Third-Party Opinion

Fiscal 2020 was a challenging business environment for many companies. Under such circumstances, NTN identified materiality and established its Human Rights Policy in fiscal 2020. In addition, NTN launched the new Medium-term Management Plan and supported TCFD recommendations under the leadership of the new President in fiscal 2021, and accelerated its transformation.
13 items of materiality were identified in light of the United Nations Global Compact signed in 2015. By clearly distinguishing between positive (Strengthen positive impacts) and negative (Reduce negative impacts), opportunities are acquired through the creation of original technologies, social cost reductions and risk aversion, and social contribution by steadily achieving the expectations of society as a global company is included in a well-balanced manner. It seems favorable that 10 out of 13 items are allocated to reducing negative impact, and for each of the 10 items, the "NTN Report 2021" reports on one or two pages of substantial efforts. Another feature is that 7 out of 13 materiality items are "social." Japanese companies tend to have lower scores for social items than overseas companies, but 10 pages are included in social items in the NTN Report 2021. In particular, various responses throughout the supply chain based on the newly established Human Rights Policy are advanced.
As shown on page 102 of the NTN Report 2021, NTN is included in many SRI/ESG indexes. As of July 2021, FTSE Russell ESG Ratings^＊, NTN's overall ESG score is ranked in the top 28% of Japanese assessed companies. Among ESG, NTN has earned a great reputation for the environment, and in terms of materiality, NTN emphasizes on society, therefore we expect to see an improvement in the "Social" evaluation in the near future.
Meanwhile, the trend toward mainstreaming ESG investments has increased the demand for both financial performance and ESG performance. The strong market capitalization of NTN's shares reflects the valuation for NTN's ability to generate future income that can be expected through the detailed value creation story that top management talks directly, and a detailed analysis of the risks and opportunities surrounding NTN and its countermeasures. Furthermore, in order to realize NTN's social contribution through creating technologies and developing new products over DRIVE NTN100's long term, we expect to communicate how to seize new business opportunities and strengthen the financial base. For that, scenario analyses that have already been addressed in line with TCFD recommendations are also useful. Carbon neutrality is a growth strategy as well as a measure to combat global warming, and is expected to promote domestic industries. The draft of the government's Basic Energy Plan, announced in July 2021, indicates that renewable energy will account for 36-38% of total power generation in fiscal 2030. While remaining uncertain, NTN's wind power generation products, other natural energy products and EV related products which are expected to expand, have significant potential to bring new business opportunities involving other companies.
In addition to the Comparison Table for GRI Standards web disclosure, NTN Report 2021 also has begun disclosing information based on the disclosure standards of SASB Standards, making it easier to obtain KPI information. With regard to ESGs and SDGs, rather than responding to all of the related requirements, I think it is increasingly important to identify which demands to focus on and respond to and express this to stakeholders in order to achieve the company's philosophy. Looking ahead to the next 100 years, we are in an age of increasingly demanding management based on purpose, and I look forward to NTN's initiatives being developed based on the “Frontier Spirit” and the “Coexistence and Co-prosperity Spirit” that have been valued over the past 100 years.

＊ESG rating by FTSE Russell. Assessment of the business's ESG risks and the company's commitment to them.