SUSTAINABILITY REPORT 2013

MAKING A DIFFERENCETO OUR WORLD THROUGHGLASS TECHNOLOGYTHE NSG GROUP IS ONE OF THE WORLD’SLARGEST MANUFACTURERS OF GLASS ANDGLAZING PRODUCTS FOR THE ARCHITECTURAL,
AUTOMOTIVE AND TECHNICAL GLASS SECTORS.
With around 28,000 permanent employees,
we have principal operations in 30 countries
and sales in over 130.
Just over a third of our sales are in Europe,
around a third in Japan and the rest primarily
in North and South America, South East Asia
and China.
Architectural — supplies glass for buildings
and solar energy applications.
Automotive — serves the original equipment,
aftermarket replacement and specialized
transport glazing markets.
Technical Glass — products include very thinglass for displays, lenses and light guides
for printers, and glass fiber, used in battery
separators and engine timing belts.

Cover picture
The NoveKino cinema building in Siedlce, Poland features
Pilkington Insulight™ Sun insulating glass units fitted with
Pilkington Suncool™ 66/33, Pilkington Suncool™ 70/40 and
Pilkington Optilam™ 6,4
Photo: Wojciech Kryński.

CONTENTS

During 2013, we made further progress in embedding
the principles of sustainable development within
our company.

About us

As members of the UN Global Compact, we consider
its 10 principles to be a natural extension of our CodeOf Conduct, which defines our commitment to socialand environmental responsibility.

Progress towards our sustainability targets is coveredin this report and on our website. We report inaccordance with the Global Reporting Initiative (GRI)
and have self-assessed our reporting level at ‘B’ forthe period covered by this year’s Report.

Good governanceOur approach to sustainability 
Corporate governance

10
14

Environmental responsibility

Environmental
responsibility

Additional information, charts and tables covering our
performance are shown in the Sustainability sectionof our website, www.nsg.com/sustainability.

02
04
06
07

Good governanceThe benefits of our profit improvement and efficiency
programs are beginning to be reflected in our results
and reduced energy consumption.

About usBusiness sectors
President and CEO’s introduction
Our sustainability targets

About us

ABOUT THIS REPORT

Environmental policies
and management 
18
Energy usage 
20Minimizing environmental impact 
22
Glass used in: Buildings, Solar Energy,
Vehicles and Technical products 
24–31

Employees 
Health and safety
Customers Suppliers Communities Socialresponsibility

Social responsibility
34
36
38
40
42

Approach to reporting Further information 

Basis of reporting

Basis of reporting
44
45

NSG Group Sustainability Report 2013

01

ABOUT US
We are an innovative, forward-thinking glass
technology company built on a foundation of many
years of expertise. Our global team is committed todeveloping and manufacturing products that meetthe needs of current customers, and open up newmarkets through continuous research, development
and innovation.
We are committed to sustainable development.
Working safely and ethically, we supply high-quality
glass products that make an important contribution
to improving living standards, to people’s safety andwellbeing and to energy conservation and generation.
Glass manufacture is energy-intensive, but our
products make a major contribution to energy
conservation and power generation. We are working
hard to reduce our waste, to minimize embodied
energy and carbon in our manufacturing and to
improve the energy-saving capabilities of our
products during their life cycle.

02

NSG Group Sustainability Report 2013

04
06
07

About us

Business sectors
President and CEO’s introduction
Our sustainability targets

Good governance

Automotive

Technical Glass

A leader in architectural glazing
and solar energy products.

Supplying every major
manufacturer in the world.

World leader in thin display glassand optical devices.

Environmental
responsibility

Architectural

Socialresponsibility
Basis of reporting

Keiji Yoshikawa
President and CEO, NSG GroupNSG Group Sustainability Report 2013

03

BUSINESS SECTORSWE OPERATE IN THREE
BUSINESS SECTORS:ARCHITECTURAL, SUPPLYINGGLASS FOR THE WORLD’S
BUILDINGS AND FOR SOLAR
ENERGY APPLICATIONS;AUTOMOTIVE, PRODUCINGGLASS AND GLAZING SYSTEMSFOR VEHICLES WORLDWIDE;AND TECHNICAL GLASS,OPERATING IN THE DISPLAY,
OFFICE EQUIPMENT AND
GLASS FIBER SECTORS.

Architectural
A leader in float glass technology and coatings

Main products• Thermal insulation glass• Fire protection glazing• Solar control glass• Glass for solar energy• Noise control glazing•	Safety and security
glazing• Self-cleaning glass

9,100
Employees in 21 countries

Automotive
Supplying every major vehicle manufacturer in the world

Main products• Solar control glass• Glazing systems• Laminated glass• Toughened glass• Security glazing• Lightweight glazing• Aesthetic glazings

14,400
Employees in 16 countries

Technical GlassWorld leader in thin display glass and optical devices foroffice machinery

Main products• Thin LCD glass• Copier/printer lenses• Glass cord

• Battery separators• GLASFLAKE• METASHINE®

3,200
Employees in five countries

04

NSG Group Sustainability Report 2013

Sales by region

Making windows better at saving energy

Financial year 2013
38%
33%
9%
20%

38%
33%
9%
20%

Our thermal insulation products combine unrivalled thermal
insulation with high light transmittance and lower reflectancefor a more neutral appearance. They help to restrict theamount of heat loss from buildings, offering designers achoice of insulation levels and aesthetic options.

About usEuropeEuropeJapan
Japan
North America
North America
Rest of World
Rest of World

42

Good governance%Contribution to Group sales*
Proportion of Group CO2 emissions 62 percent

Developing value-added vehicle glazing

Financial year 2013

We play a leading role in the development of value-added
vehicle glazing, delivering greater functionality to address
sustainability issues, such as CO2 reduction, solar control,
lighter and more aerodynamic glazing, vehicle end-of-life
issues and recycling.

EuropeEuropeJapan
Japan
North America
North America
Rest of World
Rest of World

43%
19%
23%
15%

43%
19%
23%
15%

Environmental
responsibility

Sales by region

47

Socialresponsibility%

Contribution to Group sales*
Proportion of Group CO2 emissions 33 percent

Basis of reporting

Sales by region

Supplying ultra-thin glass for small
LCD applications

Financial year 2013
EuropeEuropeJapan
Japan
North America
North America
Rest of World
Rest of World

35%
24%
33%
8%

35%
24%
33%
8%

Our Ultra Fine Flat Glass products are used in the growing
touch panel market, particularly in mobile phones and tablets
and now expanding into use in vehicles.

11%

Contribution to Group sales*
Proportion of Group CO2 emissions 5 percent*All figures for financial year ending 31 March 2013.

NSG Group Sustainability Report 2013

05

PRESIDENT AND CEO’S
INTRODUCTION“The NSG Group is committed to sustainability andcontinues to support the UN Global Compact’s Initiativeand Principles. Our strategy and policies underline theunique contribution our products can make to addressing
climate change, and the challenges we face in improving
our own energy usage and resource management.”
Our products are designed to make an important contribution
to improving living standards, to people’s safety and wellbeing,
and to the conservation of energy worldwide.
Despite challenging market conditions and significant
organizational restructuring during 2013, we have made continued
progress on our sustainability agenda. We aim to balance theneeds of all our stakeholders, manage the environmental impactof our activities, develop our people, encourage innovation inprocesses and products, work in harmony with the communities
in which we operate, and encourage our customers, contractors
and suppliers to do the same.
We are also committed to improving our own energy usage andresource management. We aim to make a positive environmental
contribution to the value chains in which we operate, while
benefiting from the international demand for products that help
save and generate energy.
Keiji Yoshikawa
President and CEO, NSG Group06

NSG Group Sustainability Report 2013

OUR SUSTAINABILITY TARGETS
Targets

We aim to achieve a sustainable operating
profit margin in excess of 10 percent.

EnergyWork in this area is the subject of
a number of R&D programs in all
three business lines.

The eight key products selected are as follows:
Architectural• Clear float glass• On-line CVD coated Solar TEC glass for the thin film PV market•	Off-line coated Low-E glass for the construction market

Good governance

Report specific direct energy
usage for eight key products,
across all three business lines, anddemonstrate improvement by 2015.

As at March 2013, the Group’s operating profit margin (before amortization
arising on the acquisition of Pilkington) was 1.7 percent.

About us

Economic

Current position and commentary

Automotive• Solar green absorbing glass side glazing• IR reflective glass laminated windshield• Galaxsee privacy glass rear sidelight

Technical Glass• NSG Glasscord® used in engine timing belts•	NSG Selfoc Lens Array for use in office machinery

Data for the selected products is available in the Sustainability section of www.nsg.com.

Report energy payback/life cycle
analysis for eight key products,
across all three business lines, anddemonstrate improvement by 2015.

The eight key products selected are as follows:
Architectural• A thin film PV module• A double-glazed unit containing our off-line coated low-e product• A double-glazed unit containing our off-line coated Solar Control product
Automotive• Car windshield• Car sidelight• Car roof light

Socialresponsibility

Good progress made with a numberof R&D programs ongoing. A forward
look at future/modified products
and their impact on improved CO2
payback has been initiated.

Environmental
responsibility

Product development

Technical Glass• NSG Glasscord® for use in engine timing belts• NSG Selfoc Lens Array for use in office machinery

Data for the selected products is available in the Sustainability section of www.nsg.com.
The SIR at the end of FY2013 was 0.38 which represents an 72 percent improvement.

Significant Injury Rate 80 percent reduction
from 2007 base of 1.38 to 0.3 (10 SI
per month, compared to baseline of 50).

Our FY2014 target is a further 20 percent reduction on FY2013 to provide a safer
place of work for our employees.

Supply chain

To date, we have directly communicated our Supplier Code of Conduct to 12,000 of our
suppliers. In parallel, we have started audits of suppliers to validate these declarations
to meet our objective that 50 percent of key suppliers will be audited by 2015. Good
progress is being made with formal acceptance of our Code and over 70 of our key
suppliers now audited.

100 percent of suppliers to haveaccepted our Supplier Code of Conduct(SCoC), with 50 percent of key suppliers
audited against SCoC by 2015.

Recycling and waste
Reduce the waste we send to landfill
by 50 percent, from a 2007 base (i.e. fromapproximately 46 kt to 23 kt by 2015).

PeopleAll employees to have a training anddevelopment review annually, with a target
compliance level of 90 percent by 2015.

Basis of reporting

Health and safety

Our waste to landfill figure for 2012 was 22 kt. This is a 53 percent reduction
on our baseline.
Further waste reduction activities are ongoing to reduce the quantity of waste
generated and to increase our recycling rate.
78 percent of employees were covered by the annual training and development
review process in 2012.
In order to foster the process of cultural change across the whole organizationin the area of health and safety, it was required that all managers were set
personal safety objectives in the 2012 process.

NSG Group Sustainability Report 2013

07

GOOD GOVERNANCE
Our NSG Code of Conduct reflects our values andprinciples. It ensures that we carry out activities ina safe, professional, legal and ethical manner andin a way that demonstrates sustainable development.
We aim to maintain high levels of accountability
and transparency, disclosing business goals andguidelines that demonstrate a responsible
management approach to all our stakeholders.

08

NSG Group Sustainability Report 2013

About us

10
14Good governanceOur approach to sustainability 
Corporate governanceGlobal Compliance Culture Assessment

Environmental
responsibility

73%

The Way we do Business
Our Code of Conduct defines the
behavior we expect across all areasof our business.

Response rate from 1,232 employees
Bribery/Corruption and Competition Law

Socialresponsibility

65%

NSG Group’s non-shop floor workforce required
to complete annual training
Basis of reporting

Environmental Management System

ISO 14001
70 percent of our business by turnover is certified

Doing the Right Thing? It’s Easy
The Reporting of Concerns procedureallows employees to report violations.

