 years old.

After giving birth to my first child, I tookchildcare leave when giving birth to mysecond child. The reason why I tookchildcare leave was because I heard
about a colleague who was actually aman who took childcare leave, and I
wanted to support my wife afterchildbirth by taking on housework andchildcare, and to be involved with thechildren.
My superiors and colleagues haveshown their understanding of taking

childcare leave, and I have received avariety of support. I was also very
grateful for the support I received fromeveryone, including answers from the
Human Resources Department to myquestions about the childcare leavesystem and benefits.
Housework and childcare during
my childcare leave was more difficult
than I had originally thought, but it wasa valuable time for me to spend a lot oftime with my family.

01
Overview of Nippon Seiki Group

Human Resource Development
Basic Policy
We believe that human resources are our most important management resource, and we conduct human resource development based on thisbelief. We support the development and growth of individual abilities by providing human resource development programs that enable employees
to be proactively aware of the skills they need and their own careers, and to take action to realize them.

02
Nippon Seiki Group's Value Creation Process

Development of Autonomous Dynamic
Human Resources

Career Design Support

In order to survive in global competition, we aim to develop
global human resources who are "autonomous, think-and-act" andcan think and act on their own to solve problems and respondquickly to changes. We provide more than 20 education andtraining programs per year, tailored to themes and levels.
In addition, we conduct regular career interviews, intensive
education and early selection for candidates for global
management, and job rotation to foster a multifaceted perspective.

By holding interviews with career counselors at milestone ages andsupporting career and skill development, we aim to create strong
human resources who can help each employee realize his or her
career positively and at the same time realize business strategies.
In addition, as a career support system that allows employees totake on new challenges on their own, we conduct internal job
openings.

03

and training

Management training

Communication・Mental health

LanguageCompliance

Health and safety

Other

Management skill

Career design

Business skill

New employee training

ESG Initiatives

Themes of education(Life plan・health management)

Idea contest

To be a place
where imaginative ideas
to be generated
Sensor solutions
Development Department

Mizuki Otuka

In order to make it easier to come up
with ideas for this contest, we narrowed
down the themes of the contest to thosearound our business areas. In addition,
we disclosed the screening weight
allocation at the time of the offering andclarified the points of focus in order topropose high-quality ideas. As a result,
we were able to gather many ideas thatwere familiar to us but had a wide
variety.

2023 Idea Contest Awarding Ceremony

At the final idea debriefing session,some of the participants commented
that the idea was interesting and thatthey had not come up with any ideas,
indicating
theimportanceofopportunities to gather ideas from awide range of employees with diverse
ideas. We will continue to run thecontest so that it will be a place whereideas that are not bound by existingideas can be generated.

Nippon Seiki Integrated Report05
Company data

Voice
Voice of the idea contest
secretariat

04
Financial Statements

We encourage our employees to create new business ideas on their own initiative, andencourage them to work in the workplace. We regularly hold business idea contests with theaim of stimulating participation in management and leading to sustainable development of theGroup.
To date, seven meetings have been held (four at the head office and three at nissei serviceco., ltd. and NS computer service co., ltd.). in fiscal 2023, these meetings were held on the
topics of "zero pedestrian accidents" and "ensuring pedestrian safety" using optical or
sensor-based technologies, and many ideas were proposed that could lead to a "future full ofsafety and security.

42

Social Initiatives ( S )Respect for Human Rights
Establishment of Human Rights Policy
On February 28, 2023, we established the Nippon Seiki Group Human Rights Policy after approval by us and the Management Committee.

Human rights policy
We, the Nippon Seiki Group ("we" or "us" hereinafter), will continue to respond to social demands to fulfill our responsibility to respect humanrights in order to achieve sustainable development with the global society in all our business activities. Here, we present our stance and thoughts
on human rights and promote our human rights initiatives
1.Commitment to respect for human rights
We recognize that our business activities can have an impact on the human rights of all stakeholders. We understand and support the “International Billof Human Rights” and the “ILO Declaration on Fundamental Principles and Rights at Work” as the minimum human rights principles and standards withwhich companies must comply. We will put them into practice in our business activities.
We will comply with the laws and regulations of the countries and regions in which we operate. If the laws and regulations of the country conflict withinternational human rights, we will pursue ways to respect internationally recognized human rights to the greatest extent possible.
2.Scope of application
This policy applies to all officers and employees of the NS Group (Nippon Seiki and its consolidated subsidiaries). We also expect all of our stakeholders
to understand this policy.
3.Human rights due diligence
We will establish and continuously implement processes to identify, prevent, and mitigate negative human rights impacts in order to fulfill our responsibility
to respect human rights with the aim of achieving a sustainable society.
4.Correction and remedy
When it becomes clear that we have caused or contributed to negative impacts on human rights, we will work to correct and remedy such impacts andprevent future activities that may cause or contribute to similar negative impacts. We will also promote the establishment of appropriate and effective
remedy mechanisms for human rights.
5.Education
We will continuously provide the necessary education and training to ensure that all officers and employees understand the importance of our humanrights policy and act accordingly.
6.Information disclosure
We will regularly disclose information on our efforts to respect human rights through our website and other means.
7.Dialogue and discussion with stakeholders
We will utilize outside expertise in implementing our respect for human rights initiatives, and will engage in ongoing dialogue and consultation with relevant
stakeholders.

