Initiatives related to the TCFD Recommendations

Governance

The ESG Materiality Steering Committee, which is the business executive organization related to sustainability, and the Sustainability Committee, an organization to supervise the business execution activities of the Steering Committee and report to the Board of Directors, are responsible for the governance function of climate change activities. The Sustainability Committee, consisting of three outside members and two internal members of the Board of Directors, meets once every quarter.

Strategy

The automotive products business, which is a core of our strategy, is an area that benefits from abundant growth opportunities associated with the advancement of global climate actions while at the same time is required to get carefully prepared for risks. Nidec defined the automotive business as the business that is most likely to be substantially affected by climate change, and it conducted scenario analysis regarding the climate change impact. Employees involved in different processes, from planning and development to quality management, purchasing, sales and finance, participated in a workshop and conducted a scenario analysis following the procedure below.
　The results of the scenario analysis and countermeasures were reported to the General Manager, Deputy General Manager, and officer in charge of the Automotive Motor & Electronic Control Business Unit and to the Sustainability Committee. Moving forward, we will conduct scenario analysis for other business segments and proceed with the quantitative analysis of the identified climate risks and opportunities.

Nidec’s actions

Geographical distribution of production plants

Nidec has a group network covering over 300 companies in more than 40 countries around the world and aims to reduce geopolitical risks and climate-related physical risks by geographically distributing its operation sites. For the automotive products business, in anticipation of the expansion of the EV market, we are accelerating the building of a mass production system for our EV traction motor systems (E-Axle) in China, Europe, and other parts of the world.

Reduction of size and weight, and resource saving by employing the “light, thin, short, and small” technology

Nidec manufactures socially and environmentally conscious products by making motors smaller and lighter and resource-saving. The first-generation model (Gen.1) of our EV traction motor system (E-Axle) achieved an overwhelming miniaturization of the motor by employing “light, thin, short, and small” technology and the oil cooling structure we had cultivated in the small precision motor business. The second generation (Gen.2) E-Axle, which began mass production in September 2022, achieved a 19% reduction in weight compared to Gen.1 thanks to the use of smaller magnetic circuits and inverters, based on the high-space-factor wire-winding technology, and also a substantial reduction in the amount of minerals used. In addition, the newly developed two-way oil-circulation system has improved the cooling capability, making it possible to use magnets that require significantly less amounts of dysprosium (Dy), terbium (Tb), and other kinds of heavy rare earth. Moving forward, we are planning to develop motors that do not use heavy rare earth or magnets.

Risk management

We established a framework in which risk surveys are conducted for each of the levels illustrated below and the survey results are shared and mutually used.

　For serious contingent risks that may lead to business interruption, the Business Unit level (L2) organizations will periodically check the status of the formulation of BCPs (Business Continuity Plans) of the major business site^* level (L1) organizations under their control, thereby ensuring that improvement activities are continuously conducted for risk reduction.
　In addition, we are working to quickly detect factors that may inhibit business continuity and properly address them mainly through risk managers assigned to all sites around the world. We have conducted BCP simulation training, assuming such risks as an earthquake, flooding, and drought, at our sites both inside and outside Japan.
　In FY2022, we conducted scenario analysis in the automotive business segment and identified climate-related risks (transition risks and physical risks) that have a large business impact. Going forward, we will consider incorporating the identified climate risks into company-wide risk management items.

* Major business sites: Business sites that are selected to cover 80% of the sales of the Business Unit or Group company to which they belong

Indicators and targets

Identifying “contribute to environmental sustainability” as one of our materiality issues, we have set the KPIs shown below.

　In addition, as a major pillar of our medium-term strategic goal Vision 2025 and ESG materiality measures, we have set the target of achieving carbon neutrality by FY2040. To achieve this target, we first aim to substantially reduce the CO₂ that Nidec emits directly through its business activities at present (Scope 1) and CO₂ that is emitted in the production stage of heat or energy purchased or used in business activities (Scope 2) by making our businesses more energy efficient and proactively introducing renewable electricity. After building a solid foundation for renewable energy-oriented CO₂ emissions reduction, we will promote a shift to energy-saving, low-carbon fuels and employ carbon offset investments and other measures, thereby achieving carbon neutrality in our business activities by FY2040. For CO₂ emitted in the supply chain (Scope 3), we will decide a reduction plan by FY2025.