Sixth Mid-Term Management Plan and the FY2020 Targets and Performance

The NSK Group considers it important to select issues to address and to set policies and attainment targets by taking into consideration such matters as regulatory requirements, the expectations and needs of stakeholders, potential risks and opportunities, and relevance to the NSK Group’s business endeavors. We work through the PDCA cycle, setting Mid-Term Management Plan targets, including for environmental (E), social (S) and governance (G) activities, and monitoring management indicators for assessing progress.

ESG category	Policy	Sixth Mid-Term Management Plan targets		FY2020 targets	FY2020 performance
Environment	Maximize the environmental contribution through products Minimize the environmental impact from business activities	Creating environmentally friendly products	Create environmentally friendly products with a Neco score of 1.2 or higher	Create environmentally friendly products with a Neco score of 1.2 or higher	Developed 6 environmentally friendly products
		Creating environmentally friendly products	Avoid at least 2 million t-CO₂ emissions during the use of NSK products	1.8 million t-CO₂	2.51 million t-CO₂
		Fighting global warming and climate change	Manufacturing, technology, offices: reduce CO₂ emissions by 7% from FY2017	5% reduction	Reduced by 31%
		Resource conservation and recycling measures	Achieve a recycling rate of at least 99%	98.9%	98.9%
			Industrial waste per unit of sales: 4% reduction from FY2017	3% reduction	Increased by 11.8%
			Water withdrawal per unit of sales: 4% reduction from FY2017	3% reduction	Increased by 16.6%
		Reducing use of environmentally harmful substances	Full response to the 10 EU RoHS2 substances	Full response	Ensured full response in newly developed products Continued efforts to completely eliminate harmful substances in manufacturing processes
		Reducing use of environmentally harmful substances	Response rate for inclusion in NSK Survey of Environmentally Harmful Substances In Japan: Maintain 100% Outside Japan: Obtain 100%	In Japan: Maintain 100% Outside Japan: Obtain 99%	In Japan: Maintained 100% Outside Japan: Obtained 90%
		Biodiversity conservation	Identify the factors in operations that could have a negative impact on biodiversity	Continue activities	Continued activities
			Expand social contribution activities related to biodiversity conservation	Continue activities	Continued activities based on the impact of the COVID-19 pandemic
			Educate to deepen employee awareness of issues	Continue activities	Continue activities

ESG category	Policy	Sixth Mid-Term Management Plan targets	FY2020 targets	FY2020 performance
Safety Management	Prevent fatal and serious accidents	Each production site manages its own PDCA cycle for identifying dangerous spots and their improvement	Raise the level of risk extraction and inspection at each site and support self-driven risk-reduction activities	Having completed extracted risk reduction up to the previous fiscal year by continuing to improve the serious accident risk assessment criteria and their operation, improved level of self-driven risk reduction at each production site
	Prevent fatal and serious accidents	Enhance the safety management of outside contractors	Business inspection and improvement guidance for contractors, subcontractors, and outside contractors	Established and started operation of the Outside Construction Rule Guidebook Established operation of an outside construction management web system
	Increase safety awareness	Train and implement behavior that increases safety awareness, including KYT* and the safety practice of pointing and calling * KYT: Kiken Yochi (hazard prediction) Training	Plan and launch a safety culture workshop at sites in Japan to raise the NSK safety culture to an interdependent (mutually-enlightening) model	Completed construction of a safety culture workshop management system Commenced workshop operations at sites in Japan
		Further enhance safety management through continuous ISO 45001 certification	Obtain ISO 45001 certification for 6 sites in Japan and 18 global sites (Plan revised due to the COVID-19 pandemic)	Obtained ISO 45001 certification and began implementing it at 3 sites in Japan and 8 global sites (Sites not yet certified are scheduled to be certified in the first half of fiscal 2021)
		Newly establish the Safety and Fire Prevention Training Center and foster an advanced safety culture	Begin operating the Safety and Fire Prevention Training Center using remote learning	The Safety and Fire Prevention Training Center began operating using remote learning, and safety education instructor training was conducted for managers and supervisors. Completed training of 2 instructors at each site.
	Prevent accident reoccurrence	Expand “Look Across Activities” (seeing accidents at other sites as relevant to one’s own workplace and learning lessons from those accidents) to operators on the shop floor	Enhance "Look Across Activities" so that factory personnel become more fully aware of the risks in their own workplace	Promoted "Look Across Activities" for factory personnel by providing them with guidance from their superiors to improve their risk awareness
	Prevent accident reoccurrence	Identify risks through risk assessment of equipment and work procedures and implement measures against those risks	Implementation/evaluation/countermeasures for risk assessment of existing equipment (Promotion of a three-year plan from FY2019 to FY2021)	Promoted risk assessment of the existing equipment as planned while implementing risk-reduction measures