Initiatives for Human Rights

Promotion of Human Rights Due Diligence

We will focus on the following human rights issues that may
arise in our business activities.

We will promote human rights due
diligence to respect human rights
through the Nippon Seiki Group's
value chain.

Priority themes[1] Prohibition of forced labor and child labor[2] Prohibition of discrimination and harassment

Photo: Human resource department of
Nippon Seiki
Mr. Sekiya, Mr. Jimbo, and Mr. Iida

[3] Respect and acceptance of diversity[4] Prohibition of shortages and unpaid wages

PDCA of Human Rights Due Diligence[5] Prohibition of excessive labor[6] Observance of occupational health and safety[7] Rights of migrant workers and foreign workers[8] Rights of indigenous and local people[9] Freedom of association[10] Right of privacy[11] Freedom of expression[12] Prohibition of Bribery and Illegal Benefits

43

Nippon Seiki Integrated Report

04.Action

Disclose to thestakeholders

01.Plan

04

Human
01
Rights Policy
03 Establishment

02.Do

03.Check

Monitoring efforts

Identification andevaluation ofnegative effect02

Prevention ofnegative effect01
Overview of Nippon Seiki Group

Health Management
Health Management Vision
In our group, it is essential that employees can take onchallenges with enthusiasm and satisfaction in order toachieve our management targets and Group Vision.
In the 2021-2023 Medium-Term Management Plan, We
are promoting Health management and work stylereforms.

Strategy Map for Health Management

Final healthrelated target
indicators

Nippon Seiki Group Health Declaration

・Improving work engagement
・Improving presenteeism
・Decreasing the number of employee with health problem
・Improvement of absenteeism

Indicators related
to changes in
employee awarenessand behavior

・Increase in internal applications
・Reduction in overall health risk
・Secondary screening rate:100%
・Improving health literacy

Indicators related tothe status of healthinvestment measures

・Increase in the number of trainees
・To reduce the amount of overtime work
・Promotion of proper eating

Health investment

・Healthcare training
・Introducing hourly paid leave・Cafeteria menu improvemen

03
ESG Initiatives

In order to realize our management philosophy,
it is essential that our employees and theirfamilies are healthy and happy both physicallyand mentally. We, the Nippon Seiki Group, willcontribute to the realization of a safe, secure,and sustainable society by actively supporting
our employees so that they can be healthy,
energetic, feel fulfilled in their work, and take onchallenges.

02

Employees are encouraged to take on new challenges
Continue to grow as a company with enthusiasm

Nippon Seiki Group's Value Creation Process

In health management
Health issues to be solved

Health Management Initiatives
Health Promotion Through Fun Events

We thoroughly manage those who have not yet undergone regular
medical checkups, and maintain a 100% medical checkup rate. Since
2022, we have been making efforts to create an environment where itis easy for women to receive cancer checkups and create
opportunities to receive them.

We plan a variety of events so that our employees can work on healthin a natural and enjoyable way. The company cafeteria provides foodeducation activities by providing menus in collaboration with local
high schools and food manufacturers. In addition, increasing physicalactivity and determining exercise habits.
We have walking events using smartphone apps to prepare for thearrival of new clothes, local communities Sports bicycle test rides andonline self-bodywork seminars are held during breaks.

2015

2022

Rate requiring detail examination

21.2 %

10.2 %

Rate of Secondary checkup

62.9 %

81.4 %

04
Financial Statements

Thorough Implementation of Health Checkups

Mental Health Initiatives
In addition to a monthly mental health consultation day by apsychiatrist, we have a full-time counselor who can feel free toconsult with us during working hours. In order to provide a wide rangeof primary physical and mental prevention, we are actively promotinginterviews that combine health guidance by public health nurses andmental health and career counseling by counselors.

