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Climate Change

NEC expressed its support for the Task Force on Climate-related Financial Disclosures (TCFD) and its recommendations in 2018 and provides disclosures on this page based on the TCFD framework.

Governance

Climate Change Countermeasure Implementation Framework

In the Environmental Management Implementation Framework, NEC engages in environmental management as well as climate change.

Within the framework described in Environmental Management Promotion Framework, we are also implementing climate change measures. The NEC Group’s environmental policies and goals regarding climate change are discussed and formulated by the Environmental Management Promotion Committee, which is made up of the managers in charge of the environment from each business unit. The Corporate Officer in charge of the Environment confirms the council’s proposals and reports them to the Business Strategy Committee, an organization that is further up the organizational hierarchy. Risks related to climate change are also shared at the Environmental Management Promotion Committee. The Corporate Officer in charge of the Environment confirms those risks that could have a significant impact on businesses and, as necessary, deliberates these risks at the Risk Control and Compliance Committee in accordance with the risk management process.

In particular, climate risks and opportunities that could significantly affect businesses are also reported to the Board of Directors, as necessary. Through deliberation, the Board of Directors gives instructions on relevant measures, thereby providing supervision that ensures that NEC advances appropriate climate change measures.

In addition, as part of our climate change measures, we are advancing groupwide measures to reduce our in-house CO2 emissions by addressing specific aspects of the issue through special committees. By reporting and submitting proposals to the Environmental Management Promotion Committee, these special committees facilitate the groupwide pursuit of energy-saving initiatives. Decisions made at the Environmental Management Promotion Committee are reported and instructed at each business unit and plant committee, and are then communicated to and thoroughly implemented by all employees.

Participation in Initiatives Related to Climate Change

NEC is participating in environmental initiatives to build a sustainable business foundation for itself and promote the realization of a sustainable society through co-creation.

Environment-related Reports for Main Committees

Since climate change is an important materiality, committees attended by managers deliberate, supervise and report on initiatives and risks related to the environment, including climate change. In fiscal 2022, in addition to engaging in dialogue with stakeholders, NEC set up the Sustainability Advisory Committee to broaden discussions between management and outside experts.

Key Discussions, Audits, and Reports

FY20232 timesMay: NEC's Approach to Sustainability Promotion and Key Initiatives
February: Business Risks and Opportunities in the Natural Capital FieldFY20232 timesMay: NEC's Approach to Sustainability Promotion and Key Initiatives
February: Business Risks and Opportunities in the Natural Capital Field
Forum Fiscal year Frequency Key discussions, audits, and reports
Board of Directors FY2021 4 times June: Report on sustainability promotion activities
December: Environmental perspectives in next mid-term management plan
February: Report on sustainability promotion activities
March: NEC Eco Action Plan 2025 (including investment and spending plans)
FY2022 4 times May: Report on sustainability promotion activities
December: Participation in BA1.5℃, report on ESG briefings
January: NEC's initiatives to become carbon neutrality
February: Environmental risks (part of Companywide risk countermeasure evaluations)
FY2023 4 times May: Activities for Carbon neutral
July: Issue of Sustainable linked bond
October: Climate Change Summit
February: NEC's environmental initiatives
~Strengthen carbon neutral measures in the future~
FY2024 2 times May: Report on ESG and sustainability promotion activities
December: Report on participation in COP28
FY2025 2 times July: Ranked 2nd in TIME’s “World’s Most Sustainable Companies of 2024” Report on our initiatives in the Adaptation Finance Business
January: World Economic Forum Annual Meeting in Davos (Report on NEC’s President taking the stage and discussing the topic of environmental pollution)
Dialogue between management and outside experts Dialogue with stakeholders FY2021 1 time What initiatives should NEC take now to create environmentally beneficial businesses
FY2024 2 times September: How to face sustainability, including climate change
March: ESG-Day
Sustainability Advisory Committee FY2022 1 time Understanding global trends related to climate change and NEC's risks and opportunities
FY2023 2 times May: NEC's Approach to Sustainability Promotion and Key Initiatives
February: Business Risks and Opportunities in the Natural Capital Field
FY2024 1 time February: What is Needed to Accelerate the Integration of Climate Change Response and NEC Business Strategies - In Response to Growing Demands for Sustainability Information Disclosure

