Eight Non-Financial Programs

• Our Road Map
• Materiality
• Eight Non-Financial Programs
• Communication with Stakeholders

Launch of Eight Non-Financial Programs

In our new approach to materiality, Nippon Sanso Holdings specified 24 material issues, including three fundamental preconditions for our existence, namely, respect for human rights, safety and security, and corporate ethics. To address these issues, we have created eight non-financial programs that will run across the entire group.

List of Non-Financial Programs

Non-financial programs		Initiative
E	Carbon Neutral ProgramⅠ Carbon Neutral ProgramⅡ Zero Waste Program Sustainable Water Program	Reduce our group's GHG emissions Reduce customer GHG emissions through environmental product offerings and applications Reduction in waste emissions Effective use of water resources
S	Safety First Program Quality Reliability Program Talent Diversity Program	Reduction in lost-time injury rate, etc. Reduction in number of claims about products, offerings and applications Utilization of diverse talent
G	Compliance Penetration Program	Compliance education and enforcement

Carbon Neutral ProgramⅠReduction of the Group’s GHG emissions

Aiming for carbon neutrality in 2050
Realizing carbon neutrality through technological breakthroughs

Aiming to become carbon neutral by 2050, the NSHD Group aims to reduce its GHG emissions 18% by FYE2026 and 32% by FYE2031. As shown below, our key initiatives to achieve these goals entail the replacement of air separation units (ASUs), the purchase of green electricity certificates, and the introduction of renewable energy.

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Carbon Neutral ProgramⅡReduce customer GHG emissions through environmental product offerings and applications

Through the NSHD Group’s products and services, we aim to achieve a reduction in GHG emissions that exceeds the Group’s own emissions.

The NSHD Group helps customers reduce their GHG emissions through the supply of its products and services. As a goal for helping customers reduce their emissions, the Group is keen to achieve a reduction in GHG emissions that exceed its own emissions.

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Zero Waste ProgramReduction in waste emissions

We have set KPIs for our aims of securing water resources based on the regional and business characteristics of each operating company.

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Sustainable Water ProgramEffective use of water resources

We have set KPIs for our aims of securing water resources based on the regional and business characteristics of each operating company.

The NSHD Group strives to reduce water withdrawal by setting KPIs for each operating company in order to more effectively use limited water resources. We surveyed water stress using the Aqueduct water risk evaluation tool developed by the World Resource Institute (WRI) to identify manufacturing plants (ASU, HyCO sites) in high-risk areas. At manufacturing plants in high-risk areas, we are taking steps to increase water recycling and reduce water withdrawal and consumption volumes.

Results of Water Stress Level Survey

The NSHD Group conducts a survey of water stress at all of its production sites in order to apprehend the risks related to use of water resources and facilitate a more effective response to water risks. Using the Aqueduct water risk assessment tool developed by the World Resources Institute, we surveyed water stress at 130 sites, with the following results.

* Water risk category: Baseline water stress
Upper level: Water usage (thousand m3), lower level: Number of production sites

	High	High-medium	Medium	Medium-low	Low
Japan	0	0	1,814	4,756	434
	[0/24]	[0/24]	[6/24]	[15/24]	[3/24]
United States	833	355	1,579	598	4,931
	[5/51]	[3/51]	[14/51]	[5/51]	[24/51]
Europe	783	24	8,876	252	14,900
	[7/29]	[1/29]	[8/29]	[3/29]	[10/29]
Asia and Oceania	194	145	733	609	1,917
	[4/24]	[1/24]	[5/24]	[6/24]	[8/24]
Thermos	0	0	0	67	132
	[0/2]	[0/2]	[0/2]	[1/2]	[1/2]
Total	1,810	524	13,002	6,282	22,314
	[16/130]	[5/130]	[33/130]	[30/130]	[46/130]

• Data as of FYE2023
• Water stress survey conducted using Aqueduct water risk assessment tool
• Reporting boundary: Production sites with ASU, HyCO, or liquid carbon dioxide facilities with annual water withdrawal of 20,000 m3 or more and Thermos

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Safety First ProgramCultivating a culture of safety

Aim for world-class safety in the industrial gases industry

As a group that handles high-pressure gases, safety is the foundation of our corporate existence. Guided by the mindset that “selling gases is commensurate with selling safety,” we are dedicated to further promoting safety and ensuring a safe and reliable supply of gases. As a Group KPI, we target a lost-time injury rate (number of lost-time injuries per million work hours) of 1.6* or lower, and strive to be a global leader in safety.

