Basic Philosophy

Reducing greenhouse gas emissions to mitigate climate change is an urgent, global-scale challenge, and it is also a priority issue for the Niterra Group. In particular, as a corporate group engaged in manufacturing, we believe that reducing CO₂ emissions from our business activities is a responsibility that our Group must fulfill.

We have declared in “Eco Vision 2030” a target of reducing CO₂ emissions (Scope 1 and 2) by 46% by FY2030 compared to FY2018 levels. We will also strive to reduce CO₂ emissions across the supply chain and product lifecycle, aiming to achieve the target of reducing CO₂ emissions (Scope 3) by 30% by FY2030 compared to FY2018 levels. We also set a target at the end of FY2024 to reduce CO₂ emissions (Scope 1 and 2) by 71.4% by FY2035 compared to FY2018 levels.

Toward achieving these targets, we will implement various measures under four key plans, “Plan A: Energy Conservation,” “Plan B: Manufacturing and Work Style Improvement,” “Plan C: Energy Creation,” and “Plan D: Procurement/Certificates,” thereby promoting both systematic CO₂ emissions reduction and economic growth.

Furthermore, we are working on establishing a carbon cycle system and utilizing hydrogen.

Our group’s efforts to Reduce CO₂ Emissions (Scopes 1 and 2)

Target for Scopes 1 and 2

1. The new targets for FY2035 and FY2030 are our own milestones formulated with the intention of meeting the SBTi 1.5°C criteria.
2. For the previous target (30% reduction by FY2030), we have already obtained certification as SBT WB2°C, and we plan to apply to the SBTi for an update regarding the new targets next fiscal year.

• For the actual emissions in Scopes 1 and 2 for each fiscal year since the base year (FY2018), we have received calculation verification by an independent third-party organization (Click here for the third-party verification report).

CO₂ Emission Reduction Measures up to 2050

Our Group is promoting a medium- to long-term plan aimed at reducing greenhouse gas emissions from our business activities (Scope 1 and 2). Currently, we are updating the plan regarding the optimal contribution ratio of each reduction measure, and plan to announce a new breakdown of measures by around the end of FY2026. During this transition period, while continuing to improve the energy efficiency of equipment and review production processes at each site (Plans A to C), we are concurrently advancing the introduction of renewable electricity and the utilization of environmental certificates (Plan D). Through both operational improvements at our own sites and energy procurement, we will work to curb emissions in a phased manner.

Measures under Plan A: Energy Conservation

Efforts at production sites

When introducing production equipment, we create a checklist for energy-efficient design and conduct checks using it. For existing production equipment and ancillary equipment, we are working on equipment improvement to reduce standby energy consumption during holidays and at night.
In addition, we carry out periodic inspections and maintenance to prevent air leaks and other energy loss due to aging equipment.

Efforts at offices

In addition to switching to LED lighting and turning off lights and PCs during breaks, we encourage “Cool Biz” wear in summer and “Warm Biz” in winter and appropriately control temperature, humidity, and ventilation to save energy.

Measures under Plan B: Manufacturing and Work Style Improvement

Efforts at production sites

We review manufacturing conditions (profiles) on an as-needed basis to avoid using excessive energy for production. The amount of CO₂ emissions of each internal business company is visualized on an internal dashboard, and daily improvement activities are being carried out at each site to ensure production is as energy efficient as possible. Our Group works as one to promote energy saving activities by sharing successful improvement cases across the Group.

Measures under Plan C: Energy creation

Efforts to introduce renewable energy

We enhance the use of renewable energy, including solar energy, hydropower, and geothermal energy.
The following are the main locations where facilities for renewable energy are currently being installed. We will continue to strategically install these facilities in the future.

For actual power generation data, please refer to the Sustainability Data.

Fuel cell

Measures under Plan D: Procurement/Certificates

Efforts to introduce CO₂-free electricity

The headquarters, the Satsuma Plant and Satsuma Electrode Plant of SparkTec WKS, and the Oita Plant of Niterra Materials use CO₂-free electricity for 100% of their power needs. We also use CO₂-free electricity at some of our other domestic locations.
We also plan to systematically implement CO₂-free electricity while curbing power consumption, mainly through energy-saving activities.