Strategy

Climate Change Countermeasure Policy

NEC has positioned Environmental Action with a Particular Focus on Climate Change (Decarbonization) as one of its priority management themes from an ESG perspective – materiality. As a result, NEC will not only make efforts to reduce the environmental impact of its products and services, but will also support customers and society in their decarbonization efforts by utilizing ICT. Based on this approach, NEC formulated the Course of Action for Climate Change Toward 2050, declaring its intent to reduce its CO2 emissions to net zero as a long-term environmental goal. 
At present, we have moved up our carbon neutrality target to 2040 pursuant to signing The Climate Pledge, and are implementing initiatives after changing the language of our climate change guidelines to move up the year for achieving our carbon neutrality target to 2040.

Aiming for reductions to achieve zero CO2 emissions from our supply chain by 2040, we obtained SBT Net-Zero certification in April 2024 and have intensified action. Given the global goal of achieving a low-carbon society,  we established the Carbon Neutral Business Promotion PMO and are implementing initiatives throughout the Group that involve reducing energy use in our ICT infrastructure, visualizing solutions for CO2 emissions, resource aggregation businesses, and environmental consulting.

Contributions through Businesses

Contributing to Customers’Environmental Management Challenges

In the Environmental Strategy section, we outlined NEC’s approach and goals in addressing environmental management challenges, and we recognize that our customers face similar issues. NEC is still in the process of advancing its environmental management, and we believe customers are also at varying stages: Stage 1, where they are responding with minimal cost to meet customer demands and regulatory requirements; Stage 2, where they aim to reduce environmental impact and improve competitiveness while earning external recognition and enhancing corporate value amid rising carbon taxes and energy costs; and Stage 3, where environmental initiatives are integrated into their growth strategies, going beyond cost savings and value enhancement. NEC believes it can contribute in various ways tailored to each customer’s stage, drawing on its own experience.

In 2024, NEC introduced BluStellar, an end-to-end business model that creates value starting from customers’ management challenges. NEC applies the BluStellar values creation model in its environmental business as well. By leveraging technologies such as sensing, AI, and security, along with highly regarded external experts and knowledge, we visualize and analyze complex environmental issues to clarify the challenges that need to be addressed. Through the Client Zero approach, which treats NEC itself as the first client for value verification, and co-creation with clients, we clarify issues and effects, contributing to the establishment of industry standards.

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Understanding the Environmental Business Market

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Solving Environmental Management Issues Through the BluStellar Model
Category Solution
(including those not yet commercialized)
Description
Consulting SX/GX consulting services Consulting to support strategy roadmap formulation, management, and implementation of priority measures
Carbon management and CO2 visualization Environmental performance management solution (GreenGlobeX, KMD CarbonKey, and EnergyKey) Collect, manage and visualize CO2, water, waste and other environmental data (for companies and local governments)
Energy conservation / GHG emissions Reduction Green data centers Data centers operated using effectively 100% renewable energy (Kawasaki Data Center, Nagoya Data Center, Kanagawa Data Center & Kobe Data Center)
Energy efficiency support for plants and buildings Optimize total energy management in construction of plants and offices and equipment installation
Net Zero Energy Building(ZEB)solutions One-stop support for ZEB, from planning to design, construction and operational management
Logistics efficiency improvement through optimization technology Optimization of delivery order and routes, support for shared logistics and transportation
Renewable energy / Distributed energy Solar power generation × Storage battery systems Systems for decarbonization during normal times and responding to long power outages
EV charging infrastructure services Authentication of EV users, charge volume management, and coordinated control of multiple chargers
Adapting to climate Change NEC digital adaptation finance Digital technology based visualization of disaster mitigation and environmental benefits enabled by adaptation measures
Smart streetlights Reduce environmental impact and magnitude of disasters with smart streetlights
Resource circulation Plastic information distribution platform Platform for the distribution of material information contained in plastics
Recycled plastic manufacturing Efficiency Use of AI to stabilize the quality and distribution volume of recycled plastics
Aluminum recycling AI AI-enabled upcycling of aluminum
Nature Positive (water, etc.) Agricultural ICT solution CropScope Ensuring yields while minimizing irrigation water and fertilizer use
Finance ESG portfolio management (Avaloq) Services for managing ESG-oriented equity portfolios

Climate Change Mitigation (Decarbonization): Product-Level Environmental Information Management

Until now, CO2 emissions have typically been visualized at the corporate level to comply with regulations. Going forward, visualizing CO2 emissions at the product level will become essential to translate CO2 reduction efforts into product competitiveness. As a result, environmental information management, including CO2 emissions, will expand from organizational-level management for disclosure to product-level management that supports product competitiveness. In the previous fiscal year, NEC conducted a product-level CO2 management trial at a Group factory as part of its Client Zero initiative. The trial helped identify challenges in operational processes and supplier collaboration that cannot be resolved by introducing management tools alone. NEC is now working on developing appropriate solutions.

