CSR activities in FY2023

Response to social issues

The Group analyzes risks and opportunities in each business environment (such as global trends on carbon neutrality, the accelerating shift to electrification to achieve carbon neutrality, labor shortages, and human rights issues, etc.), and then takes measures in line with materiality. In order to respond to the rapid changes in the external environment, we are regularly reviewing anticipated risks and opportunities.

■Risks, Opportunities and Materiality

NTN’s Business Environment	Risks for the Company	Opportunities for the Company
Response to paradigm shift
Spread of next-generation mobility	Decrease in the total number of bearings used per vehicle unit Demand for higher product performance, such as lightweight products Reorganization of the automotive industry	Expansion of sales channels due to entry of new EV manufacturers into the market Expansion of sales opportunities for driveshafts and hub bearings that support not only gasoline-powered vehicles and HEVs, but also the axle/drivetrain of EVs Increase in average selling price (ASP) due to the increase in the size of driveshafts corresponding to the output characteristics of the motor Proposals for compact and lightweight products that utilize patented technology for driveshafts Growth in demand for high-performance products for EVs Improvement in vehicle utilization rate due to progress in ride-sharing, and potential for increased demand for parts exchanges
Electrification of industrial machinery	Reduced use of bearings due to electrification of internal combustion and hydraulic equipment	Demand for high-performance products, such as products with higher efficiency Increased demand for high value-added products such as sensor integrated bearings
Spread of AI and IoT	Difficulty in securing digital talent, for which demand is increasing Rationalization of distributor networks Enclosing demand for aftermarket through industrial IoT platforms (missed demand opportunities outside of the platforms)	Advances in labor-saving equipment Rising demand for bearings with sensors Rising demand for analysis and analytic technologies Development of new fields Introduction of smart factories in-house
Response to environmental issues
Request to reduce CO₂ emissions	Rising procurement and energy costs Decreased demand for products due to decline in need for existing general-purpose machines Demand for carbon neutrality in business activities Suspension of transactions with customers and damage to corporate image in the event of failure to respond to societal demands	Increased demand for wind power generation equipment, including offshore wind turbines Increased demand for railways Increased demand for green energy products Rising need to improve fuel efficiency (electricity consumption) Widespread use of next-generation mobility (related to EVs, hydrogen)
Demand for energy-saving machinery	Decrease in the number of parts for which bearings are used due to changes in the energy transmission format and structure of machinery Establishment of a new mechanical structure that does not require bearings	Rising demand for energy-saving products Responding to new needs
Request to reduce environmental impact	Decline in corporate image and ESG ratings in the event of failure to reduce environmental impact Increase in costs due to expenses incurred by suppliers and a limited number of suppliers that can meet environmental standards	Cultivating new customers through compliance with advanced environmental standards and customers' standards Growing demand for quality and long lifespans products Promotion of environmentally-friendly business activities Pursuit of circular economy
Response to natural disasters	Suspension of operations due to a disaster Leakage of oil, chemical substance, etc. caused by a natural disaster Reduced scale of sales due to economic stagnation Crisis of business continuity Damage to employees' health and safety Supply chain disruptions	Growing demand for emergency power sources Expansion of partnerships Rising demand for labor-saving technologies
Changes in demographics
Medium- to long-term labor shortage	Impact of a human-dependent production system on the stability of operations	Acceleration of labor-saving developments and automation of production lines
Growth of emerging countries	Entry of emerging manufacturers into the market Soaring procurement prices due to the entry of competitors into the market Supply shortage of limited materials and resources	Expansion of sales opportunities due to increased demand Increased demand for new driveshafts due to the shift to front-wheel drive (FF) vehicles Growing demand for high-performance products that are compliant with environmental regulations
Issue of business succession	Cessation of business among suppliers and sales distributors	Start of business transactions with new suppliers
Globalization of the business
Trade friction and tariffs	Sluggish global demand Supply chain disruptions due to reliance on a single country (risk of over-reliance on China, etc.) Downward pressure on profits due to higher tariff costs Rapid exchange rate fluctuations	Increased opportunities to supply products and services that utilize global networks
Prevention of child labor (human rights)	Disruption to the supply of parts Suspension of transactions with customers and damage to corporate image in the event of failure to respond to human rights issues	Improvements in corporate image through proactive response to human rights issues
Response to conflict minerals	Deterioration in quality Suspension of transactions with customers and damage to corporate image in the event of failure to respond to conflict minerals issues	Improvements in corporate image through proactive response
Rise of low-price products	Intensifying price competition due to aggressive stance by emerging manufacturers Loss of sales opportunities Brand value undermined due to lower prices	Growing demand for high-performance and highly functional products due to decline in product quality on the market Demonstrating competitive advantage through differentiation of products and services