NSG Group Sustainability Report 2013

09

OUR APPROACH TO SUSTAINABILITYGLASS HAS A MAJOR PART TO
PLAY IN SOCIETY’S EFFORTS
TO REDUCE GREENHOUSE GASEMISSIONS AND TO MITIGATE THE
EFFECTS OF CLIMATE CHANGE. WE
AIM TO BE THE GLOBAL LEADER ININNOVATIVE HIGH-PERFORMANCEGLASS AND GLAZING SOLUTIONS,CONTRIBUTING TO ENERGYCONSERVATION AND GENERATION,
WORKING SAFELY AND ETHICALLY.
“The past year has been a challenging one for the
NSG Group. Despite difficult markets around the worldand significant internal restructuring and cost reduction
programs, we have maintained our commitment to thecore principles embodied in our sustainability policies.”
We continue to train and develop our people while keeping themsafe from workplace injuries. We continue to reduce the amountof energy we consume and the amount of waste we produce.
We develop new products and processes that help our customers
reach sustainability targets. Finally, we will encourage ourcustomers, contractors and suppliers to take similar steps.
Shiro Kobayashi
Director of Sustainability

10

NSG Group Sustainability Report 2013

We work with communities and governments in the areas we
operate to ensure compliance and forward-looking thinking. We
do this directly and through our membership of trade associations,standards bodies and other organizations. We also work to
influence legislation, particularly in the areas of energy
conservation and emission regulation.

The overriding basis of the Code is that we will carry out these
activities in a safe, professional, legal and ethical manner andin a way that demonstrates corporate social responsibility andpromotes sustainability. Wherever possible, the Code defines afair and common sense approach to doing business, with someelements dictated by strict legal requirements.

Our Group policies and procedures…

Good governance

Glass making is an energy-intensive process. Significant energy
is consumed in obtaining and melting the raw materials forthe manufacture of glass. Despite this necessary resource
consumption our products can and do make a tremendously
positive contribution to climate change efforts and to the qualityof living and working environments.

Our Code of Conduct reflects our values and principles,particularly the emphasis on safety, taking personal
ownership for actions and communicating with
openness and involvement.

About us

Our sustainability agenda is integral to decreasing our costs andincreasing our market opportunities. Over the past year, we haverenewed our efforts in areas such as energy saving and waste
reduction; both of which can have a significant and swift impact
on the business performance of the Group. Glass markets are
extremely competitive around the world and it is imperative that
we can meet the ever-increasing demands of customers.

…detail the procedures everyone in the Group must follow
to achieve sound governance, tight controls, risk management
and adherence to legal, ethical and sustainable principles.

Environmental
responsibility

We have communicated our approach to sustainability to ouremployees around the world and have solicited their participationin this important work. Our leadership team remains actively
committed to our High Risk Activity reduction safety program.
In 2013, we repeated the successful annual NSG Group safety
day to reinforce this commitment.

Socialresponsibility

We have communicated our Supplier Code of Conduct to our
suppliers and have conducted audits to verify the declarations
we have received. Our products require raw materials andenergy that must be extracted from the Earth. Therefore wetake seriously our responsibility to protect the natural habitatsof the affected regions.

Our vision…
…defines our determination to make a positive contribution
to sustainability, through our expertise in glass technology.

Making a difference to our world throughglass technology.

…describes how we will achieve our business objective,
contributing to energy conservation and generationby producing and supplying innovative products in asustainable manner.

Our customers
To be their preferred supplier for glass products andrelated services.
Our employees
To be their preferred place to work.
Our shareholders
To be their preferred long-term investment.

To be the global leader in innovative high-performance glass
and glazing solutions, contributing to energy conservation andgeneration, working safely and ethically.

Our suppliers
To build strong mutually beneficial relationships basedon trust, co-operation, innovation and sustainability.

Our values…

Our communities
To be a good neighbor, wherever we operate.

…define the behaviors we value and intend to follow in all
our dealings with our stakeholders.

Basis of reporting

Our mission…

Our stakeholders
We aim to be judged as best in class by:

Our Code of Conduct…
…sets out the standards we expect of everyone working
in the NSG Group.

NSG Group Sustainability Report 2013

11

OUR APPROACH TO SUSTAINABILITY CONTINUED
Our management approach

We believe we have a responsibility to be a good stewardof the environment and a responsible corporate citizen in thecommunities in which we operate. We monitor carefully the
impact of our operations on the local communities in which we
operate. We work hard to minimize potentially negative effects,
such as pollution, noise and traffic. We operate programs thatassess and manage the impacts of our operations oncommunities, in entry, operational and exit stages.

Our Group Environmental Policy defines our approach on
environmental matters. In particular, it outlines our managementof both current activity and the legacy of past and inherited
liability. It reinforces our commitment to using good scientificprinciples to try to predict and assess our impacts on theenvironment.

In addition to our business investments, helping to sustain local
operations, we also invest in the communities in which we operate.
We aim to help through direct cash donations to charities andother projects or through in-kind resources — to improve thehealth of the community or tackle specific social issues.

We take our environmental responsibilities extremely seriously.
All our operations are required to meet all legislative standards
as a minimum, and where local requirements are not consideredsufficient to address an issue, our own corporate standards
are applied. We conduct regular environmental audits designed
to achieve continuous improvement, and to maintain andraise standards.

We acknowledge that our activities will inevitably affect the local
and global environment but we have taken steps to minimize any
adverse effects and have put in place systems to try to ensurethat we manage such impacts in a controlled manner. Principal
among the tools we use is our environmental management system,
which is certified to ISO 14001 for all our glass manufacturing
and automotive manufacturing sites. We now have 81 certified
sites around the world, representing 70 percent of our businessby turnover.
We are committed to reporting on our performance both goodand bad. Environmental data is collected under the broad
headings of energy, emissions to air, water usage, recycling
and waste. The data collected is based primarily on the coreenvironmental performance indicator set of the Global Reporting
Initiative (GRI). In addition to the collection of environmental
emissions and resource usage data, the Airsweb™ system also
incorporates an incident reporting system. The most senior
executive with responsibility for environmental aspects is theGroup Director of Sustainability.

12

Society

Environmental

NSG Group Sustainability Report 2013

We also encourage our people to play a part in developing ourcommunity relationships. This can take the form of matching
contributions raised by employees or allowing individuals time tomake personal contributions of time and effort in local projects.
The most senior position with responsibility for society aspects
is the Group Director of Sustainability.

Human rights

Our Code of Conduct defines our expectations for all employees.
It reflects our values and principles, particularly the emphasis on
safety, taking personal ownership for actions and communicatingwith openness and involvement.
The overriding basis of the Code is that we will carry out these
activities in a safe, professional, legal and ethical manner and ina way that demonstrates corporate social responsibility.
The Code acknowledges internationally proclaimed human rights
and these are also reflected in our overall employment policies
and standards, providing our employees with reassurance on
how they will be treated. Our equal opportunity and diversity
policy aims to prohibit discrimination based on race, colour, creed,
religion, age, gender, sexual orientation, national origin, disability,
union membership, political affiliation or any other status
protected by law. This policy operates in all employment-related
decisions. The most senior executive with responsibility forhuman rights aspects is the Chief Human Resources Officer.

Labor practice

Safety and quality underpin everything we do, with the principleof ‘open communication’ central to our employment policies.
Our human resources strategy aims to ensure we have the rightpeople where they are needed and that we maximize our talentmanagement around the world.

We are committed to the safety of our products and to ensuring
they can be effectively handled, fitted and used by our customers.
Our product risk-review procedures are designed to identify risks
and to provide advice to users on safe handling. We communicate
these risks through safety data sheets, labels and Glazing and
Handling Guidelines.
Every R&D project developing new products and processes isrequired to have an Environmental Impact Assessment completed
early on to highlight any positive or potentially negative
implications, so that the project can be managed accordingly.
We aim for a cradle-to-cradle life cycle management approach,incorporating environmental health and protection into every
step of the life cycle of our products.
Our formal project management processes include thoroughintellectual property searches, so that our customers can be very
confident that the new products and processes we develop canbe used freely without fear of infringing third-party patents.
The most senior executives accountable for product responsibility
are the heads of the strategic business units.

Socialresponsibility

To attract, motivate, develop and retain high-performing
employees, our approach on rewards and retention includes
market-based competitive pay and market-based competitive
benefit offerings for eligible full and part-time employees.
We have identified specific challenges in attracting and retaining
talent, particularly in emerging markets, and we are alreadyputting in place policies to address these.

Product responsibility

Environmental
responsibility

We operate as an integrated international Group, with amultinational management and 80 percent of our employees
work outside Japan. We reflect diversity in our workforce andbelieve that the range of nationalities, skills, qualifications andexperience available in our many operations are a positive benefit
to our business. Our management style is to put the best person
in each job, regardless of nationality or region.

Our safety programs emphasize the importance of appropriate
safe behavior and of individuals taking personal responsibility.
We regard all injuries at work as unnecessary and avoidable. No
matter how minor, each one must be reported and investigated.
Details of our progress on safety performance are shown in the
Health and Safety section of this Report.

Good governanceOur management philosophy values people as ‘the most important
asset of our company’. We have around 28,000 people working
in 30 countries and speaking over 25 languages.

We value the health and safety of all our employees above allother considerations and aim to ensure that we provide a working
environment that allows our people to reach their full potential.

About us

We value the health and safety of all our employees
above all other considerations and aim to ensure that
we provide a working environment that allows ourpeople to reach their full potential.

We work to create a culture that allows employees theopportunity to work without fear of intimidation, reprisal or
harassment. We have systems in place to permit employees toraise any concerns in a confidential and timely manner. The mostsenior executive with responsibility for labor aspects is the Chief
Human Resources Officer.

Basis of reporting

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13

CORPORATE GOVERNANCECORPORATE GOVERNANCE IS A KEY ELEMENT
IN THE SUSTAINABILITY ACTIVITIES OF THE NSG
GROUP. WE ARE COMMITTED TO EFFECTIVE
AND TRANSPARENT ENGAGEMENT WITH ALL
OUR STAKEHOLDERS.

We believe that good corporate governancecontributes to sustainable development by enhancing
the performance of companies and increasing theiraccess to outside sources of capital.
We aim to maintain high levels of accountability andtransparency, disclosing business goals and guidelinesthat clearly demonstrate a responsible management
approach to all our stakeholders.

Our governance structure
The NSG Group is governed by its Board of Directors, which is
appointed by resolution at the General Meeting of Shareholders.
The Board comprises the Chairman of the NSG Group, four
directors concurrently serving as executive officers and four
independent external directors. In the fiscal year 2013, theBoard of Directors met 12 times.
The Board of Directors oversees the Group’s economic, socialand environmental performance and compliance with internal andinternationally agreed standards, codes of conduct and principles.

Company with Committees
The adoption of the ‘Company with Committees’ model has
brought the NSG Group into line with a number of leading
Japanese corporations and with best practice. It has introduced
additional safeguards for shareholders, increased transparency
and enhanced corporate governance, with the role of the
independent external directors strengthened.
There are three Board committees (Nomination, Audit andCompensation) and four independent external directors.
The Nomination Committee decides the details of the agenda
items to be submitted to the General Meeting of Shareholders
concerning the appointment and removal of directors.
Chaired by an independent external director, George Olcott,the Committee consists of six members, including four
independent external directors.
The Audit Committee, chaired by an independent external
director, Sumitaka Fujita, comprises four independent external
directors. It conducts audits of the execution of duties bydirectors and executive officers and ensures that adequate
risk management processes are followed.

14

NSG Group Sustainability Report 2013

It also decides the details of agenda items to be submitted to
the General Meeting of Shareholders concerning the appointment
and removal of independent auditors.
The Compensation Committee makes decisions on compensationof individual directors and executive officers. The Committee
is chaired by an independent external director, Hiroshi Komiya,
and comprises six members, including four independent
external directors.

Adoption of IFRSWe adopted International Financial Reporting Standards (IFRS)
for our consolidated financial statements, with effect from
1 April 2011. Enabling the whole Group to use the sameaccounting language has clear benefits for the Company’s
internal decision-making processes and further enhances our
corporate governance structure.
Beginning with the financial year to 31 March 2012, the Group’s
results are now reported in IFRS. This has increased the amountof financial information we publish, prompting our decision todivide the content of our annual reporting between the Annual
Report and an Annual Financial Statements document; both canbe downloaded in English from our website.