Healthycollaboration menu

Health promotion event by bicycle

05
Company data

TOPIC
Health Management Awards
In recognition of our efforts and attitude toward health management, we were certified by the
Ministry of Economy, Trade and Industry as a "2023 Certified Health and Productivity
Management Organization (Large-Scale Corporate Division)." We applied for certification for
the first time in 2022, and will be certified for the second year in a row in 2023. In addition,
seven consolidated subsidiaries have been certified under the "Niigata Prefecture Healthand Productivity Management Promotion Company Master 2023" as well as the "2023
Certified Health and Productivity Management Organization Recognition Program."

Nippon Seiki Integrated Report

44Corporate Governance ( G)

Basic Corporate Governance Concept
We place importance on relationships of trust with our shareholders,
employees, customers, business partners, creditors, local
communities, and other stakeholders. In addition, in order to achievesustained growth and increase corporate value over the medium tolong term, we will provide appropriate information disclosure,including non-financial information, and support transparent, fair, andprompt decision-making by directors and others.
We recognize that realization of a corporate governance systemand constructive dialogue with shareholders are the most important
issues. We will continue to strive to achieve sustained growth andincrease corporate value over the medium to long term.

< Diagram of Corporate Governance and Internal Control System >General Meeting of Shareholders
Appointment / dismissal

Appointment / dismissal

Supervision / Audit
Six Directors"(Excluding Directors who are Audit Committee Members)"
Consultation

Audit Committee
5 directors who are members of the audit
committee (Of which, 4 outside directors)

Supervision
Reporting

ReportingInstruction

Compensation Committee

Selection/Removal
Delegation of authority to makebusiness execution decisions

Instruction

Audit Office"(concurrently serving as thesecretariat of the Audit, etc. Committee)"

ReportingInstruction

Instruction

Internal control
promotioncommittee

Instruction

Management
Committee

Reporting

ReportingInstruction

ReportingCompliance
Committee

Traffic Safety
Committee

Risk Management

Committee of Security
Trade Control

Safety and HealthCommittee

Importing & exporting
management committee

ReportingInstruction

Accounting
Audit

Reporting

Supervision / Audit

President andRepresentative Director

ReportingAccounting Auditor(EY Shin-Nippon Limited
Accounting Corporation)

ReportNominating Committee

ReportingAppointment / dismissal

Audit(Judgment on reasonableness)

Board of Directors

ReportingInstruction

Instruction

Quality Meeting
Cost MeetingTechnology Meeting
Productivity Meeting

General Managers
Meeting

ReportingOrdering Strategy
Meeting

ReportingInternal Audit

Instruction

Each division, department, and group company< Composition and main roles of each organization >Internal

Organization

Members

Main role45

Nippon Seiki Integrated Report

Board of Directors
ChairpersonAudit Committee
ChairpersonOutside Director (male)

Nomination Committee
ChairpersonOutside Directors (Female)Compensation Committee
Chairperson11 (7 internal, 4 external)

5 (1 internal, 4 external)

5 (2 internal, 3 external)

5 (2 internal, 3 external)■Basic management decision-making and oversight of businessexecution■Appointment of the representative
director■Decisions on important business
operations (including decisions on
matters entrusted to the president
and director)■Audit of directors’ duties /Supervision■Statement of Opinions on
Designation and Remuneration,etc. of Directors Who Are Not
Audit Committee Members■Deliberate on matters related tothe appointment and dismissal of
directors, and report to the Boardof Directors■Discussion of policy regarding
remuneration of directors andindividual remuneration amount
Report to the Board of Directors

01
Overview of Nippon Seiki Group

The Board of Directors EffectivenessEvaluation of the Board of Directors effectiveness≪Summary of evaluation results≫

Every year, we analyze and evaluate the effectiveness of the Board of
Directors as a whole by conducting a questionnaire survey todirectors who comprise the Board of Directors, reviewing the results
by independent outside directors, and reporting the results to theBoard of Directors.

As a result, the effectiveness of the entire Board of Directors in theprevious fiscal year.
Directors was confirmed that they have secured the effectivenessof the management of the Board of Directors, the monitoring functionof the Board of Directors, and the method of reporting to the Board of
Directors was also evaluated that improvements are made. On theother hand, they shared the need for more opportunities to discuss
medium-term issues. Based on these opinions, we will work to make
improvements to further improve the effectiveness of the Board of
Directors.