Climate Change Adaptation: NEC Digital Adaptation Finance

Climate change measures must address not only decarbonization but also adaptation areas such as disaster prevention and mitigation. One of the main issues in the adaptation domain is insufficient funding, caused by the regional and temporal unevenness of climate-related causes and damages. At  COP28 in 2023, NEC proposed “NEC Digital Adaptation Finance,” a framework that quantifies the effects of adaptation measures using digital technologies to encourage funding. NEC has since established the Japan Consortium for Adaptation Finance and is working with its members and global partners to develop various financial instruments. The adaptation finance initiative was also introduced at COP29 in 2024, where it received numerous inquiries from organizations around the world. NEC’s expertise in digital transformation (DX) for disaster prevention has enabled the Company to pioneer initiatives like this new business for many years.

Scenario Analysis

In order to build a sustainable management foundation for NEC and promote the realization of a sustainable society through co-creation, we analyze the risks and opportunities that affect the environment and are implementing measures to reduce risks and increase opportunities.

In fiscal year 2025, we utilized AI for the first time to reassess companywide and business-specific risks.

Risks and Opportunities Presented by Scenario Analysis

Risks Scenarios (1.5°C or 4.0°C)*2 Description Timeline*3 Financial impact/Year Countermeasures
Transitional*4 1.5℃ Cost increases due to carbon pricing Medium term 4.4 billion yen Increase use of renewable energy and achieve thorough gains in efficiency to achieve net zero CO2 emissions target by 2040
Lower sales due to reputation risk Short term 3.6 billion yen SBT Initiative*5 certification, increased use of renewable energy, and purchases of green electricity
Physical*6 4.0℃ Decrease in sales due to business suspension resulting from the impact of weather disasters (floods, landslides, water shortages, etc.) on data centers Short term 3.3 billion yen Reinforce emergency power supply facilities and other power generation facilities (stockpiling fuel for 5 days of operation, etc.)
Sales decline due to production halt caused by flooding at manufacturing sites Medium term 8.2 billion yen Raise floor height, install flood barriers and watertight doors, and stockpile sandbags
Opportunities Scenarios (1.5°C or 4.0°C)*2 Description Timeline*3 Financial impact/Year Creation and expansion of opportunities
Adaptation 4.0℃ Increased revenue from demand for funding driven by greater transparency in adaptation value Medium term - Provide “NEC Digital Adaptation Finance” to visualize disaster mitigation and environmental benefits using digital tech
Adaptation & mitigation 4.0℃ Increased sales due to growing need for disaster-resistant, GHG-efficient data centers Medium term 13.3 billion yen Improvement of data center energy efficiency (greening of data centers)
Mitigation 4.0℃ Increased revenue from growing demand for reducing excess inventory in manufacturing Medium term - Reduction of waste using demand forecasting technology
  • *2
    1.5°C: A scenario in which society decarbonizes and temperatures have risen by 1.5°C in 2100
    4.0°C: A scenario in which society does not sufficiently decarbonize and temperatures have risen by 4.0°C in 2100
  • *3
    Short-term = 0-3 years, medium term = 4-10 years, long term = 11-20 years
  • *4
    Risks arising from changes in policies, laws, technological innovations, and market preferences during the transition to a decarbonized society
  • *5
    An initiative established by four organizations: Carbon Disclosure Project (CDP), United Nations Global Compact (UNGC), World Resources Institute (WRI), and World Wide Fund for Nature (WWF). The initiative encourages companies to set science-based targets for reducing CO2 emissions
  • *6
    Acute risks from events caused by abnormal weather (floods, landslides, etc.) and chronic risks from long-term changes in weather patterns (rise in sea level, heat waves, changes in suitable land for cultivation, etc.)

