Sustainability Sustainable Management Promotion

Basic Sustainability Policy

Under our management philosophy— A Company Centered on Technology Development that Contributes to Society —the Group aims to achieve both sustainable growth and social sustainability by promoting corporate activities that are innovative (innovation), based on advanced technology (knowhow), and rich in creativity (originality), which is the essence of the IKO brand philosophy. In addition, through the implementation of the Code of Conduct and the IKO Group Materiality—the guidelines for shared values and actions by all officers and employees of the Company and the Group—we will strive to build a relationship of trust with our stakeholders, improve our corporate value, realize a prosperous global environment, and develop a sustainable society by providing products society needs.

Sustainable Management Promotion System

In January 2022, the Group established the Sustainability Committee, chaired by the president and CEO, to promote sustainable management Group-wide and across the organization based on our Basic Sustainability Policy. The Committee meets regularly, in principle once every half year, mainly to develop a sustainability promotion system and to review issues related to each material issue (materiality), with the aim of steadily advancing sustainable management and improving our corporate value.

Code of Conduct

NIPPON THOMPSON and its affiliated companies (hereinafter referred to as the “Company Group”) have established a Code of Conduct and follow it to properly carry out corporate activities so that we can fulfill our social responsibilities as a corporate citizen.

1.	The Company Group complies with related laws and regulations, social norms as well as social morality when carrying out business activities.
2.	The Company Group bears social responsibility not only toward our shareholders, but also toward customers, business partners, employees, and local communities, etc. Therefore, we disclose information on our business activities, financial status, performance, etc. to various stakeholders in the proper way and time according to our in-house rules, related laws and regulations, and reasonable standards with the aim of having highly transparent management.
3.	We recognize the importance of the information owned by the Company Group, and have, therefore, established an information security policy, which we implement with thorough management.
4.	The Company Group develops and provides products that meet customer needs. In providing these products, we appeal necessity and usability while also aiming to provide products with better quality, performance, and safety than industry standards.
5.	Our business activities are the result of cooperation and support from our various business partners and others. Therefore, we respect them as important partners, comply with related laws and regulations in addition to any contracts, and maintain equal relationships with them.
6.	We do not discriminate when it comes to employment in regards to gender, age, or nationality, and make efforts to ensure a safe and satisfying work environment according to the laws and regulations of the countries and regions where our business is carried out.
7.	We comply with laws and regulations, and engage in open, transparent, and sound market competition in order to carry out healthy economic activities. In addition to respecting the rights and assets of other companies, we also endeavor to protect the rights and assets of the Company Group.
8.	We actively respond to related environmental issues for realizing a prosperous global environment.
9.	As a good corporate citizen, we respect the cultures and customs in the counties and local societies where we work, contribute to local development, and endeavor to participate in and cooperate with local events as members of local communities. Additionally, we have absolutely no relationships with anti-social forces that threaten the order and safety of society.
10.	We will establish an in-house system to ensure that this Code of Conduct is followed.

Human Rights Policy

The Company Group is making sincere effort each day to resolve social issues based on our philosophy of being “A Company Centered on Technology Development that Contributes to Society” In order for us to realize this, we believe it is essential to be a corporation that is trusted by society. Respect for human rights is an important aspect of this.

We follow international norms including the Universal Declaration of Human Rights and the United Nations Guiding Principles on Business and Human Rights as policies for promoting initiatives for respecting human rights and fulfilling our responsibilities, and have established our Human Rights Policy that must be adhered to by the whole Company Group.

Human Rights Policy of the IKO Group (in Japanese)（120KB）

Positioning of Materiality (Key Issues)

The Group promotes sustainable management in order to achieve both our own sustainable growth and social sustainability through our corporate activities. When promoting sustainable management, we identify material (key) issues arising for various social problems, and we develop initiatives in line with our basic sustainability policy, based on our management philosophy of being a technology development-oriented company that contributes to society.

Materiality Identification Process

Step 1	List the issues that are relevant to the Group from among the various social problems (Reference) SDGs, ESG key issues of global peer companies, and opinions of internal and external stakeholders
Step 2	Identify highly important issues by mapping the issues listed on the two axes: importance to society and importance to the Group
Step 3	Organize the identified issues of high importance into six material themes by grouping them based on their relationship to the vision of the Company's management philosophy
Step 4	Discussion and approval by the Board of Directors of the identified material issues and processes

Identified Material Issues

For the identified material issues, we organized them into 16 issues to be addressed from the investors' point of view, taking into consideration the opinions of external consultants. We are also promoting specific initiatives to resolve these issues. We will continue to review our material issues in light of changes in social conditions and the business environment.

Contribution to SDGs

The Company Group understands that the “Sustainable Development Goals (SDGs)” adopted by the United Nations General Assembly in 2015 are important tasks demanded by society.

Since SDGs have been set as common global goals, the orientation of companies has become clear and many companies have voluntarily begun working on these. The Company Group has also been engaging in business activities with an awareness of contributing to “Sustainable Development Goals (SDGs).”