02
Nippon Seiki Group's Value Creation Process≪Evaluation process≫Election of Directors
Nomination policy for director candidates

03
ESG Initiatives

When nominating candidates for the Board of Directors, theNominations Committee, which is chaired by an independent outside
director and constituted by a majority of independent outside
directors, shall consider the experience, abilities, and achievementsof the Executive Officer in a comprehensive manner, and in the caseof re-appointed directors, the nomination shall be made after
considering the contribution of the re-appointed directors to theperformance during their term of office.
For nominating BOD candidates who are the audit committee, we
comprehensively consider knowledge, experience, abilities andpersonal achievements that enables to appropriately satisfy the rolerequired as an audit committee.

(1)Knowledge and experience as an expert to the formulation ofmanagement strategies and plans and the execution of important
operations reflecting in the decision-making process.
(2)Ensuring that conflicts of interest do not arise between the
Company and the Board of Directors.
(3)Reflecting the opinions of shareholders and other stakeholders.

04
Financial Statements

Nomination of candidates for director as audit committee members
Knowledge that enables us to appropriately fulfill the roles required of the Audit Committee when nominating candidates for the Board of Directors
who are members of our Audit, etc. Nominations are made after comprehensively considering knowledge, experience, abilities, and personal
achievements.

< Board Composition and Skill Matrix >Manufacturing
Research,
Corporate
and production development
management
technologies
and design
Internal◎◎

Keiichi Nagano

Internal○◎

Masatoshi Azuma

Internal○◎

Yuji Osaki

Internal○◎

Masahiro YoshiharaInternal◎◎

Kazuhiko Murayama

Internal◎

Tatsuya Nagai

Internal

Etsuo Saiki

External

Eiko Tomiyama

External

Kiyoshi Suzuki

External

Toshihiko Enomoto

External

Audit andSupervisory
Committee
Audit andSupervisory
Committee
Audit andSupervisory
Committee
Audit andSupervisory
Committee
Audit andSupervisory
Committee

Accounting
and financial
taxation

Corporate
Governance

○

○

◎

ESG
Sustainability

◯
◎

○

Human
Resources
Development

◎

○

◎

○

○

◎

○

◯

○

◎

○

Globalexperience

○

○

◎

○

◎

○

IT DX

05
Company data

Koichi Sato

Marketing
sales

○

◯

◎
◎
◎

◎
◎

◯

◎

○

◎

○
◎

◎

◎

※Items of skill recognized as having abundant knowledge and expertise are marked with ◎.
※Based on work experience and current specialized knowledge, Items of skill recognized as to have knowledge and expertise are marked with 〇.

Nippon Seiki Integrated Report

46Corporate Governance ( G)

Directors' Remuneration
Total amount by type of remuneration, etc. (million yen)

Officer classification

Total remuneration,etc.
(million yen)Fixed remuneration

Variable remuneration
Incentive fee

Stock-based
compensation

Basic fee

Performancelinked bonus

Stock compensationtype stock options

Number of officers
targeted

Director(Excluding Audit Committee Members
and Outside Directors)

197

115

71

9

8

Audit committee members(excluding outside directors)

40

40

-

-

2

External Director

32

32

-

-

4

Risk Management
Risk Management System
We have established a Risk Management Committee to reduceand respond to various risks in our business operations. The Risk
Management Committee consists of the BCP Subcommittee, theRisk Management
Committee

BCP subcommittee
Disaster Prevention
Subcommittee

Disaster Prevention Subcommittee, and the Confidential Information Management Subcommittee. The BCP Subcommittee and theDisaster Prevention Subcommittee formulate business continuity

Confidentiality Control
Subcommittee

plans and reduce disaster risks, and the Confidentiality Management Subcommittee implements information security measures.

Basic Concept of BCP

Information security management

In recent years, earthquakes, fires, explosions, wind, snow, and flood

Our group is working on safe information management globally by

world, and pandemic (a new type of coronavirus) has spread through-and continuously maintaining and improving information security,

damage have occurred one after another in countries around theout the world. Since it is expected to have a significant impact on themaintenance of the supply chain, it is necessary to determine what

measures are being taken to deal with the risks and bottlenecks ofstopping business activities. It is also necessary to formulate andimplement a business continuity strategy that can be implemented inorder to avoid a "loss of management" in the event of an accident.

In order to prevent the suspension of business operations due todisasters such as fires, earthquakes, wind, snow, and floods, andinfectious diseases, the Group is narrowing down importantbuilding an ISMS (Information Security Management System) system
including employee education. In particular, we consider customer
information, sales information, technical information, personal

information, etc. to be important information, and take appropriate

security measures to protect this information from risks such asleakage, loss, destruction, and falsification.

