Understanding Global Trends in Climate Change and the Risks and Opportunities for NEC

Policy

As part of its corporate social responsibility activities, NEC engages in environmental management. NEC seeks to reduce environmental burdens across society by providing environmentally friendly products and services, while also working to minimize the environmental impact of its own business activities, including energy conservation at facilities and during transportation, and reducing the use of chemical substances. In addition, NEC strives to promote these efforts based on insights and expectations gained through dialogue and engagement with stakeholders, incorporating them into the implementation of initiatives aligned with its environmental policy. To promote environmental management across the entire Group—including NEC on a non-consolidated basis, affiliated companies, production sites, and research facilities—the Company has established the NEC Environmental Policy, which outlines its action guidelines. NEC ensures that all employees and corporate officers comply with this policy and act with due consideration for the environment. We also require suppliers, contractors, and other stakeholders in our supply chains to act in accordance with relevant guidelines and contractual agreements. Additionally, we recommend that our business partners understand and respect the intent of this policy and consider adopting similar environmental policies within their own organizations, where appropriate.

Framework

Environmental Management Implementation Framework

Important matters, including climate change, are discussed by either the Executive Committee or the Business Strategy Committee. Discussions are limited to those deemed important based on deliberations by the environmental management committees in each business unit, special sub-groups for each topic, and the Environmental Management Promotion Committee, which comprises managers in charge of the environment in each business unit. Furthermore, issues that may have a particularly significant impact on NEC's businesses are reported to the Board of Directors.

Each business unit has established environmental management committees. In addition, a system has been established for carrying out specific measures by each business unit, its divisions, affiliated companies, and subsidiaries of NEC around the world. By formulating and implementing specific action plans based on the environmental strategy devised by either the Executive Committee or by the Business Strategy Committee, we can implement consistent environmental management throughout NEC under the supervision of the Board of Directors.
For business development activities in which the environment is a new business opportunity, we have established a dedicated team called the Carbon Neutral Business Promotion PMO* to promote collaboration among all companies, including Group companies, and to accelerate commercialization.

Climate Change Countermeasure Implementation Framework

Within the framework described in Environmental Management implementation Framework, we are also implementing climate change countermeasures.

NEC's environmental policies and goals regarding climate change are discussed and formulated by the Environmental Management Promotion Committee, which is made up of the environmental promotion managers 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 and the one that provides approval at the corporate level. 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, reports to the Risk Control & 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. The Board of Directors deliberates on such reports and gives instructions on relevant measures, thereby providing supervision that ensures that NEC advances appropriate climate change countermeasures.

In fiscal 2023, participation in TCP was reported to the Business Strategy Committee and the Board of Directors, and the President approved the revision of the 2030 targets in conjunction with moving the target for net zero emissions up to 2040 from 2050. The new target is now shared by the entire Group through the revision of NEC Eco Action Plan 2025.

In addition, as part of our climate change countermeasures, we are advancing groupwide measures to reduce our in-house CO₂ emissions by addressing specific aspects of the issue through three special committees: the Eco Product Promotion Sub-group, the Eco Solution Promotion Sub-group, and the NEC Group Energy-saving Discussion Working Group. 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.

Environmental Management System

Environmental Audit and ISO 14001 Inspection

NEC is promoting the establishment of an ISO 14001-based environmental management system throughout the entire Group. Each Group company in Japan conducts in-house environmental audits while the Environment Management Department conducts environmental management audits. The latter audits are conducted by specialized certified ISO 14001 auditors. Environmental management audits particularly focus on the relationship between each division's operations and environmental strategy, the progress of environmentally friendly product development, environmental impact reduction, risk management, and monitoring of overall environmental activities such as ISO 14001 conformance, including examination of the effectiveness of the internal environmental audits. The results of these audits are verified through ISO 14001 audits undertaken by an external certification body.

ISO 14001 Certification

Environmental Risks

Environmental Risk Countermeasures

Recognizing the impact that such environmental risks as climate change and pollution by hazardous substances could have on its businesses, NEC conducts risk reduction and prevention activities through assessment, inspection, and education.

We classify risk countermeasures under three risk categories: plantrelated risks, product-related risks, and sales and maintenance-related risks. In the first category, countermeasures for plant-related risks cover risks related to leaks of hazardous substances, soil contamination, and groundwater contamination caused by natural disasters or equipment failure. To help prevent such environmental accidents, we conduct prior environmental risk assessments as well as education and training. In the second category, countermeasures for product-related risks are focused on risks such as the inclusion in products of substances regulated by the Restriction of Hazardous Substances (RoHS) Directive in the European Union and violations of labeling regulations. To address such risks, we conduct product assessments to ensure strict compliance with guidelines and use in-house systems to implement centralized management of information. As for the third category, countermeasures for sales and maintenance-related risks are aimed at mitigating such risks as violations of the Waste Management and Public Cleansing Act due to inadequate consignment of waste treatment. Our countermeasures include efforts to ensure compliance by issuing guidelines on waste and regularly conducting education for sales department personnel. In conjunction with these efforts, we have established the Environmental Escalation Manual for Emergencies to strengthen our governance of environmental risks.

Our risk management system includes the Risk Control & Compliance Committee. If a risk is identified that may have a significant effect on businesses, the Risk Control & Compliance Committee deliberates on countermeasures. The committee fulfills a supervisory function for specific risk measures by checking the results of activities, problems, and future plans and by issuing directives on where measures should focus. Further, reports are submitted to the Executive Committee and the Board of Directors, as necessary.

Legal Violations, Accidents, and Complaints

Since fiscal 1999, NEC has used its website to disclose any fines or penalties levied on the Company related to the environment. In both fiscal 2022 and fiscal 2023, NEC was not subject to any fines or penalties related to the environment inside or outside the Company There were no accidents that affected the areas beyond the perimeters of our sites; there were four environmental accidents that were contained within our sites; and three complaints were received.

Prevention Activities: Group-wide Dissemination of Information on Near-misses

Since the latent causes of environmental accidents are present in minor accidents, we thoroughly investigate their causes and implement technological countermeasures even for minor incidents at the near-miss level.
NEC's findings are then passed on to affiliated companies in Japan and abroad, and corrective measures are checked. In this way, we advance accident prevention.

Soil

Among the substances covered by the Soil Contamination Countermeasures Act, NEC completely discontinued the use of the VOCs trichloroethylene and tetrachloroethylene in 1998 and 1,1,1-trichloroethane in 1993. Further, as far as possible NEC has continued to conduct independent soil surveys.

We will continue to conduct soil surveys and comply with the Soil Contamination Countermeasures Act, related ordinances, and the directives of the administrative agency with jurisdiction and will continue taking appropriate measures.

Environmental Training

Aiming to realize the Purpose of the NEC Way, we heighten employees' environmental awareness through environmental education that targets specific business divisions and employee ranks.

Environmental Ratings by External Organizations