Climate change is primarily caused by increased GHG emissions resulting from fossil fuel consumption. Its negative impacts are already evident in the growing frequency of natural disasters such as heavy rainfall and flooding, the depletion of food and water resources, extreme heat, and the spread of infectious diseases. This poses significant threats to our lives and ecosystems.

NOF supports the goals of the Paris Agreement to keep the rise in the global average temperature well below 2°C above pre-industrial levels (the “2°C target”), and pursuing efforts to limit the increase to 1.5°C wherever possible.

To help mitigate climate change and realize a decarbonized society, we aim to achieve carbon neutrality by 2050. As an interim GHG emission reduction target, we have set a target of reducing emissions by 40% or more by FY2030 compared with FY2013 levels, and we are actively working to reduce GHG emissions.

Our focus goes beyond reducing our own GHG emissions to encompass our supply chain, as we contribute to climate change mitigation through raw material procurement, efficient delivery, and the provision of environmentally friendly products and services. We are determined to take action and grow with society for a sustainable future.

We have established and disclosed our Management Policy Regarding Responsible Care and CSR Procurement Policy, declaring our commitment to GHG reduction measures across the entire supply chain. To implement these policies, we have set Responsible Care guidelines within the Group that address climate change mitigation and adaptation, biodiversity, resource recycling, R&D, and manufacturing.

At our production sites, we are promoting the shift to lower-impact energy sources for Scope 1, improving energy efficiency for both Scope 1 and Scope 2, and responding in line with each category of Scope 3. We are also working on R&D for environment-related product lines that contribute to climate change mitigation and adaptation.

For externally procured raw materials, we have established our CSR Procurement Guidelines to promote the procurement of materials with low environmental impact. To this end, we work to raise supplier awareness, participate in the Declaration of Partnership Building with suppliers to put these principles into practice, and advance sustainable procurement activities.

Furthermore, as part of the Japan Chemical Industry Association’s Responsible Care initiatives, we actively participate in dialogue with suppliers and local communities.

Moreover, we are pursuing decarbonization innovations throughout the supply chain. This includes industry-academia collaborative projects focused on the R&D of biomass-derived materials and the effective utilization of unused exhaust heat.

Through these initiatives, we are reducing Scope 3 GHG emissions and enhancing the sustainability of the entire supply chain.

With an eye to achieving carbon neutrality by 2050 and driving social transformation, NOF is taking on the challenge of green transformation (GX) and has joined the “GX future league,” in which companies pursuing sustainable growth in present and future society collaborate with corporations, government, and academia engaging in similar initiatives. In addition, we are members of many industry associations, including the Japan Chemical Industry Association (JCIA), where our President and Chief Executive Officer serves as a director. We actively incorporate and leverage in our daily activities the policies and latest developments discussed in these associations regarding climate change solutions. In addition, while working on the goals of each association, we ensure alignment so that these goals are consistent with NOF’s own policies and strategies.

Furthermore, in the Japan Soap and Detergent Association (JSDA), of which we are also a member, our President and Chief Executive Officer and other NOF executives serve as directors and periodically assume the role of chair of the Environmental Committee, striving to address industry-wide environmental issues.

To achieve carbon neutrality by 2050, the NOF Group recognizes that reducing emissions from the Domestic Group, which accounts for approximately 88% of Scope 1 and Scope 2 GHG emissions, is critical. As such, the Domestic Group has set a FY2030 target for reducing Scope 1 and 2 GHG emissions that exceeds the target set by the chemical industry that the NOF Group belongs to, to contribute to achieving the plan presented by the Japanese government (a 32% reduction from the FY2013 level as the FY2030 target), that is, a 40% reduction from the FY2013 level as the FY2030 target.We have also formulated a roadmap for reducing GHG emissions and are working to achieve our GHG emissions targets. Progress toward the targets is monitored regularly through Responsible Care activities by tracking the GHG emissions reduction rate and the amount of reductions achieved. Specifically, we conduct interviews about updates on the progress of reduction plans at the RC managers meetings held twice a year with the participation of the heads of NOF production sites, and at RC auditing conducted once a year for affiliated companies. GHG emissions are also calculated using the financial control approach. While we are yet to obtain SBT certification, we are exploring possibilities.