In terms of IT security, in response to the recent increase in the riskof cyber attacks, we have introduced stronger defense mechanisms
such as EDR across the group.

In addition to internal systems, we maintain and improve security

operations and promoting the formulation of business continuity plans.

standards by obtaining information security certification in Japan and

Director takes the lead of operation meetings in deliberating measurescalled TISAX, and complying with Japan's automobile industry

In the event of a disaster, accident, or incident, Representative

to minimize losses, the possibility of business continuity, and the riskof delivery to customers.

Europe established by the German Automobile Industry Association
cybersecurity guidelines.

In addition, we are building and operating a system globally thatcomplies with the standardization of measures (ISO/SAE 21434) in

response to the growing awareness of product safety in the automobile industry, and are ensuring that our products have cybersecurity
measures in place.

47

Nippon Seiki Integrated Report

01
Overview of Nippon Seiki GroupIntellectual Property
Basic Concept on Intellectual Property
We promote intellectual property activities based on our basic policies

distribute our products and to our competitors.

strengthening the utilization of rights.

property risks by conducting patent research in accordance with theof securing beneficial rights, ensuring intellectual property safety, andTo secure beneficial rights, we seek and evaluate patentabledevelopment and design phases.

the creation of a foundation to advance business superiority. In

promoting verification of other companies' products. When the use of

acquisition of rights corresponding to the countries in which we

made.

addition, to support the acquisition of orders, we will promote the02

As part of our efforts to strengthen the use of rights, we are

Nippon Seiki Group's Value Creation Process

inventions, acquire rights from highly valued inventions, and promote"Ensuring Intellectual Property Safety" manages intellectual

our rights is confirmed, appropriate use of rights such as licenses isCompliance
Basic stance on compliance (compliance declaration)
The Nippon Seiki Group strives to be a corporate group that is evenestablishing a compliance code of conduct and having each director

management, complying with laws and ethics as a responsible

We will also contribute to the prosperity of society by providing

more trusted by society by placing importance on compliance in its

We aim to become a corporate group trusted by society by

03
ESG Initiatives

member of society, and practicing sound corporate activities.

and each employee act in accordance with the code of conduct.
high-value products and services that satisfy customers.

Compliance Promotion System
We

have

establishedaCompliance

Committee

under

the

The committee deliberates on important issues related to violations

Representative Director to promote compliance, and appoint aof the law and promotes continuous improvement.

Officer. The Compliance Committee is responsible for establishing a

Officers analyze compliance risks specific to each business divisionand conducting awareness-raising activities.

these risks.

Director or an executive officer with an official title as the Compliancecompany-wide compliance system, identifying problems and issues,

In addition, the Directors in charge of operations and Executive

and take countermeasures to continuously improve the quality of04
Financial Statements

Compliance Training and Education
We have included the Compliance Declaration, the Internal Reporting

addition, we are working to prevent recurrence of compliancecarried by all employees, and are working to educate employees

the Compliance Committee and the General Affairs Manager of each

System, and the Compliance Code of Conduct in the TQM notebook
about the meaning of compliance and to publicize it.

Based on the annual activity plan of the Compliance Committee,

incidents occurring at Group companies by sharing information withcompany.

In addition, we are working to raise awareness of legal compliancecompliance training for new employees, compliance training forby holding antitrust law training for sales departments and employeesmaterials (quarterly).

employees to prevent insider trading.

managers by corporate lawyers, and distribution of educational

These measures are implemented by all group companies. In

on overseas assignments, and holding annual training for all

05
Company data

Whistleblowing System
In accordance with the Whistleblower Protection Act, we haveobligations on those in charge.

employees, including affiliated companies, who are aware ofinternal whistleblower hotline. The Compliance Committee mandates

protects whistleblowers, and implements appropriate investigations,and prohibits the involvement of interested parties in cases. In thisestablished an internal reporting system that accepts reports from
improprieties, at internal and external contact points (attorneys),corrections, and preventive measures.

We ensure that whistleblowers are fully protected by allowing

whistleblowers to report anonymously and by imposing confidentiality

In addition, the Compliance Committee is responsible for thethe submission of reports on certain serious cases to outside directors,
way, the fairness and independence of the whistleblower hotline isensured.

Nippon Seiki Integrated Report48

Interviewing outside directors

TALK SESSION
About the increase of thecorporate value of Nippon Seiki

Outside director

Etsuo Saiki

Outside director

Eiko Tomiyama

A talk session was held between Mr. Saiki and Ms. Tomiyama, both of whom are our outside directors,
and the session was from a higher viewpoint of their professional specialties.