ESG category	Policy	Sixth Mid-Term Management Plan targets	FY2020 targets	FY2020 performance
Quality Management	NSK Product Development System (NPDS) This is NSK’s proprietary quality management system for quickly transforming new orders into reliable, stable production.	Verify performance with a complete grasp of the level and conditions required by the field Improve field quality	Improve NPDS quality (achieve KPI target value) Construct a global system addressing design kakotora (quality problems experienced in the past)	Established a feedback system and achieved design review (DR) KPI scores in all business divisions Achieved 100% NPDS participation rate for DR experts Established specifications for a global system addressing design kakotora (quality problems experienced in the past)
	NSK Quality No. 1 (NQ1) Program NSK is promoting initiatives to realize stable production and ensure zero defects.	Improve procurement quality Dantotsu improvement activities (ongoing activities for zero defects)	Establish supplier audit teams Improve supplier quality concern (SQC) issues by means of Dantotsu activities (ongoing activities for zero defects)	Established supplier audit teams and commenced activities Commenced construction of a unified SQC system at domestic plants Achieved global expansion of Dantotsu activities and implemented an internal awards scheme
		Identify gemba (frontline) 4Ms* quality risks, review good product conditions Enhance reoccurrence prevention * 4M: Man, Machine, Material, Method	Strengthen cooperation with regional quality assurance departments Improve the reoccurrence prevention method	Held global quality conferences online Held regional quality conferences online Held study sessions by Reoccurrence Prevention Promotion Committee members at each plant
	Human resource development NSK is promoting the human resource development to build a stronger foundation for quality creation.	Foster quality-first human resource development	Effectively utilize Quality-Dojo* Establish Quality-Dojo in technological divisions for design quality training Effectively utilize quality engineering * Quality-Dojo: A dedicated area for quality training put in place at each plant. Established in FY2019.	Established Quality-Dojo at all major global bases and commenced training of all employees Commenced establishment of Quality-Dojo in technological divisions Implementation of company-wide FMEA education

ESG category	Policy	Sixth Mid-Term Management Plan targets	FY2020 targets	FY2020 performance
Supply Chain Management	Ensure stable supply and optimize supplier portfolio	Stable procurement	BCP audits of 30 major companies (Cumulative total of 100 companies since FY2018)	On-site inspections not carried out due to the effects of the COVID-19 pandemic, efforts implemented centered on remote follow-ups of inspections conducted on 70 companies in FY2018 and 2019
Supply Chain Management	Ensure stable supply and optimize supplier portfolio	Sustainable and responsible procurement	Implementation of self-assessments based on the NSK Supplier CSR Guidelines (every other year)	Implemented to additionally reflect the assessment items pointed out in the CSR audit conducted by a third party in FY2018 Obtained responses from 416 companies in Japan (response rate 95%) and implemented verification of level of progress of efforts

ESG category	Policy	Sixth Mid-Term Management Plan targets		FY2020 targets	FY2020 performance
Human Resource Management	Leverage a diverse workforce	Promote more diversity and inclusion (D&I)		Raise awareness of D&I	President’s Diversity Message 2020 published Conducted unconscious bias training
				Improve the paternal leave acquisition rate	Improved 23.5 points against previous fiscal year (Acquisition rate 50.3%)
				Continue to run caregiving seminars	Employees taking courses increased by 1.6 times Held training courses for human resource consultation desk staff
				Create a work environment that empowers foreign nationals (Japan) Develop management personnel (global) Support the empowerment of mid-career hires	Started cross-cultural training planning, expanded support for language learning Completed Global Management College FY2019 course (Total number of graduates for all nine terms: 111) Conducted follow-up interviews/training for mid-career hires
				Raise awareness of LGBTQ+ issues	Held internal seminars Jointly held an external collaborative event
				Raise external awareness of our initiatives to promote D&I	Selected again as a Nadeshiko brand Retained Kurumin certification (certification recognizing companies with parent-friendly HR policies and programs)
			Promote the advancement of women Increase the percentage of women among managers and managerial candidates by 1.6 times (compared with FY2018)	Continue supporting women in career-track positions	Conducted third round of training for women in career-track positions
				Promote a higher percentage of women among career-track position hires (administrative and sales staff: 40%; engineers: 10%)	Administrative and sales staff: 40%; Engineers: 10% achieved
	Build more engaging workplaces	Promote work-style reforms		Expand remote work	Newly established rules for remote work Environment improvements (e.g., loaned communication terminals, switched to mobile PCs)
		Promote health and wellness		Raise external awareness of our initiatives to improve the health of our employees	Retained certification as an Outstanding Health and Productivity Management Organization (White 500)
		Promote health and wellness		Centralize the management of employee health checkup results	Commenced centralized management and analysis by installing a health checkup results management system
	Provide opportunities for growth	Support the career advancement of every employee		Train young employees at an early stage	Implemented young employee rotations
	Provide opportunities for growth	Support the career advancement of every employee		Provide ongoing growth opportunities	Adding to conventional face-to-face training, expanded the number of participants and opportunities to attend by making full use of online options and HyFlex* * HyFlex: Hybrid-Flexible (face-to-face and online training simultaneously)