NEC's Vision for 2030/2050: Our Future Lifestyles and Local Governments

NEC believes that a company cannot continue to exist and grow without analyzing scenarios for climate change. Among recent global risks, climate change risks are numerous and could have an extremely large impact on not only corporate business activities and earnings but also our livelihoods. No matter what future is in store for us, based on multiple scenarios, NEC will examine steps that should be taken to realize a safe and secure society while surviving and growing itself. In 2019, we conducted a Companywide scenario analysis, and in two different scenarios, we analyzed potential changes in risks and opportunities for NEC.

We envisioned "climate change x government DX" (FY2023)

Since fiscal 2022, we have been conducting scenario analysis for each of our various business fields because the climate change risks and opportunities differ depending on the field. In fiscal 2023, in the domain of "digital government," we used the 1.5°C and 4°C scenarios to evaluate NEC's business opportunities in government digital transformation (DX) in Japan and the transition to a decarbonized society in 2030. Specifically, we drew up a picture of "climate change x government DX" in 2030, and considered the business concept proposal based on the company's risks and opportunities. Furthermore, we have enhanced our external hearings in order to reflect the voices of our stakeholders, .

Results of Scenario Analysis (2030): World Envisioned by NEC in 2030 and 2050
~climate change x government DX~

NEC created scenarios for 2030 and 2050 to envision the impact of climate change on the future of regions and local governments (core cities and small-scale cities). We evaluated four scenarios, with the 1.5℃ and 4℃ scenarios in the transition to a carbon-free society on the vertical axis, and the relationship of citizens with their governments and the state of government systems, separated by enforced actions and voluntary actions, on the horizontal axis. In each scenario, we used some items related to climate change and decarbonization, with assumptions for 2050 in the following scenarios.

Referenced Published Scenarios

1.5℃ Scenario 4℃ Scenario
  • IPCC AR6 WGⅠ SSP1-1.9
  • IPCC 1.5℃ Special Report
  • IPCC AR5 RCP2.6
  • IEA World Energy Outlook 2021
    Net Zero Emissions by 2050
    Scenario (NZE)
  • National Institute for
    Environmental Studies, Japan,
    Version SSP SSP1: Sustainable,
    SSP5: Reliance on Fossil Fuels
  • IPCC AR6 WGⅠ SSP1-8.5
  • IPCC AR5 RCP8.5
  • IEA World Energy Outlook 2021
    Stated Policies Scenario (STEPS)
  • National Institute for
    Environmental Studies, Japan,
    Version SSP SSP3: Regional
    Divisions, SSP4: Disparities
Second scenario: 1.5℃ × Forced environmental supreme efficiency scenariozoomLarger view
Second scenario: 1.5℃ × Forced
environmental supreme efficiency scenario
First scenario: 1.5℃ × Spontaneous regional value diversification scenariozoomLarger view
First scenario: 1.5℃ × Spontaneous regional
value diversification scenario
Third scenario: 4℃ × Forced disaster response scramble scenariozoomLarger view
Third scenario: 4℃ × Forced disaster
response scramble scenario
Fourth scenario: 4℃ × Spontaneous wider adaptation gap scenariozoomLarger view
Fourth scenario: 4℃ × Spontaneous wider
adaptation gap scenario

Scenario:Our Future Lifestyles and Local Governments

  • *
    Vertical axis: Realization of 1.5°C carbon society (global temperature up 1.5°C in the year 2100) and 4°C failure (global temperature up 4°C in the year 2100)
    Horizontal axis: Forced and spontaneous aspects of relationships between residents and governments and state of government systems

