Securities Code: 6268

August 7 th, 2019 E x e c u t i v e o f f i c e r, C o r p o r a t e P l a n n i n g ,

A c c o u n t i n g a n d F i n a n c e , I n f o r m a t i o n S y s t e m s a n d C o r p o r a t e C o m m u n i c a t i o n

Kazumasa KIMURA

Value Creation Process of

Nabtesco Group

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Value Creation Based on The Nabtesco WAY

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Action guidelines By implementing our promises, we will realize "All

Stakeholder's Dreams."

The Nabtesco Group, with our unique motion control technology, will provide safety,

comfort and a sense of security in daily lives as well as any form of transportation.

Corporate Philosophy

1. Value close communications with our customers worldwide

2. Value each individual’s spirit of challenge and innovation

3. Continue to expand our business and profit

4. Continue to reinforce our sense of ethics and highly transparent business activities

5. Value the environment and promote harmony with local communities and cultures

Our Promises

Pursue sustainable value creation based on Our mission, we will realize “all stakeholders’ dreams”

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Overview of Value Creation Process

Mission

Managerial Resources That Support Value

Creation (INPUT)

Activities for Sustainable Growth

Created Value (OUTCOME)

Financial Management

Measures to solve ESG challenges

OUTPUT

Value Creation Process

Promote Value Creation Process through the execution of solving ESG challenges and Financial Management

Business Activities

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Create Value（Outcome）

Managerial

Resources Value for the Nabtesco Group Value for external stakeholders

Relationship

Capital -Customer bases founded on top-

class market shares

-Trust in the management team and

high –scoring ESG evaluation

-QCD* performance that meets the

requirements of customers

-Enhancement of partnership

with stakeholders

Technology and

manufacturing

capital

Creation of new products and a higher

competitive production system

Provision of safety , comfort and a sense

of security and contribution to climate

change mitigation

Human capital Securing of human resources who

implement The Nabtesco Way

Provision of safe and comfortable

workplace

Organizational

capital Highly ethical corporate culture based

on a global compliance system

Management transparency based on the

autonomous improvement of its

functions by the Board of Directors

Enhancement of the various values through value creation

process pursue realization of “all stakeholders’ dreams

Blue: Higher correlation to ESG challenges

*QCD: Quality, cost and delivery

ESG Challenges

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7

Material CSR Issues

Key points for today

（G）

-Strengthen corporate governance

-Promote compliance behavior

（S）

- Reform working practice

（E）

- Countermeasures for climate

change

Materiality (Material CSR Issues) to tackle various ESG challenges effectively and efficiently

（G）Strengthen Corporate Governance

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■The Corporate Governance Policy revision

◆Policy to reduce strategic shareholding

・Review the benefit and capital costs of strategic shareholding at Board of Directors

ROIC Improvement by Building Manufacturing Innovation

Pursue autonomous improvement of corporate governance to gain the trust from stakeholders

◆Management focusing on capital costs

・Adopt ROIC as a performance indicator (2017) / Promote manufacturing base improvement

by utilize “ROIC tree”

→Work to generate continuously higher ROIC than capital costs (WACC)

◆Participation of the Board of Directors in CEO succession planning

・Nomination Committee promote stipulation of CEO succession planning

（Key points for renewal in 2018）

Revised Corporate Governance Policy (Issued 2015) based on Corporate Governance Code renewal in 2018

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Directors and Audit & Supervisory Board members

◆Proportion ⇒6 outside members including 1 female director out of 15

◆Remuneration Committee ◆Nomination Committee

（G）Strengthen Corporate Governance

◆Advisory organization ・Nomination Committee（2015～）

- Nomination of CEO, directors, auditors

- Deliberation and report for CEO succession planning

・Remuneration Committee (2008～）

- Deliberation and report for compensation of

management

Effectiveness evaluation for the Board of Directors (Anonymous self-evaluations) ⇒The effectiveness of the Board considered to be well secured

Followings were founded as medium- to long-term issues ◆Board structures： -Increase the proportion of independent outside directors to at least 1/3 -Increase the number of female directors ◆Discussion by the Board of Directors -Necessary to secure enough time to deliberate important issues in management, including growth strategies

Compensation System for Directors ◆Fix and performance-linked compensation ・Emphasized the link with performance ・KPI：ROIC, Net profit, R&D indicators, environmental indicators ・Claw-back Clause ◆Improve disclosure of compensation from 2018

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（G） Promote Compliance Behavior

■Reinforcement of the global compliance system ◆Establish compliance promotion system