■Materiality

Contribution to solving social issues toward the future we aim for

Respond to climate change

Realize a sustainable society using natural energy

Reduce energy loss

Provide safety and comfort

Foundation to support ESG management

Resource recycling and pollution prevention

Improve the reliability of products and services
(Quality assurance, stable supply)

Procurement activities with an emphasis on environment and society

Promote safety and health

Respect for human rights

Human resource development

Promote diversity

Thorough compliance

Strengthen governance

■Main Measures and Related Materiality

NTN’s Business Environment	Degree of urgency^＊	Degree of impact	Main Measures
Response to paradigm shift
Spread of next-generation mobility	■■■	■■■	Provide lightweight and higher efficiency driveshafts, and low-friction hub bearings Provide next-generation mobility modules for EVs Consolidate production of high-performance products for EVs (Wakayama Works) Develop hydrogen-related products Promote production reforms and reorganization aimed at improving the productivity of existing products Strengthen the automotive aftermarket business
Electrification of industrial machinery	■	■■	Strengthen development of products that support electrification, as well as high value-added products Provide next-generation mobility modules for industrial machinery
Spread of AI and IoT	■■■	■■■	Provide service solutions through CMS technology, etc. Develop service-oriented businesses that lead to product sales, and make the shift toward new business formats Strengthen CAE analysis technology Develop "Talking Bearing" (= use of sensors in bearings) Provide robotic peripheral modules such as i-WRIST in response to the problem of labor saving Support e-commerce developments based on the new core system Make smart factories a reality, including Wakayama Works Strengthen external collaboration
Response to environmental issues
Request to reduce CO₂ emissions	■■■	■■	Increase sales of large bearings and CMS for wind power generation Increase sales for rolling stock Increase sales of green energy products Develop lightweight and highly efficient driveshafts, and low-friction hub bearings Expand the range of environment-contributing products Promote energy-saving production equipment Introduce renewable energy Provide next-generation mobility modules Develop hydrogen-related products
Demand for energy-saving machinery	■	■■	Provide compact, lightweight, and low-torque products Develop products that utilize original technologies
Request to reduce environmental impact	■■	■■	Select business partners that can comply with green procurement and CSR procurement standards Reduce environmental impact in manufacturing processes (conserve water, improve recycling rate, reduce use of hazardous substances, etc.) Develop and provide products with long lifespans Impose strict controls on environmentally hazardous substances contained in products
Response to natural disasters	■■	■■■	Formulation of BCP and BCP training in the NTN Group Provide independent power supply devices that utilize renewable energy-based power generation and storage technologies Provide robotic peripheral modules such as i-WRIST, in response to the problem of labor saving Promote work style reforms
Changes in demographics
Medium- to long-term labor shortage	■	■■	Provide robotic peripheral modules such as i-WRIST in response to the problem of labor saving Make smart factories a reality, including Wakayama Works Nurture and utilize diverse human resources Promote production reforms and reorganization Promote work style reforms
Growth of emerging countries	■■	■■■	Stable supply of core products Global production that supports optimal supply Realize the best mix of global and local production
Issue of business succession	■	■	Business continuity support through dialogue with suppliers Cultivate new business partners Reorganize partner manufacturers and streamline the supply chain
Globalization of the business
Trade friction and tariffs	■■■	■■■	Realize the best mix of global and local procurement through procurement reform
Prevention of child labor (human rights)	■■	■■	Promote human rights due diligence Globalization of compliance Implement various training programs in accordance with the laws and regulations of each region Acquire new suppliers Acquire new talent
Response to conflict minerals	■■	■■	Promote human rights due diligence Conduct supplier CSR questionnaires Respond to conflict mineral surveys conducted by customers Stable supply of adapted products
Rise of low-price products	■■■	■■	Expand product lineup and inventory Develop the aftermarket business Promote the expansion of service-oriented (solutions) businesses Proactive outsourcing for general-purpose products Integrated sales strategy for OEM and aftermarket Differentiation through services

＊The level of urgency is determined by the expected occurrence of an event over a period of time, with "low" indicating long-term occurrences, and "high" indicating short-term occurrences.