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Third-Party Opinion

NTN Report 2023 third-party opinion

Professor, School of Business Administration, Kwansei Gakuin University Chika Saka

Professor, School of Business Administration, Kwansei Gakuin University
Chika Saka

After serving as a full-time lecturer and assistant (associate) professor at the School of Business Administration, Kwansei Gakuin University, she has been a professor since 2008. Doctor of Commercial Science. Currently, she is a member of the Sustainability Standards Board of Japan (SSBJ), a member of the Business Accounting Council of the Financial Services Agency, an affiliate member of the Science Council of Japan, a member of the Environmental Council of Osaka Prefecture, a member of the Environmental Council of Osaka City, and the Executive Director of the Accounting and Economic Association of Japan. She received the Japan Accounting Association Award. Her publications include “Environmental Accounting” (Tokyo Keizai Publishing Co., Ltd.), etc. in the book.

Noteworthy points in the NTN Report 2023

In June 2023, the International Sustainability Standards Board (ISSB) issued IFRS S1 and IFRS S2, the first sustainability standards. In light of this, the NTN Report 2023 includes the following three notable points.
First, NTN disclosure is generally in line with the general requirements of S1: such as the same scope as the consolidated financial statements is covered, information on sustainability-related risks and opportunities of materiality is covered (P.21, 22), and comparative information is included. Now, if the connections between sustainability information and financial statement information could be reflected in value creation stories, etc., it would be even more useful.
Second, a list of industry-specific accounting indicators based on the SASB Standard disclosure criteria, which are required to be considered in S1, has been continuously disclosed since “NTN Report 2021.” The fact that NTN has already begun to recognize and disclose the topics in both the “RESOURCE TRANSFORMATION SECTOR- Industrial Machinery & Goods” and the “TRANSPORTATION SECTOR-Auto Parts” will certainly help NTN to reduce future financial risks and seize opportunities.
Third, the S2 theme of “climate change” was positioned as the first of the 13 materiality items as a contribution to solving social issues. The Carbon Neutrality Strategy Promotion Department of the Group Management Headquarters has been established and governance has been strengthened to achieve this goal. The addition of the “Carbon neutrality realization image” and priority measures (P.53) for Scope 1 and 2 toward 2035 strengthen the roadmap for a long-term response, which is expected to lead to an increase in the level of future efforts.
Note that biodiversity, human capital, and human rights are among the new project for the future proposed by the IFRS Foundation in May 2023. These topics are also already disclosed in the “NTN Report 2023.” In particular, the disclosure of human capital now specifies the “five pillars of the human resources strategy” (P.62). The efforts to develop the next generation of human resources who will lead the transformation are expected to contribute to the realization of the various transformations described in the top message and the value creation story.

Sustainability Disclosure Opens the Door to Medium- and Long-Term Enhancement of Corporate Value

The sustainability-related financial information covered by the ISSB’s Sustainability Standards can greatly assist in connecting financial and sustainability information to achieve true integrated thinking and integrated reporting. I believe that if the “restructuring of the business and product portfolios” (P.30), which is newly mentioned in “NTN Report 2023,” risks and opportunities, and measures to address them (P.56) are related to the financial information, the report will be more persuasive to global investors.
NTN’s steady response to sustainability, which can be read from the NTN’s report, will enable the company to align the vector of the “business structure transformation” mentioned in the top message with the vector of the mission derived from Purpose, which is “to reduce the environmental impact of business as much as possible while contributing to solving the problem through the provision of products and services”. This report may convince that each and every member in the various departments of the organization is on the way to mid- to long-term value creation in the same direction. I expect it will be a great help in achieving this goal.

Response to the third-party opinion

Executive Officer, ESG Promotion Department Shumpei Kinoshita

Executive Officer
ESG Promotion Department
Shumpei Kinoshita

We would like to thank Professor Saka for her valuable opinions.
Through the practice of our corporate philosophy, we aim to contribute to the resolution of social issues surrounding the world and realize a “NAMERAKA Society” where people can easily lead a secure and fulfilling life. Of the 13 items of materiality that we have identified as priority issues to be addressed, we have received high praise for our activities to set the concrete measures and establish the new organization to achieve the goals for carbon neutrality. We have been confident in our efforts to date.
From the viewpoint of increasing the persuasive power of our efforts to investors, as you have indicated, we will more specifically promote the measures for improving our activities to “climate change”, strengthening the connections between sustainability information and financial statement information, and promoting information disclosure, including efforts to develop the next generation of human resources who will lead the transformation.
We will listen sincerely to the valuable opinions we have received this time and strive to improve corporate value over the medium to long term.