Third-Party Opinion

Noteworthy points in NTN Report 2024

The development of a sustainability disclosure framework for investors is progressing at a rapid pace, including the issuance of Exposure Drafts of Sustainability Disclosure Standards to be applied in Japan by SSBJ. Against this backdrop, the characteristics of NTN Report 2024 can be summarized in the following three points.

(1) Targeting — Focusing on investors

Until last year, NTN’s disclosure had been made with multiple stakeholders in mind. This year, however, disclosure has been revamped, putting the focus on investors and highlighting the Group’s growth and its value creation story. The medium used for disclosure has also shifted from a physical booklet to online disclosure via an interactive PDF, thereby realizing more effective communication.
In its efforts to grow the current value creation process sustainably, the Company analyzed its risks and opportunities to clarify the growth businesses, strengthened its business model to focus on these areas of growth, and undertook value chain reform, reform of the management foundation, research and development, and consistent demonstration of the human resources strategy. In these ways, it gave greater clarity to its value creation story.
Disclosure on matters related to sustainability put the focus on carbon neutrality, human rights, and governance, which investors are highly interested in. It also positioned these as strategies that underpin the Company’s reform. Information for multiple stakeholders was disclosed online, adding greater definition and clarity to the purposes of the report as well as significantly enhancing relevance.

(2) Commitment — “Visible” management

The new Medium-term Management Plan sets out the Company’s resolve to carry out structural reforms and organizational restructuring over the next three years. The commitment of the management team is vital toward achieving such painful reforms. In this Report, members of the management team spoke in their own words about the strategies that lead toward reform alongside details about indicators and targets. In this way, they present a committed stance and raise expectations toward the achievement of the goals.

(3) Work enthusiastically — Human resources strategy

NTN’s long-term vision (p.12, 52) also reflects the recognition that it is the people who support reforms and value creation. Disclosure of contents related to this has been enhanced, including information on the five pillars of the human resources strategy that aims to realize the prosperous human development, the concrete measures of securing and developing human resources as well as fostering an organizational culture, and the gap between the current situation and the vision (p.45 – 48). These contents are also linked to disclosures in the securities report. If these are thoroughly disseminated among the employees and realized, we can expect NTN to achieve its new Medium-term Management Plan as well.

Objectives of sustainability disclosure

Disclosure itself is not intended to serve the purposes of corporate activities; rather, it is important to link disclosure to corporate values by recognizing the risks and opportunities faced by the company and changing the business model to adapt to and address them.
NTN Report 2024 looks ahead to 2035, and positions economic values (achievement of ROE exceeding shareholders’ capital costs) along the same vector as environmental and social values (achievement of carbon neutrality, and realization of the prosperous human development) (p.9 – 10). On top of that, it sets out the commitment of the management team alongside detailed disclosures of the value creation story from both the financial and sustainability aspects. I believe this is also what sustainability standards aim to achieve. I was also surprised at how clearly the requests made in the third-party opinion presented last year have been reflected in this Report.
The final version of the Sustainability Disclosure Standards is scheduled to be published this fiscal year, but I hope that the Company will not be overly caught up in the details. Instead, I hope that future disclosures will continue focusing on the spirit of enhancing corporate value that the Company has demonstrated in this Report.