Scope 1 + Scope 2 emissions from the Domestic Group and the entire NOF Group were 123 thousand tons-CO₂e and 139 thousand tons-CO₂e, respectively, in FY2025. The reductions achieved represent 78% of the FY2030 target against 40% reduction by the Domestic Group compared with FY2013 level. Progress toward the target is on track, and we will continue accelerating reductions through energy conservation and the use of renewable energy.

We are steadily reducing energy-derived CO₂ through energy conservation and the electrification of equipment that uses steam and fuel. Going forward, we will further increase the share of renewable energy used and work to reduce CO₂.

1. Perfluorocarbon
2. Due to rounding adjustments, the sum of individual items may not equal the total.
3. The FY2030 energy consumption target is based on the target for conversion to non-fossil energy under the Energy Conservation Act.

In FY2025, energy consumption was 2,772 thousand GJ for the NOF Group, down 4.5% year on year, and 2,201 thousand GJ for NOF, down 4.9%, maintaining the continuing downward trend.

CO₂ emissions associated with energy consumption were 126.0 thousand tons for the NOF Group, down 7.9% year on year, and 98.3 thousand tons for NOF, down 8.7%. We will continue to steadily implement the efficient use of energy.

1. For converting electricity consumption to CO₂ emissions, we used the emission factor published by each electricity supplier for each fiscal year.
2. Energy consumption is estimated using 9.76 MJ/kWh as the coefficient when converting electric power consumption into the calorific value.

In FY2025, energy intensity per unit of production was 14.26 GJ/tons for the entire NOF Group, up 3.0% year on year, and 14.09 GJ/tons for NOF, down 0.3%. We will continue reviewing manufacturing processes and pursuing energy conservation activities to steadily promote even more efficient use of energy.

In FY2025, energy intensity per net sales was 0.28 kL per ¥1 million for the entire NOF Group, down 9.7% year on year, and 0.30 kL per ¥1 million for NOF, down 14.3%, maintaining the continuing downward trend. We believe this result reflects both our energy conservation activities, including process improvements and reduced steam consumption through steam trap replacement, and sales growth driven by various high-value-added products. We will continue seeking to balance reduced environmental impact with business growth and further enhance corporate value.

The NOF Group regards addressing climate change as a key management issue and, in line with the government target, aims to achieve carbon neutrality by 2050. As an interim target, we seek to “reduce CO₂ emissions by 40% by FY2030 compared with FY2013 levels” and are working to realize a sustainable society.

To achieve this target, we planned ¥2.1 billion in environmental capital expenditures under the 2025 Mid-term Management Plan and have promoted the use of renewable energy, reviewed manufacturing processes, electrified non-electric equipment, and shifted to energy sources with lower environmental impact.

As a result of these measures, fuel* consumption has continued to decline as shown in the graph at the bottom, and the effects of equipment upgrades enabled a significant year-on-year reduction in consumption in FY2025.

• Conversion of Heavy-Oil Boilers to City Gas Boilers (Fuel Conversion) ①
  At the Taketoyo Plant, we are systematically converting heavy-oil boilers to city gas boilers. Two units began operating in January 2025, reducing planned CO₂ emissions by 1.1 thousand tons-CO₂ per year. An additional four units are scheduled to begin operating in 2027.
  
  
• Conversion of Heavy-Oil Boilers to City Gas Boilers (Fuel Conversion) ②
  Nippon Koki Co., Ltd. is similarly converting heavy-oil boilers to city gas boilers, with operations scheduled to begin in 2030. This is expected to reduce planned CO₂ emissions by 1.2 thousand tons-CO₂/year.
  
  
• Rationalization of Boiler Operations
  Showa Kinzoku Kogyo Co., Ltd. has reviewed its boiler operating methods and operates boilers only when needed, except during winter, thereby curbing unnecessary fuel consumption and reducing energy loss.
  