Initiatives aimed at realizing a carbon recycle-oriented society (Carbon Neutral as a service)

In order to contribute to the realization of a carbon-neutral society, we are developing methanation-related technologies (hydrogen production technology that applies ceramic solid electrolytes and CO₂ recovery technology that applies oxygen concentrator technology).

The Link Between Non-Financial Indicators (Employee Engagement) in Our Performance-Linked Stock Compensation System and Climate Change Initiatives

We have introduced the performance-linked stock remuneration for directors (excluding directors who are Audit and Supervisory Committee members and outside directors) and corporate officers (excluding employment-type corporate officers) to have them share interests with shareholders, so as to incentivize them to contribute to the improvement of the Company’s medium- to long-term performance and to increasing corporate value.
Under this remuneration system, "employee engagement" is established as a non-financial indicator, alongside mid-term performance indicators and shareholder value indicators. Employee engagement is a key indicator of the vitality and the willingness of our employees to contribute, who are the source of our Group's sustainable growth. Our Group places particular emphasis on each employee's "yarigai" (a sense of purpose and fulfillment).
This "sense of purpose and fulfillment" is also significantly nurtured by the tangible feeling that we are helping to solve social issues through our business operations. For example, climate change initiatives, such as reducing CO₂ emissions, are a major factor in enabling employees to take pride in the company's activities and feel this "sense of purpose." Furthermore, this "sense of purpose" is also enhanced through initiatives like human resource development and the creation of a supportive work environment. For this reason, actively advancing these initiatives constitutes an important evaluation metric for the management team.
Thus, we have a system where various non-financial initiatives, including our response to climate change, lead to enhanced employee engagement, which is ultimately reflected in the performance-linked stock remuneration.

Efforts to raise internal awareness (internal carbon pricing, internal carbon taxation, and internal environmental fund)

To reduce emissions in Scopes 1 and 2, we take the following awareness-raising measures: internal carbon pricing, internal carbon taxation, and an internal environmental fund.
For internal carbon pricing, our group has decided to collect 10,000 yen per ton of CO₂. Internal carbon taxation is a system under which fees are collected from departments, including internal business companies and group companies, depending on the amount of their CO₂ emissions. This system is expected to further raise awareness of and accelerate CO₂ emissions reduction.
The internal environmental fund is a system to appropriate the fees collected through internal carbon taxation for capital investment as a grant to reduce CO₂ emissions. For example, in FY 2023, we provided a grant for a solar power generation unit to the Ise Plant and the Nakatsugawa Plant of CERAMIC SENSOR. When introducing equipment, we make a comprehensive decision at a corporate management committee after conducting an environmental assessment not only of CO₂ emissions, but also of water, energy, and other overall environmental factors.

Reduction of Environmental Load at Factories in General

SUISO no MORI hub

"SUISO no MORI hub” at the Komaki Plant, which aims for the early realization of a hydrogen and carbon cycle society, is registered as a ZEB (Net Zero Energy Building). By adopting high thermal insulation and eaves, solar power panels, and desiccant air conditioning, it is expected to achieve a primary energy reduction rate of 146% (including energy creation). It will be utilized as a site for technological development contributing to decarbonization.

N-FOREST

The " N-FOREST" office building at the Komaki Plant has achieved the highest rating of "Rank S" in CASBEE (Comprehensive Assessment System for Built Environment Efficiency) due to its design that considers the landscape and the use of materials with low environmental impact. Furthermore, to contribute to the realization of a decarbonized society, the building utilizes a power generation system using solar power and SOFCs (Solid Oxide Fuel Cells).

Employee Dormitory at Satsuma Plant

The employee dormitory at the Satsuma Plant of SparkTec WKS has adopted ZEH (Net Zero Energy House) specifications. By combining "energy conservation" through high insulation and high-efficiency equipment with "energy creation" through solar power generation, we aim to achieve virtually zero annual energy consumption. We are actively promoting decarbonization in our welfare facilities as well.

Rooftop greening

Employee-participatory initiative

Under this initiative, our company receives from Chubu Electric Power Miraiz a supply of electricity with added environmental value, which is derived from surplus electricity* generated from solar power systems at employees’ homes, and uses the supplied electricity at the Komaki Plant. In addition, employees who provide environmental value of surplus electricity will be given incentives through Chubu Electric Power Miraiz.
Through this initiative, we will promote CO₂ emissions reduction together with our employees.

