Governance and Risk Management

The Board of Directors makes decisions on important management affairs of the NEG Group and supervises the execution of business affairs. Also, in management issues related to climate-related measures, the Board of Directors creates systems, formulates measures and targets on priority issues to be addressed and resolved, and evaluates and provides advice on measures executed by the President, who acts as the person responsible for business execution. Outside officers (three Outside Directors and two Outside Corporate Auditors) participate in meetings of the Board of Directors.
The President executes measures based on the decisions and advice of the Board of Directors as the person responsible for business execution.
The Management Committee deliberates on our company’s important managerial affairs and draws up detailed action plans regarding the decisions made at the Board of Directors meetings.
The CSR Committee has been established to engage in comprehensive discussion about the direction and content of CSR activities, including climate-related measures, and to have flexibility in developing such activities. In addition, the committee addresses broad sustainability-related challenges, such as ESG and the SDGs, centered on our three priority themes for CSR (the environment, diversity and inclusion, and community contribution). The Committee is chaired by an executive officer in charge of general affairs, is comprised of CSR-related department heads and other managers, and has a secretariat based in the General Affairs Division. Furthermore, to increase the effectiveness of our initiatives for each of our priority themes, we have established three working teams to address major areas. The “Environmental Team” handles climate change response and environmental preservation, while the “Diversity and Inclusion Team” handles human capital and human rights, and the “Community Contribution Team” handles educational support and similar matters.
The main activities of the CSR Committee are to develop CSR-related basic policies; establish priority themes; draft, discuss and promote measures to address priority themes; to design and discuss information disclosure policies and disclosure content; and to provide recommendations and reports to the Management Committee and Board of Directors as appropriate.
With regard to climate-related matters, based on the TCFD framework, the Environmental Team of the CSR Committee conducts hearings with staff departments and business departments to identify and review climate-related risks and opportunities, and evaluates and reviews business impact based on scenario analysis. The division responsible for risks and opportunities promotes the carbon neutral implementation plan, the key to the Group’s strategic resilience, while the Environmental Team regularly verifies progress and makes reports to the CSR Committee. The CSR Committee drafts, discusses, and promotes the contents of the support provided to each division related to the reported items in question from the standpoint of sustainability promotion, in addition to drafting and discussing on the policy for information disclosure and the contents of disclosure and providing recommendations and reports to the Management Committee and the Board of Directors as necessary.
Executive officers and relevant staff departments and business departments work via the carbon neutrality action plan and other efforts to mitigate climate-related risks and capitalize on climate-related opportunities.
The climate-related risks and opportunities, as well as countermeasures, identified and evaluated by the CSR Committee are integrated in the periodic risk auditing conducted by the NEG Group in line with our basic policy on internal control. The division responsible for risks and opportunities promotes countermeasures.

Strategies

(1) Scenario Analysis

We have carried out the following scenario analysis in order to evaluate business impacts under different scenarios, as well as to evaluate our strategic resilience with regard to climate-related risks and opportunities.

a. Analysis steps

b. Businesses targeted for analysis

All NEG Group businesses are targeted for analysis.

c. Established scenarios

d. Evaluation timeline

The impact on the NEG Group’s business by major climate-related risks and opportunities identified from scenario analysis was evaluated on a timeline focused on the year 2030.

(2) Major Climate-related Risks and Opportunities Identified, Evaluation of Impact on Business, and Countermeasures

(3) Strategic Resilience

Following the update of the reference scenarios, we reviewed impacts on business. Although the business impact increased due to soaring raw material and energy costs caused by global inflation and other factors, through incorporating new technologies and solutions from inside and outside the company and implementing above actions such as the carbon neutrality action plan, we will enhance our business resilience.

Metrics and Targets

With actions for climate change now an important issue on a global scale, committed to continually pursuing sustainable manufacturing to climate change measures, in February 2022, we announced our 2030 targets of reducing CO₂ emissions (Scope 1+2) and achieving carbon neutrality by 2050. We are promoting ambitious measures to horizontally expand all-electric melting furnaces, switch to energy-saving facilities, and invest in renewable energy. For Scope 3 emissions as well, we are promoting efforts to enhance information disclosure during fiscal 2024, such as creating a system for calculating Scope 3 CO₂ emissions.
Due mainly to reduced manufacturing in the displays business and composites business, in FY2023, CO₂ emissions (Scope 1 + 2) declined from the previous fiscal year. Meanwhile, as a result of pursuing improvement activities in our carbon neutral implementation plan, CO₂ emissions intensity (Scope 1 + 2) also declined on a unit basis from the previous fiscal year

(1) CO₂ Emissions Reduction Targets

(2) Initiatives to Achieve Targets

In order to achieve CO₂ emissions reduction targets, the NEG Group has created a carbon neutrality action plan, which involves a variety of initiatives, focusing primarily on those in the table at right. Through these, we will achieve our targets by 2030, after which we will pursue improvement activities that will make us carbon neutral by 2050.

Category	Initiatives
Manufacturing process	Promoting all-electric melting and improving melting efficiency
Switching to energy-saving facilities
Technological improvement and electrification for forming and processing facilities
Operations automation and optimization
Utility facilities	Upgrading to high-efficiency facilities
Facility optimization
Operation optimization
Technological development	Combustion technology development for CO2-free fuel (hydrogen, etc.)
Procurement	Investment and procurement for renewable energy

(3) Progress of Initiatives

a. Percentage of all-electric melting

b. Electrification for melting, forming and processing facilities

c. Combustion technology development for CO₂-free fuel (hydrogen, etc.)

We succeeded in melting glass with combustion technology using a hydrogen-oxygen burner. (Apr 19, 2022)

d. Investment and procurement for renewable energy

We started operation of a mega solar system at Shiga-Takatsuki Plant. (Mar 30, 2023)

We signed its first VPPA (Virtual Power Purchase Agreement) for solar power. (Dec 11, 2023)