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Governance

We have established the Sustainability Promotion Council as the body for discussing sustainability issues such as climate change. Chaired by the president and attended by all directors and operating officers including independent outside directors, the Sustainability Promotion Council convenes twice a year. This body discusses important sustainability issues such as environmental initiatives.
Established under the umbrella of the Sustainability Promotion Council is the Sustainability Committee, which is chaired by the officer in charge of sustainability. The Sustainability Committee reports on the status of initiatives addressing sustainability issues such as climate change to the Sustainability Promotion Council.
We address climate change through this multi-tiered organizational structure, and the Board of Directors additionally exercises oversight over climate change-related risks and opportunities.

Governance System for Climate Change Issues

Sustainability Promotion Council

Structure
Chairperson: President
Attendees: All Directors, operating officers including independent outside directors
Administrative organization: Sustainability Promotion Office of the General Affairs Department
Frequency
Twice a year (September and March)
Main agenda
Discuss sustainability issues to contribute to medium- to long-term corporate value improvement
Other
Operated from FY2018

Strategy

Scenario

We identify risks (migration risks and physical risks) and opportunities brought about by climate change based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). We use the 2°C scenario to analyze transition risks and the 4°C scenario to analyze physical risks.
The applicable time period is 2030, the final fiscal year of the Sustainable Development Goals (SDGs) for the medium term and 2050 for the long term.

	The Environment Surrounding the Oiles Group (Risks & Opportunities)
2°C scenario	In addition to increasing demands from customers, investors, and other stakeholders for initiatives aimed at achieving carbon neutrality (lower carbon economy), stronger legal regulations such as introducing carbon taxes are also expected. The need for technological innovation will become urgent in all industries, not just the automotive industry, where carbon neutralization is already underway. => Transition risks emerge, as well as opportunities to deal with them
4°C scenario	This is a scenario in which the above initiatives are not implemented. Transition risks are limited, but major disasters will occur due to extreme weather events caused by rising temperatures (wind and flood damage caused by sudden weather events and long-term wind and flood damage caused by changing climate patterns). In addition to soil erosion resulting from rising sea levels, the stability of water sources and employee health will also be impacted. => Physical risks emerge, as well as opportunities to deal with them

The Environment Surrounding the Oiles Group (Risks & Opportunities)

2°C scenario

In addition to increasing demands from customers, investors, and other stakeholders for initiatives aimed at achieving carbon neutrality (lower carbon economy), stronger legal regulations such as introducing carbon taxes are also expected. The need for technological innovation will become urgent in all industries, not just the automotive industry, where carbon neutralization is already underway.
=> Transition risks emerge, as well as opportunities to deal with them

4°C scenario

This is a scenario in which the above initiatives are not implemented. Transition risks are limited, but major disasters will occur due to extreme weather events caused by rising temperatures (wind and flood damage caused by sudden weather events and long-term wind and flood damage caused by changing climate patterns). In addition to soil erosion resulting from rising sea levels, the stability of water sources and employee health will also be impacted.
=> Physical risks emerge, as well as opportunities to deal with them

Risk

Main Transition Risks

	Impact / Time frame	Countermeasures
Removal from customer supply chains due to slow action to address climate change	Significant / medium- to long-term	Promote initiatives to achieve CO₂ emission reduction targets
Loss of earning opportunities due to slow development of eco-friendly products	Significant / medium- to long-term	Continue developing products and technologies that contribute to creating a low-carbon society
Loss of market due to innovative changes in raw materials required for products	Significant / medium- to long-term	Expand sales of biomass bearings Develop new materials Procurement of carbon-free raw materials
Introduction of carbon taxes	Intermediate / long-term	Reduce CO₂ emissions

Main Physical Risks

	Impact / Time frame	Countermeasures
Damage to plant facilities caused by rivers flooding due to record-breaking wind and water disasters	Intermediate / long-term *Low likelihood of occurring	BCP (increase production plant readiness to respond to water disasters)
Negative impact on employee health and productivity caused by rising average temperatures	Intermediate / long-term	Enhance employee health management and create efficient working environments

Opportunity

Main Opportunities

	Impact / Time frame	Countermeasures
[Bearing equipment business and architectural devices business] Creating and growing new demand by developing products and technologies that contribute to CO₂ emission reduction	Significant / medium- to long-term	[Bearing business] Technological development in EVs, renewable energy and other fields [Architectural devices business] Development of products and new technologies that contribute to conserving energy
[Structural devices business] Trend toward strengthening resilience in the infrastructure sector, including bridges, related to the prevention and mitigation of disasters and carrying out of restoration work	Significant / medium- to long-term	[Structural devices business] Strengthen presence in the field of infrastructure renewals, including bridges

Impact / Time frame

Countermeasures

[Bearing equipment business and architectural devices business]
Creating and growing new demand by developing products and technologies that contribute to CO₂ emission reduction

Significant / medium- to long-term

[Bearing business]

Technological development in EVs, renewable energy and other fields

[Architectural devices business]

Development of products and new technologies that contribute to conserving energy

[Structural devices business]
Trend toward strengthening resilience in the infrastructure sector, including bridges, related to the prevention and mitigation of disasters and carrying out of restoration work

Significant / medium- to long-term

[Structural devices business]