Q1

Based upon your own professional
specialties, what are the roles andexpectations as our outside directors?

Saiki: I recognize that the expected role from my
specialty as being a lawyer is to give opinions on therationality of the business judgements by directors,
namely, whether the business judgements in its
contents and procedures have been conducted appropriately, or if there are any breaches of the duty ofcare. Also, whether corporate governance has been
conducted appropriately from the viewpoints of the
stakeholders such as shareholders, customers,
employees, and local societies.
Specifically, whether the business judgements
have been violated by the laws associated with the
Law of Corporation or antitrust law, or contravened
against the interpretation of the supreme court's
judgements etc. Among them, issues such as
overtime work, harassment, and mental health seemto be getting more important in respect to compliance.
As for me personally, I persuade myself to makestatements without reading between the lines andsurmising others, and to swallow my pride at beingtrue to myself.
Tomiyama: Since my specialty is global marketing, I
see things from a marketing viewpoint and think how
to create valuable things and make them realize(deliver, exchange) by transferring the values. I think it
is important to contribute to the formulation of medium
to long term management strategies. I recognize thatmy supervision and making opinions are expected forall stakeholders if such strategies are for raising the49

Nippon Seiki Integrated Report

corporate values in the medium and long term.
The importance of corporate management having
sustainability for future generations has risen thesedays. Therefore I, who stands independently from thebusiness executor, am expected to give mystatements to the managers without hesitation bytaking society, economy, and risk management into
consideration from such a new vision.

Q2

Over five years have passed since bothof you were appointed as outside
directors. What do you think are thechanges since the appointment?

Saiki: I think that discussions at the board of directors’
meetings have become more vitalized. One reason isthat the board of directors' meeting has decided to
discuss issues that need to be resolved as deliberations. Besides the agendas for decisions and reports,
in order to dig deeper into issues that need to be

01
Overview of Nippon Seiki Group

report them to the board of directors. The majority ofthe members of both committees shall be outside
directors, and the committee chairpersons shall beoutside directors. By these rules, the system has been
set up to effectively fulfill their functions. We recognize
this as one of the important roles of outside directors.

Q3
Q3

What is needed to connect sustainable
initiatives to long-term development?

02
Nippon Seiki Group's Value Creation Process

Tomiyama: A trend is emerging to incorporate knowledge from outside the company for encouraging
employees' awareness reform and utilize the knowledge in formulating management strategies. For
example, I was asked and had the opportunity to givea lecture to employees about the SDGs and a lecture
to executives about purpose management. In particular, the SDGs lecture was attended by more employees than I expected (450 people, including online
attendees). I was surprised by the level of interest.
I also think women are now playing an active role invarious situations. The number of women in management positions has increased over the past few years.
Women are also leading initiatives such as developing
healthy menus for lunch as part of our health management measures, collaborative projects utilized withfood products from local companies such as Kameda
Seika and Ichimasa Kamaboko (plant-based
food/alternative meat, Next Seafood), and initiatives toincrease the number of steps taken each day to lead ahealthy life. I think that among the initiatives thechildcare support company “Kurumin” is a very goodmeasure that is designed to create a comfortableworkplace for employees.
Saiki: It is important to prepare an environment where
diverse human resources, including women, can play
an active role as we live in an era of diversity. In orderto prepare the environment for the active participationof diverse human resources, we need to disclose
information such as the proportion of female workers,
the rate of men taking childcare leave, and the numberof people who are eligible for and those who tookchildcare leave by gender. In addition to disclosing
information, we will further enhance this environment
and ensure that our company is a place where womencan play an active role. It is also important to strongly
emphasize that our workplace is one that allows
employees to balance childcare and nursing care. In
addition, with the LGBT Understanding Promotion Act
which was effected in June 2023, we are required toprepare a workplace environment where LGBTQ
people feel easy to work in. It is said that the proportion of LGBTQ people is around 8.9%, or one in 11
people, so I think we need to consider various systems
from a diversity perspective.