Risks and Opportunities Based on Scenario Analysis

  Summary of 2030 scenarios Key themes Opportunities Risks 2030 NEC business examples
1.5℃
  • National and local policies and public concerns are focused on well-being and the environment.
  • Decarbonization policies are a top priority for national and local governments, and the transition to a decarbonized society is under way due to legislation introduced in the 2020s combined with the efforts of companies and local governments.
  • Areas at the forefront of decarbonization are introducing renewable energy and promoting energy management, with net zero CO2 emissions in the consumer goods sector.
  • The penetration rate of the My Number Card is 100%. The number of administrative services that provide incentives and subsidies using this card is increasing, encouraging citizens to change their behavior.
  • Renewable energy-based distributed power sources
  • Increasing use of electric vehicles
  • Incentives for environmental activities
  • Visualization of natural capital
  • Increased awareness of well-being
  • Disaster preparedness planning using digital twins
  • Post-disaster support using the My Number Card
  • Local governments outsource and privatize some operations
  • Increase in data centers using renewable energy
  • Healthcare business expands as health incentives become more significant
  • Systematization of frameworks for emissions calculation, carbon taxes, emissions trading and carbon footprint
  • Expanding markets for sensing, visualizing and quantifying ecosystems, environmental conservation, losses and damage
  • Increased use of image analysis technology in compact cities
  • Transformation of conventional business models due to the progress of government DX and the increased standardization and commonality of systems
  • Intensifying competition with competitors and new entrants
1.5°C and energy management:
Decarbonization support services for
local governments that visualize
resident initiatives and administrative
policy outcomes

4°C and disaster preparedness:
Pre-disaster (disaster self-sufficiency
simulation); during disaster
(uninterrupted telecommunication,
damage certification issuance
support); post-disaster: volunteer
support promotion system

Both scenarios and healthcare: Data
utilization system to improve local
branding based on healthcare for
4°C visitors and environmental value
4℃
  • Many regions of Japan are confronted with rapidly declining population and financial difficulties.
  • National and local governments struggle to provide infrastructure and services for all citizens.
  • Wide-area collaboration and public-private partnerships gain traction. Climate change mitigation is deprioritized due to limited administrative staff, funding and other resources.
  • Enhanced crisis management capabilities and continuity of administrative functions are required in anticipation of increasingly frequent, large-scale disasters, and adaptation initiatives are prioritized.
  • Growing community disparities, stratification and division are affecting all aspects of policy from economics and finance to welfare, education and urban planning, and are becoming social issues.
  • Disaster preparedness planning using digital twins
  • Post-disaster support using the My Number Card
  • Fossil fuel-based centralized energy systems
  • Rising prices for energy, food and other commodities
  • Cars are primarily for household use
  • Decrease in natural capital
  • Increased needs for disaster preparedness and mitigation, and for solutions during and after disasters
  • Creation of administrative solutions using personal and administrative data
  • Growing needs for agricultural products that are resilient to climate change
  • Increase in solutions for introducing renewable energy and promoting local energy production for local consumption
  • Entry into the personalized medicine and online medical care markets
  • Coordination of supply chain BCP among industries
  • Growing security business needs
  • Contracting markets and decrease in business opportunities due to fewer customers and system integration
  • Intensified deregulated competition
  • Resistance to the use of personal and biometric information

Risk Management

Identifying Climate Scenarios

NEC conducts scenario analyses to understand the impact of climate change on our businesses and evaluate the resilience of our strategies for climate-related risks and opportunities. Our analysis focuses on the 1.5°C scenario, which involves the transition to a low-carbon economy based on the Paris Agreement and the demands of stakeholders; and the 4°C scenario, in which implementation of climate change measures fall short of current expectations. The scenarios we referred to during scenario analyses are as follows:

Referenced Published Scenarios

1.5°C scenario 4°C scenario
  • IPCC AR6 WG1 SSP1-1.9
  • IPCC 1.5ºC Special Report
  • IPCC AR5 RCP2.6
  • IEA World Energy Outlook 2021 Net Zero Emissions by 2050 Scenario(NZE)
  • National Institute for Environmental Studies, Japan, Version SSP+SSP1: Sustainable, SSP5: Reliance on Fossil Fuels
  • IPCC AR6 WG1 SSP5-8.5
  • IPCC AR5 RCP8.5
  • IEA World Energy Outlook 2021 Stated Policies Scenario (STEPS)
  • National Institute for Environmental Studies, Japan, Version SSP+SSP3: Regional Divisions, SSP4: Disparities

Timeline

To address the Paris Agreement and stakeholder demands, we recognized the need to evaluate the long-term impacts of climate change and therefore conducted our analysis up to the year 2050. We also made 2030 an interim milestone to align with the SBT targets we set.

Analysis Steps

In fiscal year 2025, we utilized AI for the first time to reassess companywide and business-specific risks, through the following steps.

As a result of the steps above, we identified carbon pricing as a companywide risk, and the data center and telecom services businesses as business-specific risks.