⇒Reinforce of the global compliance system

・Established compliance committee (2016)

・Established the Nabtesco Group Code of Ethics (2016)

⇒Full renewal of Code of Corporate Ethics and Code of Conduct which established in 2004

◆Enhance the internal reporting system

⇒Utilize self-purification

・Globalization of the internal reporting system

⇒Internal reporting system start from 2005 in Japan, 2017 in China, 2018 in Europe, North America and

South East Asia

・Established “auditor hotline*”（2017）

◆Awareness rasing activities

・Compliance handbook is available in nine languages

・Promote through corporate magazine and intranet

・Compliance education by e-learning

⇒Check implementation by ”Compliance awareness

survey”

■Raising compliance awareness

*Auditor hotline：Whistleblowing system to report an unfair act of a director/executive officer

※Surveied in 2018

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108

129

150

0

20

40

60

80

100

120

140

160

試行

期間

18年 19年 20年

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（S）Human Capital Management; Progress of workstyle reforms

Average overtime hours Target：Less than22H/M

Leave of absence ratio Target：87% and over

◆Main measures

（Theme）

・Enhance Smart work

・Operational reform and raise awareness of

improvements

・Improve IT usability

・Subsidiarity of discretion

◆KPI

（Result）

・Open satellite offices

・Improve operation based on the reform

・Use robotics process automation, less paper

work, considering the use of artificial intelligence

・Re-examination of authority rules

Secure enough time for execution of “Enjoy the Challenge” through work smart and realize fulfilling work and life balance

Number of people use tele-work

Target：150 person or more

25.2

27.4

24.223.5

22.0

15.0

17.0

19.0

21.0

23.0

25.0

27.0

29.0

16年 17年 18年 19年 20年

69% 71%73%

80%

87%

50%

60%

70%

80%

90%

100%

16年 17年 18年 19年 20年FY16 FY17 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 Trial FY18 FY19 FY20

（E） Countermeasures for climate change

■Systematic measures for climate change

（Features of our activities） Setting of environment-related incentive system ・Commendation program for environmental contribution ・Incorporation “achievement of positive environmental contribution” with performance-indicators for each division

→activate efforts for environmental issues

Built Nabtesco Energy Management System(NEMS) Collect, visualize and analyze environmental information from our each site by managing tools and Monitoring system.

→Promoting “PDCA” cycle by monthly reporting to Corporate Officers Committee.

Real-time monitoring system of electric power consumption

Promoting advanced environment management,

having positioned environmental measures as one of our business strategic priorities

since our establishment.

（E） Countermeasures for climate change

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■Measures to reduce CO2 emissions

Promoting Measures to safe and create energy in order to achieve long-term CO2 emission targets for FY2030 and FY2050.

0

500

1,000

1,500

2,000

2016 2017 2018 2019

2.4times 1.6times

(JPY Millon)

(Plan)

◆Making environmental investments aggressively Major investment targets：

・Solar power generation equipment

・Highly efficient Machineries

・Advanced measures to comply with regulations on fluorocarbons

◆Forecast of CO2 emissions

(Plan)

(Plan)

CO2

Reduction by safe and create energy

CO2

emissions *SBT：Science Based Targets

This targets have been officially

approved by the SBT* initiative

since 2017 (8th fastest in Japan）

ESG assessment ／ESG Indexes

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・Environmental Assessment

（CDP）

（WWF Japan） 「Effective Efforts to Address Climate and Energy Issues：Machinery and Precision Equipment」

First in the machinery category in the Ranking of Japanese Corporations.

・ESG Indexes

(Indices adopted by GPIF)

Awarded three highest ratings from CDP and selected other major ESG Indexes

Nabtesco has been selected

Since 2016

Nabtesco was ranked first in

Japanese companies In 2018.

(In Machinery and Electrical

Equipment Industry)

Only 7 Japanese Company

Elected Climate A List

For 3 years in a row.

Only 4 Japanese Company has elected

these three Lists.

Appendix

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ESG Disclosure

FY2018/12：Integrated Report （https://nabtesco.disclosure.site/ja/themes/141）

You can see our ESG information below.

Corporate Website：CSR （https://nabtesco.disclosure.site/ja）

＆

FY2018/12：Points of this Report

■CEO Dialogue, Dialogue on Governance, Dialogue with Strategic Partner

■Value creation process of Nabtesco Group (explanations)

■Listed ESG essential points in a systematic manner.

Corporate Website：CSR ■Listed ESG principles, activities and performances.

■ESG data book

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Value creation process of Nabtesco Group（P. 9-10）

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