IKO Group Materiality: 6 Themes		Long-Term Targets for 2050 (Vision)	Medium-Term Targets for 2030	Action Plan	Specific SDGs
	16 Issues to Be Addressed	Long-Term Targets for 2050 (Vision)	Medium-Term Targets for 2030	Action Plan	Specific SDGs
(1) Implement corporate activities for realizing a prosperous global environment	Environmental considerations in business activities	Carbon neutrality throughout the entire Group	Reduce actual greenhouse gas emissions from business operations by 50% or more from the baseline year	Continue and strengthen energy conservation Develop specific action plans to achieve medium-term targets Improve accuracy of calculating greenhouse gas emissions of Group subsidiaries
	Promoting supply chain management	Carbon neutrality throughout the entire supply chain	Achieve a high level of accuracy when calculating greenhouse gas emissions and build a system for collaboration toward carbon neutrality Strengthen and help deepen global CSR procurement initiatives	Improve accuracy of calculating supply chain greenhouse gas emissions Formulate CSR procurement guidelines Coordinate CSR procurement policies with partner companies
	Adapting to climate change	More sophisticated sustainable management linked to adapting to climate change	Enhance corporate value while responding to climate change	Respond to and disclose achievement of TCFD recommendations
(2) Contribute to technological innovation by leveraging core technologies	Promoting open innovation, suchas industry-academia-government collaboration	A company that thoroughly refines all technologies related to machine elements and receives requests for technological collaboration from around the world	Continue and strengthen technological collaboration with industry, academia, and government agencies	Proactively collaborate with external parties with a strong awareness of open innovation Strengthen alliances with partner companies
	Taking on the challenge of new technologies and new business domains	Accelerating our contribution to technological innovation by globally developing new markets and new business domains	Product development that takes into account regional characteristics and global sales growth (overseas net sales ratio of 60% or more) Develop new products with value for solving social issues, such as carbon neutral components	Strengthen marketing analysis to accurately capture market trends Expand sales in overseas markets Develop better products through better contact with customers
(3) Contribute to social development by providing products society needs	Pursuing product quality and safety	No. 1 product quality in the industry	Global quality control system Maintenance and improvement of product quality	Maintain and strengthen quality management system Strengthen quality education for employees Continue providing regular survey feedback to partner companies
	Providing flexible and stable products	100% customer delivery satisfaction	Flexible delivery by reducing production lead times Promotion of automation Improve productivity by using DX and IoT	Review systems for stable production Reduce production lead times for target model numbers Deepen inventory strategy
(4) Provide healthy, safe, and secure environments for people	Co-existence with local communities	Becoming a company that is needed and trusted by contributing to the community and society	Maintain good relations and revitalize local communities	Clean up areas in surrounding regions and rivers Collaborate with neighboring schools to support the development of the next generation Participate into and support local activities
	Providing products leading to healthy,safe, and secure lifestyles	Manufacturer of key components that create the future for all industries leading to the realization of healthy, safe, and secure lifestyles	Create and provide high value-added products leading to healthy, safe, and secure lifestyles Develop products together with customers, free from preconceived ideas	Strengthen our offer of high value-added products through collaboration with partner companies, etc. Provide solutions to customers' issues
	Respecting human rights	Realization of corporate activities as well as co-existence and co-prosperity ensuring full social safety in the global supply chain	Instill human rights policies and establish a system for conducting human rights due diligence in the global supply chain	Formulate a human rights policy Instill human rights policies into the supply chain Conduct human rights due diligence
(5) Contribute to a society where diverse people can thrive and be rewarded for their work	Strengthening recruitment and employee training	A group of employees that creates high added value in a challenging way	Acquire talented employees who will be responsible for the future of the Group Human resource development through personnel rotation and education, etc., and improve educational opportunities tailored to individual preferences and careers	Clarify the Group's human resource requirements Implement talent management Enhance self-development support system
	Building a rewarding work environment	Work environment that realizes an optimal work-life balance	Develop a high degree of employee engagement improving various systems, etc.	Develop systems related to diversified work styles Implement measures to improve employee engagement
	Promoting diversity and inclusion (D&I)	Contributing to the development of a sustainable society by ensuring diversity in human resources, regardless of gender, nationality, career, etc.	Expand diversity by increasing the ratio of women in management and supervisory positions, etc.	Promote women's activities, including better childcare support Actively assign foreign nationals and mid-career hires to core human resources
(6) Continually improve compliance and governance	Improving internal controls and ensuring compliance	A system where all employees have a deep understanding of the purpose of risk management, compliance, information security, etc., and are able to put these into practice successfully	Develop a system so that all employees understand the purpose of risk management, compliance, information security, etc., and are capable of practicing these successfully	Improve the content of all committee discussions Strengthen employee education, dissemination, and self-assessment Strengthen cybersecurity
	Continuously improving corporate governance	Highly fair and transparent management through the Group's strong governance system	Strong governance system in the Group	Improve effectiveness of the Board of Directors, such as ensuring diversity Strengthen Group governance, including qualitative improvement of Board of Directors' deliberations
	Enhancing information disclosure and communication with stakeholders	Maintaining good relationships with stakeholders by ensuring transparent disclosure of information	Ensure transparent information disclosure and build good relationships with stakeholders	Enhance voluntary, timely and appropriate information disclosure Strengthen IR activities, including heightened communication with investors Implement stakeholder engagement (dialogues)