• Electricity from households for whom the electricity purchase period under the feed-in tariff scheme for renewable energy has ended

Solar Power PPA Service

As part of Our Group's energy creation activities, aiming to reduce CO₂ emissions not only within Our Group but also in the region, in addition to our existing efforts, we are promoting a PPA service for businesses that our business partners, and factories and stores of our product users can join. Group company Niterra Power serves as the service provider, installing solar power generation systems at local factories and stores, and supplying the generated electricity to the power users at those factories and stores. The surplus electricity generated by solar power will be utilized by our company, and in the future, we will use the created electricity effectively toward a carbon cycle society by producing and utilizing hydrogen.

Efforts to Reduce CO₂ Emissions in the supply chain

Target setting for Scope 3

• The target has been classified by the Science Based Targets initiative (SBTi) as SBT WB2℃ (well below 2℃).

Scope 3 emissions are indirect greenhouse gas emissions excluding those in Scopes 1 and 2 (emissions from other companies associated with our business operations), divided into 15 categories.
Our emissions in Category 1 “Purchased goods and services,” Category 4 “Upstream transportation and distribution,” and Category 11 “Use of sold products” make up 97.6% of our total Scope 3 emissions. Therefore, we work on reducing CO₂ emissions by setting a target to be achieved by FY 2030 in terms of these three categories.
For Category 1 emissions, through the Sustainability Procurement Guidelines, we ask our business partners to set a target for reducing CO₂ emissions and work toward achieving the target. We also provide our business partners with support when needed.
For Category 4 emissions, as a specified consigner stipulated in the Act on the Rational Use of Energy, we work to reduce CO₂ emissions associated with transportation by reducing shipping distances through the restructuring/consolidation of plants and the reconsideration of waste-disposal service vendors.
For Category 11 emissions, which account for the largest portion of total Scope 3 emissions, we work on, for example, designing products to improve their energy efficiency while being used.

Initiatives for Category 1: Purchased goods and services

Sustainability Procurement Guidelines

To promote sustainability initiatives throughout our supply chain, we have issued the “Sustainability Procurement Guidelines” and distributed them to our suppliers.
These Guidelines stipulate what we expect our suppliers to comply with. They also outline our response to climate change, and in the Guidelines, we ask our suppliers to set CO₂ reduction targets and take measures to achieve them. We also ask our suppliers to disseminate these Guidelines to their suppliers and encourage their implementation.

Initiatives for Category 4: Upstream transportation and distribution

Review of logistics routes

Initiatives for Category 11: Use of sold products

Enhancing Fuel Efficiency through High-Performance Plugs

Calculation of Product Carbon Footprint (CFP)

Carbon Footprint (CFP) is a mechanism to visualize the total amount of greenhouse gases emitted throughout the entire lifecycle of a product or service, from raw material procurement to manufacturing, distribution, usage, and disposal/recycling, converted into CO₂ equivalent. Our Group considers CO₂ reduction across the entire supply chain to be a critical issue and is working to reduce environmental impact throughout the product lifecycle.
Our Group is promoting the calculation of CFP, focusing on the upstream value chain and our own production processes within the product lifecycle, to grasp the current emission structure and aid in considering reduction measures. In these calculating CFP, we refer to standards suitable for the purpose from ISO 14040, ISO 14044, and ISO 14067.Furthermore, to promote CO₂ reduction across the entire value chain, we are responding to requests for CFP-related data from customers. In the development of new products, We will promote the establishment of a company-wide management framework to ensure that development takes CFP into account.

Promoting disclosure of information about climate-related risks and opportunities

Collaboration with Local Communities

Our Group actively promoting the reduction of CO₂ emissions and the introduction of renewable energy at each of its business locations.
In February 2025, NTK Ceramics signed a partnership agreement with Iijima Town in Kamiina-gun, Nagano Prefecture, where its production facilities are located, to promote carbon neutrality. Iijima Town issued its "Iijima Town Carbon Neutrality Declaration" in October 2022, aiming for virtually zero carbon dioxide (CO₂) emissions by 2050.

Participation in business organizations and initiatives

To enhance our efforts to mitigate climate change, the Group supports public policies and regulations related to climate change, and participates in the following organizations and initiatives:

• Task Force on Climate-Related Financial Disclosures (TCFD)
• Science Based Targets initiative (SBTi)
• GX Future Consortium
• Japan Auto Parts Industries Association, Carbon Neutrality Subcommittee