In January 2020, NSK endorsed the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. In accordance with the recommendations of the TCFD, NSK identifies business risks and opportunities, adapts management plans, and enhances information disclosure with the aim of contributing to both the sustainable development of society and the sustainable growth of NSK, while endeavoring to take its environmental activities to the next level.
As a Company with Three Committees, NSK proactively delegates to executive officers decision-making authority with regard to the execution of operations and strives to increase the efficiency and agility of management. The Board of Directors oversees the proper and fair execution of duties by the executive officers.
Based on its core values of safety, quality, compliance, and the environment, NSK has set forth its two policies of “operational excellence,” representing the constant pursuit of competitiveness, and “challenging innovation,” or the creation of new value. Moreover, we are tackling three management issues, namely new initiatives targeting growth, enhancing managerial resources, and contributing to the environment and society. The Board of Directors determines the Mid-Term Management Plan, and executive organizations report on the plan’s progress to the Board of Directors.
The Global Environment Protection Committee, chaired by the President & CEO with relevant executive officers serving as committee members, deliberates on activity policies, including for climate change, considers promotion systems, and assesses and revises activity progress as an organization that comprehensively advances issues pertaining to NSK’s efforts to preserve the global environment.
Together with having a good grasp of ongoing changes to the social environment, as well as stakeholder needs and expectations, NSK evaluates the risks and opportunities that arise along with climate change, reflects countermeasures to management strategy and business plans, and strengthens the actions it takes.
NSK works to build a risk management system based on clearly stipulated fundamental principles aimed at effectively enabling global Group management and internal control functions. Every year, all the business sites perform their own risk assessment classifying, analyzing, and evaluating risks in accordance with changes in the social environment, the frequency of risk occurrence, the size of impact, and other factors to identify risks that should be addressed. The Corporate Planning Division Headquarters and the Finance Division Headquarters coordinate with business and regional and functional headquarters regarding risks at each division and each business site, which are managed in accordance with prescribed reporting systems. While putting in place preventive measures, the Company devises steps to swiftly and appropriately act in the unfortunate event a risk is actually manifested, and then works to mitigate the impact.
We had been treating climate-related risk, which is among the risks associated with the environment, across businesses or divisions as a risk of high importance. However, from fiscal 2021, we have been working to enhance climate-related risk management by also making use of the scenario analysis recommended by the TCFD while analyzing changes in the business environment and the impact on NSK’s business.
With the goal of considering the future impact climate change will have on NSK’s value chain, as well as the effectiveness of climate change countermeasures, NSK looked at the period up to the year 2050, and performed two scenario analyses, one scenario with a temperature increase of 1.5℃ to 2℃ and another scenario of 4℃.
Given the results achieved, NSK determined that its basic strategy would be to contribute to the realization of the 1.5℃ to 2℃ scenario, so as to have a hand in building a sustainable society. NSK will act to address transition risks associated with CO2 emissions regulations; indeed, NSK will seize upon the opportunities to advance its business field of Motion & Control™ by addressing society’s needs, namely decarbonization throughout a product’s life cycle, promoting measures to deal with climate change during its overall business activities.
On the other hand, NSK is also promoting measures in the event of an anticipated 4℃ scenario against natural disasters that are caused by climate change.
Based on the results of this analysis, NSK will formulate a strategy and build a framework in which it can continue to achieve sustainable growth, even with a different climate and social environment.
■ Analysis targets and prerequisites
■ Image of anticipated 2050 society in which NSK operates its business for the scenario analysis (outline)
Financial impact is indicated as negative (red) or positive (blue) impact on the business, and and the size of the circle indicates the scale of the impact.
When there is almost no impact, it is indicated as "Minimal impact."
Forecast of Risk from Response Measures
Created based on the 1.5°C to 2°C scenario. However, ＊ is assumed to be for a 4°C scenario.
In estimating the financial impact, the risk of inundation, the number of days of outages and damage due to inundation, and the projected carbon tax price are calculated using data published by public agencies.
NSK takes a dual approach to CO2 reduction, both with expanding on the volume of CO2 emissions avoided at the product usage stage owing to products that help reduce CO2 emissions, and CO2 emissions cut during our business activities. We set respective long-term goals while advancing various efforts to mitigate the impact of climate change. Moreover, considering current conditions where there is increasing urgency to address the dangers of climate change, we are considering bringing our goals forward.
In addition, in terms of CO2 emissions reduction goals, as one goal that is consistent with raising corporate value, we are using them as a metric for short-term performance-based compensation for executive officers.