The Nitto Group’s response to climate change（Disclosure Based on TCFD Recommendations）

The Nitto Group has set “Realizing a decarbonized society” as one of its material issues for sustainability and is strengthening its efforts to combat climate change. To solve environmental issues including climate change, the Group is working to develop and promote short- to mid-term and long-term strategies by establishing a governance system where President-Director & CEO is appointed as the superintendent, and the Corporate Strategy Meeting plays the central role under the direction and supervision of the Board of Directors.

In addition, in order to increase the effectiveness of environmental initiatives including climate change response, the Group has established the Global Green Committee led by the Vice President in charge of promoting climate change-related issues and strengthen cross-organizational coalitions while examining strategies and implementing and promoting countermeasures against the issues. The Nitto Group’s governance structure is as follows:

The Nitto Group places environmental, social, and governance (ESG) at the core of its management. As such, rather than establishing a general sustainability committee or ESG committee, we use the Corporate Strategy Meeting, chaired by the President-Director & CEO and comprising of all Vice Presidents, as a platform to discuss the promotion of ESG management. This enables us to incorporate ESG into management in a swift and appropriate manner, and to achieve governance that ensures higher feasibility by integrating the company’s sustainability and growth strategy.

Role of the Board of Directors

The Board of Directors makes decisions on important matters, for instance, management policies, management indicators and targets related to the environment including climate change (future-financial targets), such as the mid-term management plan and support for external initiatives. Each quarter, it provides periodic directions, and conducts supervision, concerning the climate change targets (future-financial targets) of the mid-term management plan as well as the status of progress toward target achievement, and, as necessary, adds new items to the agenda if a material matter arises.

The Board of Directors is comprised of Directors who possess qualifications, knowledge, and experience related to sustainability, including climate change, and who thus impart it with a sustainable and greater supervision function.

Please see the section below for the skills of each Director.

Nitto Group Integrated Report 2025（P.59　Skills Matrix）

As for Director remuneration, ESG items (future-financial targets regarded as material issues) have been included in the criteria for performance linked share-based remuneration (additional remuneration as an incentive for improving medium-term performance). The number of shares to be granted ranges from 0% to 150%, depending on the progress made toward achieving the key performance indicators of consolidated operating income, consolidated ROE, and ESG-related items (future-financial targets laid out in the mid-term management plan) at the end of the three-year period from the start of the performance evaluation period.

Role of the Corporate Strategy Meeting

The Corporate Strategy Meeting, chaired by the President-Director and CEO, is responsible for deliberation and decision-making regarding specific policies and measures for action based on management policies and management indicators regarding the environment including climate change, as well as managing risks and opportunities and monitoring progress towards achieving targets on a monthly basis. It provides periodic reports––on a quarterly basis––to the Board of Directors on its deliberations and decisions and the progress of initiatives, and, as necessary, provides additional reports if a material matter arises. Additionally, to ensure that the matters deliberated and decided are promptly disseminated throughout the company, the Corporate Strategy Meeting comprises all Vice Presidents who are in charge of business execution departments, special function departments, and regional management.

Role of the Vice President and department in charge

We appoint the Vice President in charge of promoting environmental initiatives including climate change, and also have special function departments responsible for implementing those initiatives that serves as a department in charge of the environment. The department regularly assesses the risks and opportunities related to climate change, considers strategies (including transition plans), as well as executes and promotes measures to tackle climate change issues. The Vice President manages and supervises the results of these assessments, the details of their consideration, and their implementation and promotion.

In order to enhance the feasibility of climate change initiatives, we have established the Global Green Committee that is managed by the Vice President in charge of promoting climate change initiatives, aiming to strengthen cross-organizational cooperation among the various functional departments involved, including departments promoting ESG management in general, procurement departments, business execution departments, and regional management. The major activities of the Global Green Committee are as follows:

The progress of these initiatives is periodically reported to the Corporate Strategy Meeting primarily by the department in charge of the environment.

The major activities of the Global Green Committee