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Sustainability
Materialities (Key Issues) and KPIs

Materialities (Key Issues) and KPIs

To realize our Sustainability Vision, the Nissha Group identifies particularly important items as materialities. We also set and engage in specific strategy items, KPIs, and action items reverse-calculated to achieve 2030 goals.

Materialities are evaluated from the 4 perspectives of, Creating Business Opportunities, Risk Reduction, Strengthening Management Foundation, and Corporate Governance, using the two axes of importance to society and stakeholders, and importance to Nissha. In addition, we hold dialogues with stakeholders including customers, shareholders and investors, and include that insights in “importance to society and stakeholders”. The identified issues and their positioning within the Group are discussed by the Sustainability Committee, and materialities are identified through deliberations and resolutions by the Board of Directors.

Materiality Identification Process

STEP1 Identify related social issues	Identify social and management issues related to the realization of the Sustainability Vision by referencing SDGs, GRI Standards, Responsible Business Alliance (RBA), etc..
STEP2 Prioritize	Incorporate knowledge gained through dialogue with customers, shareholders, investors, and other stakeholders regarding the social and management issues identified in Step 1, while analyzing and prioritizing on two axes: “importance to society and stakeholders” and “importance to Nissha”.
STEP3 Verify validity	Examine the validity of the priorities via interviews conducted with business divisions involved in the Sustainability Committee, ESG task force and other organizations.
STEP4 Establish materialities, KPIs, and action items	Based on Steps 1 to 3, materialities are identified through deliberations and resolutions by the Board of Directors. In addition, business divisions, organizations, and the ESG task force incorporate strategy items, KPIs, and action items which are then approved by the Sustainability Committee.

Creating Business Opportunities

Identified based on important social issues (needs) in the priority markets as stipulated in Sustainability Vision

Materialities	Scenario for Achieving Materialities (Strategy Items)	KPIs and Action Items (FY2026)
Solve medical issues (Medical devices/ Pharmaceuticals)	Expansion of business for Medical devices, Pharmaceuticals, and Healthcare markets	Net sales of Medical Technologies business and Pharmaceuticals
Contribute to the safety and comfort of transportation and logistics, and the reduction of environmental impact (Mobility)	Expansion of business for Mobility market	Net sales of Mobility segment
Promotion of circular economy (Sustainable Materials)	Expansion of business for Sustainable Materials market	Net sales of Sustainable Materials segment

Materialities

Scenario for
Achieving Materialities
(Strategy Items)

KPIs and Action Items
(FY2026)

Solve medical issues
(Medical devices/
Pharmaceuticals)

Expansion of business for Medical devices, Pharmaceuticals, and Healthcare markets

Net sales of Medical Technologies business and Pharmaceuticals

Contribute to the safety and comfort of transportation and logistics, and the reduction of environmental impact (Mobility)

Expansion of business for Mobility market

Net sales of Mobility segment

Promotion of circular economy (Sustainable Materials)

Expansion of business for Sustainable Materials market

Net sales of Sustainable Materials segment

Risk Reduction

Evaluated and identified environmental and social risks that impede business continuity in aiming to achieve Sustainability Vision

Materialities	Scenario for Achieving Materialities (Strategy Items)	KPIs and Action Items (FY2026)
Responding to climate change	Reduction of CO₂ emissions	Reduction of CO₂ emissions*
Respect for human rights	Reduction of labor and human rights risks	Number of child labor and forced labor cases at primary suppliers in areas with high labor and human rights risks : 0
Providing responsible products and services	Maintain and expand quality management system in accordance with business strategy Improve quality with an emphasis on product safety and feasibility at the design stage Fostering and improving the quality mindset Monitoring of compliance with laws and regulations	Number of serious quality incidents: 0
Sustainable procurement	Reduction of information security risks for suppliers	Construct a system to meet the security standards we demand, based on the varying information security levels of each supplier
Data security in response to increased use of generative AI	Continuously enhance security systems Maintain and improve security literacy among all employees Improve productivity through proactive use of generative AI	Timely deployment of security systems across the entire Nissha Group Company-wide implementation of phishing email training and educational systems Develop governance and provide education related to generative AI

* We plan to set a new CO₂ emissions reduction target in 2025, as we achieved our original target in 2024 (a 30% reduction by 2030 compared to 2020).

Strengthening Management Foundation

Identified major management foundation elements in the quest for realizing our Sustainability Vision and accelerating business activities

Materialities	Scenario for Achieving Materialities (Strategy Items)	KPIs and Action Items (FY2026)
Enhancing human capital	Utilizing diverse human resources	Female manager ratio Global consolidated: 23% Nissha non-consolidated: 12%
Enhancement of learning and growth opportunities and employee rotations	Selection rate of leader candidates in selective training programs Nissha non-consolidated: 45% Shift of human resources to priority markets
Efficiency and productivity improvement	Improve efficiency and productivity by digitalization of value creation processes	Expand data-based decision-making mechanisms Reduce working hours through the introduction of productivity enhancement tools at overseas subsidiaries: 20,000 hours / year (compared to 2023) Reduce working hours for non-routine tasks by using generative AI

Materialities

Scenario for
Achieving Materialities
(Strategy Items)

KPIs and Action Items
(FY2026)

Enhancing human capital

Utilizing diverse human resources

Female manager ratio
Global consolidated: 23%
Nissha non-consolidated: 12%

Enhancement of learning and growth opportunities and employee rotations

Selection rate of leader candidates in selective training programs
Nissha non-consolidated: 45%
Shift of human resources to priority markets

Efficiency and productivity improvement

Improve efficiency and productivity by digitalization of value creation processes

Expand data-based decision-making mechanisms
Reduce working hours through the introduction of productivity enhancement tools at overseas subsidiaries: 20,000 hours / year (compared to 2023)
Reduce working hours for non-routine tasks by using generative AI

Corporate Governance

Identified major corporate governance elements in the quest for realizing our Sustainability Vision and accelerating business activities

Materialities	Scenario for Achieving Materialities (Strategy Items)	KPIs and Action Items (FY2026)
Improving the effectiveness of the Board of Directors	Upgrade systems related to corporate governance and group governance	Improve the evaluation of the effectiveness of the Board of Directors
Advancement of global governance	Complete the global risk management system development (regional risk management systems)

Materialities

Scenario for
Achieving Materialities
(Strategy Items)

KPIs and Action Items
(FY2026)

Improving the effectiveness of the Board of Directors

Upgrade systems related to corporate governance and group governance

Improve the evaluation of the effectiveness of the Board of Directors

Advancement of global governance

Complete the global risk management system development (regional risk management systems)