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NEC Discloses ESG Initiatives Supporting Sustainable Growth of Companies and Society

Tokyo, September 1, 2023 - NEC Corporation (NEC; TSE: 6701) has published the "ESG Databook 2023," a report on its ESG (Environmental, Social, and Governance) initiatives since April 2022. The ESG Databook, renamed from the "Sustainability Report" that was published until last fiscal year, aims to clearly present ESG targets, achievements and future plans in a search-friendly format.

NEC's basic policy for sustainability management is to "contribute to solving social issues through our business," "ensure risk management and compliance," and to "promote stakeholder communication." In the Mid-term Management Plan 2025 (*), NEC aims to create social and environmental value through its businesses, with a focus on growth businesses, and to strengthen non-financial foundations that support sustainable growth of the company and society as part of its financial strategy.

The main initiatives disclosed in the ESG Databook 2023 are as follows:

1. Strengthen materiality, a priority management theme from an ESG perspective
As part of the financial strategy of the Mid-term Management Plan 2025, NEC has identified seven materialities, which are themes to be addressed to strengthen the non-financial (ESG/future financial) foundation that supports sustainable growth of the company and society. Furthermore, from the fiscal year beginning April 1, 2023, we have positioned the seven materialities as "Fundamental Materiality" for the purpose of risk reduction and growth rate improvement. This has been done in order to more clearly demonstrate our stance to enhance corporate value by integrating ESG initiatives for both risk reduction and growth/opportunity creation. In addition, the social and environmental themes to be created by growth businesses in the Mid-term Management Plan 2025 and the next pillar of growth businesses have been organized into five themes as "Growth Materiality" to create growth/opportunities and improve the growth rate.

2. Initiatives to reduce environmental risks to reduce the cost of capital and promote business that contributes to carbon neutrality
In July 2022, NEC issued its first Sustainability Linked Bond (SLB) with Sustainability Performance Targets (SPTs) of continuing to achieve an "A" CDP Climate Change rating and CO2 emission reduction rates for Scope 1 and 2.

In September 2022, NEC revised its target of virtually zero CO2 emissions for the entire supply chain by 2050 to achieve the target by 2040, which is 10 years ahead of schedule, and signed "The Climate Pledge." In response, we have also updated SLB's SPTs for fiscal 2024 to a higher target level. At the same time, we have strengthened our systems and processes to contribute to the decarbonization of our customers and society as a whole by linking the results of our own advanced initiatives and know-how to the creation of products and services.

3. Upgrading initiatives in the social area, including strengthening the security of our own company and society and analyzing human capital
As NEC is engaged in businesses that have a high public profile, we have positioned cyber security and information security as a form of materiality. NEC is promoting measures in accordance with the Cyber Security Management Guidelines Ver. 3.0 of Japan’s Ministry of Economy, Trade and Industry and the Cyber Security Framework Ver. 1.1 of the U.S.-based National Institute of Standards and Technology (NIST), and discloses its initiatives in the "NEC Information Security Report." In fiscal 2023, NEC was awarded the highest rating of "Two Stars" by the Japan Federation of Information Technology Associations (JFIA) as a company with particularly excellent security measures and as a model to emulate.

In addition, with the aim of confirming the effectiveness of human capital management and improving measures, we conducted a cause-and-effect analysis to identify initiatives that will lead to an increase in the engagement score, one of the KPIs of the Mid-term Management Plan 2025. We will continue to confirm the effectiveness of non-financial measures and continue the loop of improvement in order to re-identify non-financial initiatives that lead to increased corporate value and allocate investments appropriately.

4. Strengthening Governance
In June 2023, NEC transitioned from a company with a board of corporate auditors to a company with a nominating committee, with the aim of separating supervision and execution and strengthening the supervisory function of the board of directors. The majority of the Board of Directors will consist of independent outside directors, and independent outside directors will chair the Nominating Committee, Compensation Committee, and Audit Committee, thereby improving management transparency and objectivity. With respect to business execution, NEC will speed up decision-making and execution by substantially delegating authority to the executive officers. In addition, as part of efforts to strengthen governance on the executive side, NEC has established a cross-company risk management system led by the CRO (Chief Risk Officer), and in July, NEC established CAO (Chief Audit Officer) for early detection of risks and strengthened internal auditing.

In recognition of NEC’s ESG initiatives, the company has been included in the Dow Jones Sustainability Indices World Index (DJSI World) and the Dow Jones Sustainability Indices Asia Pacific Index for three consecutive years. Furthermore, NEC has been continuously included in the FTSE4Good Indexes and the MSCI ESG Leaders Indexes.

In the environmental area, NEC has been recognized for leadership in corporate sustainability by global environmental non-profit CDP, securing a place on its prestigious "A List" four years in a row for tackling climate change, as well as acting to protect water security. NEC has also been listed as a "Supplier Engagement Leader" within the Supplier Engagement Rating on climate issues for three consecutive years. Furthermore, NEC was awarded with a "Platinum" sustainability ranking as part of the top 1% of companies worldwide from EcoVadis, which assesses suppliers.

NEC aims to create the social values of safety, security, fairness and efficiency to promote a more sustainable world where everyone has the chance to reach their full potential. Moreover, NEC contributes to all 17 SDGs by actively engaging with various stakeholders and leveraging the power of ICT to address social challenges.


NEC ESG Databook 2023
NEC Information Security Report 2023
Note: Scheduled to be published in September, 2023

The Information Security Report introduces NEC’s latest information security initiatives, including data-driven risk visualization and mitigation and awareness transformation, as well as proactive social contributions through collaboration with educational institutions.

About NEC Corporation
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