Risk management
The scope of our operations introduces potential risks to ourbusiness activities, requiring effective risk management. These
include the effects of changes in debt market prices, foreign
currency exchange rates, credit risks, energy prices, liquidity
interest rates and business disruption. Our enterprise risk
management process enables the impact and likelihood of key
risks to be assessed in a standard format.
The information is used to assess the cumulative risk exposureof the Group and promote effective global risk responses, thus
strengthening our overall risk management structure. For further
discussion on our risks and opportunities associated with climatechange, see pages 24-31.

Compliance
Our Code of Conduct sets out the values on which the NSG Grouphas been built and on which the Group and its member companies
must depend for future success. NSG is committed to compliancewith all relevant laws, including anti-corruption laws in its Codeof Conduct.

Alan Graham is Group Chief Compliance Officer. His responsibilities
include the development, implementation and maintenance of an
integrated internal compliance management and control system
as well as the creation and review of relevant Group policies
and procedures.
Our ‘Reporting of Concerns’ procedures allow employees to voice
any corporate governance issues using a reporting line and web
portal implemented in 2012.

Global compliance culture assessment
Survey sent to 1,232 employees. Geographic distribution shown
below. Response rate was 73 percent overall.
Geographic distribution
EuropeNorth America
South America
Japan
Asia

46%
15%
7%
23%
9%

Architectural
Automotive
Technical
Group functions

26%
40%
4%
30%

Environmental
responsibility

Central Compliance has partnered with Group Internal
Audit to include both ABAC and Competition Law
minimum controls in any site audit.

A process has been formalized on the action taken to escalate
concerns through the proper channels. Public policy development
and lobbying information is found in the Group’s Code of Conductand on the nsg.com website. Relationships with Lobbyists iscovered by the Group’s ABAC program.

Good governanceIn line with best practice, we conducted compliance culture risk
assessment with 1,232 employees in 23 countries focusing on
two major compliance programs — Bribery/Corruption andCompetition Law. In addition, we participated with Internal Audit
on an assessment of our two main compliance programs — ABAC
(Anti-bribery/Anti-corruption) and Competition Compliance.
Steps to enhance both programs are in process.

Key Compliance Contacts have been identified in each SBU andGroup Function. These Key Contacts are responsible for ensuringthat the Key Roles in their area of responsibility are kept informedof program updates and are meeting the program requirements.
About us

It defines the conduct expected of the Group and its employees
across all areas of our business and applies to relationships with
employees, customers, suppliers, business partners, the community
and all others with whom we have contact in daily business life
(our stakeholders).

Business unit

Socialresponsibility

Since 2008, we have identified employees who face specificCompetition Law risks in their roles within NSG Group. That
process is now used within the Group’s ABAC program. Specificguidance is provided to these ‘Key Role’ employees. Over
65 percent of NSG Group’s non-shop floor workforce are required
to complete annual training covering Bribery/Corruption andCompetition Law through the Group’s Ethics and Compliance
Education Center. All are required to be familiar with theCompliance program policies, manuals and procedures.

Open Management System
General Meeting of Shareholders

Supervisory
Function

Election/Dismissal

Independent Auditors

Decisions on proposals
on Election/Dismissalof Independent Auditors

Audit Report

Board of Directors

Recommendations
concerning Executive Officers/
Corporate Officers

Supervisionevaluation

Audit
Election/Dismissal of Committee Members

Co-operation

Decisions on compensation

Nomination Committee

ReportSustainability
Committee

Decisions oncompensation

Compensation Committee

Supervision

Management Committee
Representative Executive Officers
Executive Officer

Audit Committee
Election/
Dismissalof Executive
Officers/
Corporate
Officers

Audit

Corporate Officers

Co-operation

ReportInternal
Audit Dept.
Internal Audit

Executive
Function

Basis of reporting

Election/Dismissal of directors

Decisions on proposals on
Election/Dismissal of directors

ReportRisk
Management
Committee

ReportCo-operation

Report to Chief Legal Officer

Compliance
Officer

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15

ENVIRONMENTAL RESPONSIBILITY
Glass manufacture is energy intensive, but our
products make a major contribution to energy
conservation and power generation. We areworking hard to reduce our waste, to minimize
energy usage in manufacturing and improving theenergy-saving capabilities of our products during
their life cycle.

Total energy used by the Group53.10 PJ
The total energy used by the Group
in 2012 was 53.10 PJ (14.75 TWh)

Total CO2 emitted by the Group

4.5 MtCO2

Environmental responsibility
Responsibly sourcing raw materials.

NSG Group emitted 4.5 million tonnes CO2 in 2012
to manufacture a range of net energy-saving products.

Furnace energy
Striving to reduce energy usage andcarbon emissions.

16

NSG Group Sustainability Report 2013

About us
Good governance
Environmental
responsibility

18
20
22
24
26
28
30

Socialresponsibility

Raw material consumption
Increasing recycled content andre-melting glass whenever possible.

Environmental policies
and management 
Energy usage 
Minimizing environmental impact 
Glass in buildings
Glass and solar energy
Glass in vehiclesTechnical glassBasis of reporting

Energy efficient glass
Manufacturing energy-saving products.

NSG Group Sustainability Report 2013

17

ENVIRONMENTAL POLICIES AND MANAGEMENTWE TAKE OUR ENVIRONMENTAL RESPONSIBILITIESEXTREMELY SERIOUSLY. WE REQUIRE ALL
OPERATIONS TO MEET LOCAL LEGAL STANDARDSBUT APPLY OUR OWN CORPORATE STANDARDS
WHERE THESE ARE STRICTER THAN THE LAW.

Our Group Environmental Policy defines our approachon environmental matters. In particular, it outlines
our management of both current activity and thelegacy of past and inherited liability. It reinforces ourcommitment to using good scientific principles to try
to predict and assess our impacts on the environment,
both positive and negative.

Our Environmental Policy
Given the nature of our business, we acknowledge that ouractivities will inevitably have an impact, but we have taken steps
to minimize the adverse nature of any impact and have put inplace systems to try to ensure that we manage such impacts
in a controlled manner.

Our environmental management system is certified
to ISO 14001 for all our glass manufacturing andautomotive manufacturing sites.
Principal among the tools we use is our environmental
management system, which is certified to ISO 14001 for all our
glass manufacturing and automotive manufacturing sites.
We are committed to reporting on our performance both goodand bad.
Calendar year 2007 is our chosen starting point for reporting on
the progress of the enlarged Group. Environmental performanceis monitored and reported for manufacturing operations that areunder the direct control of NSG Group. We continue to work withregulatory authorities worldwide on issues relating to historicalindustrial activity on and around Group premises.

Data collection
Environmental and safety performance data is now collected rightacross the Group using an online electronic data reporting system
known as Airsweb™. This database is multilingual and accessedover the corporate intranet, by sites under NSG operational
control, allowing monthly updating of relevant information.
Environmental data is collected under the broad headings ofenergy, emissions to air, water usage, recycling and waste.
The data collected is based primarily on the core environmental
performance indicator set of the Global Reporting Initiative (GRI).

18

NSG Group Sustainability Report 2013

ISO 14001

About us70%

of our operations take place on sites certified
to ISO 14001 environmental standard.

Our German glass-melting
sites have recently beencertified to the ISO 50001
energy management system.

Monitoring performance

To ensure a consistent and innovative approach, we operate anumber of multidisciplinary design panels whose task is to ensure
full assessment and review of proposed changes. Our stage gate
process ensures that an appropriate level of information andresource is applied to an issue at set points within the developmentof a project or proposal. This ensures the most efficient use of
our resources and encourages innovation.

Certification
We aim to certify our manufacturing facilities
to the internationally recognized ISO 14001
environmental standard and now have 81
certified sites around the world, representing
70 percent of our business by turnover. Our
Automotive business line was one of the firstcompanies in the automotive industry to achievea corporate certificate for environmental management.

Environmental
responsibility

Supplementing the routine monitoring of our business, we also
maintain a number of central registers used to guide our strategic
development and maintain a high level of corporate governancein the sustainability field. For example, a register of all furnaces,
their associated permits, relevant legislation and abatement
capabilities is maintained and used to support the assessmentof any proposed changes in operation or design.

Good governanceIn addition to the collection of environmental emissions andresource usage data, the Airsweb™ system also incorporates anincident reporting system. This allows the timely reporting andrecording of incident data both safety and environmental, as wellas provision for tracking the progress or remedial actions andcommunication of learning points.

A single ISO 14001 certificate from TÜV SÜD Management Service
GmbH covers central functions and the vast majority of ourAutomotive plants worldwide.
Our German glass-melting sites have recently been certified to the
ISO 50001 energy management system. This system is currently
being implemented in our Italian sites.

For glass manufacturing plants we have defined our strategic
approach to abatement in order to ensure that across the world
we hold fast to our principles even in parts of the world where
legislative controls are less well developed.

More details on our environmental policies and risk analysis
can be found on our website.

Socialresponsibility

Our Automotive business was one of the first in theautomotive industry to achieve a corporate certificate
for environmental management. A single DIN EN ISO
14001 certificate covers the Group’s Automotive
sites worldwide.

www.nsg.com/sustainability
Basis of reporting

NSG Group Sustainability Report 2013

19

ENERGY USAGEWE WORK CONTINUOUSLY TO MINIMIZE ENERGYINPUT INTO ALL OUR PROCESSES, SO THAT THE
USAGE OF GLASS CONTRIBUTES NET BENEFITTO SUSTAINABILITY.

Our energy usage

Initiatives to reduce energy usage

For both environmental and financial reasons, we use natural gas
as the fuel of choice for glass melting. We reduced consumption
by 7 percent compared to 2011.

We have continued our efforts with an ongoing program of work
across all sites to increase energy awareness. This program
involves a number of teams within the manufacturingorganization with the objective to deliver significant
improvements in energy efficiency of our operations and includes
the development of a Group-wide database of energy-saving
projects. These activities can be broadly categorized into
two areas:

Heavy fuel oil has been substituted for natural gas and is usedas back up. We reduced consumption by 13 percent compared
to 2011.
Diesel oil and liquid petroleum gas are used as back-up fuels andto power small engines and boilers.
In 2011, our consumption of diesel oil was 20.3 million liters(up 3 percent on 2011) and that of liquid propane was 11,500 tonnes(a 10 percent increase on 2011).
During 2012, we consumed 8.5 PJ (2.3 TWh) of delivered
electricity (a 3 percent decrease on 2011).
The total energy used by the NSG Group in 2012 was 53.10 PJ(14.75 TWh). This represents a 7 percent reduction on 2011 data.

NSG Group energy usage
40,0001. Management systems
Investment in energy management systems includes theachievement of ISO 50001 certification across all operations inGermany and installation of sub-metering hardware and software.
2. Efficiency improvements and investments
A number of projects to improve energy consumption within our
processes. A significant amount of investment in key areas ofenergy consumption includes:

NSG Group resource usage
2011
2012

30,000

1,200
1,000
800

20,000600
400

10,000200
020

NSG Group Sustainability Report 2013

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Energy optimization during shutdown/hot-hold activities

Partnership with suppliers

We are steadily increasing NSG’s global renewable energy
generating capacity.
Our Weiherhammer plant in Germany has recently leased out
15,000 m2 of roof space for the installation of solar panels
incorporating thin film technology (cadmium telluride CdTe).

IT Server virtualization

Virtualization technology allows the server administrator
to convert one physical server into multiple virtual machines.
Each virtual server acts like a unique physical device, capable ofrunning its own operating system. We have virtualized 485
physical servers and IT plans to virtualize all servers that meetrequirements. At the moment they are located in seven regional
data centers (UK, Germany, Poland, Japan, US, Brazil and China)
and operated by 36 physical boxes (hosts).
If each server is constantly powered on, virtualization technology
saves over 1,250 tonnes of CO2 /year. An additional benefit ismaintenance reduction and travel savings.