  
• Other Fuel-Related Measures
  In the transportation sector, we are considering decarbonization through the conversion of company vehicles to EVs. At production locations, we continuously promote comprehensive improvements in fuel use, including reducing thermal energy loss through stronger steam trap management.

To achieve the NOF Group’s targets of “carbon neutrality by 2050” and “a 40% reduction in CO₂ emissions by FY2030 compared with FY2013 levels,” reducing electricity consumption and decarbonizing electricity, which accounts for a large share of energy consumption in manufacturing, are among our highest-priority initiatives. In addition to reducing electricity consumption through energy conservation activities, we aim to significantly reduce CO₂ emissions by replacing the electricity we procure with clean energy.

• Complete Switch to Electricity with Non-Fossil 
  Certificates at the Kawasaki Works
  As our most important initiative to decarbonize purchased electricity, the Kawasaki Works switched all electricity used from FY2022 to electricity with non-fossil certificates. This reduces CO₂ emissions by approximately 11 thousand tons annually and makes a major contribution to the NOF Group’s Scope 2 reductions.
  Electricity with non-fossil certificates is electricity accompanied by certificates verifying that it was generated from non-fossil sources such as renewable energy. Purchasing it is a highly effective and immediate means of reducing CO₂ emissions.
  Using the Kawasaki Works initiative as a precedent, other production sites and Group companies are also implementing or considering a phased switch of part of their electricity to electricity with non-fossil certificates*, aiming to further reduce the NOF Group’sCO₂ emissions.

• Promotion of Energy Conservation Activities
  To reduce electricity consumption, we actively promote energy conservation activities through higher equipment efficiency and waste heat recovery. Specifically, we are working to reduce electricity consumption by implementing thorough measures to turn off unnecessary lighting and manage air-conditioning temperatures, while considering further expansion of solar power generation, introducing heat-pump heat recovery systems, converting lighting to LEDs, improving the efficiency of pumps, refrigeration units, transformers, and other equipment, and installing inverters. We will continue working to improve energy efficiency throughout the entire manufacturing process.

The NOF Group recognizes that steam purchased externally for manufacturing processes is a significant component of GHG emissions. Because fossil fuels are required to generate steam, reducing steam consumption contributes to achieving our GHG emission reduction targets.

To achieve the NOF Group’s decarbonization targets, we have promoted ¥2.1 billion in environmental capital expenditures under the 2025 Mid-term Management Plan, advancing the use of renewable energy, reviews of manufacturing processes, electrification of non-electric equipment, and conversion to energy sources with lower environmental impact.

One of the core measures is the electrification of non-electric equipment that uses steam as a heat source. Furthermore, by using electricity derived from renewable energy, we aim to reduce GHG emissions and achieve the NOF Group’s GHG emission reduction targets.

• Reducing Steam Consumption through Electrification of Non-electric Equipment and Process Improvements
  At the Oita Works, we electrified steam ejectors by replacing them with vacuum pumps in FY2023 under Phase 1 construction and introduced a steam diagnostic program to begin continuous monitoring of steam usage. These measures are expected to reduce GHG emissions by a total of at least approximately 0.6 thousand tons-CO₂e annually.
  Every plant updates steam traps and reviews processes as needed. Through the synergistic effects of these ongoing improvement activities and electrification, purchased steam consumption has continued to decline since FY2021.
  As a future initiative, Phase 2 construction to electrify steam ejectors at the Oita Works is planned, targeting operations in FY2026 and FY2027. A plan to electrify steam ejectors at the Kinuura Plant (Aichi Works) is also underway, targeting operations in FY2029.
  The NOF Group will continue expanding the equipment targeted for electrification and steadily promote initiatives to achieve its FY2030 CO₂ reduction target and carbon neutrality by 2050.