* Target 40% reduction of average from FYE2017 to FYE2021 (2.53)

The above efforts have improved the lost-time injury rate to a level that meets the target.

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Quality Reliability ProgramInitiatives for increasing quality and reliability

Instilling corporate awareness of emphasis on quality and enhance quality and reliability of our group's products

As a corporate group dealing mainly in industrial gases, we consider our unwavering quality commitment to be the stable supply of products that underpin a range of industries, and that because our product is an invisible gas, reliability is an essential quality that we must provide. We will promote a culture that emphasizes quality by keeping our important promises to customers and strive to further raise awareness among employees. We will also implement a series of initiatives with the aim of increasing quality and reliability by promoting the introduction of LIMS and other automation technologies. We are currently focusing on the quality audit program* being undertaken by the entire NSHD Group since FYE2022.

* Each operating company conducts a quality audit of their business sites once every three years based on important audit items set by NSHD.

● Instilling quality-centric culture and improving awareness of employees

• Quality ethics and compliance education
  The entire NSHD Group implemented this education program in FYE2020 and FYE2021, and plans to restart it in FYE2024.
• Quality audit program
  The quality audit program was launched in FYE2022 for the entire NSHD Group, and operating companies conduct quality audits of their business sites once every three years using priority audit items decided by NSHD.
• Share information on quality complaints along with measures for remediation and improvement
  In FYE2021, the NSHD Group began using the SHEQ Report System to share information across the Group, putting into place a platform for utilizing information.

● Promote the introduction of LIMS and other automation technologies

• Automation of test, inspection, and analysis recording
  This initiative was introduced in FYE2020 and FYE2021 across the NSHD Group, with the highest priority given to areas that have not been automated yet.

● Increase satisfaction of electronic materials gases customers

• Increasing customer satisfaction through the activities of the Semiconductor Specialty Gas Quality Committee (SSG-QC)
  The NSHD Group’s electronic materials gases production companies evaluate and implement initiatives (i.e., sharing best practices) to improve customer satisfaction, and a Groupwide conference is held twice a year to provide updates on results and progress in these initiatives.

Talent Diversity ProgramIncrease human resource diversification and engagement

Talent development strategies for sustainable growth

With an eye on sustainable growth, the NSHD Group intends to actively accept people of diverse talents, cultures, and values, and to develop them as “The Gas Professionals.”
We have set KPIs related to empowering women and focus Groupwide efforts to achieve them. We encourage personnel exchanges across regions in order to broaden their perspectives and grow while learning about each other’s different backgrounds.

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Compliance Penetration ProgramCompliance penetration and enforcement

Compliance training at all operating companies

In FYE2022, the NSHD Group conducted compliance training in each region and at each operating company. One of our KPIs is the percentage of employees who have participated in compliance training. For this KPI, our target is a 100% participation rate in training that is mandatory for all employees, as compliance is positioned as basic training in all regions and operating companies.
Compliance management, prevention of harassment, prevention of unfair competition (Japan), prevention of unfair business practices, prevention of harassment, diversity and inclusion: respecting each other’s differences (United States), recertification of code of conduct, compliance (Europe), code of conduct and NSHD policies (Southeast Asia), code of conduct, internal whistleblowing system, prevention of unfair business practices (Australia), code of conduct, data protection, prevention of conflicts of interest, prevention of unfair competition (East Asia), code of conduct, internal whistleblowing system (Taiwan), code of conduct, internal whistleblowing system (India)
In FYE2022, all employees in all regions and at all operating companies were required to participate in these training sessions, but in a few regions, the participation rate did not reach 100%. In total, the employee participation rate was 99.7%. The NSHD Group aims to reach a 100% participation rate for this training in order to further enhance awareness of compliance.