Alternative fuels

Our Chilean plant is using waste-derived diesel oil froma treatment plant that separates waste fuel from water.

CO2 neutral heating with timber pellets
in Finland
Our Tampere plant has substituted the heating system’s oilburner for a compacted sawdust pellets system. One ton ofpellet is equivalent to 500 liters of oil in heating power so
the new system will immediately and significantly reduce
the plant’s CO2 footprint, saving approximately 375 tonnesof CO2 /year. The equipment is financed and maintained by
an external provider.

Socialresponsibility

The panels have the capacity to generate approximately
800,000 kWh for the national grid each year.

We have recently installed photovoltaic panels on the roof of ourGerman Weiherhammer plant.

Environmental
responsibility

Solar panels fitted to plant roof in Germany

Our Rossford technical center in North America produces about
7 percent of its own electricity with on-site photovoltaic generation.

Good governance

We are working with key suppliers to develop projects to
reduce energy consumption in our manufacturing sites. Close
collaboration with leaders in specific technologies is enabling us
to implement optimum solutions to specific energy management
challenges. For example, in our sites in Italy and the UK, newefficient lighting systems have been installed in place of old
outdated lamps, leading to a halving of electricity consumption
and a significant reduction in ongoing maintenance. Collaborative
projects have also been implemented to address compressor
inefficiency, to make better use of waste heat generated in our
glass-making processes and to reduce peaks in electricity demand.

Renewable on-site energy generation

About usAs a result of the economic downturn, leading to reduced
demand, some of our float lines have been put on hot hold(maintaining working temperature but not producing glass).
Others have been closed down with a view to restarting whenmarkets improve. Our Automotive and Technical Glass operations
were similarly affected, with an unusual number of shutdowns
and restarts. Although some markets have since picked up,these developments affected absolute resource consumption
and emission data in 2012.

The pellets’ high density also permits compact storage andoptimized transport over long distance.

Basis of reporting

NSG Group Sustainability Report 2013

21

MINIMIZING ENVIRONMENTAL IMPACTGLASS MANUFACTURE IS AN ENERGY-INTENSIVEPROCESS, INVOLVING THE MELTING OF RAW MATERIALSAT HIGH TEMPERATURES. PRINCIPAL EMISSIONS FROM
THE PROCESS ARE TO AIR AND ARISE AS PRODUCTS
OF THE COMBUSTION OF FUEL AND AS CO2 FROM THE
DECOMPOSITION OF SODA ASH, DOLOMITE AND
LIMESTONE USED IN THE PROCESS.
Our environmental impact analysis of the float glass andautomotive glazing production processes reveals thatthe significant emissions are carbon dioxide, oxides ofnitrogen, oxides of sulphur and, to a far more limited
extent, particulate matter.
In the operation of our float plants, heavy oil to natural
gas conversion has helped to reduce carbon emissions
by around 50 percent over the past 40 years, and a
combination of design and operational innovations has
made further progress.

Recycled glass cullet
Glass for recycling is a valuable resource. Wherever quality allows,
we recycle any glass off-cuts or cullet within our own glass
melting lines. Glass from our downstream operations and fromour customers represents a potentially useful resource to us.
We gain a double benefit from the use of such cullet. Its use to
make glass reduces the requirement for raw materials and avoids
disposing of what would otherwise be a waste material andcloses the recycling loop. Ten percent cullet use saves 3 percent
furnace energy and leads to reductions in CO2 emissions.
In 2012, we sent 446,000 tonnes of glass for recycling and boughtin 169,000 tonnes to supplement cullet from our own internal
recycling. 37,000 tonnes of glass could not be successfully
recycled so was sent for disposal.

Cullet usage to improve efficiency and reduce emissions

One of our sites has recently manufactured glass using 100 percent
cullet. Cullet return projects are ongoing to try to minimize theneed for virgin raw materials.

Lexington Kentucky Scrap Glass Recycling Project

Our North American plants have recently worked with Reflective
Recycling to separate glass from the PVB interlayer in rejectwindshields and tempered glass. This has significantly reduced
the haulage distances of waste products and has allowed theend product to be recycled, thus reducing CO2 emissions
alongside waste and transport costs.
In Automotive, all supplied materials are registered in the global
IMDS (International Material Data System) to ensure we havecomplete visibility of material content to identify hazardous
materials and opportunities for recycling. This data is shared
openly with our automotive customers, to support their own
recycling efforts.

22

NSG Group Sustainability Report 2013

PVB is used to manufacture laminated glass. PVB trims fromthe edges of the laminated glass are returned to PVB suppliers
to be recycled in their manufacturing processes. In 2012, around2,000 tonnes of PVB trim was returned to our suppliers or otherrecyclers to be reused.

Waste
The glass manufacturing process itself produces very little
waste material. All trimmed glass is recycled back into themelting process and waste is limited to maintenance waste,occasional off-specification raw material that cannot be blended
and packaging waste.
If glass is produced that cannot be remelted on-site, it is sent,
where practicable, for external recycling. We use the wastehierarchy to guide our disposal options. In this system, landfill
is the least favored option.
However, with significant tonnages of mineral materials arisingfor disposal we have not eliminated landfill completely. We
disposed of 47,000 tonnes of non-glass waste (a 20 percent
reduction on 2011), of which 1,132 tonnes of hazardous(36 percent reduction on previous year) and 21,000 tonnesof non-hazardous waste (32 percent reduction) were sent tolandfill. We disposed of 6,544 tons of hazardous waste in 2012(a 46 percent reduction on 2011).

Emissions to air
These arise from the combustion of fuel in melting the raw
materials. The principal materials emitted are oxides of sulphur andnitrogen. Some particulates arise partly from trace components
in the fuel and some from the glass formation itself.
The fuels we use — oils and natural gas — all contain sulphur
compounds as contaminants. Natural gas, our preferred fuel,contains less sulphur than oil. Heavy fuel oil contains the highest
levels of sulphur of all our fuels, especially that readily available
in Japan. Our furnaces in Japan are therefore fitted with efficientemission gas-cleaning equipment. The combustion of such fuels
can produce a mixture of sulphur oxides (SOx).
Most sulphate arising from soda lime glass manufacture isreleased as sodium sulphate, which is of low toxicity. Nitrogencompounds released arise from the combustion air in which thefuel is burnt. At the high temperatures used in glass-making, thenitrogen in combustion air is oxidized to a mixture of nitrogenoxides (NOx). Actions we take to reduce or prevent the emissionof these oxides of nitrogen are detailed on our website.

Reducing carbon emissions
In 2012, the NSG Group was responsible for the direct andindirect emission of 4.5 million tonnes of CO2. This represents
an 8 percent decrease on 2011.

Water management

We used a total of 20.2 million cubic meters of water in 2012.
This was a decrease of 3 percent on 2011 data.

TimberIn Europe, much of our glass is transported on steel stillages
without packaging, utilizing specialist ‘Floatliner’ vehicles. We
use a significant quantity of wooden packaging in our operations.
Although much of the timber we use comes from sustainable
forestry, we cannot yet guarantee this worldwide and this remains
an area for improvement. We also work with our suppliers todesign reusable wooden packaging.

Good governanceIn the operation of our float plants, heavy oil to natural gas
conversion has helped to reduce carbon emissions by around50 percent over the past 40 years and a combination of designand operational innovations has made further progress.

About us

Our direct emissions were 3.5 million tonnes (a 9 percent
decrease on 2011). Direct emissions occur from our furnaces andfrom fuel used in bending and toughening furnaces in Automotive
and Building Products. In Europe, externally verified, direct 2012
CO2 emissions from the Emission Trading Scheme were reducedby 6 percent compared to 2011.

Across the Group water consumption can vary considerablyaccording to process and product demands as well as water
quality. Typically, ~2 m3 are required to manufacture one tonneof float glass and ~90 liters are required to process each square
meter of automotive product.

Environmental
responsibility

In glass-making, water is used for cooling, but most of ourplants operate with closed loop systems and so only require
top up. Water is also used for washing glass in plants but there
the need is for very high purity, so water is treated and thenreused. We seek to minimize our water consumption by working
with suppliers to recycle water and to install advanced water
treatment facilities. This not only reduces the consumptionof water itself but also the chemicals used in the treatmentof the water.

Principal emissions from the NSG Group during 2012

4.5

2011

EuropeNorth America

2012

11,000Socialresponsibility

12,000NSG Group glass-melting carbon emissions

South America
Japan

4.0

10,000China and South East Asia
3.5

9,000

3.0

8,000
7,000

2.5

Basis of reporting

6,000
2.0

5,000

1.5

4,000
3,000

1.0

2,000
0.5

1,000

2011
2012

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NSG Group Sustainability Report 2013

23

GLASS IN BUILDINGSOUR PRODUCTS ARE AT THE HEART OF
MODERN ARCHITECTURE, ENGINEERING ANDCONSTRUCTION. THEY PLAY A BENEFICIALROLE IN ADDRESSING SOME OF THE MAJOR
ENVIRONMENTAL CHALLENGES OF BUILDINGS.

Sustainability in buildings
Around the world, our products play a vital role in improving
energy efficiency and reducing CO2 emissions. But they alsooffer other advanced functionality and create safer buildings
for communities; fire protection, noise attenuation, safety andsecurity, privacy, decoration and even self-cleaning properties.
Architects increasingly seek to bring natural environmental
factors into the interior of buildings by maximizing natural
daylight. This has been achieved through the use of larger
glazed areas in façades and roofs, and entirely glazed façades,
where the glass is a structural component of the building.
The correct choice of glass can help to reduce the capital outlay,
running costs and associated carbon emissions of buildings.
Glass has a unique role to play in promoting sustainability,
reducing greenhouse gas emissions and mitigating the effects
of climate change. On average, buildings account for almost
50 percent of the energy consumed in developed economies.
The ‘energy balance’ between the manufacture of highperformance glazing products and their use means that theenergy used and CO2 emitted in manufacture are quickly paidback through the lifetime of most of our products.
Sustainable building rating system initiatives are increasingly
being used to rate the environmental performance of buildings
across the globe.

Energy efficiency in buildings
Energy issues are crucial to the building glass industry, as glass
products can make an important contribution to combatingclimate change. Improving the energy efficiency of buildings
also brings other benefits. Well-glazed buildings are more
comfortable and cheaper to run for the owner and occupier.
From a social point of view, national economies and energy
security will improve when energy-importing countries becomeless dependent on increasingly expensive supplies from otherparts of the world.

24

Our products help in addressing some of the major environmental
challenges of buildings, new and old. Governments are putting
increased focus on legislation and policies to improve their energy
efficiency. We work closely with trade associations, governments
and authorities that frame building standards to ensure thatthe energy-conservation properties of glass and CO2 reduction
targets are taken into account when standards are set.
They are helping to transform the market for added-value
glazing in North America, Europe, Malaysia and India. In China,
legislation is at an earlier stage, but the government has alreadyintroduced building regulations to improve the energy efficiencyof new buildings. Similar opportunities are anticipated in Europe,with the recast of the EU Directive on Energy Performance of
Buildings and new Energy Efficiency Directive.

Thermal insulation — keeping heat in buildings
In cold weather, low emissivity (low-e) products reflect heatback into the building. Our thermal insulation products,
Pilkington Energy Advantage™, Pilkington K Glass™ and
Pilkington Optitherm™, combine unrivalled thermal insulation
with high light transmittance, with lower reflectance for amore neutral appearance. They provide thermal insulation andpassive solar heat gain, helping meet demand for more energyefficient windows.
Low-e glass is a value-added product that has a transparent
coating on one surface. This reflects heat back into the building,
reducing heat loss through the window. It also reduces the heattransfer from the warm (inner) pane of glass to the cooler (outer)pane, thus further lowering the amount of heat that escapesfrom the window. The coating also allows large amounts of freesolar energy to enter the building, thereby heating it passively.

