Financial Information: Annual Report 2004

	Corporate Sustainability: Environmental and Social Activities

Environmental Activities

Contributing to the Establishment of a Recycling-Based Society

Aiming to contribute to the establishment of a recycling-based society capable of sustainable growth, NSK remains keenly conscious of the environmental effects of all of its products, at every stage of their lifecycle.
  Bearings, our chief product, are made in large part of scrap metal. These bearings are again recycled into new steel products when the machinery in which they are installed reaches the end of its useful life span. In this sense, our main product is extremely environmentally friendly. To further reduce environmental impact, we are undertaking various activities to make our production processes more energy efficient. At the same time, we are lengthening product life spans and eliminating the use of harmful chemical substances throughout each product’s lifecycle, from design and development to production and scrapping. As a result, the number of products and technologies registered as “environmentally friendly” according to NSK internal standards increased by 11 to 91 in fiscal 2003.
  As of March 2003, we had achieved zero emission* at all plants owned by or spun-off from NSK Ltd. In fiscal 2003, we succeeded in reducing landfill waste volume for the entire NSK Group to 34 tons, or 0.1% of the total waste volume. We also improved our recycling ratio 0.4 percentage points year-onyear to 94.8%.

*NSK’s definition of “zero emission”: Equal to or less than 1% of our total landfill waste volume

Countering Global Warming

NSK has set a fiscal 2010 target of reducing CO2 emissions per production unit by 23% compared with fiscal 1990 levels. By increasing the efficiency of our energy usage and switching to clean energy sources, such as solar energy, in fiscal 2003 we succeeded in reducing CO2 emissions by 7.4% compared with the previous fiscal year, reaching a level 21.0% lower than fiscal 1990. At NSK Precision Co., Ltd. (Maebashi Plant), we introduced a hybrid solar cogeneration system that utilizes the excess heat resulting from electricity generation to warm production facilities such as constant-temperature rooms used for precision processing.

“Green” Procurement

In order to comply with customers’ increasingly strict environmental requirements regarding our products, NSK has established strong communication channels with suppliers to gain their cooperation in reducing environmentally harmful substances contained in components and raw materials used in our products. We have revised the NSK Green Procurement Standards, a manual that designates substances requiring monitoring and measures that need to be taken by our suppliers. To ensure a full understanding of this policy and to strengthen our ties with suppliers, we host regularly scheduled Green Procurement seminars.

Recycling Ratio and Landfill Waste Volume

CO₂ Emissions and CO₂ Emissions per Production Unit

ISO14001 Certification and Audit Methods

As of July 2004, NSK’s 22 domestic sites and 14 out of the 19 overseas sites eligible for ISO14001 certification have been duly certified. In addition to external audits, we conduct regular internal audits to monitor the effectiveness of our environmental management, thereby ensuring systematic and continuing improvements to our environmental performance. Some 350 NSK employees currently are certified as internal environment auditors. To increase this number, we offer employees an environmental education program.

Environmental Education

NSK’s environmental education program is designed to increase the environmental awareness and knowledge of all NSK personnel, from top management to shopfloor operators. To this end, we not only hold educational seminars but also use Company newsletters and Intranet bulletin boards. As well, we promote employee participation in environmental activities.

Seminar objectives	No. of participants	No. of times held
1. To ensure observance of environmental laws and regulations	1,617	24
2. To increase environmental awareness	6,785	57
3. To obtain environmental qualifications, including internal environment auditor certification	57	17
4. To promote environmentally friendly design and “green” procurement	451	11

Fulfilling Our Social Responsibilities

Risk Management

Preserving the integrity of the NSK brand is one of management’s most important responsibilities. Accordingly, we take an extremely serious approach to risk management. Business risks of particular concern include corporate scandals, employee misconduct, and accidents such as explosions and fires at our production facilities.
  In July 2002, we issued NSK’s Business Ethics Regulations and NSK’s Code of Conduct Policies, both of which define the basic rules that NSK executives and employees must abide by to ensure the highest degree of ethical conduct throughout the NSK Group. At the same time, we issued the Basic Policy of NSK Risk Management as a guideline for crisis prevention and damage minimization. “Safety first” is NSK’s overriding policy in cases of an actual emergency. In June 2004, we issued the more comprehensive NSK Risk Management Manual, which treats a wide range of crises and includes guidelines for accident prevention and post-disaster restoration, countermeasures for environmental pollution, and policies concerning information security. In the case of an actual emergency, the decisions of the person in charge take first priority, with this manual serving as a supplementary guideline.
  The Risk Management Committee, established in 2002, is now incorporated into the internal monitoring function of the new corporate governance structure, and we intend to further expand and strengthen its functions.

Corporate Social Responsibility

NSK’s strong reputation as a socially responsible corporation has been built on activities such as our zero-emission initiatives at production facilities, social contributions in the form of charitable donations, scholarships, and volunteer activities, and our proactive approach to corporate governance, reflected in the establishment of audit, compensation, and nomination committees.
  NSK is currently included in the following major global socially responsible investment (SRI) indexes (as of July 2004):

• Dow Jones Sustainability World Indexes (DJSI World)

. . . NSK has been included for three consecutive years

• FTSE4Good Global Benchmark Index

. . . NSK has been included since 2002

• Morningstar Socially Responsible Investment Index

. . . NSK has been included since the launch of this index in Japan in July 2003

Only 17 Japanese companies are included in all three of these indexes; NSK is one of them. For further information regarding NSK’s relationship with stakeholders, including customers, suppliers, employees, and local communities in which the Company operates, please refer to the first edition of the NSK Social and Environmental Report, issued in July 2004. NSK Environment Report

Dow Jones Sustainability Indexes WebSite FTSE4Good WebSite