In promoting the decarbonization of electricity, “in-house power generation,” which reduces dependence on externally purchased electricity and generates electricity using renewable energy within the NOF Group, is an important measure directly linked to reducing Scope 2 emissions. Introducing in-house power generation facilities using renewable energy, including solar power generation, contributes to stabilizing long-term energy costs and provides a foundation for autonomous decarbonized management toward carbon neutrality. The NOF Group is progressively introducing and expanding its in-house power generation facilities suited to the characteristics of each production site.

• Introduction of Solar Power Generation Facilities at the LS Aichi Plant and JEUNE BEAUTY CORPORATION. 
  In April 2025, the LS Aichi Plant and JEUNE BEAUTY CORPORATION introduced rooftop solar power generation facilities. The electricity generated is consumed onsite at the plants, helping to reduce purchased electricity and CO₂ emissions. When introducing the facilities, we carefully examined building roof areas and sunlight conditions to determine the optimal installation scale and ensure stable power generation throughout the year. This has achieved emission reductions of 70 tons-CO₂e per year and has become an important factor in achieving the NOF Group’s Scope 2 reduction target. Solar power generation across the entire NOF Group reduces emissions by 208 tons-CO₂e per year. Going forward, we will consider deployment at other production sites and seek to increase the in-house power generation ratio across the Group.
  
  
• Use of a Cogeneration System at the Kinuura Plant
  The Kinuura Plant has introduced a city-gas-fired cogeneration system that simultaneously produces electricity and heat, significantly improving overall energy efficiency. Compared with separately procuring or generating electricity and heat, a single cogeneration system can supply both, simultaneously reducing primary 
  energy consumption and CO₂ emissions. We will continue stable and efficient equipment operation and seek further reductions in CO₂ emissions.

At the Aichi Works, NOF manufactures products for specific purposes using perfluorocarbon (PFC), which has a high global warming coefficient, as the diluent for organic peroxides.

Because the PFCs used are low-boiling-point solvents with significant atmospheric impact, we have worked to reduce impact through process improvements. Since FY2006, we have also operated equipment that cools, recovers, and reuses PFCs using condensers installed in each process. Through several subsequent equipment improvements, we have continued reducing PFC emissions. As a result, emissions have been significantly reduced compared with 1995, the base year for PFCs.

In FY2025, PFC emissions decreased approximately 13% from FY2024 due to the effects of facility improvements. Going forward, we will continue stable operation of recovery equipment, pursue diluent changes, and promote emission reductions.

The NOF Group also promotes GHG reduction activities through forest maintenance and CO₂ absorption.

At the Shirakawa Plant of Nippon Koki Co., Ltd., we used Fukushima Prefecture’s Carbon Dioxide Absorption by Forest Maintenance Activities Certification System to conduct tree planting and thinning, receiving certification for absorbing 282 tons of CO₂ from 2012 to 2013.

NOF Metal Coatings Asia Pacific Co., Ltd. supports Kanagawa Prefecture’s “Kanagawa Forest Restoration 50-Year Project” and has participated in the “Forest Restoration Partner System” since 2022 to support forest maintenance, resulting in approximately 247 tons of CO₂ absorption over five years.

In 2025, the Oita Works endorsed Oita Prefecture’s “Forest Creation with Corporate Participation” program and carried out tree-planting activities in the forests of Yufu City. As the saplings grow, they are expected to absorb approximately 160 tons of CO₂ over five years.

CO₂ absorbed through the NOF Group’s forest maintenance activities

• Cumulative total 689 tons

To realize a sustainable society, the NOF Group recognizes reducing GHG emissions throughout the supply chain as an important issue. Of total Scope 3 emissions of 872.5 thousand tons-CO₂e in FY2025, the major categories were Category 1, purchased goods and services, at 408.7 thousand tons-CO2e and Category 10, processing of sold products, at 24.7 thousand tons-CO₂e. We will continue working to improve calculation accuracy and establish emission targets. Based on the CSR Procurement Guidelines, we will also promote continuous improvement by engaging and collaborating with internal and external stakeholders to reduce emissions throughout the supply chain.