In hot climates, reliance on air conditioning, which would
otherwise be increased by such larger glazed areas, is mitigatedby the use of advanced solar control glass, allowing the sun’slight into buildings, while blocking much of its heat.

The potential for low-e glass (double and triple glazing) to cut
CO2 emissions from new and existing buildings has been analyzed
by the Dutch scientific institute TNO. It found that up to
90 million tonnes of CO2 emissions could be saved annually by2020 if all Europe’s buildings (existing and new residential andnon-residential buildings) were fitted with double-glazed low-e
insulating glass units. An additional seven million tonnes of CO2
emissions could be cut through a greater use of triple-glazed
low-e insulating glass units for new buildings, where appropriate.

In cold climates, low-emissivity glass reduces heat loss, whileallowing high levels of valuable free solar gain to heat buildings
without significant loss in natural light.

Advances in low-emissivity (low-e) glass technology have madewindows an essential contributor to energy conservation andcomfort, minimizing heat loss and internal condensation.

NSG Group Sustainability Report 2013

Solar control — keeping heat out of buildings

The best energy-efficient glass combines solar control andlow-emissivity properties. Pilkington Suncool™, Pilkington
Solar-E™ and Pilkington Eclipse Advantage™ provide both.
The use of these types of glass allows a bright and comfortableenvironment to be maintained inside a building with reduced
requirement for air-conditioning and lighting.

Pilkington Suncool™ 40/22 glazing units cut thetransmission of solar radiation by more than 75 percent,significantly reducing the load on the building’s coolingsystems. The same specification also assists thermal
insulation enabling the glazed areas to surpass not only
current Building Regulations but any likely changes in thenear future.
Pilkington Suncool™ 40/22 is also utilized in the roof
glazing where it is combined with a heat-strengthened
laminated pane for additional safety.
The building has been short listed for the UK Building
Sustainable Project of the Year.

Environmental
responsibility

A study undertaken by TNO for Glass for Europe concluded
that between 15 and 80 million tonnes of CO2 emissions
annually — roughly between 5 percent and 25 percent of the
EU’s target — could be saved by the year 2020 by optimal useof solar control glass.

The Living Planet Centre is WWF-UK’s new administrativebuilding and visitors centre. Designed to set a sustainablebenchmark, the inclusion of 1,600 m2 of Pilkington glazing
has helped target a BREEAM Outstanding rating whilst
creating a comfortable workplace flooded with natural light.

Good governance

Increasing attention is being given to air-conditioned buildings,
to reduce energy usage and CO2 emissions, creating opportunities
for solar control glass. Most of our solar control products havespecial coatings that can reflect up to 75 percent of the solar
heat, while transmitting the majority of the visible light andreducing glare. We have a wide range of products to satisfy
every need; Pilkington Optifloat™ Tints, Pilkington Reflite™,
Pilkington Eclipse Advantage™ and Pilkington SunShade™
provide different levels of solar control performance.

NSG supplies glass for World Wildlife
Fund building
About us

Pilkington Spacia™ was the world’s first commercially available
vacuum glazing, offering the thermal performance of conventional
double glazing in the same thickness as single glass. Sales aredeveloping worldwide, particularly for use in historic buildings,
in which the original frames can be retained.

Photos: WWF-UK © Richard Stonehouse.

To maximize energy efficiency all year round, our products canoffer the ideal glazing solution by balancing both solar control
and low-emissivity performance.

Socialresponsibility

Self-cleaning glass — minimizing
environmental impact

Basis of reporting

Our Pilkington Activ™ range has been installed successfully indomestic and commercial buildings throughout the world. Using
the forces of nature to help keep the surface free from dirt, theworld’s first advanced dual-action self-cleaning glass ensuresless manual cleaning is required — therefore reducing the needfor toxic chemicals and hazardous cleaning products and cutting
water wastage, as well as reducing maintenance costs andhealth and safety risks.
Solar control and low emissivity glass for energy efficiency canalso be combined with Pilkington Activ™ self-cleaning glass tofurther reduce the environmental impact of buildings.

Fire protection glass — passive andsustainable protection
Buildings that are vulnerable to fire are fundamentallyunsustainable. Fire damage can affect lives and communities,
through destruction of jobs and public assets. Combining fire
safety and integrity with transparency and the ability to bringlight into buildings presents significant technical challenges.
Our range of fire-resistant glass, Pilkington Pyrostop®,
Pilkington Pyrodur®, Pilkington Pyroclear®, and Pilkington
Pyroshield™ 2 is used in a variety of building, marine andrail transport applications around the world. We offer threetechnology types — wired glass, advanced, toughened fireresistant glass and a special proprietary clear intumescentinterlayer technology. The latter not only protects against
flames and smoke, but also against the heat of a fire, and heattransfer mechanisms.

NSG Group Sustainability Report 2013

25

GLASS AND SOLAR ENERGYGLASS PLAYS A SIGNIFICANT ROLE IN THE GROWINGSOLAR ENERGY SECTOR. WE SUPPLY PRODUCTS FOR ALL
THREE OF THE LEADING TECHNOLOGIES, CONVERTING
POWER FROM THE SUN INTO CLEAN RENEWABLE ENERGY.

Countries across the globe have adopted legislation toincrease the use of renewable energy as it is widely
recognized that a move from hydrocarbons is essential.
This was propelled in part by the Kyoto protocol, aninternational agreement linked to the United Nations
Framework Convention on Climate Change which
established that industrialized countries have an
obligation to reduce emissions of greenhouse gasses.
Solar energy panels offer alternative power generation
solutions for a variety of markets, from large-scale solar
stations to inaccessible geographic areas, from cloudy
northern-hemisphere rooftops to hot sunny deserts.
Europe continues to play a leading role in the solar
segment, but the Asia Pacific region has quickly closed
the gap. North America is also making significant
investment in solar installations. In addition to theestablished markets, Photovoltaic (PV) is increasingly
being seen as part of the solution to meet the growing
energy demand in emerging economies.

Competitive Levelized-Cost-Of-Energy (LCOE) of PV is largely
playing a role in encouraging solar generation. Although manyof the early markets were heavily subsidized at the onset,
feed-in tariff’s in countries such as Germany, Spain, Italy and
Greece are becoming less important. The arrival of ‘grid parity’is successfully creating sustainable solar markets.
Depending on the type, a photovoltaic panel will typically produce
enough power in around two years to offset the energy used in
manufacture. In other words, the input energy is equivalent toonly 6.6 percent of the total output of the panel. During its life
cycle, a solar panel can produce over 15 times the amount ofenergy used to make it.
Global Photovoltaic (PV) is expected to achieve steady growth
based largely on declines in module prices and installation costs.
However, it is also aided by significant improvements to module
efficiency. In fact, advances in glass and coating technologies are
helping our customers manufacture increasingly efficient modules.
Our high-quality glass products are used in the three leading
solar technologies aimed at converting solar energy into
electricity: thin film PV, crystalline silicon PV and concentrated
solar power applications.
In addition to the generation of electricity, our glass products
are also used in solar applications that generate hot water.
Glass is an integral and important element of solar modules,
used to convert solar energy into electricity. In traditional PV,
the solar cells may be encapsulated using toughened glass,which protects the cells from the elements.
Increasingly, electrically conductive glass is used in PV modules
as the front contact of the solar cell, to form a system which
generates a direct electrical current.
We have been closely associated with the leading companies
within the crystalline silicon and, especially, thin film PV industries
for a long time. This collaboration has come about, in part, asa result of the historical expertise in on-line coating of both
Pilkington and NSG, which has enabled us to become theworldwide leading producer of high-quality, high-volume TCO
glass. We have been a technological leader in low-iron glass
compositions for over 25 years and our anti-reflective coatings
are being used to further increase module efficiency.

26

NSG Group Sustainability Report 2013

About us

First Solar has announced the construction of a mega
solar project with a generation capacity of 1.4 MW in Kita
Kyushu-shi, Japan. Using First Solar’s advanced technology
thin-film PV modules, the project will provide clean and safe
solar power, offsetting demand previously supplied by
nuclear reactors and providing energy security to Japan.

Thin film PV modules produce power at low cost per watt. They
are ideal for large-scale solar farms, as well as Building Integrated
Photovoltaic applications (BIPV). They benefit from generating
consistent power, not only at elevated temperatures, but also on
cloudy, overcast days and at low sun angles.
With our advanced technology, the coating properties can be‘tuned’ to a wide variety of Thin Film PV technologies, including
silicon and cadmium telluride based.

Crystalline photovoltaic solar modules
Developed from the microelectronics technology industry,
crystalline silicon (c-Si) is the most widely used solar technology.
Due to their high efficiency, crystalline silicon modules are best
suited to applications where space is at a premium.

Socialresponsibility

NSG, First Solar and construction project leaders attend the ground-breaking
ceremony for the 1.4 MW solar project in Kita Kyushu-shi, Japan.

Thin film photovoltaic solar modules

Environmental
responsibility

Over 100 million First Solar photovoltaic (PV) modules havebeen installed throughout the world. NSG Group supplies
the advanced technology glass with a proprietary electricalfilm tuned to First Solar’s thin-film modules.

Good governanceFirst Solar starts construction of solar power
plant in Japan

Concentrated solar power applications
Concentrated solar power (CSP) technology uses mirrors toconcentrate sunlight. The high-performance mirrors are
manufactured using metallic reflective coatings and weather
protective paints deposited onto very high-performance low-ironfloat glass.

Basis of reporting

Thin film photovoltaic solar modules
Produce power at low cost per watt,effective at weak light conditions,but require large surface areas for
installations.

Concentrated solar power
applications
Typically large area mirror arrays.
Require a large area and lots ofsunshine. Particularly effective
in sunny deserts.

Crystalline photovoltaic solar
modules
Highly efficient, but as the cells
are expensive to make, best used
in applications where space is at
a premium.

NSG Group Sustainability Report 2013

27

GLASS IN VEHICLESAS A WORLD LEADER IN AUTOMOTIVE GLAZING,WE AIM TO PROVIDE OPPORTUNITIES FOR VEHICLE
MANUFACTURERS TO ADDRESS SUSTAINABILITYISSUES, SUCH AS CO2 REDUCTION, SOLAR CONTROL,VEHICLE WEIGHT, AERODYNAMICS AND RECYCLING.

The global automotive industry is increasingly
addressing the sustainability agenda. The shift tohigher efficiency conventional engines, electric vehicles
and plug-in hybrids marks a new era, with CO2 reductiona major focus. This requires glazing advances in solar
energy control, weight reduction and energy saving
or generation.
As a world leader in automotive glazing, we are meetingthese challenges. We are developing coating technology
and glass compositions to produce high-performance
infra-red reflecting and advanced infra-red absorbing
glazings. Our aim is to provide further opportunities forvehicle manufacturers to meet their sustainability
requirements.

Demand is increasing from vehicle manufacturers for glazing
solutions that meet the challenge to design cars that are kinder
to the environment.
Vehicle manufacturers look towards the supply base to develop
and deliver products that address energy reduction, energy
generation and recyclability.
We have supplied glass used in automotive photovoltaic roof
systems that can actively supply power to the vehicle, helping
reduce reliance on conventional energy sources.
We aim both to reduce energy used during the manufactureof products and to increase their contribution to sustainability
during their lifetime.

Hybrid and electric vehicles
The importance of hybrid and electric vehicles is growing,
as consumers demand more environmentally-friendly models.
We are working with a variety of established automotive
manufacturers and new entrants who are developing new
vehicles that are greener by design. Vehicle glazing is not only
important in creating a modern exterior design, but can also
contribute significantly to the feeling of space inside the car
and all-around visibility.

Lightweight glazing
There can be over 13 individual pieces of glazing on a vehicle,
all contributing significantly to overall weight and affecting fuelconsumption. We are focused on the introduction of lightweightglass and glazing technology, with the launch of reduced
thickness laminated and toughened sidelights, backlights,
windshields and rooflights.
Our in-house developments for glass-shaping technology now
make it possible for vehicle manufacturers to reduce the massof glass components by up to 25 percent.
Glass in vehicles offers more properties than simple
transparency, so when designing vehicles for reduced mass inthe components, consideration needs to be given to acoustics,
stiffness, sealing and guiding systems and solar control.