ESG category	Policy	Sixth Mid-Term Management Plan targets	FY2020 targets	FY2020 performance
Respecting Human Rights	Promote initiatives in line with international human rights norms	ー	ー	Maintained process of labor-management discussions and improvements Maintained initiatives to protect LGBTQ+ rights, etc. Continued to respond to inquiries and reports from employees concerning workplace harassment, etc., and implement corrective measures

ESG category	Policy	Sixth Mid-Term Management Plan targets	FY2020 targets	FY2020 performance
Corporate Governance	Realize a transparent, fair and timely decision-making system for sustainable growth and improvement in our corporate value over the mid- to long- term	Further enhance the effectiveness of the Board of Directors	ー	Strengthened the monitoring function by appointing a majority of outside directors to the Board of Directors
Corporate Governance		Strengthen Group governance	ー	Enhanced monitoring function and risk management by separating corporate auditor duties from management support

ESG category	Policy	Sixth Mid-Term Management Plan targets	FY2020 targets	FY2020 performance
Risk Management	Implement appropriate risk management to maintain the soundness and transparency of executive management, to increase confidence among business partners and markets, and to improve corporate value	ー	ー	Identified key risks and mitigated them

ESG category	Policy	Sixth Mid-Term Management Plan targets	FY2020 targets	FY2020 performance
Disaster Risk Management	Development of group crisis management systems	Strengthen cooperation with regional headquarters outside Japan	Strengthen reporting and information sharing systems	Set up an emergency response organization to prevent the spread of COVID-19 infections, formulated the Group’s basic policy, and shared countermeasures implemented in each region
	Development of group crisis management systems	Optimize crisis management system	Review the management system based on crisis response results
	BCP creation and effectiveness enhancement	Japan: Improve BCP effectiveness for earthquake, wind, and flood damage	Enhance capabilities to continue product supply	Strengthened emergency response capabilities through training at the Group Crisis Response Task Force and Site Crisis Response Task Forces
	BCP creation and effectiveness enhancement	Outside Japan: Establish a BCP against serious risks	Formulate a BCP assuming serious risks	Expanded sites formulating BCP, and started cross-regional BCP formulation

ESG category	Policy	Sixth Mid-Term Management Plan targets	FY2020 targets	FY2020 performance
Information Security Management	Respond to risks associated with the convenience of information handling due to the rapid development of information and communication technology and strengthen compliance with relevant laws and regulations Build even more robust network mechanisms and organizational structures to counter increasingly sophisticated cyberattacks	Enhance information security infrastructure	Continue PDCA cycles for the Information Security Management System (ISMS)	Implemented ongoing ISMS activities
		Obtain ISO 27001 certification	Obtain certification in the Information System Department	Obtained certification in November 2020
		Strengthen incident response capability (including the C-SIRT* system) * SIRT is the abbreviation for Security Incident Response Team.	Establish C-SIRT organization and commence activities	Appointed person to C-SIRT and conducted incident response training
		Enhance ID and access management	Complete preparations for building an ID and access management system	Continued work to build the system and implemented preparations for migration

ESG category	Policy	Sixth Mid-Term Management Plan targets	FY2020 targets	FY2020 performance
Compliance	Increase trust from international and regional society by completely adhering to the laws and regulations, and by taking actions based on high ethical standards	Further strengthen the global compliance system	Monitor compliance plans and their progress outside Japan	Monitored compliance plans outside Japan and their progress through global and monthly meetings Supported and monitored measures based on the results of the employee engagement surveys (compliance awareness surveys) conducted in fiscal 2019
		Improve sophistication of compliance risk management	Conduct competition law (antitrust law) audits (worldwide)	Conducted competition law (antitrust law) audits and ascertained risks (worldwide)
		Heighten employee compliance awareness	Further develop compliance training for operators working at plants	At the Saitama Precision Machinery Plant, department managers served as instructors and conducted training for all factory operators
		Increase the compliance hotline's reliability	Share information on usage status and corrective measures (worldwide)	Information on system usage and corrective measures shared in the Compliance Newsletter and via other channels such as digital signage

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