03
ESG Initiatives

04
Financial Statements

05
Company data

resolved over the medium and long term, it has been
decided that these issues will be raised and discussed
at the board of directors’ meeting as “matters fordeliberation''.
Now, the explanations at the board of directors’
meetings are easier to understand. In the current
economic environment, where events are occurring
one after another, such as the coronavirus pandemic,
semiconductor shortages, and Russia's invasion of
Ukraine, management is becoming more difficult thanever before. From the beginning of his appointment,
President Sato has consistently given his messages
with simple words “become more muscular” and“produce more output with less cost, expense, andtime” for the transformation of management structure.
One of the concrete measures is that the explanationsof resolutions at the meetings have become “simple
and to the point” more than ever. Also, various
management indicators have become more comprehensive and easier to understand.
Tomiyama: It's definitely becoming vitalized. The
evaluation of the effectiveness of the directors provided opinions concerning the selection and narrowing ofagendas to be discussed by the board of directors’
meeting, were discussed by the executive side andthe outside directors, and a new direction was derived.
Outside directors discuss what agendas should be
brought up, and exchange opinions regarding
requests with the president and others. They also
work together with executive officers to create theagendas for the board of directors' meeting. I believethat such an initiative has never been done before hebecame president.
And the functions related to the board of directors’
meeting have evolved, and a nominating committee
and remuneration committee have been established,and proposals have been put forward by thesecommittees.
Saiki: A voluntary remuneration committee was established the year before last. This is to ensure transparency and fairness in the company’s decision-making,and to create objective and transparent procedures sothat remuneration functions as a healthy incentive forsustainable growth. The committee will examine thepolicy for determining remuneration of directors(excluding directors who are audit and supervisorycommittee members) and the appropriateness of
individual remuneration amounts and will report themto the board of directors. A voluntary nominationcommittee was also established at the same time. This
is to ensure transparency, fairness, and objectivity inthe selection and dismissal of directors (excluding
directors who are audit and supervisory committee
members). The committee will create a policy fornominating directors, achieve an appropriate composition of the board of directors’ meeting, and generatea skills matrix for the board of directors’ meeting, andNext Page

Nippon Seiki Integrated Report50Interviewing outside directors

Q4

How about the communication ability
as a company?

Tomiyama: Since our company is basically a B-to-B
company, we had not given much thought to public
relations in the past. To spread awareness of ourvarious initiatives, I gave advice that “It’s better tofocus on public relations.” As a result, the organizationof public relations was created. Regarding the news,
exposure to media such as newspapers and television
has increased significantly. I think it's great that thecompany immediately put my advice into action.
One of the goals of promoting sustainability is tobecome a company chosen by stakeholders. We cancontinue our business medium to long term thanks tothe stakeholders such as investors, employees,
customers, business partners, and the local community. In order to be chosen, we must obtain empathy andtrust from them by disseminating information. To doso, I think it is better to disclose and publicize theactivities and the achievements of the company
together with the background. I believe that stakeholders choose us because they understand that weare a company that contributes to society through ourbusiness, and by being so, we will become a company
that is needed by society.
Saiki: Starting in 2021, we have published an"Integrated Report" which has become the standard
for global companies. The report not only contains
financial information but includes non-financial
information such as ESG initiatives and actions aimed
at promoting and resolving social issues. We provide
explanations to stakeholders about future corporate
value creation, and simultaneously, we try to meettheir expectations.

Q5

On the other hand, please let me hear
any arising issues.

Saiki: I think that the future perspective of the Head
Up Display business should be more materialized. In
the Head Up Display business, which is positioned asa core business, the company should strive to further
improve its profitability, as well as consider and implement specific medium to long term measures.
Tomiyama: I also look forward to the further growth of
the Head Up Display business. I think the enhancement of tackling marketing is important for it. I don't
think the supply values of Head Up Display have been
fully transmitted to automakers and users yet. Price isalso a means of value transformation. I don't think car
manufacturers or general users around the world
recognize the fact that “Drivers don't have to movetheir eyes by utilizing this system while driving, whichleads to safer driving.” I think we need to do more to51

Nippon Seiki Integrated Reportraise awareness of how our Head Up Display cancontribute to solving the social issue of the highnumber of traffic accidents caused by distracted
driving.
In order to realize sustainability management, it isimportant to realize and promote Sustainability Transformation (SX). In short, the goal of SX is “the more wesell and expand our products and services, the moresociety will improve.” I think we need to make more
people aware that the more Head Up Display are sold,the more traffic accidents will decrease, and society
will improve. The value of our company's existence is“providing peace of mind, safety, and excitement to all
people.'' Society's need to reduce traffic accidents(problem solving) and the value of a company's
existence in pursuit of it are synchronized. Therefore, I
think we need to be more aware that our company
develops products and services that reduce traffic
accidents and improve society.
Saiki: Always with a long-term perspective, sustainable growth requires the development and cultivationof new businesses for the next generation. In particular, I think it would be a good idea to swiftly formulate
and implement concrete measures, such as launchinga new business project team which respects the
freedom, flexibility, and fresh ideas of younger generation employees. It may be possible to reflect changes
in the values, consciousness, and consumer behaviorof Millennials and Generation Z at the basis of theideas of the younger generation. I do think this point isquite important for the development of new businesses.
Tomiyama: If that happens, it will be an exciting
project.
Saiki: Responding to climate change is also a major
issue. From an era when "maximizing shareholder
returns" was the top priority, we have now entered an
era where social issues are such as increasing
concerns about climate change and sustainability, andthe SDGs led by the United Nations. We urgently need01