28

NSG Group Sustainability Report 2013

About us

65%

Solar control technology
Approximately 30 percent of the heat loading on a car’s interior
comes through the windshield.

control and reduces the need for air conditioning.

•	Privacy glass fitted to the rear lowers temperatures,

enables greater cooling efficiency, and reduces UV lighttransmission.

•	Heated windscreen enhances visibility in icy or humid

conditions, eliminates the need for de-icer spray andreduces damage to the wiper system.

•	Laminated glazing that removes more than 99 percent

of UV light transmission significantly minimizes thedegradation of interior fabrics.

•	By moving from 6 mm to 5 mm windscreen thickness

and reducing overall vehicle weight, fuel efficiency
is improved.

•	Laminated, green tinted, hydrophobic front door glazing

reduces the power required from the air-conditioning unit.

As used on the new Range Rover Hybrid.

Basis of reporting

Our vehicle glazing products provide advanced solar control byabsorbing or reflecting infra-red energy from the sun. Our range
of optimized green and privacy solar absorbing glasses can
reduce the heat entering a vehicle by up to 65 percent.

•	Superior infra-red reflecting windscreen enhances solar

Socialresponsibility

The relationship between high-performance solar control glazing
and vehicle CO2 emissions reduction has long been recognized.
It is accepted that control of heat energy entering vehicles
directly impacts air-conditioning usage and will lead to reduced
fuel consumption and CO2 output. Our advanced solar control
glass can make a significant contribution to the reduction of
air-conditioning usage by reducing solar heat gain.

NSG glazing technology is contributing
to more sustainable vehicles

Environmental
responsibility

Our range of optimized green and privacy solar
absorbing glasses can reduce the heat entering
a vehicle by up to 65 percent.

Good governance

Vehicle glass

Advanced glass coatings used in laminated glazing can selectively
allow the transmission of visible light while rejecting heat
entering vehicles. Combining solar control properties with aheating function within the glass, for removing condensation,
can reduce air-conditioning use on a year-round basis.

Glazing systems
We develop and supply not only glass, but also glazing systems
used to mount and seal the products in vehicle apertures.
We work constantly to decrease component content, witha view to reduced cost and weight.
New technology areas, such as integral seals, significantly
reduce processing steps and the amount of hardware needed
to transform glass products to glazing products. Issues suchas driver visibility and pedestrian safety overlay our work in
the development of the next generation of automotive glazing.

Glass and end-of-life vehicles
Glass typically constitutes around 3 percent of the compositionof an average car. We are actively involved in the eliminationof harmful materials in glass, ink, solder and other components
in automotive glass products.

NSG Group Sustainability Report 2013

29

TECHNICAL GLASSOUR TECHNICAL GLASS PRODUCTS CONTRIBUTINGTO ENERGY CONSERVATION AND SUSTAINABILITYINCLUDE GLASS FOR DISPLAYS, LED PRINT HEADSFOR OFFICE MACHINERY, BATTERY SEPARATORTECHNOLOGY FOR ELECTRIC AND HYBRID VEHICLES,AND GLASS FIBER FOR TIMING BELTS AND PAINTS.

Battery separator technology — an importantrole in the next generation of electric vehicles
The NSG Group is a world leader in the development of advanced
glass products for use in battery separators. Initiatives to achievea low-carbon society have focused the automotive industry
on the development of more fuel-efficient vehicles. The Idling
Stop and Start (ISS) system, which stops the engine during idle
time and restarts only when necessary, requires advanced
performance batteries. Our R&D is focused on improving thecapacity, stability, power and safety margins of the next
generation of batteries. Our sales of separators for these
new batteries are expanding rapidly.

We are developing and expanding sales of separatorsfor smaller and more powerful batteries for use in
future lower-emission vehicles.

Displays in communications devices
We are a world-leading supplier of ultra-thin glass for small LCD
applications, helping to reduce power consumption in the display
market and reduce the need for travel. Our Ultra Fine Flat Glass(UFF) is produced in thicknesses as low as 0.3 to 1.1 mm. These
products are increasingly being used in the growing touch panel
market, particularly in mobile phones, tablet computers and now
expanding into vehicles.
This technology reduces the need for peripheral equipment,
and reduces manufacturing resources.

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NSG Group Sustainability Report 2013

LED print heads — reducing power
consumption in office machinery
These next-generation LED systems employ our proprietary
SELFOC® Lens Array (SLA®) and technology is increasingly
being adopted for use by copier and printer manufacturers
such as Fuji Xerox, allowing optical systems to be designed
compactly and manufactured at low cost.
The new system uses self-scanning light-emitting devices
and radially distributive refractive index rod lens arrays toprovide images up to 1,200 dpi. Our new range of advanced
LED print heads provides an image quality equal to or
surpassing more conventional laser scanning units, butwith the added advantages of miniaturization, low power
consumption and low-noise operation.

Photo: courtesy of Fuji Xerox.

Microglas® Glasflake™ — C Glass Flake —contributing to expansion of renewable energy

MICROGLAS®CORD is NSG Group’s glass fiber cord for engine
timing belt manufacture. It is used in the advanced ElectricPower Assisted Steering (EPAS) system that can help to cut
fuel consumption and reduce CO2 emissions.

Nippon Sheet Glass Environment Amenity, an NSG Groupsubsidiary has started, in collaboration with Device, Inc.,a new business of designing and building ‘zero-emission
offices’ for small-to-medium-sized office and commercial
buildings to help them significantly cut electricity
consumption and thereby reduce energy costs.

The EPAS technology has been developed by NGF EUROPE
Limited’s customer Gates Power Transmission withThyssenKrupp. It delivers a fuel saving of around three
to four percent, with a consequential reduction in CO2emissions, because it only requires power during actual
maneuvering, unlike standard hydraulic systems, which area constant drain on the engine.

Our Glass Cord is being used in a new power-assisted steering systemthat cuts fuel costs and reduces emissions.

Basis of reporting

EPAS is already used in around two million vehicles in theEuropean market and its adoption is expected to increase
throughout Europe and North America. Global demand for
our Glass Cord will increase as vehicles with EPAS system
become main stream.

As its first major product in this new business, NEA has
launched Tropos Inner Glass Skin System (Tropos IGSS), a
state-of-the-art construction method designed to transform
existing buildings into highly energy-efficient buildings
with double-skin glass facades. Tropos IGSS was developed
based on results from ‘D-Project’, a demonstration project
conducted by Device, Inc. from 2009 on global warming
countermeasures. The project has demonstrated that if abuilding is retrofitted with a double-skin façade structure,and supported with mechanical ventilation that allows
the control of air flow in the intermediate cavity between
the two facade layers, heating and cooling loads in thebuilding are significantly reduced, thereby reducing energy
consumption. The project has confirmed a CO2 emissions
reduction of more than 70 percent compared with the
pre-refurbishment levels.

Socialresponsibility

The EPAS drive belt uses 0.2 mm Glass Cord produced by
NSG Group. The diameter is key to this application because
the belt has to go around a tight pulley system, which
requires it to be extremely flexible. The Glass Cord, which
actually spirals around the rubber belt, is also coated with
our RFL latex composition for optimum adhesion.

Environmental
responsibility

Inner Glass Skin System — energy-saving
solutions for next-generation office buildings

Good governance

Glass cord engine timing belts — helping to
reduce fuel consumption

About us

To address global warming, efforts are being made aroundthe world to accelerate the shift from fossil fuel to renewableenergy sources. Wind power is an example of the renewableenergy resources, and offshore wind power installations haveincreased, particularly in Europe. Wind turbines and otherequipment installed at offshore wind farms need to operate fora long time under exceptionally harsh conditions, such as wind,
wave and salt water, as well as collision with floating objects.
Microglas® Glasflake™ — C Glass Flake is used in anti-corrosion
coatings and linings to protect offshore structures.

Tropos IGSS can provide both improved indoor climate
and reduced use of energy by taking full advantage andeffective control of characteristics of glass (light transmission
and heat conductivity) in response to changing
environmental conditions.

NSG Group Sustainability Report 2013

31

SOCIAL RESPONSIBILITY
NSG values the health and safety of all employees
above all other considerations and we aim to provide
a working environment that allows employees toreach their full potential. We also recognize our
responsibility to be a responsible corporate citizenin the communities in which we operate.

Number of employees

Significant Injury Rate

28,000 0.38
32

NSG Group Sustainability Report 2013

About us

Employees and safety
Moving safety to the next level.
Good governance
Environmental
responsibility

Customers
Committed to the safe use of our
products.

34
36
38
40
42

Socialresponsibility

Employees 
Health and safety
Customers Suppliers Communities Basis of reporting

Suppliers
Working with suppliers to improve
employee and community safety.

Communities
Building relationships with local
communities.
NSG Group Sustainability Report 2013

33

EMPLOYEESOUR MANAGEMENT PHILOSOPHY VALUES PEOPLE AS ‘THE MOSTIMPORTANT ASSET OF OUR COMPANY’. SAFETY, QUALITY ANDENVIRONMENTAL RESPONSIBILITY UNDERPIN EVERYTHING
WE DO, WITH THE PRINCIPLE OF ‘OPEN COMMUNICATION’CENTRAL TO OUR EMPLOYMENT POLICIES.

Our management philosophy, ‘people are the mostimportant asset of our company’, is deeply rooted in the
400-year-old Sumitomo Spirit to which we subscribe.
It has therefore been a cause of great regret that the
restructuring initiatives we have had to take over the
past year required significant headcount reductions,with some 3,000 people having left the Group since
the initiation of the programs.
Our human resources strategy aims to ensure wehave the right people in the right position and that
we maximize our talent management around theworld. We aim to create an environment in which
our employees can flourish, leading to greater staff
retention and in-house innovation.

Employee engagement
Employee engagement is a high priority. Following on fromthe 2011 NSG Group Employee Survey we implemented agreed
Action Plans which focused on increasing employee engagement
and motivation. These plans focused on the areas which mostimpact on our employees’ motivation and satisfaction helping
to increase loyalty and commitment to the Group and covered
topics such as Communication, Daily Work, Learning &Development and Health & Safety.

123 action plans covering 333 locations. 80 percentof plans completed to date.

Diversity
Our Code of Conduct acknowledges internationally proclaimed
human rights and these are also reflected in our overall
employment policies and standards and provide our employeeswith reassurance on how they will be treated. Our equal
opportunity and diversity policy aims to prohibit discrimination
based on race, colour, creed, religion, age, gender, sexual
orientation, national origin, disability, union membership,
political affiliation, or any other status protected by law.

12 percent of NSG Group managers are female.

Maximizing the potential of individuals
It is through the skill and effort of our people throughout theworld that the NSG Group achieves its success. Our aim is todevelop a competent, motivated and flexible workforce that isable to respond positively to the needs of the business against
a background of continuing change.
We aim to provide personalized opportunities for growth andachievement and for employees to make a full contribution totheir teams, Business Unit, Global Functions and the NSG Group.

NSG Group employee distribution
EuropeNorth America
Asia
South America(As at 31 March 2013)34

NSG Group Sustainability Report 2013

42%
14%
34%
10%

Talent Management
We are committed to maximizing the talent in our organization
to create flexible, skilled and motivated people, focused on theachievement of our business objectives.
Throughout this year we have focused on developing our TalentManagement processes to ensure that we identify and develop
our high-potential employees with the necessary skills, experience,competencies and motivation.