Type Description Timeline
Companywide risk Increased costs due toimplementation of carbon pricing Short, medium, and long term
Business specific Risk Telecom services business Meeting customer demands for 100% renewable energy-based production Short to medium term
Data center business Revenue loss due to data center shutdowns Short term

Summary

In fiscal year 2025, NEC conducted a scenario analysis-based risk assessment across all its businesses. By applying AI for the first time and screening by the Environment Management Department, NEC identified companywide and business-specific climate-related risks that could reasonably be expected to impact the Company’s outlook. The Environment Management Department led the assessment, and confirmed that NEC could continue and grow its business under any scenario by taking appropriate measures. The climate change risk measures identified will be sequentially incorporated into the long-term strategies of each business unit.

At the same time, envisioning diverse future scenarios for customers from a climate change perspective is a necessary step to uncover NEC’s business opportunities, and analysis of such opportunities will be carried out in the coming years. 

Objectives of Climate Change Measures

NEC is targeting carbon neutrality by 2040. We have set targets for 2030 and fiscal year 2026, and are taking action.

Year achieved Initiatives Indicator
2040 The Climate Pledge, SBT Net-Zero and RE100 Scope 1, 2, and 3 Zero
Green electricity 100%
2030 SBT Net-Zero Scope 1 and 2 50% (compared to FY2021)
Scope 3 50% (compared to FY2021)
FY2026 The Climate Pledge, SBT Net-Zero and RE100 Scope 1 and 2 25% (compared to FY2021)
Electricity from renewable energy 114,000 MWh

Scope 1, 2 and 3 Emissions

Thousand tons
Emissions
Scope 1 16
Scope 2 (market-based) 165
Scope 2 (location-based) 218
Scope 3 5,234
Category 1 Purchased goods and services 3,946 Category 9 Downstream transportation and distribution 0.03
Category 2 Capital goods 222 Category 10 Processing of sold products 0.0003
Category 3 Fuel- and energy-related activities not included in Scope 1 or Scope 2 41 Category 11 Use of sold products 952
Category 4 Upstream transportation and distribution 49 Category 12 End-of-life treatment of sold products 0.2
Category 5 Waste generated in operations 3 Category 13 Downstream leased assets -
Category 6 Business travel 14 Category 14 Franchises -
Category 7 Employee commuting 3 Category 15 Other -
Category 8 Upstream leased assets 2      

Greenhouse Gas Emissions (Scope 1, 2 and 3) *Market-based data for Scope 2

Calculation Method

We determine greenhouse gas emissions for the NEC Group on a consolidated basis. Scope 2 market-based calculations are based on Japanese law, and location-based calculations are based on the country-specific emission factors in International Energy Agency (IEA) Emissions Factors 2024. Scope 3 calculations are based on the GHG Protocol Scope 3 Standard. Scope 1, 2, and 3 calculation results have all been verified by a third party

Progress towards Our SBT Net-Zero Goal

The NEC Group has the goal of achieving carbon neutrality by 2040, which has been certified as a Net-Zero goal by SBTi. To achieve this goal, we aim to reduce Scope 1, Scope 2 and Scope 3 emissions by more than 50% each by fiscal year 2031 compared to fiscal year 2021. To achieve our goals, for Scope 2 we are increasing the use of renewable energy that meets the RE100 standard. For Scope 3, we are engaging with our suppliers to reduce Category 1 emissions, which is the category with the highest emission volume.

Furthermore, in order to reduce Category 11 emissions, we are working to improve the energy efficiency of our products and proposing the use of green data centers that use 100% renewable energy to our customers.

However, Scope 3 emissions have increased as our business has expanded because the calculation of Scope 3 does not yet reflect the results of the above measures. To resolve this issue, we are currently reviewing our calculations to base them on primary data.

  FY2025 Emissions Results Compared to FY2021
Scope 1 and 2 181,000t 44.7% reduction
Scope 3 5,234,000t 15.0% reduction

Assets and Business Activities Exposed to Physical Risks

NEC operates data centers in 11 locations throughout Japan, including Kobe and Kanagawa. Data centers provide cloud services and data warehousing services to government agencies and companies, and are important facilities that operate multiple information systems. The operational continuity of data centers is critical to providing uninterrupted services to customers. 