1. NOF on a standalone basis, 10 domestic affiliate companies (Nichiyu Kogyo Co., Ltd.; YUKA SANGYO CO., LTD.; NiGK Corporation; Showa Kinzoku Kogyo Co., Ltd.; Nippon Koki Co., Ltd.; Nippo Kogyo Co., Ltd.; NOF METAL COATINGS ASIA PACIFIC CO., LTD.; JAPEX Corp.; NIKKA COATING CO., LTD.; NICHIYU LOGISTICS CO., LTD.), and 2 major overseas affiliate companies (Changshu NOF Chemical Co., Ltd.; PT. NOF MAS CHEMICAL INDUSTRIES)
2. NOF on a standalone basis, 7 domestic affiliate companies (Nichiyu Kogyo Co., Ltd.; YUKA SANGYO CO., LTD.; NiGK Corporation; Showa Kinzoku Kogyo Co., Ltd.; Nippon Koki Co., Ltd.; Nippo Kogyo Co., Ltd.; NOF METAL COATINGS ASIA PACIFIC CO., LTD.)
3. NOF on a standalone basis, 10 domestic affiliate companies (NICHIYU TRADING CO., LTD.; NICHIYU LOGISTICS CO., LTD.; Nichiyu Kogyo Co., Ltd.; YUKA SANGYO CO., LTD.; NiGK Corporation; Showa Kinzoku Kogyo Co., Ltd.; Nippon Koki Co., Ltd.; Nippo Kogyo Co., Ltd.; JAPEX Corp.; NOF METAL COATINGS ASIA PACIFIC CO., LTD.)
4. Databases used: Emissions Intensity Database Ver. 3.5 for Calculating the GHG Emissions of Organizations through the Supply Chain (Ministry of the Environment)

The NOF Group is working to reduce GHG emissions across the entire supply chain in line with our CSR Procurement Guidelines. We participate in the Declaration of Partnership Building, strengthening collaboration with our suppliers.

Category 1 emissions from purchased goods and services were 408.7 thousand tons-CO₂e in FY2025, accounting for approximately 47% of total Scope 3 emissions. We are currently introducing a calculation system and preparing to establish reduction targets by improving calculation accuracy.

Since FY2006, the NOF Group has operated an integrated delivery system to improve logistics efficiency. NOF has also been tackling modal shifts* and joint delivery.

We are promoting a modal shift from truck to rail transportation, and rail and marine transportation currently account for 18.3% of total cargo volume. In terms of GHG emissions intensity during transportation, if we take FY2006—the first year of implementing the integrated delivery system—as 100, the figure for FY2025 was 41.5.

The NOF Group recognizes the importance of life cycle assessment (LCA) in more appropriately understanding the environmental impact of products and services and considering future reduction measures. LCA is a method for quantitatively and comprehensively assessing the environmental impact of products and services throughout their entire life cycle, from raw material procurement to manufacturing, distribution, use, disposal, and recycling. To realize a decarbonized society, it is important to understand environmental impact information not only for manufacturing processes but throughout the supply chain, and we recognize LCA as the underlying approach.

The NOF Group has begun examining ways to improve the accuracy of carbon footprint (CFP) calculations, which form the basis of LCA. CFP is a system that quantifies and visualizes, on a product-by-product basis and in terms of carbon dioxide (CO₂) equivalent, the GHGs emitted at each stage of a product’s or service’s life cycle, from raw material procurement to manufacturing, distribution, use, disposal, and recycling.

Based on this approach, the NOF Group is organizing and creating a database of product-specific Scope 1, 2, and 3 information and conducting trial carbon footprint calculations. Previous calculations used proxy values based partly on information for entire production locations and major raw materials. By refining product- specific information, we will obtain carbon footprints that more closely reflect actual conditions.

Going forward, we will progressively expand the range of products covered and develop and refine relevant data. By simplifying and standardizing carbon footprint calculation methods, we will consider more advanced environmental impact assessments incorporating the LCA approach.