About us“Our people need constructive feedback to help
them to build on and improve performance.
The appraisal feedback training also provides anopportunity for managers to explain why certain
types of behavior matter and to reinforce our Groupvalues. At appraisal time people should have clear
feedback on how their skills and competencies have
either had a positive impact or have hindered theirjob performance and achievement of objectives.”
Clemens Miller
Chief Operating Officer

Socialresponsibility

We operate a comprehensive system of regular communication
and briefing within all businesses, including effective mechanisms
for two-way communication. Everyone receives regular updates
on Group and local business objectives, targets, results andbest practice at central and business line levels. This includes
monthly briefings from the heads of the respective businesslines. All employees also receive the Group’s employee magazine,
MADO, every eight weeks in their own language. The Group
Intranet, NSG Group Inside, is available to every employee on
the company network. We operate formal mechanisms to brief
and consult unions and employee representatives on Group
operations and future plans, as appropriate to local
circumstances and requirements.

This workshop underlined the need to give structured, balanced
and timely feedback in order to support employees in improving
their performance. One of the key messages was that providing
specific feedback on what is being done well along with what
could be improved should be done on a regular basis, rather thanjust at the annual appraisal interview. It also looked at how togive effective feedback at appraisal time and the importance ofgiving feedback, observations and evaluation on the behaviors
that have underpinned an individual’s performance, rather thanfocusing solely on the extent to which they have or haven’t
achieved their objectives.

Environmental
responsibility

Consultation and open communication

Good governance78 percent of our employees had an annual training
and development review — 86 percent in our best
performing region.

Project Messenger initiative
Basis of reporting

The NSG Group aims for excellence in communications as
an indispensable part of team building, sharing objectives,
understanding issues and concerns, meeting targets andcreating a positive working environment. Throughout 2012 we
focused on delivering our Project Messenger Communications
Training Program to all of our managers and supervisors withthe aim of giving them confidence in their ability to communicate
effectively and appropriately in team briefings, group meetingsand on a one-to-one basis.

Globally, 2,415 supervisors and 1,153 managers haveattended a Project Messenger program

Appraisal feedback training
A training program aimed at improving the feedback given to
employees was rolled out to managers worldwide.

Globally, 911 managers attended the Appraisal
Feedback Workshop. More than 75 percent said thatthey were highly likely to put the workshop learning
into practice.

Management development programs
We continue to run global management development programs
such as our long-standing ED1 and ED2 programs. Delegatescome from all SBUs, functions and regions.

NSG Group Sustainability Report 2013

35

HEALTH AND SAFETY

Focus on high-risk activities in the Group•	Vehicle and Pedestrian Safety•	Machinery Safety: guarding, frequent accessand isolation• Contractor Control including permits•	Materials Handling: moving glass, load security,
grabs, trolleys and pallets

Safety organization and strategy

Significant Injury Rate (SIR)

In 2013 the organization for safety changed. The NSG Group
Sustainability Director, rather than reporting to the Group HR
Director, now reports to the Chief Operating Officer. Whilst
a safety update continues to be provided each month there isa more detailed safety review every six months with the senior
Operations Team comprising the Heads of the four SBUs andthe Heads of the Group Functions.

2.0

1.5

1.0

The first review in this new format was held in March inGelsenkirchen, Germany with a follow up in San Salvo, Italy in
September. The next review will be held in Germany in March 2014.

0.5

10
20
11
20
12
20
13

Moving safety to the next level

20

08
20
09

20

06
20

20

07

0

The safety strategy remains the same with a focus on improving
the effectiveness of our safety tools and programs. To help
us to move safety to the next level the following initiatives
were introduced:

High-risk activities — percentage completion
0%

20%

40%

60%

Vehicle and Pedestrian Safety
Machinery Safety (FASS)

77%
52%

Machinery Safety (CI)
Contractor Control

80%

74%
54%

100%

•	Independent audits of our safety tools to drive a moreconsistent approach, develop our safety skills and to improve
our shared learning. These audits were cross Regions andcross sites within a Region for maximum impact.

•	Further improve our level of proactive employee involvement

as a means of continuing to change our safety culture.

•	Further develop our First Line Supervisors to improve our
Example of regional progress measurement to help prioritization.

overall level of safety leadership.

Our safety tools and programs continue to focus on further
improving our control of our high-risk activities and achieving
an 80 percent reduction in our Significant Injury Rate by 2015.

Safety performance
The Significant Injury Rate continues to be our primary reactive
indicator. This records injuries requiring medical treatment
beyond first aid or the reallocation of duties to allow an individual
to continue working in addition to any absence from work.
The SIR for financial year FY2012 was 0.35; an improvementof 38 percent compared to FY2011.
The SIR for financial year FY2013 was 0.38; an increase of
9 percent compared to FY2012.

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NSG Group Sustainability Report 2013

Fire fighting course with local fire service.

Safety Day leaflets distributed to employees.

About usOur San Salvo Bravo site in Italy was recognized for its
safety performance and won a national safety award.
The awards were supported by the lead organization
representing Italian industry and the Italian National
Institution for Work Accidents.
The prize helps to spread a culture of occupational safety
and innovation and publicizes the best practices ofenterprises that excel in commitment to continual
improvement of health and safety.

Forklift safety driving contest in Vietnam.

Socialresponsibility

SafetyDay

Bravo wins Confindustria ‘Enterprises for
Safety’ national prize

Environmental
responsibility

Following the success of Safety Day in 2011 and 2012 thethird such event was held on 17 October 2013 and proved tobe our most successful. The date was set much further inadvance to help planning and sites knew from their previous
experience what events are best suited to work mosteffectively in their culture.

Good governance

Safety Day

17th October
2013

Basis of reporting

Senior managers attended sites to demonstrate theirpersonal commitment and the opportunity was taken tocelebrate safety success. Sessions were held to further
increase the level of safety awareness, there were many
health-related activities and employees were given theopportunity to improve their first aid, fire fighting andemergency response skills.

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37

CUSTOMERSHIGH QUALITY AND SERVICE STANDARDS ARE
KEY FEATURES IN BUILDING RELATIONSHIPS WITHOUR INDUSTRY CUSTOMERS AND END-CONSUMERS.
WE ARE COMMITTED TO THE SAFE USE OF OURPRODUCTS, ENSURING THEY CAN BE EFFECTIVELYHANDLED, FITTED AND USED BY OUR CUSTOMERS.

We aim to be the most efficient, most reliable, most
responsive and most sustainable supplier of choice ofour customers. Our objective is to produce a wide rangeof effective, innovative and sustainable products in all
our business and our R&D effort is focused on productand process development to support this objective.
Most efficient means having the lowest delivered unit cost ofwhat we supply and using the minimum resources and energy
to produce and process them.
Most reliable means that, having committed to a customer order,
we deliver what they ordered, with the promised quality, when
they expect it, in full, on time, every time, without quality issues
or paperwork mistakes.
Most responsive means that when our customers contact us bywhatever method, they get an answer immediately. In otherwords, they know where they stand with us.
To be the most sustainable supplier means ensuring that we
set high standards and adhere to them throughout the supply
chain, from our own suppliers, through manufacturing, transportand delivery. We aim to achieve an economic performance that
ensures the long-term viability of the Company.

1. Product responsibility
We aim to provide customers with products that havesafety, environmental and in-service benefits. These
include personal protection, security, energy saving, solar
control, noise reduction, fire protection, improved stylingand enhanced visibility for vehicles, and self-cleaning
properties for glazing in buildings.
We are well aware that glass products generally require
careful handling. We are committed to the safety of our
products and to ensuring they can be effectively handled,fitted and used by our customers. Our product risk review
procedures are designed to identify risks and to provide
advice to users on safe handling. We communicate theserisks through safety data sheets, labels, and Glazing and
Handling Guidelines.

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NSG Group Sustainability Report 2013

Awards for quality and marketing
Architectural•	The University of Helsinki library wascertified with LEED Gold using Pilkington
Suncool™ Pilkington Optitherm™ and
Pilkington Optiphon™ OW.

Automotive

Technical Glass•	‘Supplier of the Year’ was awarded by Gates
Europe to NGF Europe in August 2013.
•	Display division received Excellent
Supplier Award from TPK Holding Co., Ltd
in July 2013.

Good governance•	Our Guilin plant in China won 1st prize ina national Kaizen competition.
•	2013 Master of Quality award presented
to Mexicali from Daimler Truck (the only
glass supplier to win the award).
•	Fiat ‘Qualitas Awards’ — Argentina.
•	Toyota ‘Quality Achievement Performance
Certificate’ and ‘Etios Project Contribution
Special Award’ — Brazil.

•	Toyota: Quality Achievement Award andQuality Appreciation award (Japan).
•	Nissan: Best Companies in Nissan cars
Sales Introduction (Japan).
•	Mazda : Outstanding VA/VE award (Japan)

About us•	‘Supplier of the year’ awarded by
JE Berkowitz to Pilkington North America.
•	PNA was awarded most innovative productfrom US Glass magazine for Pilkington
MirroView™.
•	Pilkington UK won Commercial Projectof the Year at the G13 Awards — one of
the main highlights in the UK glazing
industry’s year.
•	Corius office building in Poland wascertified with LEED Gold using Pilkington
Suncool™ and Pilkington Optiphon™.

Environmental
responsibility

The NSG Group is a global leader in manufacturing
excellence and innovation, notably in the areas of glass
melting, glass forming by the float process, online coating
and complex shaping technology, especially for automotive
windshields and backlights. The Group invested¥6,900 million in R&D in FY2013.

In the Architectural Glass business, the Group has ISO
9000:2000 quality management certification in Europe,
Japan, North and South America.
Our European Architectural Glass business has been aleading player in the development of new glass productstandards for the European building industry. Thesestandards have provided a route for glass manufacturers
to meet the European Construction Products Directive andapply to virtually all NSG Group products used in buildings.

Basis of reporting

3. Product innovation

Quality is a key feature in building successful relationships
with our industry customers and end customers. It is also
a key factor in sustainability, because high quality can
reduce waste throughout the supply chain, while improving
production efficiencies. Quality encompasses design,development, manufacture, delivery, assembly and priceof glass, as well as customer support. In the NSG Group,
the achievement of high quality is supported by the useof rigorous quality management systems and standards.

Socialresponsibility

2. Highest quality

The Group owns or controls approximately 4,000 patents
and patent applications, predominantly in the fields offloat glass production and processing and automotive
glazing and also in the Information Technology field, andhas access under license to patents held by third parties.
The Group has also been active in selective licensing of
its patents and technology, in the areas of online coating,encapsulation (of automotive glazing) and rain sensors
for automotive glazing.

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39

SUPPLIERS
WE PURCHASE MATERIALS, GOODS AND SERVICESFROM OVER 20,000 SUPPLIERS WORLDWIDE. OUR
SUPPLIER CODE OF CONDUCT AND RELATED AUDITSHELP ENSURE THAT OUR SUPPLIERS UNDERSTAND
AND COMPLY WITH OUR STANDARDS.

As part of our Sustainable Procurement Program,we operate a Supplier Code of Conduct. It outlines
behaviors, processes and procedures — in short, thestandards we expect from our suppliers. Engagementwith suppliers may be via appropriate accountmanagers and the Procurement function has the
responsibility to ensure that suitable engagement
arrangements are in place and communicated.
Our manufacturing processes use materials, products
and services procured from around 20,000 local,
regional and global suppliers. Our suppliers are
therefore crucial to the achievement of our sustainability
objectives. To manufacture and supply superior quality
glass products to our customers, we aim to build strong
relationships with suppliers that are based on aframework of trust, cooperation and sustainability.

Our Supplier Code of Conduct
The wide range of issues addressed in the Code reflect the
many and diverse activities in which our suppliers are involved.
Wherever possible, the Code defines a fair and common-sense
approach to doing business, while incorporating all relevant
legal requirements.
The content of the Code also takes into account our Values andPrinciples, particularly the emphasis on safety, taking personal
ownership for our actions and communicating with openness
and involvement. It is the responsibility of all of our suppliers
to follow the principles of this Code to ensure compliance with
our requirements.

Supplier Sustainability Evaluation
Between 2011 and 2015 we plan to evaluate
approximately 500 key suppliers.
In order to meet our objectives of completing assessments ofour key suppliers as well as further due diligence on our suppliersof high environmental impact NSG has engaged in the servicesof EcoVadis.