Meanwhile, in recent years, natural disasters have become more frequent in Japan. In 2019, a typhoon that brought record-breaking rainfall impacted a wide area of Japan. This rain caused major damage to lifelines, including power outages and broken water mains. River flooding caused widespread damage. Abnormal weather caused by climate change could increase the frequency of disasters, which could pose a risk to the continued operation of data centers. With this in mind, NEC builds data centers in areas that are less susceptible to flooding and tsunamis to prevent water damage to facilities. Our data centers are equipped with emergency power sources with enough fuel to operate generators for at least 72 hours. This would allow information systems to continue to operate even in the event of a power outage. We have concluded priority fuel supply contracts with fuel suppliers to ensure that we receive priority fuel supplies in the event of an emergency. 

In addition, to enable NEC to proactively respond to climate change in the future, we have decided to reevaluate the natural disaster resilience of all data centers and conduct annual load tests that involve start-up tests of emergency generators in simulation of actual power outages, and are taking action accordingly.

Performance of Data Centers in Japan and Goals for Fiscal 2026

  Fiscal years
FY2022 FY2023 FY2024 FY2025 FY2026
goals
Item Average power usage efficiency
(PUE)
1.38 1.45 1.44 1.47 1.50
Total energy usage
(MWh)
129,556 147,910 145,727 134,505 137,643
Renewable energy usage rate(%) 9.3 18.3 41.9 45.7 47.4
  • *
    Data for NEC data centers only.
  • *
    NEC Cloud IaaS uses 100% renewable energy.
  • *
    In fiscal 2025, we expect PUE to temporarily decrease due to the construction of new data center buildings in Kanagawa and Kobe.

Internal Carbon Pricing

With the aim of improving energy efficiency and promoting the introduction of low-carbon facilities and equipment, we have set internal carbon pricing. This pricing allows us to convert the CO2 emission reductions that would result from a given capital investment into a monetary value, which we can then use as a reference when making investment decisions.

The aforementioned carbon pricing mechanism will drive our decarbonization activities going forward and reduce the risk associated with potential increases in carbon taxes and emissions trading in a decarbonized society of the future. NEC has set its internal carbon price at 3,000 yen/t-CO2.

Reflecting Climate Change in Executive Compensation

In fiscal year 2023, NEC determined key performance indicators (KPIs) and sustainability performance targets (SPTs) that reflect NEC’s initiatives for “Environmental Action with a Particular Focus on Climate Change (Decarbonization),” and issued sustainability-linked bonds with maturities of five, seven, and ten years. Failure to achieve all SPTs will require NEC to purchase emission rights (CO2 avoidance or reduction converted into credits or certificates) equivalent to 0.1% of the bond issuance amount prior to redemption, which will affect earnings. This will also significantly impact NEC’s reputation, and will directly affect the evaluation of corporate officers, including directors. The impact is less than 5%.

The CSCO is responsible for the entire supply chain. NEC has formulated climate change guidelines with a long-term perspective to 2040, determined medium-term goals to 2030, and integrated short-term and medium-term goals that are reviewed annually.

The CSCO is responsible for the NEC Group’s medium- to long-term goals, and is working on functional reforms to promote environmental management. Progress toward these goals factors into bonus assessment in the annual performance evaluation to reflect the significance of progress towards achieving the emission goals of the NEC Group. The impact is 10%.

Carbon Credits

At present, NEC is not using carbon credits to offset CO2 emissions. With a view to achieving carbon neutrality by 2040, NEC plans to use carbon credits in the future to neutralize residual emissions, but has not yet considered specific details.

Energy Efficiency & Conservation Mutual Audit Program

In collaboration with our group companies, we conduct the ‘Energy Efficiency Mutual Audit Program’ twice yearly. This initiative involves mutual visits among our facilities to assess and evaluate energy usage and energy-saving measures. Within each facility‘s energy efficiency activities, we utilize a “mandatory energy-saving action checklist” (commonly established across the group) to regularly monitor implementation status. The audit process involves identifying key focus areas based on this checklist, followed by on-site inspections and stakeholder interviews. Through this program, we verify compliance with mandatory energy-saving measures while also providing specific feedbacks for potential improvements. These efforts contribute to improving overall energy performance and further drive energy conservation and cost-saving initiatives across the group.