Strengthen presence in the field of infrastructure renewals, including bridges

Risk Management

The Sustainability Promotion Council chaired by the president and attended by all directors and operating officers assesses and identifies risks related to climate change issues based on reports from the Sustainability Committee and decides the overall direction for management. In addition, we established the Environmental Sub-Committee (chaired by the head of the Quality Assurance & Environmental Safety Dept.) under the umbrella of the Sustainability Promotion Council and Sustainability Committee as the administrative organization for addressing climate-related risks. In light of the risks and opportunities involved, we are pressing forward with measures to address climate change issues, with a particular focus on reducing CO₂ emissions.
The status of our efforts to address climate-related risks is regularly reported to management via the following process: Environment Sub-Committee => Sustainability Committee => Sustainability Promotion Council. Furthermore, the BCP/BCM Sub-Committee under the Sustainability Promotion Council and Sustainability Committee also follows up on the physical risk of flooding caused by climate change, although the possibility of its occurrence is low.
Due to the increasing diversification of risks, in April 2024 we reassigned the Risk Management Sub-Committee under the Sustainability Promotion Council to the Risk Management Committee, which is an advisory body to the Board of Directors. The Risk Management Committee enhances information gathering and management and strives to reduce the impact and likelihood of risks occurring.

Oiles Group Sustainability Promotion Structure

Indicators and Targets

In 2023, the Oiles Group once again revised its our environmental targets, which we previously revised in 2021, in order to achieve carbon neutrality by 2050. We have divided our recently revised environmental targets into two steps, with the first step being reducing total CO₂ emissions by 46% from their FY2013 level by FY2030 and the second step being eventually achieving carbon neutrality by 2050. In this second step, the Oiles Group as a whole seeks to achieve carbon neutrality by 2050.

Environmental Targets

(1) Step 1: Reduce total CO₂ emissions by 46% from their FY2013 level by FY2030

(2) Step 2: The Group as a whole achieves carbon neutrality by 2050
*This applies to Scope 1 and Scope 2

Oiles Group CO₂ emissions (Scope1, Scope2)

Reference: Oiles Group supply chain CO₂ emissions

Category		FY2022 CO₂ emissions (t-CO₂)	FY2023 CO₂ emissions (t-CO₂)	Ratio of FY2023 total (%)
Scope1	Our direct CO₂ emissions	7,435	5,899	3
Scope2	Our indirect CO₂ emissions	21,808	18,110	10
Sum of Scopes 1 & 2		29,242	24,009	13
Scope3	1. Purchased products & services	124,696	131,379	72
	2. Capital goods	8,631	7,233	4
	3. Fuels, etc., not included in Scopes 1 & 2	5,349	5,041	3
	4. Transportation & deliveries (upstream)	12,233	12,846	7
	5. Emissions from businesses	1,144	1,117	1
	6. Business travel	264	268	0
	7. Employee commuting	913	932	1
Sum of Scope 3		153,230	158,817	87
Total Supply Chain CO₂ emissions		182,473	182,826	100

*The CO₂ emissions of the Oiles Group (Scope 1, Scope 2, and Scope 3) have received independent assurance from the Sustainability Accounting Co., Ltd.

Status of Efforts to Reduce CO₂ Emissions

To achieve our environmental targets, the Environmental Sub-Committee under the Sustainability Promotion Council promotes initiatives in cooperation with our manufacturing sites.

Solar power generation at the Fujisawa Plant

We have mostly completed the conversion to LED lighting at our domestic plants and we are systematically upgrading to energy-efficient air conditioning and production equipment. We started solar power generation at our Fujisawa Plant in FY2021, and are now planning to adopt on-site PPA at multiple sites overseas. We also began procuring renewable energy in FY2022, and are expanding this to our domestic affiliated companies in addition to our four domestic plants, as we strive to reduce our group-wide CO₂ emissions.

Raising the awareness of each and every individual employee is also important for achieving our environmental targets. In addition to working to reduce energy loss and defects at our manufacturing sites and continuing to educate employees on environmental issues through training, we have made devising “environmental approaches” a mandatory item on the annual plans of each department since FY2023 to raise awareness of environmental approaches. At our Fujisawa Plant, the office of the Environmental Management Committee takes visually presented data of energy consumption over Oiles corporation and notifies each workplace of its monthly consumption. For the workplaces using large amounts of energy, the office also encourages them to identify reasons for that use through a comparison with the data of the previous year and other workplaces and to reduce their energy consumption by themselves.

These actions enabled us to reduce the Group’s total CO₂ emissions. In FY2023, the Group’s total CO₂ emissions were 24,009 t-CO₂, an 18% decrease from the previous fiscal year, although consolidated net sales increased 9.3% from the previous fiscal year. In addition, CO₂ intensity (CO₂ emissions per unit of energy) was 0.349 t-CO₂/million yen. That figure was lower than that in the base year of FY2013, and the same was true in the previous fiscal year. Moreover, the CO₂ emissions of our domestic manufacturing sites in FY2023 were 14,871 t-CO₂, a 23.7% decrease from the previous fiscal year.
In order to achieve our plan for 2030 (Step 1), we will promote various measures in Japan and overseas, including further promotion of energy conserving companywide, further upgrading to more energy-efficient facilities, and increasing the ratio of renewable electricity procured.

To achieve our target of achieving carbon neutrality by 2050 (Step 2), we need to review our energy procurement system company-wide, implement energy-efficient production lines, and fundamentally review our methods of production. To provide products and technologies that help solve the world's issues, we will “tirelessly pursue technologies” to create innovation for the Oiles Group to achieve carbon neutrality by 2050.