EcoVadis is a well-established company in the area of CSR/
sustainability evaluation and has many major companies asclients. After looking at several potential service providers, adecision was made to select EcoVadis based on its global reach,comprehensive online assessment tool, the location and sizeof our supplier and also its impressive portfolio of customers.
Important aspects of the evaluation are the ethical and social
behavior of our suppliers as well as their environmental
management system and approaches to health and safety.
Using a third-party provider means we can accelerate theprocess of completing assessments and, for the low-scoring
suppliers identified as a significant risk we will continue to use
the services of our own Supplier Development Team to workwith them on an improvement plan including clear timescales
for implementation.
Suppliers who are unwilling to cooperate may not have along-term future with NSG.

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NSG Group Sustainability Report 2013

The standards we expect

Ethical behavior

Our suppliers must accept personal
responsibility for behaving professionally,
ethically and with integrity and fairness.

Social behavior — human considerationsin the workplace
All our suppliers must conform to therelevant International Labor Organization
Labor Standards as a minimum requirement.

Environmental behavior

Our suppliers must recognize the crucial
importance of their role in reducing
environmental impact. They must play theirpart in creating a prosperous and sustainable
future by continually seeking to achieve bestpractice in environmental protection.

Currently, around two-thirds of our 700 suppliers in this category
meet our requirements for environmental certification or chainof custody for wood supply. Those who do not comply are
undergoing further evaluation and development or will bephased out.

Our procurement activities and projects demonstrate ourcommitment to sustainability. Good practice is shared throughGlobal Procurement Category teams and spread throughout theGroup. We leverage our Global Procurement function to achieve
this spread of good practice effectively and efficiently.

Conflict minerals
NSG Group supports the goals and objectives of the
Dodd-Frank Wall Street Reform and Consumer Protection
Act’s Section 1502, which aims to prevent the use of conflictminerals that directly or indirectly finance or benefit armed
groups in The Democratic Republic of the Congo (DRC) or an
adjoining country as defined in the Act.
Identifying suppliers who provide materials that could
potentially include these minerals is now a very importantpart of our procedures and due diligence is being completed
via an online questionnaire.
There is an action plan to eliminate any use of thesematerials and where there is a level of uncertainty further
checks are made, including visits to the supplier, by our
Supplier Development Team to confirm and eliminate.

Basis of reporting

Working with suppliers to save energy

In line with our Sustainability Policy, we communicate withand work constructively with our suppliers and governments,
regulatory agencies, the scientific community and other relevant
stakeholders, to develop and encourage business and community
practices that make progress towards the common aim ofsustainable development.

Socialresponsibility

In 2010, we began to identify suppliers that have a particularlyhigh impact on the environment. Our aim is to ensure that our
suppliers minimize their negative impacts and work positively on
environmental initiatives. The scope includes wooden packaging,batch materials, waste management contractors and chemicals.
We insist that suppliers in these categories have a recognizedenvironmental certification such as ISO 14001 or equivalent.
In the case of wooden packaging we look for a recognized chainof custody in regard to the wood supply.

Communication and co-operation

Environmental
responsibility

Impact on the environment

Key elements of the code now form partof our supplier audits. We have a supplierdevelopment team of 15 engineers, covering
all regions. This team is responsible for
improving performance where necessary
against these standards.

Good governanceWe expect our suppliers to uphold our standards indealing with their own suppliers, contractors andsub-contractors and to be able to provide evidenceof this if requested.

Evaluation

About us

We expect our suppliers to achieve andmaintain high standards throughout the
supply chain, but particularly with regards
to the following:

We are working with key suppliers to develop projects to reduceenergy consumption in our manufacturing sites. Close collaboration
with leaders in specific technologies is enabling us to implement
optimum solutions to specific energy management challenges.
For example, in our sites in Italy and the UK, new efficient
lighting systems have been installed in place of old outdated
lamps, leading to a halving of electricity consumption and asignificant reduction in ongoing maintenance. Collaborative
projects have also been implemented to address compressor
inefficiency, to make better use of waste heat generated in our
glassmaking processes and to reduce peaks in electricity demand.

NSG Group Sustainability Report 2013

41

COMMUNITIESTHE LOCAL COMMUNITIES THROUGHOUT THE WORLD IN
WHICH THE NSG GROUP OPERATES ARE THE FOUNDATIONOF OUR BUSINESS AND THE LIVES OF EMPLOYEES.
WITHOUT A RELATIONSHIP OF MUTUAL BENEFIT WITH
THESE COMMUNITIES, THE GROUP AS A WHOLE COULD
NOT SUSTAIN ITS OPERATION.

We have around 28,000 permanent employees, withprincipal operations in 30 countries throughout Europe,
Japan, North and South America, China and South andSouth East Asia. We do this in over 500 separate
facilities worldwide — some large and some small. Eachhas an impact on the community in which it is based, by
providing employment, investment and other benefits,
but also having an impact on the environment.

The effects of necessary investments on our communities
are generally beneficial, bringing additional employment andeconomic benefits. For every investment we make, an impact
assessment is conducted to ensure we understand and manage
the likely effects on the community, the environment and the
local economy.
As a responsible and often prominent member of the communities
in which we operate, we believe it is important to be involved
actively by leveraging our core business and management
resources to help to address local issues.

Aims and objectives
We want our operations to function in healthy, thriving communities
and to be seen as a good neighbor to those communities.

For every investment we make, an impact assessment
is conducted to ensure we understand and manage thelikely effects on the local community, the environment
and the local economy.
We know that if we want to operate effectively and to be able toexpand or change when the time is right, we need the goodwillthat comes from being an active supporter of the community.
In addition to our business investments, helping to sustain local
operations, we also invest in the communities in which we operate.
We aim to help through direct cash donations to charities andother projects or through in-kind resources — to improve the healthof the community or tackle specific social issues. We operate
programs that assess and manage the impacts of our operations
on communities, including entering, operating and exiting.
We also involve our staff in providing a lead in developing our
relationships with the communities in which we operate. Thiscan take the form of matching contributions raised by staff orallowing staff time to make personal contributions of time andeffort in local projects.
In FY2013, we made contributions worth around ¥33 million
to our local communities. Our grants helped the arts, medicine,
welfare, job creation and urban renewal.

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NSG Group Sustainability Report 2013

LOCAL COMMUNITY ACTION INITIATIVES
About us

When the area around our Aken plant was flooded, NSG
organized dryers and emergency power supplies for affected
NSG employees. Emergency services used the plant facilities
and NSG made a donation to the firefighters who supported
us during the flood.

Our employees are encouraged to participate in their local
communities. Our VASA plant in Argentina was involved ina project to clean and paint a local school.

Tree planting in Chile

Sponsoring community awards

Our Lirquen plant in Chile carried out community projects
in the surrounding schools including tree planting and school
painting. Caçapava automotive plant organized several
employee family visits to the plant.

NSG sponsored the Sustainable School Award at the St Helens
Reporter Education Awards 2013. This category recognizes
schools that have developed environmental awareness andsustainable development education across all the curriculum
areas and the life of the school.

Pilkington Vehicle Design Awards 2013

NSG apprentices

The annual Pilkington Vehicle Design Awards at the Royal
College of Art continues to recognize talented future car
designers from around the world. The awards provide aplatform for students to showcase their creative talents toprospective employers including the world’s leading automotive
manufacturers and designers. Employers use the awards toidentify up-and-coming talent in the industry.

NSG apprentices based on UK sites have all received
distinctions in every single one of their college subjects
this year.

Environmental
responsibility

VASA plant community project

Good governance

Flood relief in Aken, Germany

Socialresponsibility
Basis of reporting

NSG Group Sustainability Report 2013

43

APPROACH TO REPORTING
This Report forms part of our non-financial performance
communications and reflects Group, regional and site-level
reporting. Unless otherwise stated, the Report covers thosebusinesses over which the NSG Group has management control.
Data relating to the environmental performance of Group
operations covers 31 float and five rolled glass sites. Joint
venture sites where we do not have operational control are
excluded. All Architectural, Automotive and Technical Glass
downstream processing are also included in the reporting.
Safety statistics shown cover our ‘workforce’ (employees andpermanent contractors).
Our environmental and social performance is of interest to
our stakeholders and important to our business success and wehave been reporting on these matters since 2002, in successive
environmental, social activity or CSR reports.
We published our first Sustainability Report in 2009, when we
decided to widen our reporting to cover all aspects of sustainability.
In June 2009, we published our Group Sustainability Policy,
setting our sustainability agenda, and in December 2009
established a Group sustainability Committee to direct,
coordinate and monitor our efforts to improve our approachto sustainability.

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NSG Group Sustainability Report 2013

In 2010, the Board agreed specific sustainability targets for theGroup. These are shown on page 07 of this Report, along withan account of our progress towards them.
In 2012, Shiro Kobayashi was appointed as the Group’s Directorof Sustainability. Shiro chairs the Sustainability Committee, whichis leading our efforts to ensure that the principles of sustainable
development are embedded in all of the Group’s activities. We
will report further on our progress in our 2014 Sustainability
Report, which will be published in early 2015.
This Sustainability Report has been prepared in accordance with
the Global Reporting Initiative (GRI) G3 Sustainability Reporting
Guidelines, which provide a globally recognized framework forreporting on an organization’s economic, social and environmental
performance and responsiveness. We have self-declared our
performance at Application Level B.
To keep the size of the printed report to a minimum, we haveincluded additional information, charts and tables covering our
performance in the Sustainability section of our website.
The printed report can also be downloaded from our website
at www.nsg.com/sustainability.
For detailed GRI and UNGC index, please visit www.nsg.com/
sustainability.

FURTHER INFORMATION

Publications
ANNUAL REPORT 2013
FISCAL YEAR ENDED 31 MARCH 2013

‘MAKING A DIFFERENCE TO OUR WORLD
THROUGH GLASS TECHNOLOGY’

NSG01_024 | Annual Report 2013 | 11/07/2013 | Proof 6

To oUR SHAREHoLDERS

NIPPoN SHEET GLASS co., LTD.
147TH FIScAL PERIoD INTERIm REPoRT
1 APRIL 2012 — 30 SEPTEmBER 2012

‘mAKING A DIFFERENcE To oUR woRLD
THRoUGH GLASS TEcHNoLoGY’

NSG01_020| NSG To Our Shareholders – December 2012|

Proof 6|

12_11_2012

NSG01_020 |NSG To Our Shareholders – December 2012|

Proof 6 |12_11_2012

To our Shareholders
Published twice a year, in June and December, designed
to keep shareholders informed of progress against our
strategy. Editions in both English and Japanese.

WebsitesNSG Group corporate website (English)
www.nsg.com
NSG Group corporate website (Japanese)
www.nsg.co.jp
Commercial website (Architectural and Automotive)
www.pilkington.com

Environmental
responsibility

The Way we do Business
Produced for Group employees in all of the languages
in which the Group operates, summarizing the main
points of the Group’s Code of Conduct.

Company name: Nippon Sheet Glass Co., Ltd.
Unified global brand: NSG Group
Head office: 5-27, Mita 3-Chome, Minato-ku, Tokyo 108-6321 Japan
Established: 22 November 1918
Paid-in capital: ¥116,449 million
Total assets: ¥885,436 million
Net sales: ¥521,346 million (consolidated)
Employees: 27,932
NSG Group companies: 244
Web: www.nsg.com

Good governance

Annual Report
In order to obtain a full understanding of theperformance of the Group, this document should
be consulted.

Company information (as at 31 March 2013)

About us

We produce a regular flow of publications intended to provide
current and potential investors with as much information as
possible about the Group, the industries in which we operate andthe organization, strategy, targets and progress of the Group.
The range of these publications is shown below.

Sustainability contact
www.nsg.com/en/contact-us

Socialresponsibility
Basis of reporting

NSG Group Sustainability Report 2013

45

This report is printed on Revive uncoated, a 100% recycled paper madefrom post-consumer collected waste. Revive uncoated is manufactured
to the certified environmental management system ISO 14001.
Published by NSG Group
Designed by Corporate Edge
Printed by CPI Colour