achieve long-term growth. I believe that we will enteran era in which stakeholder capitalism will be emphasized even more. A company must consider the profits
of their stakeholders (i.e., shareholders, employees,
clients, customers, and local society), and consider
the stakeholders to be entities that create value
together with the company. Among them, one of themost important things for a corporation to consider is“human capital”. Investing in human resources, which
are the source of value creation, is for increasing final
results. I think it would be a good idea that the plan
includes the following: the optimization of the humanresources portfolio in response to changes in theenvironment, management strategy, diversity ofknowledge and experience, reskilling, employee
engagement, and so forth.
Saiki: It is indeed persuasive when you, Professor
Tomiyama, who teaches at a university, say so. I also
believe that investing in human resources is important.
As they say, “What one likes, one will do well.” I
believe that the employees joined the company byhaving interest in manufacturing (or Monozukuri) andhaving a “will” that is “for society, for people”. To
support the “will” and make it realized, I think we haveto fundamentally reconsider the personnel system. We
need to review how to foster job satisfaction andmaximize the performance of current employees,
including new graduates, mid-career hires, rehires
after retirement, and fixed-short-term employees. It isalso necessary to take measures to address social
trends such as the improvement of the retention rate ofyoung employees and labor shortage issues due toretirement of elderly employees.
Tomiyama: We, the members of the outside directors,
will deepen our understanding of the Nippon Seiki
Group, including its corporate culture, and be
conscious of our role in providing fresh awareness tothe management team at the same time. We willcontinue to do our best to fulfill our duties in accordance with the mandate from stakeholders in order toformulate the next medium-term management plan
2024-2026, and further realize our vision for 2030.

02
Nippon Seiki Group's Value Creation Process

03
ESG Initiatives

04
Financial Statements

Q6

Overview of Nippon Seiki Groupto resolve these issues. Particularly, as a company inthe automobile industry, responding to carbon neutrality is important. It is important to connect the current
various measures which have already been formulated
into a more effective action plan, expand and develop
them by adding new measures. We have started
disclosing information based on Recommendations of
the Task Force on Climate-related Financial Disclosures (TCFD) as part of our efforts to achieve ourcarbon neutrality goal, but we need to have further
detailed discussions on this.
Tomiyama: This is related to the request made by the
Tokyo Stock Exchange, Inc., but discussions regarding
our capital policy are also increasing. From now on, it
is necessary to make plans for capital policy andmanagement strategy to be an attractive company forinvestors and shareholders.
Saiki: I agree with you. Up until now, we have been
actively working on business and capital alliances,including an alliance with Alps Alpine and making
Kyoei Engineering a subsidiary, as a strategic use of
cash. The board of directors’ meeting also discusses
matters including capital policy. I believe that moredetailed explanations are required in order to gain theunderstanding of shareholders.
Tomiyama: In future discussions, I also believe it will
be necessary to allocate more time to management
strategy, develop and utilize human resources, andpresent a purpose to stakeholders including employees as to where the company is headed.
Saiki: Concerns about climate change and sustainability are increasing, and we have entered an era
where solving social issues such as the SDGs areurgent matters. Along with these consciousness
changes in society as a whole, companies can nolonger rely solely on economic rationality, but are now
required to create balanced value with ESG (Environment, Society, Governance) in mind. Economic
rationality has become a means rather than a purpose,and it is necessary to have a higher-order way of
thinking or a concept setting to integrate them. This is,
I think, the reason why the purpose management has
been paid attention to recently, so we will deepen our
discussion on it at the board of directors’ meeting.

Toward formulating a new medium-term
management plan05
Company data

Tomiyama: I think we should think of the coming three
years with back-casting thought by foreseeing thefuture of the next five and ten years. As an outside
director, I want to review the business to focus on withthe long-term viewpoint that clarifies what we should
aim for in ten years. I believe that improving employee
engagement and HR strategies are also necessary to

Nippon Seiki Integrated Report52